Wednesday, December 31, 2008
-- McClatchy, Belo and Media General have almost as much (or more) debt than they are worth.
-- All stock prices are down considerably, two companies more than 90 percent.
-- Three companies are posting net losses. This doesn't include Tribune, which is not included in the list because it's not a public company anymore. However, Tribune is in the net loss column.
-- Profit margins are way down, by more than 50 percent at one company.
-- The companies collectively have more than $10 billion in debt, which is less than just one company: Tribune.
-- One company has declared bankruptcy: Tribune.
Share price = 74 cents, down 94 percent since beginning of ’08.
Market cap = $61 million
Company's worth = $2 billion
Outstanding debt = $2.07B
Profit margin = down 70%
Notes: Paid $404 million in debt in 2008. Laid off 1,400 of its workers, or 16 percent. Miami Herald reportedly on auction block. Posting net losses.
NEW YORK TIMES
Share price = $7.02, down 60 percent in ‘08.
Market cap = $1.01 billion
Company's worth = $2.1 billion
Debt = $1.13 B
Profit margin = down 1%
Notes: Is looking to do a sale-leaseback of a portion of new headquarters to generate about $225 million in needed cash. May sell stake in Red Sox. Boston Globe reportedly for sale.
Share price = $1.56, down 40 percent
Market cap = $159 M
Company worth = $1.29 B
Debt: $1.14 Billion
Profit margin = down 21%
Notes: Spun off newspaper business into separate unit called A.H Belo in early 2008. Belo is now a “pure play” broadcast company.
Share price = $2.18, down 38 percent
Market cap = $44.6 million
Company worth = $36.5 million
Debt = $10 M
Profit margin = down 56%
Notes: Laid off 500 employees in ‘08, generating $30 million in annual savings. Salary freeze went into effect November ’08. Amended credit agreement. Robert W. Decherd, A.H. Belo's chairman, president and chief executive, will receive a salary of $600,000 in 2009, compared with $250,000 this year.
Share price = $8, down 79 percent
Market cap = $1.82 B
Company worth = $5.6 Billion
Debt = 3.91 B
Profit margin = down 25%
Notes: Laid off 3,000 employees or 10 percent of its workforce; does not reflect 1,000 job cuts in Gannett Community Publishing. Detroit Free Press (in JOA with Detroit News) will reduce home delivery days to Thur., Fri. and Sun; subscribers can view paper online or via single copy sales on other days. S&P placed Gannett on credit watch list. Acquired shares of Career Builder from Tribune. Posting net losses.
Share price = $1.73, down 98percent
Market cap = $118.9 million
Company worth = $122.9 million
Debt = $60.3 million
Profit margin = down 29%
Notes: Laid off 400 workers. Selling Rocky Mountain News and San Diego Union-Tribune. Closed the Cincinnati Post and Albuquerque Tribune. Posting net losses.
Share price = $390.25, down 52 percent
Market cap = $3.65 Billion
Company worth = $3.69 billion
Debt = $509 million
Profit margin = up 3%
Notes: Announced will share certain news content with Baltimore Sun. Washington Post Co. is not a pure play newspaper company. Its Kaplan education unit provides about $2 billion in annual revenue, or the lion's share of the company's revenue.
Share price = $1.75, down 91 percent
Market cap = $39.9 million
Company worth = $777 million
Debt = $750 million
Profit margin = down 62%
Thursday, December 11, 2008
Not being from Chicago, I am not going to wade in the murky waters of Chicago politics, except to say that the whole mess has given the Chicago Tribune a new lease on life. Perhaps this extends to all newspapers by showing how print can still chew on a meaty news bone. Apparently, the Trib has been ragging on Blago for quite a while.
Suddenly, newspapers are relevant again.
Let's remember that this is the same week in which Jon Stewart reportedly said, "Newspapers are black and white and all over." Ouch.
The story out of California alleges there may have been a "breach of fiduciary duties of loyalty and prudence to the plan's participants" connected with the possible purchase of over valued company stock and over leveraging the ESOP with debt. See http://losangeles.injuryboard.com/miscellaneous/tribune-company-under-investigation-for-potential violations...
The Injury Board states it is a group of personal injury law firms. Obviously, they want to represent Tribune employees who have been "injured."
ESOPs -- Seem to be safe for now, but that's only because the ESOP is barely a year old and has no distributions. As mentioned in earlier posts, the ESOP is great for Tribune because it provides a substantial tax benefit. Tribune does not have to pay corporate taxes because it is employee owned. There's also another benefit: ESOPs can borrow from banks, and both the interest and principal payments are tax deductible for the corporation, substantially reducing borrowing costs. ESOPs are not necessariyl great for employees, however, since ESOPs are totally invested in the company, in this case a bankrupt one.
The Wall Street Journal published the best explanation I've seen on this subject, titled "Tribune Filing Exposes Risks of ESOPs." See www.wsjonline.com/article/SB122887539160993693.html.
Health benefits to terminated employees -- The bankruptcy court says health benefits to employees who took buyouts will continue for up to three months. That would extend to the second week of March, based on the date of Tribune's bankruptcy. After that, you may be on your own. I would even argue that this could change before then, if the financial situation continues to deteriorate, as is expected. See the Baltimore Sun's story about Thursday's bankruptcy hearing here www.baltimoresun.com/business/balbz.tribune11dec11,0,3266475.story. By the way, note that the correct term is terminated, not laid off.
401Ks -- They are safe, although Tribune stopped contributing to the 401K plan earlier this year.
Defined pension benefits -- Tribune has a defined pension plan that was phased out some years ago. It appears to be safe for now. However, the thing to watch is whether Tribune turns the pension plan over to the Pension Benefit Guaranty Corp., as other bankrupt companies have done in the past. If this were to happen, folks who earned the highest salaries under the plan would be most affected. The pension plan has more than $500 million in surplus assets. Tribune has used about $60 million of this for pension benefits for departing employees. See the Wall Street Journal story referenced above. Full disclosure: As a former Tribune employee, I am scheduled to receive a small pension when I reach retirement age.
Severance payments -- If you are owed severance payments or deferred compensation, get in line with other creditors. Tribune said it would discontinue these payments immediately.
Bear in mind that when a company seeks protection under bankruptcy, all this remains fairly fluid and is subject to change at any time. A second bankruptcy hearing is set for January 5.
Monday, December 8, 2008
"Sam Zell's Plan D: It's All About Buying Time," Ken Doctor, www.contentbridges.com
"Tribune Bankruptcy: Timeline of Company's Troubles," www.poynter.org/column.asp?d=101&aid=155321
"Can Tribune Survive Bankruptcy?" Reflections of a Newsosaur, http://newsosaur.blogspot.com
"Inside Tribune's Newsrooms, Assurances of 'Business as Usual' as Outsiders Worry More Trouble Will Follow," Editor and Publisher, www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003920487
"Tribune's Bankruptcy Snares Employees," Business Week, www.businessweek.com/bwdaily/dnflash/content/dec2008/db2008128_376528.htm?chan+top+news+index
"Letter from the Publisher," LA Times, www.latimes.com/business/la-fi-tribune-publishernote,0,4109653.story
"Sam Zell's Memo to Tribune Employees," Editor and Publisher, www.editorandpublisher.com/eandpews/article_display.jsp?vnu_content_id=1003920461
"Keeping Calm about the Tribune's Bankruptcy," Chicago Tribune, www.chicagotribune.com/steve_chapman/2008/12/keeping-calm-ab.html
"Tribune Files for Bankruptcy," New York Times, http://dealbook.blogs.nytimes.com/2008/12/08/tribune-files-for-bankrutpcy/
Tribune's new owner Sam Zell characterized the financial situation as the "perfect storm." When the high pressure system of debt meets the low pressure system of rapidly declining ad revenue, you've got a storm. This tempest is not confined to Tribune's teapot. Storm clouds have been gathering over other newspaper properties and chains. But Tribune's bankruptcy filing is the first major indication that all hell is about to break loose:
- The New York Times reported that the Miami Herald is for sale. The Herald is owned by McClatchy, which itself is laden with about $2 billion in debt from its purchase of Knight Ridder. The most valuable part of the Herald is said to be its waterfront property, not the newspaper.
- Scripps has put the Rocky Mountain News, Colorado's oldest paper, up for sale. You knew that once Scripps entered a joint operating agreement -- remember them? -- with the Denver Post, the grave diggers were out somewhere digging a trench.
