Monday Business Briefing: Will new investigative reporting initiative push CJ, WFPL to media showdown?


Future Clay & Cotton in Norton Commons. (Photo Courtesy of Margy Taylor.)

Welcome to the June 17 Monday Business Briefing.

This is your private business intelligence briefing, with Insider Louisville staff and contributors vetting tips collected during the past few days and hours.

This is the “Houston we have a problem” edition of Insider Louisville.

We set aside this past weekend for final testing on the way to launching Insider Louisville.

Here we are, obviously. But it was – how to put this – a two-day roller coaster ride of highs and lows as we tweaked, trouble-shot and traced the grievous sins of our service providers. Where is the NSA when you need them?

Now we’re up, so on with the show … which is a media-heavy show today.

• Since the death of Bob Schulman five years ago, Louisville has been without a full-time media critic. Which is particularly unfortunate in 2013 because we are at a pivotal point between the winding down of conventional media, and the coalescence of its digital replacement. Rick Redding’s post last week about the unlikely combination of David Jones, Jr., and Ed Hart financing WFPL’s new Kentucky Center for Investigative Reporting marks the boldest challenge to the Courier-Journal since the Louisville Herald-Post closed in 1936. And it’s not clear the CJ will have an answer now that WFPL has investigative reporter Ralph Dunlop, who left the CJ last year during one of the many rounds of downsizings and buyouts. If WFPL succeeds in adding four more reporters per Donovan Reynold’s master plan, WFPL could, within a year, become the dominant hard news source in Louisville.

Of course, that raises the issue of how WFPL will continue to fund such a juggernaut, which would cost at least $500,000 per year at a station that raises about $1 million annually through on-air fund drives. Will it be renewals by Jones and Hart? A ProPublica search for big grants? Will the CJ try to match WFPL’s effort? Because investigative journalism is expensive, lightly read, and has a lot less impact in 2013 than it did in the Watergate Era. The CJ, the way we see it, has very little motivation to counter. Yes, they make a big deal of doing “Watchdog Journalism,” except they don’t, really. The CJ has instead amped up coverage of sports and crime. Which is what their readership wants, and what they do best.

The question becomes, which platform will WFPL use for these investigative pieces? Their news programming reaches about 6 percent of the projected Louisville radio market. According to the latest Arbitron CMUE rating, about 80,000 people tune into the station each day for at least 5 minutes, or roughly 6 percent of the people living in the MSA. However, that fraction of the population includes government officials, policy makers and community leaders.

WHAS Radio with Rush Limbaugh and some of the commercial radio stations with national morning shows have larger audiences, but not as influential audiences. It seems obvious WFPL will be forced to spend some of that windfall on its website, push technology and active media if they’re going to match the CJ’s daily audience of about 130,000.  Which again is expensive.

So, why is this a business story? Because at the end of the day, all media other than WFPL still run on advertising. That said, more and more, WFPL is working advertising lite into every segment of its broadcasting, pulling away dollars not so much from the CJ, but from Business First and from LEO Weekly. Moreover, WFPL can’t fail as they rely on fundraising, grants and federal funding. Insiders already are telling IL they’re concerned that Reynolds’s efforts to turn WFPL from a small market public radio station into a media empire will make it tougher for many non-profits to raise money this year. Finally, we are part of the mix. All this opens the door to a direct competitor challenging Insider Louisville, the only news site not tied to a legacy print or broadcast organization.

In the final analysis, consumers benefit from all this anarchy, because competition for the big story is growing. Instead of waiting for the paper in the morning, Louisville likely will become a microcosm of the 24/7 global news business. But how good will it be?

 • Speaking of investigations, the Center for Investigative Reporting might want to start with the Medicaid Meltdown in Kentucky. This week, the CJ dutifully reported that everything is just super-duper.  Medicaid Commissioner Lawrence Kissner told a legislative committee Thursday how pleased he is with the way managed care is working for Medicaid patients in Kentucky one year in. “We are driving significant improvement in healthcare outcomes,” Kissner said of using managed care to deliver Medicaid. He singled out Coventry Health Care, based in Bethesda, Md., for their exemplary work.

Here in the reality-based world, the view is a little different. Back in March, U.S. Senior District Judge Karl Forester ordered Coventry to reimburse Lexington, Ky. based Appalachian Regional Healthcare after Coventry tried to unilaterally end its contracts with ARH. Forester alluded in his ruling to “numerous issues evident in Kentucky’s hastily concocted managed-care program and the harms ARH has suffered.” A Franklin Circuit judge ruled back in March that another MCO, St. Louis-based Centene Corp. couldn’t unilaterally end its contract with the state July 1. In short, everyone from health care providers to patients to insurers are ruing the day Gov. Steve Beshear implemented the plan as a campaign ploy when he ran against former Sen. David Williams. It’s a complicated story, not at all sexy. But it’s one that affects thousands of Kentuckians, rich and poor. And not in a good way. Now, with the expansion of Medicaid under ObamaCare, will that only get worse?

