Despite falling short of projections in 2001, Media Net grows more optimistic with each advertiser signed and each inkling of a recovery in national ad sales.
In 2001, Media Net tallied revenue of $34 million, missing its $40 million-plus target. "I feel damn good about our performance in '01," Mr. Murphy says. "We played hard ... We proved the model we created did drive business."
Media Net is intended to provide one-stop shopping and multimedia outlets for national advertisers. An 8.5% revenue slump in national advertising last year to $7 billion, according to the Newspaper Association of America, didn't help Media Net's cause. The NAA is predicting a 1% gain in 2002.
Barton Crockett, an analyst at JP Morgan, is more upbeat, predicting a 3.2% increase in national advertising. A rebound should benefit Media Net, and the venture's revenue should jump by more than 30% to $45 million this year and $90 million by 2005, he estimates. "There is some demand. It's one of the initiatives that helps [Tribune Co.] grow."
However, in first-quarter results announced earlier this month, Tribune Co. said national advertising in its publishing group fell 4% from a year ago, though executives said they see evidence of an uptick going forward.
In 2001, Media Net inked 200-plus deals, including more than 60 that involved more than one type of medium, with investments ranging from $25,000 to $3 million. Its largest score was a yearlong partnership with General Motors Corp. that involves all Tribune Co. newspapers and TV stations. Analysts say the win boosted Media Net's credibility, and Mr. Murphy agrees it "put us on the map."
Compared with a soft first-quarter 2001, cross-media revenue rose 40% in first-quarter 2002, Mr. Murphy says. During the most recent quarter, 25% of Tribune Interactive national ad revenue came from newspaper customers, compared with 15% a year ago.
Some of the key Media Net signings, however, haven't embraced the cross-platform concept. The national sales team sold TD Waterhouse Group in 2002 on a $1 million-plus buy in the Chicago Tribune, Los Angeles Times and Newsday. Teamwork between the local and national sales teams yielded an agreement with Target Corp. in the Chicago Tribune and L.A. Times for all its retail subsidiaries.
Critics in the ad community-and on Wall Street-say Tribune Co.'s portfolio lacks the breadth and depth of coverage to pull off a truly national strategy.
One obvious shortcoming is Tribune Co.'s newspaper absence in Manhattan, and Newsday's strength in Long Island and Queens isn't close enough to clinch a deal, analysts note. "It's hard to say you have enough of an imprint in the N.Y. market," says Steve Barlow, an analyst at Prudential Securities.
George Sancoucy, senior VP and co-managing director of print and convergence at Interpublic Group of Cos.' Initiative Media, New York, has met several times with Media Net, though he wouldn't identify for which clients. "The feedback that came back from a national advertiser was that it had too many holes," he says. "We still had to go to other media partners."