- The New York Times has put its spankling new building up for collateral to the tune of $225 million. Asked on NPR this morning what headline he would write for his newspaper, Bill Keller, executive editor of the New York Times, responded, "We Will Survive."
Doesn't sound like much, but the truth is, many papers are not going to survive. The changes in the industry are too monumental to ignore and, like the economic free fall we happen to be in, nobody knows where this is heading. And let's be perfectly clear: Many newspapers are still profitable, they're just not making as much money as they had grown accustomed to.
In an interview with Portfolio, Zell threw down the naked truth: He wished he had been a newspaper owner during the last 4o years, instead of the last year. Those 40 years were obscenely profitable, attributed in part to newspaper monopolies from coast to coast that allowed newspapers to charge advertisers whatever they wanted. Newspapers weren't making money; they were printing it.
The mint has closed. Nobody's printing money anymore. Newspapers are going to be skinnier, will have significantly reduced staff and will have a limited print run.
However, blaming the restructuring only goes so far. Each newspaper company has its own peculiar tale of debacle. In Tribune's case, it was Zell's leveraged takeover of Tribune that was built on a mountain of hubris. Many stories have described the Tribune financial buyout as "complex," as if this explains why Tribune is bankrupt. There's really nothing complex about it. Zell bought Tribune by putting up little of his own money, making employees "owners" and thus qualifying for a big federal tax break, and borrowing billions at a time when Wall Street was awash with dough. Very simple.
What failed was Zell's calculation that he could pull it off and pay it off. Tribune already had $4 billion in debt from its disastrous purchase of Times Mirror. Zell added about $8 billion to that. Even in the best of times, $13 billion in debt is hard to pay down. During hard times like this, well fuggetaboutit. The bankrutpcy petition listed Tribune's assets at $7.6 billion, for a negative net worth of about $5.4 billion.
To be fair, how could Zell know the industry was about to collapse? Industry veterans didn't even know. Incredibly, some still talk as though this a cyclical change.
Filing for bankruptcy is not necessarily a disaster. It will give Tribune some breathing room to figure things out because the bankrupcy court will keep creditors at bay. If creditors and courts agree, Tribune may be allowed to stretch out its debt payments over a longer period of time, allowing it to retain cash. Under the best circumstances, it will pay only a portion of its debt, not all of it. (Somebody's going to get stiffed.) However, Tribune will have to submit a plan to the court as to how it's going to generate cash and pay debt.
If Tribune and other newspapers are banking on an asset sale to see them through, the bad news is, newspapers are not worth anything right now. Any newspaper property that goes on the auction block today is going to go for a dime. It's almost not worth selling, Zell and others alluded in coverage of the banruptcy. Newspapers may be tempest tossed, but the money they generate can help pay down restructured debt.
And so one hurricane season ends, and another begins.
Tuesday, November 11, 2008
For the third quarter, operating profit crashed 83 percent to $37 million on operating revenue that fell nearly 11 percent to $1.04 billion. Total third quarter net loss was $122 million.
So far this year, Tribune has posted $2.83 billion in net losses, versus a profit of $166 million for the same period last year. In fact, its operating revenue for the nine months is $3.15 billion, down 8 percent -- and just slightly larger than its net loss.
On the publishing front, the numbers are startling, with an operating loss of $3.75 billion. Cash flow has sunk 53 percent to $205 million, while operating revenue is down nearly 12 percent to $2.07 billion.
Tribune is staying ahead of its creditors by selling off chunks of the company. In the third quarter it sold a 10 percent stake in Career Builder for $135 million, using the after-tax proceeds to pay down debt. Earlier this year, it finalized the sale of Newsday, allowing it to pay off debt. Still, interest expense ballooned 32.5 percent to $232 million in the third quarter.
Tribune has wiped off nearly $4 billion in good will from its books this year, equal to half the company's purchase price in 2007. It's clear that Tribune is cleaning house, wiping off all kinds of good will related to its various subsidiaries, as well as discontinuing operations of other units. That means -- maybe, sort of, cross your fingers and hope -- Tribune is worth roughly $4 billion. Very likely it is worth less. Only future financial statements will tell.
Staff reductions are costing Tribune a bundle, about $115 million thus far this year in severance. Of that, $85 million is from publishing. The company may not see positive financial results from this and other moves until next year. But if the economy continues its downward trajectory ...
These are just some of the financial highlights. For more info, go to www.tribune.com/pressroom/releases/2008. In fact, skip the press release and go straight to the tables.
Sunday, November 9, 2008
Buried in last week's avalanche of election news was this little nugget: The St. Pete Times and the Miami Herald will merge their Tallahassee bureaus in December to "provide a new level of depth of coverage" of Florida's capital.
I understand that this move will save the two papers money in these tight financial and circulation times. This is especially true for McClatchy, owner of the Miami Herald, which is weighed down by enormous debt from its merger with Knight Ridder.
But the reader is not necessarily well served by the merger of these capital bureaus or any news partnership among and between former newspaper rivals.
When two competing papers merge their operations, competition is reduced. It's as simple as that. Instead of having two papers competing for good stories for their readers, you will have one. No matter how good the stories may turn out to be for the merged bureaus, a loss of coverage has occurred. The number of newspaper voices has been diminished. This is not a good thing, but apparently it is an increasingly popular thing to do.
The Dallas Morning News and the Fort Worth Star-Telegram are also considering a partnership. I lived in Dallas many years ago, when the Dallas Times-Herald was still in circulation. The Times-Herald was a scappy paper with a lot of heart. It beat the pants off the Morning News plenty of days. The death of the Times-Herald didn't improve coverage in Dallas, but it sure enriched the News' parent company Belo Corp.
And if you recall, earlier this year the Herald, Sun-Sentinel and PB Post announced they would combine resources to cover certain stories in South Florida.
As these mergers or partnerships continue, readers can look forward to ever shrinking sources of news.
I also bought a paper that showed Obama on the stage at Grant Park with his daughters; the headline stated, "This Is Your Victory." Photo was poor. I don't think it was as effective as the portrait of Obama.
If you browsed the front pages at the Newseum, the Obama portrait stood out in a sea of sameness (including headlines; not a whole lot of originality there). So, kudos for this cover.
Meanwhile, Tribune put out a press release touting the demand for the post-election paper. Noticed the Orlando Sentinel expected the least demand of all the major papers, about 12,000 additional copies printed. Perhaps this is a reflection of Central Florida's GOP-dominated politics. If not, I'm afraid to say it may be a reflection of the continuing decline in readers.
Here are the numbers, as reported by Tribune. Bear in mind the figures may have changed since they were originally reported November 5.
Orlando Sentinel and South Florida Sun-Sentinel each printed an additional 12,000 copies. Not too impressive for a battleground state, and puzzling for the much sought after I-4 corridor that turned blue. (Broward County was already blue.)
The Chicago Tribune printed and expected to sell an additional 200,000 copies.
The Los Angeles Times expected to sell more than 100,000 copies.
The Baltimore Sun doubled its normal press run whatever that is.
The Hartford Courant printed an additional 15,000 copies.
Thursday, October 30, 2008
Here are the daily circulation numbers for Tribune papers, as reported by the Audit Bureau of Circulation:
Los Angeles Times, down 5.2 percent, to 739,147. LA Observed reported that 75 more staffers got the given pink slip this week at the Times. Sunday circulation fell 5 percent.
Chicago Tribune, down 7.7 percent, to 516,032. Sunday circulation was also down by 6 percent.
Baltimore Sun, down 6 percent, to 218,923. Sunday is off by 4 percent. This is pretty dismal.
Orlando Sentinel, down 3.3 percent, to 206,363. The Sentinel didn’t even report its numbers. It ran an Associated Press story that didn’t include the dismal outlook for a paper whose circulation was once more than 250,000. At this rate, the next time the ABC circulation figures are reported, the Sentinel’s daily circulation may fall below 200,000.
The Sun-Sentinel is already under 200,000. It slid 9 percent to 183,562, as reported by the Miami Herald. The Sun-Sentinel also didn’t report the latest newspaper circulation, according to a search of its online archive.
By the way, the Washington Post and the New York Times are reporting that Tribune’s Washington bureau will undergo a consolidation after the election. Read more pink slips.
