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The Son Also Rises
Comments () | Published July 22, 2009
Has Politico turned a profit? Skeptics say no, but Robert Allbritton insists it’s in the black. Is it a new business model that will save newspapers? Probably not. It operates in the unusually ad-rich environment of Capitol Hill. Photograph by Chris Leaman

But pushing reporters and muscling into the media market has come at a cost.

“The burnout factor is high,” says one Politico writer. “They haven’t figured out a way to fix it or avoid it.”

Ryan Grim started reporting for Politico when it launched in 2007; he had come from the Washington City Paper. “The congressional team excelled in covering the bailout story,” he says. “We worked and filed midnights on Saturday because that’s when Henry Paulson was meeting and making decisions. But that pace of coverage never stopped.”

Grim left Politico in January to cover Congress for the Huffington Post. “It’s wrong what they do to people,” says Grim, 31. “Political reporting means long and unpredictable hours, and that’s fine. But making weekends mandatory when nothing’s breaking isn’t sustainable.”

Grim says that the newsroom in Rosslyn where editors and Robert Allbritton work is “extremely friendly” and that they don’t require the extreme hours of everyone—but almost everyone. The White House staff, for instance, works a two-day shift every other weekend, and several congressional reporters have worked seven-day weeks with little downtime since September.

What’s different about working for the Huffington Post?

“I can go home,” he says.

Last December, after Barack Obama’s victory but before his inauguration, Harris met with Allbritton in the newsroom to map out their plan to cover the White House. They wanted to hire some name-brand reporters who had sources and firepower.

“Here’s a list of six,” Harris said. “We would like to hire two.”

Most Washington editors and reporters are skeptical about claims that Politico is turning a profit, in part because Allbritton has hired so many high-priced journalists. Reports of wages in the $200,000 range are fiction, VandeHei says. “Our salaries are competitive with the New York Times but not way above.”

Allbritton took the memo up to the 27th floor. He pondered the choices, did some research, conferred with his executives. Two hours later, he took the elevator back down. “We ought to hire them all,” he told Harris and VandeHei.

“Are you serious?” Harris said.

“It’s time to double down and take another risk,” he said.

Politico hired Josh Gerstein from the New York Sun and David Cloud from the New York Times. It made runs at four others. Cloud became Politico’s chief national-security writer but lasted only six months. Turned off by Politico’s manic pace and narrow focus on politics, he quit in June.

I asked Allbritton how he could have started up a news operation and be making money when so many newspapers and Web sites are operating in the red?

“We exist on Planet Capitol Hill,” he says. “It is its own little microcosm. The defense contractors, the advocacy groups, the nonprofits have to get their messages out, and they have good-sized budgets.”

And they have been advertising in Politico’s print and Web editions. Boeing airplanes have flown across Politico’s home page. There are days when half of the print edition’s 44 pages are ads for companies such as Goldman Sachs. There are also days when only six of 28 pages are paid ads.

The advertising-rich media market on Capitol Hill already supports the Hill, Roll Call, National Journal, and Congressional Quarterly. It’s not far-fetched to see another publication or two feeding happily at the same trough.

Staci Kramer of paidContent, which covers the publishing business, has written often about Politico. “They have a hybrid model that relies on both print and digital,” she says. “If they relied on one alone, it would not work. They have multi-revenue streams and a layered audience, so they can take advantage of their national reach and a very targeted local readership at the same time.”

She agrees that ad dollars are plentiful on Capitol Hill. “These publications can make a lot of money from a small group of advertisers,” she says. “But at the bottom of it all, when you can’t see someone’s books, you have to rely on what they say.”

Allbritton says, “We’re making a little bit of money in the middle of a recession, and we’ve been in business only 2½ years. The pie will grow.”

Moody’s Investment Service, which rates and analyzes global businesses, wonders if Allbritton Communications is making enough money to service its debt. In its February 11 report, Moody’s says Allbritton has annual revenue of approximately $225 million, but it downgraded the company’s outlook to “negative.”

“Allbritton derives the majority of its revenue from advertising,” the report says, “which faces cyclical pressures and heightened price and volume competition from media fragmentation. We anticipate considerable revenue pressure in 2009 due to weak consumer spending and credit market conditions, as well as the normal odd-year decline in political advertising, and forecast that Allbritton revenue will decline by 10% to 15% for calendar 2009.”

On January 23, Robert Allbritton called WJLA staffers to a meeting. He described the difficult financial situation and announced that he would have to lay off 26 staffers. It was the first major cutback the station has had to make. Many veterans, such as Andrea McCarren, found themselves out on the street. The Washington City Paper called it a “bloodbath.” He assured the remaining employees that their jobs were secure, but newsroom directors told them that afternoon they would have to accept a pay cut and a subsequent salary freeze. 

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Posted at 12:00 AM/ET, 07/22/2009 RSS | Print | Permalink | Washingtonian.com Articles