• Picking back up our media theme, a new CJ subscriber (and former subscriber) survey hints heavily that our local Gannett newspaper may soon follow the lead of other U.S. dailies and cut back home delivery. Moreover, the survey queries readers about how much non-local content they’ll tolerate.

A subscriber who filled out the long, long survey told us it began with questions about newspaper and internet reading habits including frequency and length of time spent with content. The survey referenced the New York Times, Wall Street Journal, USA Today and news sites such as Google, but not local competitors.

“Then,” said one source,”it (asked) how I would feel about … pages and sections from USA Today in the CJ.  There were also screen shots of the suggested pages – like local business on one page, USA Today business on the next.  It asked about having a Friday USA Today sports section and a Sunday Life USA Today section.  There were questions regarding more local content.  Then it went into a section of choices, each page had four choices of how many pages of USA Today content, local content and how many days of home delivery (or none, all digital).”

Sources tell us the survey hints that Gannet executives in McLean, Va. are trying to reduce costs by dumping Monday-through-Friday papers. The survey discusses home delivery options as a variation on weekend delivery, Friday, Saturday, Sunday;  Saturday and Sunday; and Sunday only. “There must have been over 10 pages of this and not until the last few (questions) did it include choices of 7-day delivery ,” our source said. “Many of the pages for me were picking the best bad choice and then saying I would not buy that.” Then the survey generated price points for packages and asked if the subscribers would consider paying that amount.

“I got the feeling they are looking for ways to use content from Gannett and possibly drop a lot of home delivery in favor of digital,” the source said.

Gannett’s print advertising revenue — the company’s single largest source of revenue — fell 2 percent in the fourth quarter of 2012 to $658 million, down from $671 million a year ago. However, the worst may be over for Gannet. This was the smallest print advertising decline for Gannett during the past EIGHT quarters. For the year, print advertising revenue was down 6.2 percent to $2.36 billion.

• Some good news. Last week, our Melissa Chipman interviewed the three out-of-town startups in the inaugural class of the Velocity accelerator in Jeffersonville. Two of the three startups have already expressed enthusiasm about the possibility of relocating to the area after the accelerator program is over. The low cost of living and our proximity to so many other cities were two motivating factors. But it seems like the big motivators are how accessible and nice and welcoming everyone in the startup ecosystem has been to them. Louisville hospitality at its best!

• Confirmed: The 2013 NuLu Festival will expand into the 800 block of East Market Street from the 700 block in front of The Green Building. Maker Faire, a national organization of tech hobbyists, engineers and savants, will participate with a number of displays and booths. Last year, with perfect September weather, the event drew about 10,000 people. This year, the sky’s the limit. Makers Faire is tied to Make Magazine, founded by Louisville native Dale Dougherty.

• Look for sweeping changes to Kentucky’s alcoholic beverage laws. A majority of Kentucky’s 120 counties remain dry. But since the 1980s, liberalization of state Alcoholic Beverage Control laws have become an economic-development issue. No wine or beer at a restaurant, you can kiss Japanese and European investment goodbye. Last year Gov. Steve Beshear created an ABC task force to try to simplify the state’s arcane liquor laws. We read about 115 pages of the proposed changes, and our takeaway is that the legislature could make it easier for micro-breweries, vineyards and urban distillery/tourism operations to flourish. One of the biggest questions that needs to be answered, however, is how alcoholic beverage sales at increasingly popular trolley hop events can be made more uniform, with some sort of provisional event license. This is an issue that may be addressed in the near term, since it appears many participants are breaking the law on a regular basis, offering free wine and spirits at their stores.

BankTracker, the investigative reporting partnership between American University School of Communications and NBC News, has just released its latest analysis, and once again, PBI Bank is Louisville’s worst bank. By a country mile. PBI’s troubled assets roses to $164 million as of March 31, the end of the first quarter. That’s up about 20 percent from $133 million for the first quarter 2012. Troubled assets now represent about 14 percent of all assets at the bank, where assets total $1.13 billion as of March 31. Business First has had several stories about the miracle going on there. We don’t see it. PBI Bancorps shares closed Friday at about 81 cents.

Actual Monday Biz Briefing briefs:

• Mayor Greg Fischer and executives at Gazelle will finally announce this tech recycler’s arrival from Boston. We got this Friday:

Please join Governor Beshear, Mayor Fischer and Gazelle’s CEO Israel Ganot and the rest of the Gazelle executive team and Louisville staff for our official Grand Opening on Monday, June 17 at 10:30 a.m. at 7213 Global Drive, Louisville.

We told you Gazelle was coming back in February. We learned since then that the company won’t move here. Bummer.

• The fate of the Marcus Lindsey is still up in the air. We were told weeks ago a new operator had been selected for the Main Street events space, but now we hear deals are still on hold.

Clay & Cotton owner Margy Taylor is weeks away from opening her store/office/home in Norton Commons.