Elsewhere in Florida:
St. Pete Times continues to reign supreme in Florida with circulation of 268, 935, but that too was down by 7 percent. It was the only Florida newspaper to run its own bylined story of the circulation decline.
Miami Herald, down nearly 12 percent, to 210,884. That’s a daily loss of nearly 30,000. The paper reported some of its numbers online in a three-paragraph brief. It also ran the Associated Press Story, which didn’t reflect the Herald’s substantial circulation decline.
Tampa Tribune, edged down 2.4 percent, to 187,582 daily circ., as reported by the St. Pete Times.
Palm Beach Post didn’t report anything, according to a search of its online archive.
Jacksonville Times-Union also mum.
Tuesday, October 21, 2008
Having been an editorial writer at three different newspapers, I understand how these things work. You would think that it's all to do with interviewing the candidates and learning more about their positions and experience. Ah, but there's more. Much more.
After the editorial writers have made their best arguments pro and con, we start worrying about what the paper's position is really going to be. The editor and/or publisher can change the whole thing by making a decision that doesn't reflect any kind of consensus. The head of a newspaper chain can also hand down an edict. In addition, it can also get personal, as in "I don't like this person." That's just the way it is, because some members of an editorial board are more equal than others. It's a faux democracy.
In the 2004 presidential election, the Orlando Sentinel editorial page editor spent a good deal of time massaging the publisher (and who knows who else) in order to endorse John Kerry. It was the Sentinel's first Democratic endorsement in a very long time. I think 40 years, if I'm not mistaken.
(Kerry, by the way, was very knowledgeable and likeable in private, devoting lots of time to the editorial board interview. His public persona was another matter.)
All of which is to say that newspaper editorial endorsements are not really the above-board, what's in the best interest of the community kind of opinion. Sometimes it ain't got nothing to do with the community.
To have newspapers like the Sentinel, LA Times and, of course, the Trib endorse Obama signals that Sam Zell really allowed the papers to make their own choices. He may not care very much about the part of the job that people like Col. McCormick lusted after: Kingmaker! All editorial page editors want to be kingmakers, every single last one of them.
However, if it's true that Zell didn't play his hand -- a hand that he had every right to play as owner -- that makes him a very unusual person indeed.
Revolving lines of credit are often used for things such as payroll, etc. Even well capitalized companies are reporting problems accessing cash. I read the other day that hotel chain Marriott was having issues, although it's financially sound.
With its finances on shaky footing and a credit market that has dried up, I guess Tribune is not taking any chances. Their motto seems to be let's hold onto cash. It doesn't seem like an unreasonable thing to do right now, but it also makes you wonder how much Tribune's financial situation has worsened.
If you'd like to participate, go to www.ajr.org.
The paper appears slightly less text heavy than before and has more white space. Other than that, I really don't see much of a difference between the old and the new. Take a look at www.visualeditors.com.
That's what is going to happen in South Florida when the Sun-Sentinel begins printing the Palm
Beach Post, the Palm Beach Daily News and the Spanish-language paper La Palma in December.
The move eliminates 300 jobs in the Post's prouduction, mailroom and transportation areas. Apparently, the Post's presses are very old and need to be replaced. It sounds as if the arrangement may be temporary, until new equipment comes on line. But it doesn't seem as if this sort of expansion is prudent at this time or is in the offing.
This further strengthens the cozy relationship newspapers in South Florida are developing. If you recall, the Sun-Sentinel, Post and the Herald agreed earlier to share certain content.
Sunday, October 19, 2008
Event: Crossing the Great Divide
When: Thurs., November 6
Time: 6-8 pm
Where: Citrus Restaurant
821 N. Orange Ave.
Hosted by: Orlando chapter of the Florida Public Relations Association
Who should attend: Current and former journalists thinking about making a transition from journalism to ...
Information: Jamie Floer, 407.244.3685/ email: email@example.com
Monday, October 13, 2008
Newspapers have been experimenting with coverage and stories on their Web sites to make them more attractive to readers and advertisers. In Orlando, we have seen an increased focus on the titillation and sensational crime coverage on the Sentinel's Web page.
It's obviously attracting readers, based on higher online traffic reported here in an earlier post. Whether it's making money is another matter. Online revenue fell 4 percent at Tribune in the second quarter ended June 30, the Times reported. Of course, that doesn't necessarily mean that the Sentinel is down, since that is a companywide figure. The figure could be up in Orlando and down in other markets.
Online readers need to consider whether they want to reward the Sentinel's and other newspaper's tawdry online coverage. If not, they can let their mouseclicks do the walking.
Sunday, October 12, 2008
We have witnessed a number of cases like this in Florida. Trenton Duckett is another local-child-goes-missing case that fell under a 24-hour media watch, as did the Terry Schiavo case (which some people considered a crime, although I disagree). And who can forget Elian Gonzalez, who got the same media treatment? There are a number of others on the national scene, such as Jon Benet Ramsey, OJ Simpson and Natalee Holloway. Seeing a pattern here?
These are all crime cases, and crime is one of the easiest beats to cover. Put a police scanner, a reporter and crime tape together, and you have a story on the 5, 10 and 11 o'clock news cycles -- often with just a bit of new info added, if that. (Note that crime reporting has not suffered in the past 10 years or so, although crime rates fell significantly. This had the effect of distorting the role or rate of crime in communities. However, crime rates are beginning to rise again.)
In print, the Orlando Sentinel practically ignores the Anthony case, but splatters it all over its Web site, where it's all-Cayley-Casey-all-the-time. There's a reason for this: The Anthony case drives visitors to the site. In an earlier post, I wrote that in August the Sentinel landed on Nielsen Online's list of Top 30 online newspaper sites (it was No. 30), as reported by Editor & Publisher.
There's nothing to account for it, except the Anthony case. The Sentinel has not reported anything spectacular or breathtaking lately. The Central Florida area has not had a major disaster, such as shuttle going kaput. Tourism traffic is down, so it can be that. It's got to be the Anthony case, which has gone national in broadcast and print. The Sentinel and other local media have latched onto the story and are are milking it dry. In these lean advertising times, an increase in Web visitors or TV viewers is a boost to the bottom line.
The media -- print and broadcast -- whip up a public frenzy with these cases that is unconscionable. Do we really need to know that Casey Anthony visited her lawyer on any given day? No. If TV vans and reporters were not permanently parked outside the Anthony home, would the vigilante crowds disperse? I think so. All the world's a stage, and when when you take away the platform the actors scamper, looking for their next close-up.
Time and time again, this type of coverage has created a downward spiral that has contributed to a miscarriage of justice. The magnification of the crimes is so huge and out of proportion to reality that it results in spontaneous combustion. Law enforcement, under extreme pressure to resolve a case, screws up procedurally, tactically and in other ways. The defendants, under the glare of enormous spotlights, attract shady characters looking for publicity. That was the role played by the Padilla (no relation) bounty hunters in the Anthony case.
I am no Casey Anthony fan (no mother waits 30 days to report her missing child), but can she get a fair trail here? If Casey Anthony were ugly, would the media be following her around? Probably not.
The Jon Benet Ramsey, Natalee Holloway and Trenton Duckett cases have all led to dead ends. In the Duckett case, the mother, considered suspicious, committed suicide. The Ramseys had to move from Colorado and were cleared of suspicion only recently. Elian Gonzalez appeared as if he were about to have a nervous breakdown and the FBI had to use armored vehicles to break down doors to get Gonzalez out of Miami. The media frenzy had a lot to do with it. (I covered part of Gonzalez story, and have never experienced anything like it.)
And don't forget that the Atlanta Journal Constitution had to pay out a nice chunk of change to security guard Richard Jewell because of its faulty coverage of the Atlanta Olympics bombing case. I could go on -- how about the New York Times and scientist Wen Ho Lee? -- but I think I've made my point.
We are likely to see a non conclusion to the Anthony case. Of course, the Sentinel and local TV will pretend they had absolutely nothing to do with it.
I don't agree with everything in the story. For instance, Carroll seemed enthralled when an reporter told her that when a story breaks she can update her blog from her desk.
When a story breaks, you shouldn't be at your desk. Not even high flying technology changes that. And, second, let's face it, you can update a blog from the toilet. I don't get what impressed Carroll about the reporter's comment.
