Talk Radio on WABC Shifts Focus to the Local

WABC-AM (770), which is owned by Cumulus Media, will introduce a new lineup on Thursday that emphasizes live and local programming, as its two most popular hosts, Rush Limbaugh and Sean Hannity, move to a rival station, WOR-AM (710).

Weekday programming at WABC will include the return of Curtis Sliwa’s and Ron Kuby’s show, “Curtis and Kuby,” from noon to 3 p.m., after an absence of more than six years, and, starting Monday, a one-hour program at 5 p.m. with Pat Kiernan, the NY1 television anchor.

Geraldo Rivera, who joined WABC in early 2012, will turn his focus to New York news in a two-hour live show at 10 a.m., as Cumulus announced in November. Michael Savage’s syndicated program, which has been heard in the evenings, will now run from 3 to 5 p.m. “Imus in the Morning,” with Don Imus, will continue from 6 to 10 a.m.

“We’re delivering on our pledge to invest in localized content that will entertain, inform and engage listeners while also providing advertisers unique opportunities to reach their customers on a sustained basis,” John Dickey, Cumulus’s co-chief operating officer, said in a statement.

The changes come as Cumulus tries to build its programming chest to compete against Clear Channel, whose 850 stations include WOR. Once a small player in the radio industry, Cumulus expanded greatly in 2011 when it bought Citadel Broadcasting for $2.5 billion, and it now operates about 460 stations.

Mr. Limbaugh and Mr. Hannity, whose shows are syndicated to hundreds of stations by Clear Channel’s Premiere Networks division, are by far the country’s most popular talk hosts, and their combined presence helped make WABC the dominant talk outlet in New York. Talkers, a trade magazine, estimates that Mr. Limbaugh reaches more than 14 million listeners each week and Mr. Hannity 13.25 million.

Last year, however, Cumulus executives said millions of dollars were lost after advertisers withdrew from the shows, largely in response to Mr. Limbaugh’s ridicule of Sandra Fluke, an advocate of insurance coverage for birth control.

Mr. Limbaugh’s and Mr. Hannity’s shows left WABC at the end of 2013 as a result of complex negotiations between Cumulus and Clear Channel. Mr. Hannity’s show was dropped from dozens of Cumulus stations, while the syndication contract for Mr. Limbaugh was renewed at most stations, but discontinued at WABC. In New York, their shows are now heard on WOR.

“Curtis and Kuby,” which ran on WABC from 2000 to late 2007, will now compete against Mr. Limbaugh, and Mr. Savage’s show will be up against Mr. Hannity.

While none of the new figures on WABC have followings on the scale of WOR’s syndicated hosts, Cumulus is betting on the appeal of locally focused content to draw New York listeners.

Mr. Kiernan, who is on NY1 each weekday morning, said his show, which will include a co-host who has not been named, would be a recap of the major news and pop culture events of the day. He also emphasized the importance of local programming on the radio, as stations compete not only against one another but also against an ocean of media online.

“In an era when listeners can go off in so many different directions,” Mr. Kiernan said, “local is something you can’t take away from people.”

News Corp. Sells a Group of Small Local Publications

The collection of small newspapers and niche publications, known as the Dow Jones Local Media Group, will be owned by an affiliate of the Fortress Investment Group, News Corporation said in a news release. The publications will be managed by GateHouse Media, the newspaper publisher based outside Rochester.

The details of the transaction were not released, but the money involved was evidently relatively small, because if it had been bigger (or, in financial terms, material to the company) News Corporation would have had to disclose more financial information.

Christine Frank, managing director of Waller Capital Partners, which advised Dow Jones, said “there was significant interest among strategic and financial buyers” for the local publications.

“This is a testament to the growing number of buyers for newspaper assets and these properties in particular,” she said.

The company’s interest in selling the local publications was reported in April by The Wall Street Journal. The Journal and the collection of local publications were both included in the 2007 deal in which News Corporation acquired Dow Jones. Shortly afterward, News Corporation tried for the first time to sell the local media assets, but it pulled back in 2008 because of unfavorable market conditions.

