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CRAIN’S DETROIT BUSINESS
February 17, 2014
Metro Times: New owners, new plan Mandate: Confusion? ■ From Page 3
■ From Page 3
or three more staff writers. “In each market, the paper plays an important role in having that alternative viewpoint covering the news and politics and stories that are not being covered by the mainstream press,” Zelman said. “We see there’s a lot of opportunity to cover what’s going on in Detroit.” That’s in addition to the paper’s local arts, music, food and culture coverage, and pages of show and event listings. A new full-page question-andanswer feature has been added, and the long-time “News Hits” column has been brought back. Grzegorek is interviewing staff writer and permanent editor candidates, and the goal is to have a top editor hired in the next couple of months, he said. The strategy comes down to investing cash into Metro Times to try to make it profitable rather than slashing jobs and spending, which has been a common approach since newspapers began to bleed cash in the Internet era.
Business risk Zelman, 30, declined to discuss how the December deal was financed other than to say it’s a family investment of less than $10 million. Also investing as minority owners in the deal, and bringing editorial leadership to the effort, are Chris Keating, publisher of Cleveland Scene, and Michael Wagner, publisher of the San Antonio Current. “I came into the business to learn from them,” Zelman said. “They have the experience. I have the passion for it.” Zelman was a sales and marketing executive at Royal Chemical Co., a Twinsburg, Ohio, contract chemical blender and maker of cleaning products owned by his family and led by his father, President and CEO Daniel Zelman. The Metro Times deal also included the Cleveland Scene, Orlando Weekly and San Antonio Current, and the four newspapers are part of a new company, Cleveland-based Euclid Media Group LLC, that’s based at Cleveland Scene. Euclid Media has about 25 employees at the Metro Times and another 60 across the other three. One strategy is to centralize as many financial, advertising and editorial functions as possible while ensuring the newspapers remain very local, Zelman said. “We can design a cover in one city that can be used in another city,” he said. “We’re looking at cost savings as one company. We need only one CFO. There are some ways that all four can work together.”
Falling figures Metro Times and Cleveland Scene are not profitable, Zelman said, but the Florida and Texas weeklies are.
THE TIMES A-CHANGIN’ Here’s a look at some of the major changes for Detroit Metro Times in the past year: The newspaper was put up for sale in August by Scranton, Pa.-based publisher Times-Shamrock Communications. It was bought in December by a Cleveland group, along with alt-weeklies in Cleveland, San Antonio and Orlando, Fla. Former publisher Chris Sexson, who had been with Metro Times since June 2008 after four years with the sister weekly in San Antonio, made a bid for the Detroit paper, but he decided to leave after Times-Shamrock went with Andrew Zelman’s group. Sexson left to join Nashville-based SouthComm Inc., a rival alt-weekly chain, as director of business development. Sexson in late August reportedly fired Metro Times editor and reporter Curt Guyette, who had written for the paper for 18 years. DeadlineDetroit.com reported that he was fired for talking about the sale. Interim Editor Vince Grzegorek said Guyette, now writing for the ACLU in Detroit, is writing a piece for a March edition of Metro Times. In October, the newspaper left its downtown Detroit space, at 733 St. Antoine St. near Greektown Casino-Hotel, after 33 years and moved into temporary office space in Ferndale. It left downtown because TimesShamrock didn’t want to renew the lease because of the sale. Bryan Gottlieb was fired by the new owners in January. Gottlieb was hired as editor-in-chief in March 2012. He replaced W. Kim Heron, who had been editor since 2006 and left Metro Times in December to work for the Troy-based Kresge Foundation. When Metro Times changed hands in 1999, it was estimated by industry trade group reports at the time to be taking in about $8 million annually in revenue. Zelman declined to say what Metro Times’ revenue was last year, but did say it was less than half what it was in 1999. Times-Shamrock bought the Metro Times and its downtown Detroit building in February 1999, along with the Orlando Weekly and San Antonio Current, for a reported $21 million from Detroit-based Alternative Media Inc. That entity was owned by Metro Times cofounders Laura Markham and Ron Williams. Times-Shamrock put them up for sale in August, with Bozeman, Mont.-based newspaper brokers Cribb, Greene & Associates hired to handle the sale. In addition to competing withthe Internet, the Metro Times also has to compete for alt-weekly advertising dollars. Royal Oak-based Real Detroit Weekly was launched in 1999 as primarily a nightlife entertainment guide — stories, listings and ads about concerts, bars, bands, eateries, art, fashion, etc. — rather than a traditional largely left-leaning alternative news outlet. Newspaper industry watchers are interested in the Euclid Media effort. “I think it’s really encouraging news from the point of view of more enterprising journalism happening in Detroit,” Bill Mitchell, former head of a newspaper economics program at the St. Petersburg, Fla.-based Poynter Institute for Media Studies, a journalism school and think tank. Whether the new company can make it work financially remains to be seen, said Mitchell, a former Detroit Free Press reporter. “It’s hard to know what the economic prospects of this move are,” he said. “If they proceed smartly by investing in a strong editorial product, with strong growth on the digital side, it can be good not only for the journalism side but for the company.”