But it's a good interview. Take a look at http://www.pbs.org/mediashift/2008/10/gannett-pushes-for-more-tech-hires-data-centers-niche-sites-284.html
Wednesday, October 8, 2008
Things have turned e chilly at the LA Times, and not just because of the staff cuts. Seems that top editors are spending a lot of time trying to figure out who writes Tell Zell. com, according to LA Observed. That explains why there hasn't been a new post on Tell Zell since September 19.
There's nothing like the defenders of free speech clamping down on free speech. We have known for a while now that newspapers believe free speech applies only to them, because they are "special."
Thursday, October 2, 2008
When newspapers start lying to readers about what they are publishing by using euphemisms instead of straight talk, you may as well throw away the printing presses. You cannot be trusted to tell us what is fact and what is advertising. The blurring of this line will render newspapers worthless.
This came up apparently because the Baltimore Sun labeled a special advertising section -- what else? -- a "Special Advertising Section." Abrams then wondered, who's going to read it if you call it advertising?
Who's going to read it if you lie to readers and mislabel your ads?
I can think of a local example in the Orlando Sentinel. Has anyone taken a look at the Seminole Extra section lately? There's no there there. Not even a half-hearted story on the cover. Nada.
The 8-page section is about 6-1/2 pages of ads. Whatever happened to the 50-50 ratio of news to ads? The remaining 1-1/2 pages are taken up by listings. Nobody is calling this a "Special Advertising Section," but that's what it is.
Advertisers ought to be asking questions because they're not getting their money's worth. There is no content to lure readers. In the old days, there were stories that weren't exactly a 'fit" in the main paper, which was higher and mightier than the Extras. If somebody thought a story wasn't meaty enough for Local/State, it would wind up in the Extras. Right off the bat, there was never a lot of respect for the regional reader.
This version is worse. This is a let's-hope-people-don't-notice strategy. The Sentinel is not willing to cut off the Extras entirely because of the ad revenue. It's always been said that the Extras are where the "little advertisers" can afford to place their ads.
Abrams need look no further than the Sentinel to see the new Special Feature come to life.
Gannett had to tap its credit line of about $4 billion because short-term financing has dried up. Standard and Poor's credit rating agency put Gannett on its credit watch list for a potential downgrade, even though Gannett said it still had a substantial sum left on the $4 billion credit line. Then Gannett Chairman, President and CEO Craig Dubow said in a statement one of the most tone deaf things you can possibly say in these economic times, "Our underlying fundamentals remain strong..."
Geez. Where have we heard that before? And how much credibility do the orignal folks who uttered these infamous words have left? Just asking.
Star Tribune, owners of the Minneapolis Star Tribune, skipped its quarterly $9 million debt payment recently because it needed to conserve cash. (I'd like to try that trick some day.) It missed a debt payment in June as well. Bankruptcy may be waiting in the wings.
McClatchy, who bought out Knight Ridder and now publishes the Miami Herald, got ahead of everybody last week and renegotiated its $1.75 billion in bank loans (its total debt is higher). The price? Higher interest rates on the loans and a potential scaling back of its credit line. The company also has to cap its dividend payout, which will help it conserve cash. McClatchy could pay anywhere from $3 million to $11 million more a year in interest. Not quite sure which is better: paying the quarterly debt payment or paying higher interest?
That brings us to Tribune, which has been quiet lately. However, rising interest rates on its debt could cost Tribune as much as an extra $100 million more a year. That's what Wall Streeters are saying. Tribune also is getting closer to violating a requirement that it keep its debt under nine times its cash flow. The Wall Street Journal reported this week that the ratio was 8.3 at the end of June. Tribune is betting that the sale of its Chicago Cubs will help it meet the next debt payment of $1.4 billion next summer.
But in a way newspapers are actually fortunate. Yes, lucky. Newspapers prospects stink so badly that no bank is likely to be so foolish as to step in and take over a newspaper. That would be like shooting itself in the head. Who would buy a newspaper these days?
Those of you who still earn a paycheck from newspapers can sleep a tad -- but only a tad -- more soundly, knowing that there's little risk that you'll show up one morning and find that a bank has taken your computer.
However, it's still possible you may show up to work one day soon and find a pink slip attached to your monitor.
Monday, September 29, 2008
The answer: It depends on whether you are an online reader or a newspaper reader.
If you are an online reader, the Sentinel is not expending much energy on keeping you up to date with the latest economic news that has already cost you big sums of money in terms of the value of your retirement portfolio and/or the value of your home. News, in fact, that is about to cost you a good deal more as a taxpayer, too.
Taking center stage online is the Caylee-Casey saga. The Sentinel covers everything that moves about this tawdry affair, most of which is non news.
About two weeks ago, columnist Mike Thomas asked disingenously whether that's all people are interested in reading. "Tax policy, schmax policy," he wrote. Then he ended the column with, "It seems for a lot of people, that beats watching the real news these days."
Hogwash. If Caylee is all the Sentinel is offering up, what else is there to read? And please don't conjure up the bogey man of the old liberal media elite feeding you the news. I read the Wall Street Journal every day, and it's shoving the economic collapse down my throat. Nobody would call the Wall Street Journal part of the liberal media elite.
I like to think the Journal is doing its job of keeping its readers informed of extremely complicated, bad news. Not so for the Orlando Sentinel, which is tied up in titilation.
Several weeks ago, when the market plummeted more than 300 points, it took the Sentinel a half-hour -- until after the stock exchanges closed -- to update its website to reflect the sliding fortunes of Americans, including many of its own readers. A half-hour in online time is an eternity. Would that happen with the Caylee affair? The answer is a resounding no.
Meanwhile, readers of the paper edition are offered a very different kind of coverage. In today's paper (9-29), the headline reads: "Leaders: Start Bailing." The online paper, however, contains the usual Caylee box on the upper left corner. The headline reads: "Orange Sheriff Beary on Casey Anthony case: 'You might say it's a challenge." No kidding. The only hint of economic turmoil was a link on the rail to the right that stated, "Dow down 300 points in first half hour."
Sunday's paper had a weird cover on "50 Years of NASA. " Now, NASA is certainly a local story in Central Florida, but it didn't merit the kind of coverage it got Sunday during a weekend in which the country's political leaders (nay, heels) are negotiating to literally save the U. S. and world economy from collapse to the tune of $700 billion. That's going to cost every man, woman and child in the United States about $2,000 each or $6,500 per family.
The Caylee tabloid story pales in comparsion, but not to Sentinel editors. Perhaps this is what the Sentinel means by hyper loco coverage.
It is loco alright. Even if you wanted to focus on a local story, it raises a legitimate question: Is Caylee it?
Where are the Sentinel's priorities? Where is the news judgment? What can the editors at the Sentinel be thinking?
The paper must do more. What we are reading/seeing is an insult to a thinking person's intelligence.
Why, that's 15 seconds more of all Caylee all the time!
The Sun-Sentinel was down by about 29 seconds, to 6 minutes and 25 seconds. The Baltimore Sun also fell to 6 minutes and 37 seconds, from 7 minutes, 16 seconds. The Chicago Tribune was posted 7 min., 33 seconds, less than the from 10 minutes, 20 seconds, of the year before. And the LA Times was down 6 minutes, 48 seconds from 8 minutes, 10 seconds.
The mostly lower numbers were blamed on a surge of unique visitors. Apparently, there is an inverse relationship between unique visitors and time spent online. The higher the unique visitors, the lower the time spent online.
In August, the Orlando Sentinel posted 1.65 million unique visitors, up 10 percent. Decent numbers, to be sure, but not among the best.
The Sun-Sentinel soared 26 percent to 1.67 million unique vistors. The Baltimore Sun jumed 127 percent to 2.5 million due to hometown guy and Olympic favorite Phelps. The Chicago Tribune was up 56 percent to 4.7 million, while the LA Times climbed 66 percent to 8.9 million.
Before folks start breaking out the champagne, however, bear in mind that these numbers shift quite a bit. With the exception of the nation's top newspapers, such as the NY Times, Wall Street Journal and Washington Post, the papers at the bottom of the list cycle in and out.
In July, for instance, neither the Sun-Sentinel nor the Orlando Sentinel were on the time spent online or the unique visitors lists at all.
Is their appearance on both lists a fluke or a sign of something more solid?
Before then, the Globe had stated it would conduct a review of de Luzuriaga's stories for any potential conflicts of interest. I thought it would be a good idea for the Orlando Sentinel to do the same so that it could assure readers of the integrity of Sentinel reporters and stories.