The same logic guided the decision to sell now: the community papers — like The Cape Cod Times, The Herald in Portsmouth, N.H., and The Daily Tidings in Ashland, Ore. — and the small magazines don’t fit into the company’s larger framework.

“We are confident that the papers will prosper under the new owners, but they were not strategically consistent with the emerging portfolio of the new News,” Robert Thomson, the News Corporation chief executive, said in a statement.

In June most of News Corporation’s television and film units were split off into a separate company called 21st Century Fox, leaving News Corporation as the publishing arm of Rupert Murdoch’s media empire.

Deep Cuts at Patch, AOL’s Local News Sites

The cuts were an effort to reach profitability in a division that has failed to gain traction with consumers and has suffered huge losses financially. Patch’s troubles have been a source of frustration for AOL’s chief executive, Tim Armstrong, who helped found the service in 2007 when he was an executive at Google. Shortly after arriving at AOL in 2009, Mr. Armstrong had the company acquire Patch.

Patch’s idea is to provide an online network of local news sites, filling the gap in coverage left by newspapers that have either closed or greatly scaled back their investment in reporting in response to declines in advertising revenue.

The company said it had analyzed the performance of the approximately 900 Patch sites and identified about 60 percent as high-performing ones that should remain intact. AOL said it would look for partners to operate 20 percent of the sites that are considered viable, and it would close or consolidate the rest. At its current staffing, Patch has more than 1,000 employees.

“Patch’s strategy will be to focus resources against core sites and partner in sites that need additional resources,” AOL said in a statement. “Additionally, there are sites that we will be consolidating or closing.”

The statement added: “Patch has become an important brand across many towns in America. The Patch team across the country has served and will continue to serve communities with journalism and technology platforms. Unfortunately, with these changes we are announcing today, we will be reducing a substantial number of Patch positions.”

Some investors, skeptical that Patch can succeed, have urged AOL to dump the service altogether. The company has told analysts that it expects Patch to be profitable by the fourth quarter of this year.

Mr. Armstrong has said he is confident in Patch’s potential. The company says that the service has 3.5 million newsletter subscribers and 4.7 million registered users, increases of 138 percent and 181 percent in a year-over-year comparison. It says that between April and June, Patch had a 10 percent increase in traffic compared with the same period in 2012.

Patch’s troubles were the backdrop for an embarrassing episode for Mr. Armstrong last week. During a conference call with Patch employees, he became angry with an executive who was videotaping the proceedings and fired him on the spot, as employees listened. He apologized on Tuesday for the manner of the firing.

Report Finds Legal Fees Out of Control in Local Governments

A report released Tuesday by the state comptroller found local governments are failing to control excessive and improper payments for legal services.

Local, U.S. Trends Creating Harrisburg Legal Work

While the city of Harrisburg has been mired in financial difficulty in recent years, firms in the state capital said they've recently seen upticks in practices that suggest positive growth in the general economy.

You're the Boss Blog: For Local Businesses, the Internet Threat Isn’t Just the Sales Tax

An owner’s dispatches from the front lines.

I am a third-generation retailer. My father and grandfather owned a “dime store” (Google it), and working there gave me a foundation that would allow me to become a successful entrepreneur.

Because my father was unable to teach me anything about management (only one nonfamily employee), marketing (didn’t do any) or finance, I learned most of what I know about business through trial and error. But I did learn something more valuable, something more basic from my father. What I learned has since been termed customer service, but it is something I have been giving since I was 7 years old.

My father was good at it. But in the end, it couldn’t make up for the competition from bigger stores that slowly put him, and thousands like him, out of business. All of these years later, I wonder whether specialty stores like mine — picture framing, art, a furniture store — will be put out of business by the latest version of bigger stores, the Internet retailers.

