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Associated Press suspends pricing plan, wants review of membership policies

Associated Press suspends pricing plan, wants review of membership policies

It was the the fear of newspapers' backlash that forced the Associated Press (AP) last week to retract its plans of new fees. News agency AP, which is owned by its US member newspapers, has said its board of directors has asked the management to complete a sweeping review of the news cooperative's membership policies by next April. A note to staff said some job cuts are likely. [Link]

"It is time to consider fundamental change," William Dean Singleton, chairman of the AP board and CEO of MediaNews Group Inc, said in a statement.

Most issues are on the table in the membership review, including the requirement of two years' notice for cancellations, according to a statement from the not-for-profit news organization. But AP executives called it unlikely the changes would include taking the AP public or bringing in Web operators such as Google Inc. and Yahoo Inc. as members.

The board's actions follow cancellation threats by more than 100 AP members, including the Los Angeles Times, the Chicago Tribune, The Columbus (Ohio) Dispatch and the Star Tribune of Minneapolis, Minn.

Reasons varied, though many of the complaints centered on cost. "We understand that it's a tough era and some people want more," said Tom Curley, AP's president and chief executive. "This is an attempt to show that we are moving in the right direction."

It was not immediately clear whether the changes announced Thursday last will mollify all AP members, but Gary Graham, editor of the Spokesman-Review in Spokane, Washington, called it "a good starting point."

"I'm encouraged that the AP board is responding to the concerns that many of us have had," said Graham, whose paper recently announced plans to cancel AP services and took the further step of threatening to go to court in a bid to void the two-year waiting period.

Ben Marrison, editor of the Dispatch, said it was too early to say whether the announcement would affect the Columbus paper's cancellation notice. But he called the move "a good first step by AP and a signal that it understands the issues facing the newspaper industry as a whole."

Curley said in an interview that he could not yet offer specifics, but said reductions through attrition alone were unlikely. The need for job cuts, he said, results from the broader economic downturn rather than the specific rate cuts totaling $30 million.

AP has yet to identify offsets to the rate reductions. It recently imposed a companywide hiring freeze, and a notice to staff said some job reductions were likely and that some work might be reassigned. The company reported $24 million in net income on revenue of $710 million last year. About 25 percent of the AP's revenue comes from U.S. newspapers.

Last October, AP's board approved the first major overhaul of its fee structure since 1985, when the cooperative began assessing newspapers based on their circulation instead of the population in their area. Under the plan that would have taken effect January 1, newspapers were to get a basic package called AP Breaking News and then have the option of paying extra for an additional premium service called AP Complete, which includes analyses, enterprise and other stories.

The board voted unanimously to offer AP Complete to all members at the basic package price, forgoing about $7.2 million next year in projected additional revenue. Under the original plan, fees would have dropped for most newspapers, but about 10 percent would have paid more. Those increases, totaling about $1.8 million, have been put on hold pending the membership policy review.

Although the review could lead to a restoration of separate pricing for basic and premium stories, "the distinction is likely gone for good," said Tom Brettingen, AP's senior vice president and chief revenue officer. Brettingen said the policy review could ultimately lead to different classes of memberships, such as a basic level for smaller papers that might not need the full range of services. "The review will be wide-ranging," he said. "The review is going to study just what does it mean to be a member of the AP versus a customer."

AP is a global news company founded in 1846. It serves about 1,500 newspapers and 5,000 radio and television stations in the United States. About 1,300 of them are regular members and more than 4,000 are associate members — generally weekly newspapers and broadcasters.

Date posted: October 29, 2008 Last modified: May 23, 2018 Total views: 544