Unlocking A New Era Of Inquirer Journalism:

A Report To The Company From Our Management Offsites

June 17, 2019

For at least the past 15 years, we have been responding to cataclysmic changes in the
news industry. In many ways, we’ve been at the center of America’s local journalism
disruption, given our ownership turmoil over that time.

In recent years, however, we’ve made many meaningful changes: merging our three
newsrooms into one; restructuring our news coverage approach and our physical
space; clarifying our company brand; introducing the digital subscription product; and
making positive improvements to our workplace culture. These cultural improvements
include: diversifying the racial and gender makeup of our newsroom and company;
recognizing exemplary performance by establishing monthly and annual employee
recognition programs; and receiving national recognition for reducing a gender pay
equity gap in our newsroom.

But, in many ways, we have failed to solidify our digital footprint, and our quest for a
viable business model remains elusive. Changes in the marketplace continue to
accelerate at a pace that requires a much greater sense of urgency.

We have fewer than five years to make fundamental changes in our business, our
products, our operations and our culture. Importantly, many urgent decisions must be
made now to secure our future as a company. At stake is our ability to produce quality
journalism that makes a difference in our city and region.

For the past four months, the senior leadership team has been meeting off-site weekly
for intensive half-day sessions to identify a common vision for our future, acknowledge
the changes in our culture that are required, and define a path forward to a sustainable
and growing business. We need to make some tough but necessary decisions about the
future of our print product. We need to secure resources to invest in digital operations,
and we need to attract new audiences with content that they are willing to pay for.

Being owned by a not-for-profit entity makes us unique among our industry peers, but it
does not make us immune from the challenges facing the local newspapers across the
country.

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The State of Our Industry
Print circulation and advertising revenues continue their steep decline. Metro U.S. daily
newspapers experienced an average circulation drop of 41-45% from 2012 to 2018
(​CJR​). Newspaper print advertising revenue nationwide declined about 70% between
2005 and 2018, from $49 billion to about $15 billion. Digital advertising revenue, has
been insufficient to offset these declines, growing to about $5 billion in 2018, up from $2
billion in 2005. Facebook and Google simply dominate the digital marketplace,
accounting for 77% of local digital advertising revenue and 58% of national digital ad
revenue (​WSJ​).

Newspaper companies, large and small, have reacted to these revenue losses in
strikingly similar ways. First, by reducing expenses largely through staff reductions;
secondly by eliminating their print editions on certain days of the week; and
unfortunately, in many cases, by shutting down. About 1,800 U.S. newspapers ceased
operations or merged between 2004 and 2018, a drop of 20% (​Poynter​). The total
number of full-time U.S. newspaper newsroom employees dropped about 45% between
2008 and 2017, from 71,000 to 39,000 (​Pew​). Approximately 36 percent of U.S.
newspapers experienced layoffs from January 2017 to April 2018 (​Pew​). More than
1,000 newspaper jobs have been eliminated through layoffs and buyouts since January
2019 (​WSJ​).

There are some bright spots amid the gloom, including digital consumer revenue, which
is on the rise across the industry, philanthropic collaborations, and growth of an events
business with its imperative to focus on the local communities that we serve.
Each of these promising new lines of business are centered around delivering value to
our most loyal customers, be they digital subscribers, attendees and sponsors of our
events, or donors.

Going forward, we will redouble our focus on consumer revenue as the linchpin of our
future growth. It is urgent that we do so, because the economics of our business mirror
what’s happening in the industry at large.

The stakes for us are extremely high. Democracy suffers when newspapers fade away.
More than 1,300 U.S. communities are currently considered news deserts, lacking any
local news coverage, up from 900 in 2004 (​Poynter​). People in news deserts tend to
experience household incomes, poverty rates, education achievements and broadband
access that fail to stack up to the national average (​CJR​). Union, Pa., is considered a

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news desert, having lost its last local paper, the weekly Mifflinburg Telegraph, in 2014.
We must not let this happen in Philadelphia, the birthplace of the First Amendment.

The Need for Radical Change

Given the disruptive industry headwinds, the need for revolutionary — not evolutionary
— change in the way we deliver news, information and marketing services in the
nation’s fourth-largest media market has never been more critical to our future. That fact
has been laid bare by an exhaustive analysis of the current state of our industry and our
company during months of off-site discussions about our best path forward. The future
of media is digital, and the bottom line is that we’re ill-prepared to confront the
challenges and opportunities before us. This calls for a radical change in the way we do
business.

How Long Do We Have?

Countless U.S. companies — from Tower Records to Borders Books to Blockbuster —
that chose to do nothing as their industries were digitally disrupted and wound up dead
or near death because of their inertia. The economic challenges of our industry and the
dominance of the major tech platforms​ pose mortal threats to our long-term
sustainability. At our current trajectory, we know that in five years we will be buried
under a debt load that will be next to impossible to overcome.

