Spanish-language newspaper Hoy will start distributing its Los Angeles and Chicago editions free next month in an effort to drive up circulation and advertising revenue, its parent company said Wednesday.
The New York edition, which was recently found to have overstated its circulation, will continue to be sold for 25 cents a copy. Hoy is owned by Chicago-based Tribune Co., which also owns the Los Angeles Times.
Savings in distribution costs will enable Hoy to print more copies and raise its competitive profile against other Spanish-language publications and broadcasters, said Digby Solomon Diez, interim chief executive and publisher of Hoy.
The Los Angeles edition of Hoy, which was launched in March, distributes about 65,000 to 70,000 editions each day Monday through Thursday and about 120,000 copies Friday, Solomon said. Those numbers include paid sales and free samples. By mid-January, Hoy will distribute 75,000 free copies the first four days of the week and 150,000 on Friday.
The papers will be distributed through vending boxes, stores, restaurants and other locations and delivered free to residences in certain ZIP Codes where the publisher expects to find concentrated Latino populations and advertisers' businesses.
That distribution model should be three times cheaper than the single-copy sales Hoy primarily relies on today, which result in high returns of unsold papers and require subsidies to wholesalers and retailers, Solomon said. In contrast, New York's thicket of small news vendors provide cheaper distribution costs -- and they don't like to give up scarce counter space to free publications.
"There is no compelling economic reason to be 'paid-circulation' " in Los Angeles and Chicago, Solomon said.
He said the decision was unrelated to the circulation scandal in New York, where Hoy overstated its daily sales by nearly 43,000 copies for the 12-month period that ended Sept. 30, according to the independent Audit Bureau of Circulations. Hoy's daily circulation there was 49,681, not the 92,604 the paper originally reported.
"Often papers targeted to a specific market do better with free distribution than paid circulation," said industry analyst John Morton, president of Morton Research Inc. in Silver Spring, Md. "They immediately have a much bigger readership that they can deliver to advertisers."
Hoy's primary competitor in Los Angeles is La Opinion, which has circulation of 124,990 and has been around since 1926, said La Opinion Vice President Mary Zerafa. The daily newspaper is distributed through single-copy sales in news racks and stores for 25 cents. Hoy, she said, has found it difficult to penetrate the market as a new publication.
"When you're not making headway, you need to change course," Zerafa said.
Hoy wants to attract more young Latino immigrant readers, Solomon said, and grab advertising dollars away from broadcasters.
"A paper that can't grow in circulation can't compete with Univision or Telemundo," he said. "We think the fastest way to grow is to eliminate the price barrier."
Tribune shares rose 6 cents to $42.47 on the New York Stock Exchange.