Digital dollars One of the immediate efforts by the new ownership group has been the digital push. Previously, after the print edition’s weekly content was added to the website, there was little else for another week. Metro Times is generating fresh daily content, having regular online engagement with readers, and is launching a new website later this year. The effort is showing an immediate payoff, Zelman said. “We were at 500,000 page views two months ago; last month, we hit 2 million with an increase in our efforts to generate more digital content, increase social media following and drive page views,” Zelman said. Digital advertising rates are tied to a website’s popularity. If more people visit MetroTimes.com, the more the news outlet can charge advertisers. Euclid Media also is looking at adding more events in its markets. Locally, Metro Times generates revenue from its annual Blowout and “Pig & Whiskey” festivals.
Re-circulating The free tabloid, published every Wednesday, has steadily reduced the number of editions it puts on the streets. Currently, it’s about 50,000 weekly, Zelman said. In March 2012, it was just under 60,000. In 2010, the paper’s weekly print run was 72,840, according to the State of the News Media 2011 annual report from the Pew Research Center’s Project for Excellence in Journalism. In 1999, it was about 110,000 copies. In the past four years, Metro Times reduced its geographical circulation area — halting distribution in Windsor, Toledo and north of New Baltimore. Zelman said the intent is to eventually recover some of that circulation, but he doesn’t expect it to reach 80,000. Bill Shea: (313) 446-1626, bshea@crain.com. Twitter: @bill_shea19
Coffman listed four categories in which rule changes and clarifications could impact companies. Employers with 50-99 employees. Due to criticisms by business groups, the Obama administration gave employers one more year to comply and avoid the tax penalties, also known as the employer-shared responsibility payments. These employers, which the IRS says account for 7 percent of the workforce, now have until Jan. 1, 2016, to comply with Obamacare’s employer insurance mandate. Employers with 100 or more qualified full-time employees who don’t offer coverage to some segments of employees still must comply with the law by Jan. 1, 2015. These employers, which the IRS says account for 66 percent of the workforce, have more flexibility in how many employees are offered coverage. For example, only 70 percent must be offered coverage to avoid penalties next year; 95 percent must be offered coverage in 2016 and beyond. Employers who have nontraditional types of employees, including seasonal, volunteer and educational workforces, have new information on how to identify full-time employees. Employers who have plan years that don’t renew on Jan. 1 also have transitional relief, making it much easier to comply on their renewal date later in the year. Kirk Roy, vice president of health reform with Blue Cross Blue Shield of Michigan, said the clarification on the plan start date is new. He said school systems are most affected because their plans usually start in September. Roy “The original rule was (Jan. 1) 2015, but if your plan year starts Sept. 1, the IRS will give you about a half year until the plan year starts,” Roy said. “This is an important clarification.” Coffman said employers can look at compliance with the 70 percent coverage rule this way: Company “A” has 1,000 employees in five divisions with 200 workers in each division. But it offers health insurance to only three divisions, or 600 employees (60 percent). To comply, a company could offer coverage to a fourth division, which would increase its coverage offering to 80 percent. Roy said the percentage of employees offered health insurance is intended to help employers with large numbers of part-time workers. “What is still not clear is how employers document and report this to the IRS,” he said. But penalties still could be assessed if the employer has one or more full-time employee who is a premium tax credit, Roy said. The shared responsibility payment is computed separately for each employee. Companies still have to offer plans to employees that can’t exceed more than 9.5 percent of the taxpayer’s household income, Roy said.
To calculate the potential shared responsibility payment for workers seeking coverage though the public marketplace, payments owed the IRS for the month equals the numbers of FTEs who receive a premium tax credit for that month multiplied by 1/12 of $3,000. Coffman said large employers of more than 100 FTEs still face penalties if any of their employees receive health insurance through the exchange and garner federal subsidies. For example, if at least one fulltime employee receives a premium tax credit because coverage is either unaffordable or does not cover 60 percent of total costs, the employer must pay the lesser of $3,000 for each of those employees receiving a credit or $2,000 for each of their full-time employees in total. A full-time employee is defined as averaging 30 or more hours per week over a minimum of three month. The first 30 employees are excluded from the penalty. For example, an employer with 75 employees would pay the penalty for 45 workers, or $90,000. Another major change in the shared responsibility rules is a clarification on how to identify part-time, nontraditional or seasonal employees. “A lot of employers don’t offer (health insurance) to seasonal workers, so these rules have significant financial and administrative impact on them,” Coffman said. Seasonal employees are determined to be full-time employees based on the measurement period the employer uses for variablehour employees. They perform labor or services on a temporary basis, including retail workers employed only during holiday seasons or manufacturing companies during peak times. Coffman said the law shortened the break in service period from 26 weeks to 13 weeks, which allows employers to restart the measurement period like they would a new hire if the employee has a break in service of more than 13 weeks. Here are other clarifications to help employers identify nontraditional or seasonal full-time workers: Volunteer hours worked by bona fide volunteers for a government or tax-exempt entity, including volunteer firefighters, will not cause them to be considered fulltime employees. Education employees cannot be treated as part-time for the year simply because their school operates on a limited schedule in the summer. Student work study or co-op programs offered as part of a federal or state-sponsored work study program will not be counted to determine if they are full-time employees. Adjunct faculty must be credited with 2.25 hours of service per week for each hour of teaching or classroom time. The IRS has requested additional comments for this provision. Jay Greene: (313) 446-0325, jgreene@crain.com. Twitter: @jaybgreene