Have not heard anything about this, however. Seems like the Sentinel is doing its best to ignore the sad and sordid episode as well as the potential local implications.
I don't claim to know what would prompt a reporter to allegedly commit such a major breach. I will chalk it up to youth, immaturity and obviously lack of judgment.
She seemed like a such a nice person. I wish her the best.
Thursday, September 18, 2008
LA Times staffers are seeking class action status, but Zell is pushing to dismiss the case.
In a moment of hypocrisy, Zell said maligning the company in public does no one any good.
Haven't Zell and his honchos been badmouthing Tribune since he bought the company for a dime of your money at the end of 2007?
Hyprocrisy and doublespeak seem to be de rigueur these days.
Tuesday, September 16, 2008
The news release about the suit calls Zell's takeover of Tribune "a scam," which has put the employee retirement fund at great risk. The suit alleges that Zell has raided the employee pension fund to the tune of $400 million. Read the story published by LA Observed here http://www.laobserved.com/archive/2008/09/extimes_reporters_sue_zel.php.
The suit is not asking for monetary damages, which leads me to believe that the LA Times staffers are angling for a seat on the board of directors of the supposedly employee-owned company.
When Zell bought Tribune for $8 billion, he converted it into an employee-owned company. An employee-owned company does not pay corporate taxes, meaning Zell saves him tens of millions of dollars a year in taxes. What a deal.
Earlier on, Zell mentioned that employees may be represented on the board. But has not made a move to make it happen.
Whatever you may think of the merits of the lawsuit, you have to tip your hat to the folks at the LA Times. They are not passive; they are not meek reporters and editors who are going to go down quietly. You can see the activism and hyper smarts in reporters and editors who think up stuff like this, including hanging a banner from a parking garage that reads: "Zell Hell: Take Back the LA Times."
The staffers have a passion for the LA Times and a fervor they bring to their work that is admirable. Guess that's the difference between a first tier and a fourth tier paper.
Can't imagine that happening here. ...
The affair allegedly took place in 2007 while de Luzuriaga was an education reporter for the Miami Herald. The paper broke the story Sept. 12, but it did not quote from emails they may have sent to each other.
But the New Times got down and dirty with the salacious stuff that has come out in emails, which seem as if they all came from de Luzuriaga. Makes you wonder, who released these emails?
The superintendent of schools to be Alberto Carvalho has denied that an affair took place, adding that the emails are invented or doctored. De Luzuriaga, who now works for the Boston Globe, is not commenting.
Don't know whether this story is true, but for a reporter to get in bed with a source is a huge faux pas. It's unethical, a conflict of interest and grounds for firing. In one of the emails, de Luzuriaga alludes to how they should help each other professionally. The Herald is reviewing the reporter's coverage of the school district. No kidding.
If you want to read all about it, follow this link to Bob Norman's blog, "The Daily Pulp" at New Times: http://blogs.browardpalmbeach.com/pulp/2008/09/miami_herald_sex_scandal_the_e.php
There's a link on the blog to a PDF with about 11 pages of emails.
The hit at the Miami Herald totals 119 jobs. Back in June, about 250 positions were elminated.
McClatchy blamed poor August ad revenue, which declined about 18 percent. It slashed its dividend by half to 9 cents a share in order to retain cash for operations. Over the next year, McClatchy will retain about $100 million in cash that would have gone to dividends. McClatchy is trading at about $3 a share. I never thought I'd see the day this would happen, but here it is in all its weary glory.
And I'm sure there is plenty more to come from other newspaper companies.
Monday, September 15, 2008
The thundering herd heading for the exit was heard around the world as investors tried to limit their losses. And you might be wondering, what does this have to do with me? Plenty, buddy.
For starters, newspaper stocks were not exempt from the stampede. Gannett fell nearly 7 percent. Media General slid 20 percent, and is now trading at under $10 a share. The New York Times took a hit, falling 11.5 percent. And McClatchy also slumped 7 percent, closing at $3.38 a share. Talk about a come down.
The credit markets -- read money lenders -- are not in a giving mood. That's a reason Lehman entered bankruptcy and why Merrill Lynch rushed into the arms of Bank of America. Nobody would lend it money to keep going. An interesting side note to BofA: The bank flourished during the Depression by buying up the assets of companies and people in a world of hurt. It certainly seems as if BofA is poised to do the same in this go-round. Merrill Lynch is its second acquisition, after mortgage lender Countrywide.
Few, if any,lenders will be forking over cash to companies seeking to get into or conclude merger or buyout deals. That includes McClatchy, who is rumored to be considering going private. Unless McClatchy has all the cash on hand to buy its outstanding stock -- and that's possible considering the stock's bargain-basement price -- nobody is going to lend a newspaper money. A newspaper?!
Nobody is going to lend money to Tribune, for instance, to remain a going concern either. Nobody is going to lend a company money to buy the Daytona Beach News-Journal. I'm sure Carlos Slim is saying he could have bought his stake in the NY Times for 12.5 percent less, if he had only waited.
In addition, if you are on the prowl for money to upgrade or expand your home, buy a home, purchase a car or make any kind of major purchase, the money is drying up for you, too. Whatever money you have in your 401K also is rapidly shrinking.
We are taking a major drubbing. And it's only Monday.
Another 41 people will be jobless due to a continuing decline in advertising revenue. "The company’s financial performance has taken a dramatic turn for the worse over the past few months," said Jim Hopson, chief executive manager.
The News-Journal is on the auction block as a result of a falling out with its long-time partner Cox. Just months ago, the paper predicted its sale would be complete by November. That sounded preposterous then, and seems even more so today.
The News-Journal is not alone in its turn for the worse. Gannett released its August advertising numbers, and they are not good. Gannett took in nearly 17 percent less revenue in its publishing division in August versus a year ago. Employment classified revenue alone fell nearly 34 percent.
Stay tuned as other newspaper companies post their August numbers.
Sunday, September 14, 2008
The DVD, titled "Obsession: Radical Islam's War Against the West," was delivered to millions of readers across the nation this Sunday, according to Editor & Publisher. Apparently, the Miami Herald, the Orlando Sentinel and other papers in Florida delivered the DVD to readers of the Sunday edition. In all, about 28 million copies will be delivered in September.
This smacks of yellow journalism to me, even if the paper(s) had no hand in the DVD production. Allowing these folks to piggyback on newspaper distribution systems puts them in bed with the creators of this movie. Seems rather exploitive of readers to me.
To paraphrase Sarah Palin, "Thanks, but no thanks." I don't want the paper to use me in this way. The creators of this DVD are all but in bed with one of the presidential candidates. The DVD is being used to incite our emotions.
I won't be opening this DVD. It's going straight to the trash.
If you'd like to complain call the Orlando Sentinel at 407.420.5000 or write to the editor at 633 N. Orange Ave., Orlando , FL 32801
I guess America couldn't build the tortilla curtain fast enough!
Slim is worth $60 billion, and is considered the world's second richest man. He acquired his wealth through lucrative telephone and wireless market investments. In Mexico, if you want to make a phone call, Slim has a hand in it. Before Slim's purchase of NY Ttimes' shares, the newspaper said, "It’s hard for a Mexican to spend a day without handing him some money."
Now, each time we plunk down money on the NY Times, we'll be generating profit for Slim, too.
According to the National Association of Hispanic Journalists, which is part of the town hall, only 9 people have completed a brief and answered an anonymous 15-question online survey regarding the Orlando Sentinel’s coverage of Hispanics. In addition, about 16 people have RSVP’d for the town hall. Earlier in the week, only 10 people had RSVP'd to the town hall and 5 people had taken the online poll.
The low numbers are not surprising. The Sentinel has had a testy relationship with the Hispanic community for some time, dating to coverage in 1996 about drugs and the witness protection program that essentially maligned Hispanics in the Orlando area.
It's one thing to write about the Hispanic community, including the bad news, and another thing to generalize about its members in a way that stereotypes the community. In addition, the tone of the earlier stories also was sorely lacking.
The Hispanic community, to its credit, would have none of it. They marched in downtown Orlando against drugs and crime. However, the march originally was aimed against the Orlando Sentinel, until organizers switched gears. They shouldn't have.
The relationship between the newspaper and the Hispanic community never fully recovered. And the Sentinel has been tring to mop up the mess. But based on my reading and interaction with the Hispanic community, I've concluded that the community has moved on. They have found other media and news outlets, both in print and online, that they prefer. Consider that in 1996 the online world was in its infancy, which is to say the Sentinel had little competition.