That is why ​the time to act is now​, with a series of very difficult yet necessary decisions
that will give us our best chance at emerging as ​the Netflix of our industry​, rather than
the next Encyclopedia Britannica. Our transformation will require a series of major
structural changes. But equally important will be significant changes in our culture, how
we interact with one another, and how we work together. Many things must change if
we’re to truly ​create an agile organization​ that meets the enormous challenges we’re
facing. Becoming less risk-averse and instilling a stronger willingness to experiment,
innovate and collaborate in a less hierarchical workplace won’t be easy. We must all
make a conscious effort to change. But the moment now calls for radical change.

Our Ambition and What Must Change

We have targeted an ambitious “Spot on the Wall” of $95 million in digital revenue that
provides a North Star to guide us toward a sustainable and growing business. We must
radically shift from a largely print-driven operation to a robust digital news company, and
to do so will require dramatic top-to-bottom changes. Those include a complete
reimagination of our digital-print structure, our product and technology portfolios, our
culture and, perhaps most importantly, our relationships with our audiences. Only then

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can we create a reader revenue-dominated organization powered mostly — but not
exclusively — by digital revenue.

Many of the critical decisions on this five-year journey will be centered on urgently
driving down legacy costs on the one hand (reimagining print, cost optimization, what
we leave behind, etc.), while also maximizing our revenue growth through strategic
investments related to digital subscriptions, advertising, events, philanthropy, and
entirely new businesses. Many of these decisions need to be made within the next two
years for us to establish our financial footing.

Our Future Audiences

Perhaps the greatest challenge we face in recalibrating the print-digital revenue mix is
identifying, targeting and cultivating our future audiences with products that resonate.
New ​market research​ ​suggests​ that we face great competition for audience attention in
a wide swath of reader segments. Our current paid audiences tend to be mostly white,
mostly male and get their news from a variety of sources other than The Inquirer. Those
audiences also tend to perceive a bias or lack of trust in our news report, and also see
us more as a print organization that is less relevant than our more nimble digital
competitors.

Audiences are no longer stable targets; they change as rapidly as the technology
evolves to serve them. Our readers used to rely on us to tell them what we thought they
needed to know. The model was to broadcast. Now we must listen to them and
respond. The new model is conversation. We no longer define what news is; the
audience has redefined news to incorporate almost every digital input: Celebrity videos,
Facebook posts, Instagram stories and tweets, as well as traditional daily journalism.
This demands that we speak to them across a variety of platforms, and more acutely
listen to them and respond to their evolving needs. But it also means continuing to
differentiate our offerings and make a ​more aggressive case for our value​. Especially to
those most likely to pay us for what we do.

It’s become crystal clear after conducting our research and analyzing traffic and
subscription patterns that the products and services we offer need to be much more
audience-driven, and digital. Our print audience is rapidly eroding and our current digital
audience shares too many characteristics of our dying print readership. Therefore, our
digital news content and product portfolios will need to appeal to people beyond the
current audience of the printed paper.

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The Culture We Aspire To

Our Future Organization – One Company, One Mission, One Culture

The most effective path to reaching more diverse audiences is by building a highly
diverse organization at The Inquirer, an organization that reflects a diversity of
backgrounds, life experiences and interests. Flourishing as a diverse organization
requires a mindset of Inclusiveness, an openness to — and a celebration of — differing
points of view. This demands a lot from all of us, because like it or not, we all have
unconscious biases. A requirement for our future success is for each of us to
acknowledge these biases and work to overcome them.

We are one company. However, if we are honest with ourselves, we must admit that we
don’t always behave like a single, unified organization. There are cultural divides within
us. Regardless of their origin, our future success depends upon bridging these divides
and to create one culture where our differences make us stronger. No matter when you
were born, no matter where you grew up, no matter if you work in the newsroom or the
business side, whether you are union or non-union, whether you favor print or digital,
you are part of The Inquirer team, and are bound by The Inquirer’s mission: To become
the indispensable source of news and information for the diverse communities within the
Philadelphia region, with a sustainable and growing business built upon the trust and
support of our customers.

During our offsites we defined and committed to behaviors that we expect from each
other from this day forward; behaviors that will lead us to a new culture. These
behaviors describe the values that we aspire to model in the way we work together:
Action & Accountability; Candor & Authenticity; Integrity & Inclusion; Passion & Fun.

The Way We Work Together

Loosely Coupled, but Tightly Aligned

Aiming all our activities towards our Spot on the Wall, and adhering to new behaviors,
will be the enablers of a new way of working together as a more nimble, agile
organization.

