@ Local Online: McClatchy’s Pruitt: We’re Comfortable With Ad-Supported Model

Taking the podium during day two of Borrell Associates’ Local Online Advertising Conference, McClatchy (NYSE: MNI) chairman and CEO Gary Pruitt described his mixed feelings of ease and discomfort standing there. On one hand, he was happy to be wearing jeans instead of the suit he usually wears for appearances before Wall St. bankers and analysts. The discomfort was due to the fact that he was a newspaperman speaking at an internet conference. He regained his contentment by channeling Darwin as he discussed the position of heading a newspaper in the digital age. “We don’t need to be the strongest to survive, we just need to be able to adapt, and that’s something we’ve proven we can do,” he said. During the course of 45-minutes, he also discussed his comfort with the ad-supported model for McClatchy, as opposed to the industry’s current interest in paywalls.

Some of the other points he touched on:

Pruitt dismissed the notion of newspapers’ irrelevance because of the expanding choices from social media sites and other digital outlets. “If you can hold on to your audience, you can be leading local media provider in your market, even with the proliferation and fragmentation of the entire media landscape.”

While he also touted the diminishing upsells from print to digital, he noted that the majority of online revenues still comes from existing newspaper advertisers. But over time, he expects that to change. “The percent of internet-only ad dollars will grow because of self-serve vehicles and classifieds. We don’t need it to be 50/50 for us to have the same cash flow. Digital has a higher profit margin because of the lower costs from not having to print and distribute it compared to print.”

As he has said last week during McClatchy’s Q4 earnings, Pruitt has little interest — at the moment — in paywalls. “I get that newspapers are very used to a subscription model.’It works for print. Why not insist that people pay online?’ The reason is, the internet is based on a broadcast model of ad support and it’s hard to buck that system. We’re not ideological about paywalls. We’ll continue to experiment and will try paid models. We will copy the success of those who crack the code. But the current model is working for us right now.”

When pressed on his view of paywalls, he answered by citing a quote from philosopher Bertrand Russell. “When Russell was asked, ‘Would you die for your beliefs? ever the pragmatist, the philosopher answered, ‘No, I might be wrong.’ That sums my view up pretty well.”

Another area where Pruitt parts company with many major publishers is on the topic of Google (NSDQ: GOOG). Whereas News Corp (NYSE: NWS). CEO Rupert Murdoch has inveighed against Google News’ ability to subvert the WSJ’s online revenues, Pruitt is all for this “virulent competitor that’s been taking ad share from media.” He went on to say that search engines don’t take content without McClatchy’s permission. “Yahoo (NSDQ: YHOO) and Google have supplied 20 percent of McClatchy’s traffic,” Pruitt said. “We are vigilent on protecting our content.”

McClatchy’s recent profit swings have come after a very difficult period for the company, and it continues to struggle with the effects of the recession and the debt from its purchase of the Knight Ridder newspaper chain almost four years ago. While many question the wisdom of the Knight Ridder acquisition, Pruitt did give the company high marks for a number of other moves the company took years ago.

In particular, the decision to acquire geo-based domains like Miami.com and Alaska.com, which are two of its geo-portals. Pruitt: “The Miami Herald started Miami.com as an edgier guide to dinging and nightlife in South Beach. Meanwhile, Alaska.com offers tourist information. They both go further than the newspaper can go in serving that kind of general cultural information. And many others have tried. It’s not easy. After all, how many people here remember Microsoft’s Sidewalk or AOL’s Digital Cities?”