Today, about 52 percent of Hispanics are online, according to emarketer. That number likely will grow rapidly as the population expands. Hispanics are very big into social networking sites and also in visiting sites that report news of their homelands, none of which is reflected in the Sentinel.
I'd say Hispanics don't care about the Orlando Sentinel, but the Sentinel has to care about Hispanics because it is the fastest-growing segment of the population. When you read about the expanding population of Central Florida, it's the Hispancs who are doing nearly all the expanding.
If the Sentinel doesn't re-engage this population, the future, in terms of circulation and revenue, looks dim. The Sentinel may hang on to its traditional readers - the educated, white suburbanites -- but don't expect much help from Hispanics. That train has left the station.
Sunday, September 7, 2008
Tribune Co.: We're Adapting to the Times
Your article about Tribune Co. and Sam Zell ("The 'Grave Dancer' Takes a Tumble," In Depth, Aug. 11) was a disappointing compilation of inaccuracies, half-truths, and incomplete reporting.
The article fails to provide any context to help readers understand the fundamental change the media industry is currently undergoing. Battered in the short term by a weak economy that has eroded real estate, employment, and automotive classified advertising and in the long term by advertising's migration to the Internet, newspapers are experiencing the worst downturn in decades.
As a result, Tribune and its peers have been forced to reduce expenses—and staff—inside and outside the newsroom. And yet, despite these reductions, Tribune still has the two largest local newsgathering organizations in the country—in Los Angeles and Chicago—and continues producing great journalism.
The story also didn't explain our strategy to fully leverage the content of our diverse media products—across print, broadcast, and the Internet—and to develop a new, sustainable business model for newspapers.
Finally, the article missed many of the positive things going on at Tribune.
We're building a streamlined, single-technology platform. It will ingest and process audio, video, photos, text, graphics, and other content and process it for dissemination to TV stations, printing plants, Web sites, PDAs, cell phones, and other devices.
Based on direct feedback from our readers, we are redesigning our papers to keep them relevant in a world of electronic consumption. We're also resizing them to better match user habits. We can't afford to print a two-hour read when consumers typically spend only 20 minutes with the paper.
In broadcasting, our local TV stations generally outperformed the industry in the first quarter (direct sales were up in almost all markets). We're launching or expanding local news in Chicago, Miami, San Diego, Denver, and elsewhere. Using inexpensive programming and unique promotions, we've relaunched our national cable channel, WGN America, which reaches 72 million homes and is getting record ratings.
Online, we're developing the platform and the creative programming to enable our Web sites to engage in more e-commerce and social networking. We're also moving into other methods of content delivery, such as the iPhone (AAPL) and the Kindle (AMZN).
There are many examples of change at Tribune—driven not just from the top, but from the thousands of employees who believe in this industry and, most importantly, in our company. We're moving more swiftly and transparently than others in the industry, so we're getting a disproportionate share of the media's attention. That's O.K., we can take it. But occasionally the claims are so egregious we have to set the record straight.
Wednesday, September 3, 2008
Tribune retians 31 percent ownership, while McClatchy has 14 percent and Microsoft owns 4 percent.
If I robbed the 7-11 down the street, I would serve hard time. But the Enrons, WorldComs and the Adelphia Cables of the world notwithstanding, white collar crime still pays in the United States. These Newsday guys are held harmless for the enormous damage they inflicted on the company.
These nine fat cats significantly inflated circulation figures for Newsday and its Spanish-language offshoot Hoy in order to milk more dollars out of advertisers. When the truth came out, Tribune had to make restitution to advertisers to the tune of nearly $100 million. And that is nothing compared with the loss of its credibility.
One by one each Tribune newspaper was ordered to go over their circulation figures. A few others also reported inflated numbers -- but not like the thievery that took place at Newsday/Hoy.
Over a period of four years, between 2000 and 2004, Newsday miraculously added 100,000 copies to its daily circulation. That's the equivalent of the city of Gainesville. For Hoy, the figure was 45,000 per day -- merely a Titusville.
Louis Sito, who was former senior vice president of sales at Newsday, publisher of Hoy and vice president of Hispanic Media for Tribune, was judged "the most culpable." Still, he will pay only a $15,000 fine. Sito used to issue press releases boasting that Hoy had a daily circulation of 90,000, and was well on its way to 100,000. It was the biggest! The best!
Later, the former publisher of Orlando's El Sentinel, Anibal Torres, was sent to New York to mop up after Sito at Hoy.
The inflated Hoy circulation figures were nearly double that of its rival, El Diario La Prensa, the oldest Spanish daily in New York with a long history of covering New York's Latino community. Folks at El Diario complained about the circulation figures for years, saying the numbers didn't hold up. Finally, attention was paid.
Sito also is responsible for souring the relationship between Tribune and La Opinion in Los Angeles, which was 50 percent owned by Tribune. Once the folks at La Opinion got a whiff of Tribune's plan -- or I should say Sito's plan -- to start a Spanish-language daily in Los Angeles and create a national paper, they bought back Tribune's half ownership. Can't blame them. But it was a loss for Tribune, because in my opinion La Opinion is the best Spanish-language daily in the country. In a delicious bit of irony, La Opinion's parent company ImpreMedia later bought what was left of Hoy.
As for the Newsday Nine, so much for justice served. Not only was justice not served in this case, it was subverted.
Sunday, August 31, 2008
Florida naturalist and author Bill Belleville has taken note of the Orlando Sentinel's coverage of the local flooding, implying that it's gone over the top in its description of nature doing what nature does.
The thing that stood out to him was a line in a recent story about squirrels, gators and other critters "going on the attack" as a result of the recent rains.
"We somehow have lost the language needed to more realistically describe our natural world. We’ve compromised the river’s watershed with hard surfaces, and by doing so, keep rainfall from soaking in the ground," he writes in his blog www.floridanature.wordpress.com.
That reminds me of a passage in Zora Neale Hurston's "Their Eyes Were Watching God," when Janey is taking a walk before the hurricane strikes. She notices the gators, birds and other wildlife heading in droves in the opposite direction, a good sign that she better take cover, too.
I agree with Belleville that we have lost the ability to read important signs that nature sends our way. Check out his "saunterings." Belleville has great insights, as well as some eery photos of natural Florida.
Somehow, the papers are going to share content while also "preserving" competition. How is this possible? When newspapers share content, it means fewer newspapers will cover the news, regardless of whether it's called "routine" news or some other type of news. It's really that simple.
''Our goal is to better serve our South Florida audiences while protecting the individual brands and identities of our respective newspapers,'' a statement from the editors said, as reported in Editor and Publisher.
This could mean that newspapers, like many online news sites, may become aggregators of news. That is, they publish stories by many different originators. That's not unlike what newspapers do via their membership in the Associated Press: They buy the right to publish other newspapers' stories, most often national and international news.
What the newspapers have done is to bypass AP, which is happening more these days. But here's the danger: They're also bypassing the newsgathering process of their own newsrooms. If you gather news, you gather sources and insight into what is happening in your area. So this is announcement is not necessarily good news for readers who are interested in contrasting news coverage.
Obviously, the newspapers are trying to control costs, save money. It's a nod to the tough economic times the industry is facing that the traditional and long-held rivalries among newspapers that brought readers tough news coverage is giving way to the kumbaya of let's all get along.
And that's not counting a few Star alumni who currently work for the Sun-Sentinel. Plus, Ken Cogburn, the former editor of the Orlando Business Journal, was former managing editor of the Star. So the Star must have had an eye for hiring talent.
I replaced Ivan Roman at the Star when he left to join El Nuevo Herald in Miami. I held three different posts over the course of nearly seven years: business editor, assistant managing editor for features and editorial page editor. I returned to the states shortly after the paper was sold. I didn't meet Ruz until I moved to Orlando years later, but I have known Vazquez for years, and worked with her brother Tony, who is now a lawyer. I helped recruit Edgardo Martinez and Carlos Galarza to the Sentinel.
For the uninitiated, the Star was an unusual paper. It was the island's only English-language daily, and won a Pulitzer Prize in its first year of operation for a series of editorials denouncing the Catholic Church's attempt to influence a gubernatorial election. The church was upset about Gov. Luis Munoz Marin's pro-birth control stance. The paper's archives are a treasure trove of Puerto Rican history in the last half of the 20th century.
