Saturday, January 31, 2009

Orlando Sentinel Job Cuts Likely

Based on an Orlando Sentinel staff meeting held Friday, it looks like:
  • Jobs will be cut in stages. How many people will be affected is unclear. Bankruptcy court will have to weigh in on whether next set of ex-staffers get severance payments, as others have.
  • Earlier deadlines will be established for Sunday paper so it can be printed in two press runs, instead of three.
  • No more movie listings in the tv guide.
  • Lots more content sharing to take place with other Tribune papers. Lots more templating of pages and ads.
  • News will be written and assembled for the Web and then plopped into the next day's paper.
  • Redesign of the Web site may be in the works; professional design team may be involved.

According to Editor Charlotte Hall, all of these changes will happen on "steroids," meaning very quickly.

Sounds like the digital newsroom will arrive sooner rather than later. The paper product will be an afterthought.

More Cutbacks at LA Times

Tribune is at it again. The Wall Street Journal reported Saturday that the LA Times will get rid of as many as 300 positions. Of those, maybe 70 are newsroom staffers, or 11 percent of the newsroom. Plus, the paper is folding its local section into the main A section. Could you imagine? Local news is disappearing from view not only at the LA Times but in newspapers nationwide.

This may be the beginning a new round of cubacks at Tribune newspapers, following very dismal profit/loss numbers newspapers are reporting across the country. Just a sample:

  • Gannett's profit fell 36 percent in the fourth quarter. The company is writing off $5 billion in good will. That means Gannett thinks its newspapers are worth $5 billion less today. If that's true of Gannett, other newspaper chains may soon engage in a second round of good will slashing. Mercifully, Gannett is hinting it may cut its dividend. Gannett pays about $365 million a year in dividends. Cutting the dividend may save some jobs.
  • A.H. Belo, publishers of the Dallas Morning News, is letting go 500 workers.
  • New York Times' fourth-quarter net plummeted 47 percent. It is looking to sell the Boston Red Sox, borrow against its new headquarters and recently borrowed $250 million from Mexican media mogul Carlos Slim, who already owns Times stock. Maybe the paper should change its name to El Tiempo de Nueva York.

Wednesday, January 14, 2009

Gannett Stuns Industry with Furlough

Gannett's decision to furlough all of its workers for one week without pay during the first quarter is stunning news. It is one of an increasingly common number of instances in which newspapers behave like manufacturers of widgets. Closing a bureau is the equivalent of closing a plant. Furloughing workers is what manufacturers do when there's not enough work (orders) to go around, too much inventory and diminishing cash flow. Come to think of it, that's General Motors' MO. I guess producing the news is not so different from producing cars after all.

The newspaper company announced that every employee is affected. That's more than 40,000 people. News staff can't show up for work, can't email and can't make calls to sources. No work. Period. Labor laws/regulations apparently require it. Nothing left to do but figure out how to stagger the time off. Gannett has already frozen salaries and last year cut its workforce by more than 15 percent.

Gannett is an egregiously poor caretaker among newspaper companies. It was Gannett, after all, that pushed for ever higher profit margins that competitors felt they had to follow. Even now, the company pays a hefty annual dividend of $1.60 a share. With 228 million shares outstanding, that comes to $365 million a year, or $1 million for each day of the year.

Shouldn't Gannett cut its dividend to conserve cash? Maybe suspend it for a time? And let's not forget that even now Gannett's operating margin is still a solid 21.5 percent, probably the leader among newspapers.

A one-week furlough is better than no job at all. If it staves off more layoffs, then reporters and editors will embrace it. Perhaps other newspaper chains are calculating how much they would save by following Gannett's example, as so many newspaper companies have done and continue to do.

Several years ago, who would have thought of a furlough for newspaper reporters and editors? Welcome to 2009.

Tuesday, January 13, 2009

Orlando Sentinel and Florida Today Share Content

The Orlando Sentinel this week began a trial run of a content-sharing venture with former rival Florida Today. This reduces newspaper competition in the Central Florida area, which is already a one-newspaper town. Only the Daytona Beach News-Journal and Florida Today provided some level of competition to the Sentinel. It raises the legitimate question, why buy a paper if they are all going to contain the same, exact news written from the same, exact perspective?

