Cablevision’s Tad Smith Uses Retention Defense for Newsday

NewsdayComLogo.jpgCablevision Systems president of local media Tad Smith responded to the flurry of stories about Cablevision-owned daily newspaper Newsday signing up only 35 online subscribers with an emailed memo to the newspaper’s staff, which was obtained by paidContent:

As some of you may have seen, the press had a little fun with a recent remark Newsday publisher Terry Jimenez made at an employee meeting. In response to a question, Terry said that we had approximately three-dozen subscribers who have signed up to pay $5 per week for access to newsday.com. This made its way into the media, which inevitably focused on the very low number of subscribers and declared newsday.com a “disappointment.” Despite my reluctance to enter this media scrum, I wanted all of us to understand clearly newsday.com’s strategy and to share in my genuine satisfaction with results thus far, as well as optimism for the future.

The strategy for Newsday‘s Web site uniquely derives from its carriage on Cablevision. Newsday.com creates value for its shareholders when it publishes high-quality content that people desire. And unlike other publishing Web sites, Cablevision has millions of high-speed-Internet customers, plus hundreds of thousands of Newsday home-delivery subscribers who pay a fee each month to receive services. Therefore, Newsday‘s Web strategy has two parts: 1) to provide Newsday‘s print subscribers with a rich Web experience that goes far beyond what they can get in the newspaper alone, thereby motivating them to remain, return, or choose to subscribe to Newsday; and 2) to provide Cablevision’s high-speed-Internet customers with reasons to remain with Cablevision, reasons to return to Cablevision, or reasons to choose Cablevision.

The way to measure success for newsday.com is not, therefore, to count how many people sign up to pay $260 per year for access to the Web site. Our objective instead is to grow our target audience’s utilization of newsday.com’s great content and tools. How does this create value? Those who value the Web site’s benefits are more likely to be retained as Cablevision or Newsday subscribers, and the enhanced retention improves the economics of our business. This is quite similar to the value that is created by a targeted local cable network offered on your cable service.

As such, the newsday.com strategy is entirely different from the strategies pursued by other current and prospective online publishers. Other online publishers do not sell high-speed-Internet services. They must sell their services to customers one by one. In short, newsday.com is unique in the advantages it brings Cablevision and vice versa, and we like it that way. You will hear more communication in coming weeks describing newsday.com’s performance, but let me just say that, for now, we are on the right track. Consistent with our strategy, the performance measure to focus on (nowhere else reported) is the change in unique visitors compared year-over-year in the New York metro area (our target audience): After a Web-site redesign, platform change, gate implementation, and Google’s flagging the site as “subscription,” our reported visitors in the New York metro area declined by a remarkably low 2 percent, from 657,000 in December 2008 to 643,000 in December 2009. And while we are encouraged at the minimal loss after all those changes, we are committed to winning those unique visitors back and growing from there.