Many interesting people have passed through the Star's newsroom, including Pulitzer Prize winning author William Kennedy, who was its first managing editor. The story goes that Kennedy turned down Hunter Thompson for a job at the Star. Another staffer Manny Suarez nearly won a Pulitzer for a series of stories on the murder of two youths on a mountaintop known as Cerro Maravilla that involved the police and ensnared then Gov. Carlos Romero Barcelo. According to scuttlebut, Suarez didn't get the prize because the stories, written in the early 1980s, were not all published in the same year.
For 24 years or so, the Star was owned by Scripps Howard, which did an awful job of managing it. I recall that executives came down in January, when the weather got bad in Cincinnati. As far as I could tell, they poured very little money into the paper -- until they got ready to sell it. All of a sudden, there was a flurry of building renovations and computer upgrades.
We learned that Star had been sold through its union during the Christmas holidays of 1993. The paper had a tough union, and the current owner blamed the union's unwillingness to cut benefits and agree to further staff cuts for the paper's demise. Having worked there, I can attest that it's more complicated than that.
The market for an English language paper had been dwindling for years. Plus, the owner squandered what resources he had on a Spanish-language edition, taking on far larger and better-financed rivals. Not a good plan.
I am sad to see it go. For a very long time the Star was the only island paper to write credibly about politics because it didn't have ties to a political party. But it was dysfunctional -- a good friend used to call it the San Juan Star Authority for its government-like sluggishness. Still, of all the papers I've ever worked for, the Star was definitely the liveliest. It had spunk, verve and heart. Adios, amigo.
Tuesday, August 26, 2008
“Cosmetic redesigns are a waste of time of money. In contrast, content-driven redesigns can be powerful catalysts for positive, substantive changes to newsroom culture, but only when they transcend superficial changes to fonts, color palettes and grids. . . . If Orlando's redesign fails, it won't be because it went too far . . . It will fail because it didn't go far enough.”
To read the full post, visit http://www.brasstacksdesign.com/orlando_sentinel_redesign.htm
Monday, August 25, 2008
Credit rating agency Fitch stated last week that Tribune's junk bonds just got junkier, creating the backdrop for potential bankruptcy. In financial talk, that means people who hold these bonds can move to the back of the line. Fitch said Tribune's senior debt holders are likely to get anywhere from 31 cents to 50 cents on the dollar (ouch!) in the event of a "distress." Read bankruptcy. Bear in mind that senior debt is the Top Dog of debt. It gets settled first in a bankruptcy. But nobody said investors would get every penny they are owed.
Tribune's cash-generating machine is stuck in neutral due to a downbeat economy and negative newspaper market. Without sufficient cash on hand, Tribune can't pay down its $13 billion debt.
Tribune entered Junk Hell several years ago. It became a junk bond company in 2006 -- more than a year before Sam Zell came on the scene -- when Standard and Poor's slashed its credit rating. At the time, Tribune's debt was a mere $5 billion. Since then, S&P hasn't stopped slashing Tribune's credit rating.
It's getting crowded in debt hell, because Tribune is keeping company with many fallen angels. Among them: auto giants General Motors, Ford and Chrysler; mortgage company Countrywide and home builders Toll Brothers and Lennar Homes. Fannie Mae and Freddie Mac are approaching junk status, too.
The New York Times may get pushed down if it doesn't cut its dividend, which credit raters said it needs to do to preserve cash.
When Tribune paid off $800 million of debt after it sold Newsday, I thought perhaps things aren't that bad after all. But it seems Tribune is barely keeping pace. The reduction in Tribune's debt rating fans the flames of hell because company's coming.
Saturday, August 23, 2008
If you jut had to know Obama's VP choice, you could have signed up at the candidate's Web site for a text message. In other words, the campaign didn't need newspapers to tell the news. It retained complete control of its own breaking story.
The text message went out early Saturday morning to individual supporters and others first, before it went out to the media. Seems to me, the choice deliberately bypassed Friday night deadlines. As expected, many newspapers were caught flat footed.
In Florida, the St. Pete Times got it (it's not for nothing that the St. Pete Times is the state's best paper), but not the Miami Herald, the Sun-Sentinel, Orlando Sentinel, Palm Beach Post or the Tampa Tribune. (Go to www.newseum.org/todaysfrontpages/ to compare front pages from across the U.S. and 56 other countries every day.)
With the advantage of a 3-hour time difference, many but not all West Coast papers carried the news. In the Midwest, the Chicago Sun-Times had it, but not the Chicago Tribune. East Coast papers as a group didn't fare well. The Washington Post missed it, as did the Washington Times, the New York Times and the Wall Street Journal.
Of course, the online version of the papers can make up for the print gaffe. Trouble is, online operations aren't staffed 24 hours a day; however, maybe they should be. That may be an example of new thinking that keeps newspapers competitive, which is what online newsgathering is supposed to do.
- Last week, the newstand price for the daily New York Times rose to $1.50 from $1.25. Home delivery charges are going up 4.5 percent. It's the second year in a row that the NYT has pushed up prices.
- The Wall Street Journal hiked its price to $2 in late July, following an increase to $1.50 per issue last year. Since 2007, the WSJ newstand cost has gone up 100 percent.
- The Chicago Tribune recently boosted the price of its Sunday edition to $1.99, up 20 cents. You have to love the old 99-cent trick that avoids round-numbers and gives buyers a penny back.
- Earlier this year, the Washington Post went up to 50 cents per issue for the daily edition.
- The San Francisco Chronicle quietly raised its price to 75 cents from 50 cents.
- The Cleveland Plain Dealer is reportedly mulling a price increase.
Raising the price of a produt for which demand is declining is not a good idea -- unless you want to accelerate the decline. If the price goes up and circulation goes down, what are newspapers going to tell their advertisers? More important, what are they going to charge their advertisers? Rest assured, advertisers will ask for an adjustment to compensate for fewer eyeballs scanning the paper.
Earlier on, in the newspaper paleolithic era, newspapers were thought to be immune to price increases. The catchword phrase was "price insenstive." The thinking was, readers with a habit would be unwilling to go without a morning fix, a quaint idea that reflects the days when newspapers had the "news" mostly to themselves.
Newspapers that continue to think this way do so at their own peril, because they have more competition today than they can count. And new forms of competition are evolving every day. Just an example: If you wanted to know who Barack Obama's running mate was, you didn't have to wait for the newspaper (or TV or radio) to "inform" you. Inquiring minds signed up on Obama's Web page to receive a text message directly to their phones. Who foresaw that text messaging would compete with media for headline-grabbing news?
Don't think that raising the newstand or home delivery price of a paper is the only way to squeeze more revenue from readers. Each time a newspaper cuts its page count, as the Orlando Sentinel and other Tribune papers did, that's a price increase. Each time a newspaper reduces coverage or content, as the Orlando Sentinel and other Tribune papers did, that's a price increase. Each time something like this happens, the reader is getting less for the same price. That's a price increase.
Perhaps national newspapers such as the NYT, WSJ and Washington Post can withstand a price hike. They are a cut above the rest, although they, too, are not immune to circulation declines. (As a buffer, the Washington Post owns Kaplan and other education business, which generates more revenue for the Post than the Post itself.)
Local papers that promise more local coverage while slashing away at page count and content, may experience a stronger backlash as readers begin to see through the empty promises and realize that the "new and improved" paper is actually less so and more expensive, to boot.
Wednesday, August 20, 2008
Tuesday, August 19, 2008
It could be a case of the latter, given that the paper is in trouble because it had the arrogance to buy the naming rights to a performing arts center for about $13 million without letting its partner Cox Enterprises know. Cox sued. The News-Journal opted to buy out Cox and a federal court set the price at $129 million for Cox's 47 percent ownership share. An appeals court upheld the ruling, and here we are. The paper is for sale to pay off Cox.
Given these end times for newspapers, it's not clear what amount the News-Journal can fetch. The field of newspapers with for sale signs hanging from their banners is getting crowded. Among those on the auction block are the Newark Star-Ledger, Chicago Sun-Times and San Diego Union. The number of companies who probably wish they could put their newspapers up for sale: infinite.
A newspaper for sale today is going to get a rock-bottom price. And that's if they are lucky. If they're unlucky, they will languish for a while on the market until somebody gets the hint: Ain't no interested buyers.
