The Tribune Co. is reportedly developing a tablet that it could sell at a subsidized price to newspaper subscribers. 

It has been a tough few years for newspapers that have seen circulation numbers and ad revenues drop significantly as consumers increasingly embrace digital media. Newspapers have been addressing these challenges with a variety of strategies, including upping their mobile presence.

?If the Tribune Co. goes after a heavily subsidized approach, they could have a play,? said Dmitriy Molchanov, a senior analyst with Yankee Group, Boston. ?If it is just an ereader, there isn?t a play.?

?You?re paying $150 for a six-month subscription to The Wall Street Journal anyway, so to pay a premium price for content and get a tablet at a subsidized price could make sense,? he said.

The Tribune Co. is a leading newspaper publisher that owns the Chicago Tribune, The Baltimore Sun and The Los Angeles Times. It has faced significant financial difficulties over the past couple of years and is hoping to emerge from bankruptcy soon.

Mobile investment
The Tribune Co. is among several publishers that have moved into mobile apps in the past year. 
However, mobile could play an even bigger role for the company.

A Tribune Co. executive who spoke at the 2011 Mobile Marketing Forum in June talked about the need for the media industry to invest in new platforms and the important role that mobile will play for the company going forward.

?I think the challenge for the media industry today is to invest in new platforms,? said Eddy Hartenstein, president/CEO of Tribune Company and publisher/CEO of the Los Angeles Times, Los Angeles.

?They continue to deliver increasingly relevant stories that engage audiences and expand their audiences,? he said. ?We service today to connect advertisers with the right target audiences.

?We will play a big role in the mobile space ? not just now, but in the years and years to come.?

The Tribune Co. tablet will reportedly use Google?s Android operating system. The tablet will be offered for free or at subsidized price to anyone who signs up for an extended subscription.

Reports suggest the tablet may come bundled with a wireless data plan via a mobile carrier as well.

Tests were originally planned to begin this month, but it looks likely the company will miss this deadline, according to reports.

While wireless carriers frequently subsidize the price of smartphones and make their profit with service contract, this strategy has not been employed with tablets as often. 

?Operators in the mobile space haven?t really gone after the subsidy model for tablets as much as they have with smarpthones,? Yankee Group's Mr. Molchanov said. ?Look at Japan and SoftBank, which gives an iPad away for free when you sign a contract ? that?s been tremendously successful.?

Part of the problem is the relatively high cost of manufacturing tablets, which means no one is making a high profit margin on these devices to start with. If the Tribune tries to bring the price down significantly, this will lower any potential profits that will have to be made up with subscriptions.

Content sales
Content sales are a big part of the reason for the interest in tablets from publishers and companies such as Amazon, which is reported to readying a tablet launch to help it drive content sales.

The Tribune Co., which owns 23 television stations, could possibly be considering pushing more than reading content through an iPad.

However, it remains to be seen if such moves can successfully drive enough content to make a tablet profitable. 

?The challenge for the Tribune or any other content provider that wants to use the tablet as a way to boost subscriptions is making the equation work financially,? said Rhoda Alexander, director for monitor research at IHS iSuppli, El Segundo, CA.

Another question will be if a tablet can help the Tribune bring in new users or will it merely migrate existing subscribers over to the new device, possibly at a lower profit margin.

There is also a question of whether a tablet could help the Tribune Co. attract more advertising.

?The tablet is going to be a huge device category for users to access content,? Ms. Alexander said. ?So anybody who is selling content has an interest, naturally, in the tablet market.

?There is a possibility to realize a profit on hardware, to use tablets as vehicle to more effectively sell their content and stay relevant in a world that is going increasingly digital,? she said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

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