Although content sharing may not do much for readers, it is the wave of the future. It helps newspapers cut costs by not having to staff and maintain bureaus in certain areas. The potential to pool reports also cuts costs. The Miami Herald has already entered a similar pact with the South Florida Sun-Sentinel and the Palm Beach Post. Other newspapers around the country are also taking this route.

However, the Orlando Sentinel and Florida Today won't share all content, since enterprise and investigative reporting will remain exclusive -- at least for now.

Get the details from the memo below:

From: Hall, Charlotte HSent: Monday, January 12, 2009 10:25 AMTo: OSC DL EditorialCc: Anderson, Julie; Benson, Kelly; Burke, Dyana; D'Orlando, John; Greenberg, Howard; Hall, Charlotte H; Khahaifa, Avido; Lafferty, Mike T; Motley, Robyn; Ortiz, Norbert; Schaible, Linda A

Subject: Florida Today Sharing Importance: High

Today we begin a test of a content-sharing partnership with Florida Today. Routine news stories and advances of events posted on our Web sites can be picked up by the other paper for publication in the next print cycle. Stories and photos will be attributed to the originating paper, and bylines will be used. Exempted from the sharing arrangement are columns, investigative stories and major enterprise stories.

Florida Today content will not appear on and vice versa, but the Web editors from the papers will pursue an aggregation strategy, including RSS feeds for some content.

During the test, the managing editors and team leaders will also explore the possibility of pooled coverage or team coverage of events on a case by case basis. The test will run three months, and the arrangement could be made permanent or expanded at the end of that period. Mark Russell and Roger Simmons are the point people in our newsroom. If you have questions, you can direct them to Russ, Roger or me.


Thursday, January 8, 2009

One More Trend

One newspaper move that is becoming trendy of late is freezing salaries or salary/wage give-backs in order to reduce costs.
  • Dow Jones, publishers of the Wall Street Journal, just announced a salary freeze. They also plan to negotiate with their unions to implement a similar freeze among members.
  • The Chicago Sun-Times is asking its unions for a 7 percent cut in members' salaries.

This puts newspaper folks in a bind. On the one hand, you want to keep your job. However, the only way to do that may be to surrender some of your salary, or accept a freeze in salary. Considering the alternative, which is no job at all, this may not be too hard to swallow. More newspapers may go this route, especially if they've cut staff to the bone.

Look out for other ways that effectively "reduce" salaries, including:

  • hike in health insurance costs
  • reduction or elimination of 401k contributions

Some newspapers deliver the newspaper free or at reduced cost to employees. You'll know you're really in trouble if you lose this benefit.

Sunday, January 4, 2009

Five Big Newspaper Predictions

The newspaper landscape has never looked bleaker, at least in my years of experience. One company has declared bankruptcy (Tribune), and at least one other may may follow suit in 2009. Advertising revenue is in a tailspin, declining much faster than anybody anticipated. This year may prove to be even worse than 2008, and last year was pretty bad.

Many economic forecasts are very pessimistic about 2009, and I happen to agree with them. There's not a whole lot of light in this tunnel, especially with consumer spending way down. This downturn is going to force a lot of publishers' hands to produce more cost-saving cuts, bolder ideas or otherwise engage in desperate Darwinism.

Here are my Five Big Newspaper Predictions for 2009:

1. More layoffs
With ad revenue in a severe downward spiral, newspapers will need to significantly reduce costs and that means staff. I predict it will be brutal. Newspapers have no choice: labor and newsprint costs are the two largest newspaper expenses. Newsprint prices are going down, in part because demand has fallen. Many newspapers have already reduced page widths, number of sections, etc., which means they are buying less paper. They have also reduced staff. But I predict more staff will have to go in order to align revenue with expenses.

2. More newspaper sales
Look for media companies to unload some newspapers at bargain-basement prices. Maybe the Miami Herald is one; the Boston Globe is another. I predict that newspaper companies would rather sell for pennies on the dollar than continue to carry a newspaper that is a financial drag on their profit and loss statements and balance sheets.

