Should The Union, KNCO do a ‘coopetition’ deal?

A downturn like this — the worst in decades — is the best time to shake up a business, including in a small-town media market such as ours. 

Earlier I suggested The Union strike a deal with the Auburn Journal to milk the business along the 49 corridor, where a Home Depot, Trader Joe’s and others are springing up or going to. The venture could include cross-selling some advertising in both counties, a potential “win-win.”

The Union operates in a business “cul de sac,” and The Journal could get some incremental ad dollars. Highway 49 is more of a profitable business corridor than the scenic but isolated Hwy. 20, the path to where The Union’s sister paper, the Sierra Sun, operates.

The Journal is run by a family-owned newspaper chain called Brehm Communications of San Diego. (It prides itself on a hand-carved wooden BCI logo in corporate headquarters, among other things). Weird.

Here’s a less ambitious plan, though: The Union also could strike a cost-cutting deal with KNCO, its neighbor in the “cul de sac” we call home.

For both the newspaper and the radio station, the biggest money-maker is ads from the “mom and pops” that operate here. In the past it was a good business for both. But we’re not growing anymore, so there are fewer “spoils” to split.

An alliance between the two could be structured on either the ad or the edit side, for that matter. (Merging edit between The Union and The Journal would be more difficult because of different markets).

Here’s the background on both businesses, which dominate our media landscape:

•KNCO is suffering from its expansion into neighboring Yuba County, where the market has since tanked. Its timing was bad. KNCO’s holdings also include KUBA and STAR FM.

More than a dozen local people, including some well-heeled retirees, are investors in the station. Some of them are newsmakers too — creating a potential conflict in the news reporting.

The group includes Chairman Ed Sylvester, President Scott Robertson, chief executive Bob Breck and Secretary Gordon Beatie, all from Nevada City or Grass Valley, as the regulatory filings state. (Jim Keil used to be an investor before his Grass Valley Chevy dealership folded and he left for Mexico.)

The recent performance of Nevada County Broadcasters has been disappointing to its investors, to be sure. They are supposed to receive dividends.

•For its part, The Union is suffering from the downturn here but also the woes of family-owned chain ownership.

Swift, the Reno-based chain that owns The Union, has been cutting jobs, reducing frequencies of its papers and closing some papers throughout its chain. At the Nevada Appeal, its flagship paper, the publisher also is the editor — an inherent conflict of interest.

At the Vail Daily, once a solid monopoly market, Swift now faces competition from a new paper, The Mountaineer. It was started by the former owner of the Vail Daily, Jim Pavlich, a millionaire.

The Vail Daily’s editor just disclosed that staffing there is down to 2002 levels. The Vail area’s real estate sales plunged 67 percent in January alone.

Management changes are underway at Swift as well. Swift’s CEO was promoted to chairman, creating a new opening for a CEO, as was reported in Entrepreneur.com. Who fills that slot will help determine Swift’s future, here and at its other papers.

KNCO also is turning up the heat on The Union with a new Web site created by Spiral Studios in Nevada City. KNCO.com is selling ads too.

In addition, both The Union and KNCO are facing competition on the Web from a startup called nevadacountymall.com. So it would make sense for the newspaper and radio station to strike some sort of deal, nipping the startup competition in the bud.

The Union’s and KNCO’s control of the local media market would best be described as an “oligopoly,” but I doubt if any deal would face regulatory scrutiny in this downturn.

It also could be informal: The Union’s previous publisher, Jack Moorhead, seemed to have no problem letting KNCO in the door in the first place. He’s friends with many of the investors. For years, both companies prospered on the business side as the area’s two dominant media players.

In Silicon Valley and elsewhere, cooperative competition between companies is called “coopetition.” “Coopetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage, and where they believe they can share common costs,” as Wikipedia states.

Media concentration can have a downside, however, as Ben Bagdikian (a journalism professor of mine) wrote in the “Media Monopoly.”

The biggest ongoing concern is ensuring “tough reporting on the community’s powerful — as important to its overall success as helping the community recover from very difficult times,” as the Sacremento Bee’s publisher explained in a letter on Sunday. She’s right.

In the meantime, the ranks of local bloggers is growing here, offering independent voices. This is a hobby for me, but I’ve been surprised at the traffic growth in just one month and positive feedback.

People here are voracious consumers of honest information. What bloggers need is an independent aggregation site. I like “NC Voices,” an original effort. A new site is starting, however, called nevadacountyunites.com

The media landscape is changing, including in our small market. It’s my belief that the more independent voices we have, the more the reader benefits.

Author: jeffpelline

Jeff Pelline is a veteran editor and award-winning journalist - in print and online. He is publisher of Sierra FoodWineArt magazine and its website SierraCulture.com. Jeff covered business and technology for The San Francisco Chronicle for 12 years, and he was a founding editor and Editor of CNET News for eight years, among other positions. Jeff has a bachelor's degree from UC Berkeley and a master's from Northwestern University. His hobbies include sailing, swimming, and trout fishing in the Sierra.

4 thoughts on “Should The Union, KNCO do a ‘coopetition’ deal?”

  1. You speak of http://www.nevadacountyunites.com/ in the context of blog aggregators, but it looks more like a local social networking site to me. I was urged by a friend to join, and I see some familiar faces among the thumbnail photos there, but I have been stalling until I can figure out what’s its vision or mission is … it seems all very vague to me.

  2. Thanks for the shout-out, Jeff. I’ve added the Mall feed to Nevada County Voices (whose official URL is ncvoices.us ) – right now it’s in the film/tv aisle.

  3. Jeff: Good article.
    I am responsible for marketing at NevadaCountyMall.com. We are a business dedicated to the community of Nevada County. The site is all about saving money and making money. The Local auction is the cornerstone, avaiable to all residents & businesess. We differenciate with our merchant, service provider businesses by giving them a free online (e-commerce) store and web presence.
    Charities can now have ongoing revenues sources, businesses can now have a clearence or liquidation local sales channel. Individuals can sell a couch or art work. Visit our site it has something for anyone and everyone, it is a true local economic stimulus for all. Help Nevada County bid early and often…
    Regards,
    John

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