Small retailers have been under attack for 40 years. The number of local hardware stores, shoe stores and clothing stores has fallen drastically. Other small businesses — privately owned drugstores, office supply shops and small electronics stores — have all but disappeared. But some small businesses are at least holding their own, and some are even doing well. The local bakery, locksmith, jewelry store, shoe repair store, bike shop, frame shop, cleaners, hair salon, pizza parlor, tailor and florist still occupy space in strip centers across America.

Many of these businesses have a strong service component, which means they don’t really have Internet competitors. But some do. In particular, I think of the local shoe store. Customers can come into the store, try on numerous pairs of shoes and walk out empty-handed — only to go home and order online, perhaps saving sales tax and maybe a few dollars more. Great customer service may help the local retailers, but nothing is going to stop some people from stealing their time.

A recent You’re the Boss blog post on this topic got quite a response, with many people agreeing that “showrooming” is wrong. But the responses also reminded me that many people do not understand what happens on the other side of the counter. There are many misconceptions about why there are cost savings from buying on the Internet, with some of them stemming from the phrase “bricks and mortar.” There is a common assumption that local retailers charge more because they have to pay more in rent. But that generally is not the case. As a retailer who sells both on the Web and off, I can assure you that competing on the Web is not free. The cost of building and maintaining a Web site can easily eat up whatever savings you enjoy paying warehouse rent instead of retail rent.

So what are the differences? Well, the big Internet businesses are going to have lower costs because of their economies of scale. And labor can be a huge savings. Web retailers don’t have to pay commissions, and they don’t pay people to stand around and wait for the opportunity to serve customers. But much of this cost advantage can disappear if the site offers free shipping.

On the other hand, the advantage Internet retailers have enjoyed by not having to collect sales tax has been greater than many realize. If you have bought from Zappos, you may have noticed that its prices are often the same as the local shoe store’s — until the local store charges for sales tax. Forcing Internet retailers to collect this tax will do much to level the playing field. But there is another reason that some of these big companies charge less, or more accurately choose to charge less, and it is one that is poorly understood. They charge less because they are O.K. with not making a profit. Most small businesses can’t afford to do that.

Why would a company choose to operate without a profit? Because it wants to provide great value? Check. Because it wants everyone to love the brand? Check. Because it wants to gain market share? Check. Because it wants to put everyone else out of business, so that it can one day flick a switch to raise prices and make a fortune? CHECK!

Don’t believe me? Well, here is Jeff Bezos of Amazon, explaining why making a profit isn’t important. Of course, he doesn’t say he’s planning to raise prices after he puts a lot of people out of business, but let me translate something for you: Gaining market share by not taking a profit makes the most sense if you are planning to raise prices later when you have less competition.

If this competition with giant Internet companies seems like some kind of Brave New World, it’s really not. It’s pretty much the same strategy the robber barons employed in the 19th century. Today’s combination of tax avoidance and profit delay enjoyed by the Web retailers has made it very difficult for some local retailers. But is the end near?

Well, the Internet’s free ride on sales tax may be. And I believe that if that ends, the game will change. It may be too late for some, but it will make it easier for local companies to compete. Of course, there will continue to be some casualties because of inventory levels, buying power, and maybe even service. And make no mistake: not all local retailers learned the customer-service lessons my father taught. Meanwhile, some Web retailers do give great service, including Zappos.

But here is some sobering math — and perhaps the ultimate misconception. When a local store loses 10 percent of its business to Internet competition (or for any other reason), it doesn’t sound devastating. But that 10 percent decline in revenue can easily mean a 100 percent decline in profit. Here is the (simplified) math. Let’s say a store has $1 million a year in revenue and a 5 percent profit at the end of the year, or $50,000. If sales fall 10 percent, to $900,000, and the business’s cost of goods sold is 50 percent, the $100,000 drop in revenue will wipe out the entire $50,000 in profit. And if sales should fall 20 percent, the store will post a $50,000 loss. That can’t last long.