Our ​newsroom​ and ​company​ surveys​ ​both make it clear that there are widespread
concerns about our ability to work cross-functionally. As a company we have grown
used to operating in silos, with a top-down management structure. These methods of
collaborating do not match the goals that we need to achieve. Our best and only option

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forward is to harness our collective expertise and collaborate across the whole
business. And that will require significant changes to our behaviors. In our new way of
working together we will empower small, autonomous, cross-functional teams, that are
loosely coupled but tightly aligned by our mission, and our Spot on the Wall.

We must relax our hierarchical structure and push decision-making down deeper into
the organization. While it’s often the case that senior leadership in most companies
receive the lion’s share of credit for innovation and transformation, real change is driven
from the middle of organizations, with small teams operating autonomously. Carving out
space where smaller teams can create, innovate and experiment with a
less-hierarchical structure is our best path forward. As New York Times CEO and
President Mark Thompson​ ​recently said​: “All chief executives talk about how much they
support innovation, and most chief executives go around murdering it.”

The Need for Truly Cross-functional Teams

What does our newfound cross-functionality look like in real time? For us to accelerate
our transformation in a meaningful way, we must create our own ​transmedia​ newsroom,
and those seamless collaborations must permeate the entire organization. That means
we must begin integrating product managers, designers and engineers into the
newsroom. Our editors, too, must take ownership of their digital presence with the same
zeal that they do their sections in the paper.

We need to take advantage of our open-air spaces and proximity to one another​ ​ in a
way that speeds up the decision-making process and creates a much flatter
organization. We can no longer remain beholden to the rhythms of a producing the
​ roduct every day. We
newspaper with well-defined lines built for producing the ​same p
need to operate in spaces where new thinking, new innovations and new products are
the norm, where we all agree to the intended outcomes of products before we begin,
and measure their success accordingly.

The new Inquirer must create journalism that our audiences want and need, must
develop the technology to reach them where they are, quickly and reliably, and craft
cross-departmental workflows that help our teams move our digital product to market
more efficiently. We recently were awarded a generous grant from the Knight-Lenfest
fund to be applied solely to this effort.

As our journalists see the fruits of cross-functional teamwork, and recognize the skills
brought to the table by our expanding staff of product managers, engineers, digital
marketers and data analysts we will have unlocked a new era of Inquirer journalism.

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This new era begins today.

Individual Accountability and Metrics that Matter

In this new way of working together and encouraging input from the bottom-up as well
as from the top-down, we also plan to reward successful outcomes but also hold
staffers accountable for behaviors inconsistent with our new Inquirer culture. For too
long, we have enabled low performers, and rewarded activity rather than outcomes. It is
no longer acceptable to do things just because we’ve always done them. In fact, it is
incumbent on all of us to ask what must we stop doing to free up the time and
bandwidth to achieve our ambitious Spot on the Wall.

The Inquirer newsroom has created a ​digital dashboard​ that measures the impact of our
individual coverage teams and the reporters who staff those teams. The strength of this
approach, which was developed cross functionally by the newsroom and key members
of our analytics and tech staff, is that it includes a wide range of measures of impact on
our audience such as reach, depth, engagement, conversion rates and much more. In
our digital subscription model, these are metrics that matter.

We are already building similar metrics into other critical company functions such as
digital marketing, and product development so that we are continuously measuring our
impact and value to our customers. Taking this metrics-driven approach with a focus on
outcomes is critical to our future success.

The Path Forward, and What Will Be Required

Failure is Not an Option

As we enter this pivotal phase of our transformation, we all must contemplate the worst
case: ​What happens if The Inquirer fails​ ? How will Philadelphia citizens gain access to
deeply reported, credible information they need to hold local government officials
accountable, to hold other institutions accountable? Who will fill the news and
information void for the communities we’ve served for nearly two centuries?

The mere possibility of failing to deliver on Gerry Lenfest’s call to preserve

Inquirer-caliber journalism for generations to come should motivate us all to boldly
respond to the enormous challenges of our day. Of all the media organizations
confronting these imposing challenges, few companies are poised to create a blueprint
to sustain local journalism like The Inquirer. But we must unify in responding to this
great challenge, and that’s the intent of creating this urgent yet strategic call to action.

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Today, we begin a journey as one to create a new future for The Inquirer and to
redefine journalism in Philadelphia in a manner that not only preserves our future as a
company, but also preserves the essential role of a free and independent press to
uphold the democratic values of the communities we serve. In time, the presses
themselves will have a diminished role, but our voices and our impact will be stronger
than ever.

While our task to reinvent the company to secure a viable path forward is imposing, it’s
also a remarkable opportunity to tackle the primary obstacles in our way as we create
the blueprint for sustainable local journalism.

We thank all of you for accepting this challenge.