Investors are scared of newspapers, following the continuing debacle at Tribune and McClatchy, to name just two well-known newspaper chains that are taking a soaking. They are drowning in billions of dollars in debt and not generating enough cash flow to pay it off. Financial analysts aren't even covering the newspaper industry anymore, a sure sign newspapers are dead and buried. And trading volume on many newspaper stocks is anemic by Wall Street standards.
As for share price, it's ugly out there. Gannett is trading at $18.65 per share, down nearly 50 percent in the year to date. E.W. Scripps Co. is selling at $7.07 a share, down 30 percent for the year. McClatchy closed at $3.99 per share Tuesday. That's right, $3.99. Murdoch's News. Corp., which bought the Wall Street Journal, has not seen a bump from the sale. Its stock price is $13.90, down nearly 50 percent from the same period a year ago. Even the venerable Gray Lady, the New York Times, with a stock price of $13.57 per share, is down nearly 21 percent thus far this year.
The Daytona Beach News-Journal has a couple of things going for it. First, it pretty much has the market to itself now that the Orlando Sentinel has decided to cut and run from Volusia County. Still, it's also feeling the economic pinch and announced it would close three bureaus and cut 99 staffers from its payroll. It's also a medium-size newspaper with 100,000 daily circulation. Smaller papers generally are outperforming the big guys right now. And the family owned paper, now nearly 80 years old, is an institution in Volusia County. It has a good brand.
Even so, a sale by the end of November -- just three months from now? Somebody needs to put down the pipe and breathe some fresh air.
Monday, August 18, 2008
Goodwill is the je ne sais quoi of the value of something you buy. It doesn't exist as something you can touch and feel. It's an abstract thing such as reputation or brand to which companies assign a dollar value when they make a play for your assets.
At least once a year, accounting rules set by the Financial Accounting Standards Board call for companies to "test" their goodwill and intangible assets for signs of "impairment." FASB requires this test of goodwill and intangibles to determine whether they are holding up or, to put it in FASB parlance, "reflect the underlying economics of those assets."
When newspaper companies went hunting for goodwill at the end of the second quarter, they found huge chunks of it had evaporated into thin air. In other words, there was significant "impairment" in the value of properties acquired earlier.
With the click of a calculator,
- Tribune eliminated $3.8 billion in goodwill in the second quarter related to the purchase of the Times Mirror newspapers, including the LA Times, Baltimore Sun, Hartford Courant and others, for which Tribune overpaid. That's on top of $130 million in goodwill Tribune eliminated in 2007.
- Gannett is expected to write off between $2.6 billion and $2.7 billion of goodwill in the second quarter. In 2007, it eliminated $130 million in goodwill from its financial statements.
- McClatchy last year wrote down $1.37 billion in goodwill related to its buyout of Knight Ridder newspapers, which includes the Miami Herald. At the end of 2007, McClatchy only had $1 billion left in goodwill.
Now, this is not cash money. Heavens forbid. It's a paper loss. But the write down of goodwill is still very significant. It basically means your stuff isn't worth what you thought it was when you plunked down good money ($8 billion in the case of Tribune) to buy some properties or assets.
It's like acknowledging that the wonderful 3 bedroom, 2 bath house you just had to have and paid $150,000 for two years ago is now worth $50,000 -- if that. If you put the house on the market today, you would have to eat $100,ooo of goodwill. And so it is with newspapers.
Nobody would pay $8 billion for Tribune today, and especially not Sam Zell. I'd venture to say he probably has a voodoo doll of Dennis FitzSimons somewhere in his office in Tribune Tower. Zell and others had no choice but to write down the assets.
Newspaper stocks have tanked, and that's a sign of the value of a company. Tribune is not a public company anymore. But McClatchy, for example, is trading at $4.19 a share on very low volume (350,433). Most other newspaper stocks are in the toilet as well.
That's goodwill for you. Here one moment, flushed the next.
Sunday, August 17, 2008
Television news, and especially local television news, wouldn't exist without the newspapers from which they crib stories. It is a truth universally accepted that television doesn't employ one-tenth of the reporting staff that newspapers do (or used to). When you hear the morning news on "all news" cable television or a snippet of news on the morning network shows, the great majority of it is regurgitated from the morning paper.
If you want an example of television's commitment to local news, look no further than crime news. Television didn't veer away from crime news when it was clear that crime was falling across the United States in the 1990s and into the 2000s. Why? Because it's easy to cover crime news. All you need is a police scanner and a backpack journalist, if that. Thoughtful stories require manpower, legwork and time.
If newspapers shrink in size and depth of reporting, you will soon see that reflected in your local news and radio broadcasts. But I digress.
There is one newspaper chain who has nearly abandoned newspapers and has pursued television in a big way. It would not surprise me if Zell is channeling in some way Scripps Howard. (Full disclosure: I once worked for a Scripps Howard paper in San Juan, Puerto Rico.)
Scripps Howard owns about 10 local televsision stations, including two in Florida, plus it's the parent of HGTV, Food Network, DIY Network, Fine Living Network, the Great American Country television network as well as SN Digital, food- and shelter-related interactive businesses. The latter group is known as the Scripps Network.
According to its latest second-quarter results, Scripps Network revenue jumped 13 percent and its profit increased 10 percent, very healthy numbers compared with the dismal state of newspapers. Scripps' local television stations, though down in revenue, are still doing OK, compared with newspapers. There's no mistaking that Scripps Howard is clearly a broadcast company now. Scripps Network revenue makes up nearly 53 percent of all revenue. Combined with local television stations, the figure jumps to 65 percent.
And what of its newspapers? There are 15 of them left, including four in Florida. The largest of its newspapers are probably the Rocky Mountain News and the Memphis Commercial Appeal. Scripps historically has been quick to go the JOA (joint operating agreement) route. The Denver paper now is a JOA after a bruising fight with the Denver Post.
Last year, Scripps closed down its Cincinatti Post and Kentucky Post (across the state line) newspapers after a JOA with Gannett expired. Which is to say, Scripps closed down the newspapers in its very headquarters city (Cincinatti) rather than keep the papers going! This year, Scripps closed its Albuquerque paper when the JOA with Journal Publishing expired.
Do you see a pattern here? How long do you think the Rocky Mountain News will be around? I'm taking all bets.
The point is, Scripps is the wave of Zell's future. When all the slicing and dicing is done at Tribune, it may very well resemble something like Scripps (give or take local television vs. network television) in its overall makeup.
Saturday, August 16, 2008
We gathered not to bury the Orlando Sentinel but not exactly to praise it either. The people who are no longer at the Sentinel could fill a house, and we did. There was a palpable sense of loss at how low the paper has fallen. Here's evidence: I was interviewed on talk radio earlier in the day, and the host asked listeners to call in with questions. Not a peep was heard. I'm thinking the guy has really low ratings or expectations of the Sentinel are significantly diminished. In the old days, if you had a comma out of place, you would hear about it from a readers.
Here are some instant impressions from the party:
- The most popular question was, "Are you still there?"
- One person was astonished at how the Sentinel buried news of approaching Hurricane Fay inside the paper. In the old days, back when hurricanes mattered (who can forget 2004?), a hurricane would merit page one.
- Folks talked about how much physical space there was at the paper now. There was a time the Sentinel had a clean mafia who "cited" you if your desk got too dirty or the paperwork out of hand. I was once warned because I didn't have a photo of my husband and daughter in a proper photo frame. Unbelievable, but true, and so Sentinel. Now, there's plenty of room to roam and space to fill. And I guess nobody cares what you do with it.
- Some folks are enjoying a leaner management. The Sentinel was always known for its top heavy structure (as is Tribune overall), layers of managers who were always looking for an opportunity to get in your way or prove their worth. No more, and what a freedom that is.
- The best line of the night: The newsroom has become like an emergency ward, where stories are tended to in triage because there are so few people to go around. While that might work in a hospital (and even then it's questionable), in a newsroom stories that aren't at the top of the list often don't get told at all. That's especially true in these lean staff times.
The people who are no longer in daily journalism seemed more relaxed and talked of other things. The ex Sentinels I talked with said they were glad they left. One recent departee said he was sleeping much better.
The people who are still doing newspaper work of course seemed very worried. Everybody is networking and keeping irons in the fire. They know red letter day can come at any moment. And old buddy said, "It used to be that newspapers didn't pay well, but your job was secure. Maria, if you were to walk into the newsroom now, you wouldn't recognize it."
Say amen somebody.