People are often surprised when a local store or restaurant that seemed busy closes down. But would an outsider even notice a 10 percent drop in business? Of course, the person paying the bills — or not paying the bills, in this case — will always notice.

So what is the moral of this story? If you are a retailer facing Internet competition, the new sales tax law — if it passes — should help, but it may not solve all of your problems. And if you are a customer, please think twice before you use the services of a local retailer without any intention of buying. We all may pay a hefty price for your “savings.” Empty storefronts don’t help a neighborhood.

Jay Goltz owns five small businesses in Chicago.

In Paris’s Banlieues, New Recipe for Success Is Local

“We came from a place where there was injustice and a lack of opportunity,” Mr. Benamer, 36, recalled of his banlieue, Bondy. But there he was in the heart of tourist Paris, on a winter afternoon in 2007, with his mother pointing incredulously to truffle-and-foie-gras maki being rolled out to patrons at Eat Sushi, which since then has expanded into a chain of 38 restaurants across France.

“How did you manage to do all this?” she asked.

His answer was simple: he did it on his own.

“I was not going to let this feeling that we have no chance keep me closed inside the banlieue,” Mr. Benamer recalled recently.

For decades, the disadvantaged suburbs that ring Paris and other large French cities have been places of privation, plagued by discrimination and poverty. France has long vowed to improve the plight of the banlieue populations, often Muslim and primarily people with Arab or sub-Saharan African family roots in the French colonial past. Despite pledges by Nicolas Sarkozy when he was president to address economic and social inequality after a series of violent riots in 2005 and 2007, though, critics say little has changed.

That is why a new generation of people like Mr. Benamer are trying to turn the suburbs into incubators for entrepreneurs, who see using their own initiative as the only way up and out of the banlieues, which are home to an estimated 10 percent of France’s 63.7 million people.

Through persistent lobbying, banlieue entrepreneurs have been founding “angel” investment funds, persuading big French companies like AXA Insurance and BNP Paribas to contribute seed money that fuel start-ups ranging from trash removal to taxi fleets. It was one such fund that recently helped finance the national expansion of Mr. Benamer’s Eat Sushi chain.

No one can yet quantify the new businesses emerging from this movement, or measure its success. But the activity is occurring largely outside the sphere of the French state.

“If we wait for the government to do something, people will just remain stuck,” Mr. Benamer said. “If we want things to improve, we have to do it ourselves.”

As part of the self-help effort, banlieue-based organizations that promote ethnic diversity have been aggressive about placing minorities into mentoring and jobs programs at French companies that as little as a decade ago routinely rejected applicants with non-French names.

“Things are changing,” said Majid El Jarroudi, a consultant of Moroccan origin, who grew up in the Paris banlieue of Montreuil.

Mr. Jarroudi, 36, started his career operating a small restaurant. He founded an organization, Adive, to assist banlieue entrepreneurs after visiting the United States and marveling at how much easier it seemed for minorities to move ahead.

Attitudes have shifted slowly in France, he said, but these days, “there is a growing recognition that the banlieues should not be seen as a place to fear, but as a source of dynamism, full of people who are eager to work and to succeed.”

Mr. Benamer is a case in point. One of the youngest in a family of 10 children, with illiterate parents, he grew up in the gritty Bondy suburb, which was engulfed in the 2005 and 2007 riots, although he and his family avoided the trouble. After getting a vocational degree when he was 18, he started a small sandwich business with his younger brother, Yahia. Working 13-hour days, they were quickly selling more than 2,000 sandwiches a day to local colleges.

Soon, they set their sights on takeout sushi, a market in which Mr. Benamer saw greater potential. In 2006, the brothers co-founded Eat Sushi, with a flagship outlet in the heart of Paris. Last year, an angel investment fund, Citizen Capital, took a 30 percent stake, with plans to double by 2015 the number of stores and sales that last year topped 20 million euros (about $26 million).

Today, Eat Sushi employs 550 people in cities and banlieues around France in a work force, including managers, with origins in 30 different countries.

Stefania Rousselle contributed reporting.