3. At least another bankruptcy
Tribune's bankruptcy last year was no surprise to many who have been watching the company struggle. But Tribune by no means will be the only one. Lee Enterprises, publishers of the St. Louis Post Dispatch, is looking more and more like a candidate for bankruptcy. Last week, its auditor warned of the company's ability to remain a going concern due to its inability to pay down debt. Do the math. If you have to tap a credit line to pay off loans, it means you have little or no cash flow. Tribune did this last year, and look what happened. Lee has about $4 million in cash and $1 billion in debt. The company is also in the net loss column, and its stock has plummeted about 95 percent.

3. More newspapers will halt home delivery
Newspapers will cut back on home delivery on certain days of the week to shave costs. Home delivery is part of a newspaper model that flourished with increasing suburbanization in the 1940s and beyond. It helped boost circulation by allowing newspapers to follow the population migration to the 'burbs. (This, by the way, is how the neglect in coverage of urban population groups accelerated.) Plus, more workers began driving to work instead of commuting, making home delivery a viable alternative. However, as a financial model, home delivery never made much sense. Single copy sales are a much less expensive and efficient way to sell newspapers.

4. More newspapers will cease publishing 7 days a week
Not everybody can get away with this, but some newspapers can or may have to in order to remain viable. The Wall Street Journal only publishes 6 days a week (up from 5). The Christian Science Monitor is available only on the Web now. Certain days of the week are loss leaders for newspapers, including Saturdays and Mondays. Readership is low on those days. (As a reporter, I always protested having my stories published on those days.) The next best alternative is a very thin newspaper on loss-leader days, kind of like a digest of what's coming up the rest of the week. Or a combination of a digest and no home delivery.

5. More graphic-heavy design
Some wags may call this the triumph of design over content, and they would be right. At certain newspapers, design folks have catapulted in stature. It's already happened in Baltimore, where graphics guru Monty Cook took over as editor of the Baltimore Sun. Can Bonita Burton be far behind at the Orlando Sentinel? She's already been elevated to deputy managing editor for presentation. Both the Sun and the Sentinel are Tribune papers. More appealing graphics do not necessarily boost circulation, but graphics do make newspapers appear more in step with the Web, and that is increasingly important. Essentially, this means the traditional newspaper reader -- who is over age 50, educated and has a deep newspaper habit (in fact, they are keeping newspapers afloat) -- will continue to get shafted.

Thursday, January 1, 2009

Year End Jobless

Lots of newspaper folks felt the sharp edge of the ax in 2008. Tallying up the numbers, however, is not easy. One source puts it at more than 15,586 nationwide ( . But the numbers are not attributed so they can't be verified.

For more reliable numbers, I turned to the Bureau of Labor Statistics, which breaks down its stats by industry. A fascinating picture began to emerge. The figures include magazines and other publications, but not the Internet.

Layoffs began rising sharply in June and have been on a steady climb since August. I predict the numbers will accelerate in 2009, based on awful year-end newspaper numbers (see posting below).

The country has been in a recession for more than a year. Newspaper advertising is tumbling rapidly, circulation continues its decline and most newspaper chains are burdened with lots of debt, which they have a decreasing ability to pay. Tribune was the first newspaper chain to file for bankruptcy, but there very likely will be others.

Of the big publishers, I'd watch McClatchy, publisher of the Miami Herald, whose Florida and California markets are hard hit. McClatchy also is struggling with $2 billion in debt. Media General, publisher of the Tampa Tribune, also is in bad shape, with the company's worth of $777 million just slightly ahead of its debt of $750 million.

Here's an industry snapshot:

Number of announced layoffs in 2008: 93
The largest number reported was 14 for the month of November, and the figure has been climbing since August, when there were 9 layoff announcements. The last time the numbers approached or surpassed 100 was in 2001 and 2002.

Publishing unemployment rate: 4.4 percent vs. 6.7 percent for all workers for November 2008. Publishing unemployment has spiked and dipped for the last several months, indicating a lot of industry volatility. It jumped to 4.6 percent in September, but went down in October to 2.7 percent, only to rise again in November.

Number of reporters: 39,230
Unfortunately, this number is for 2007, the latest available. We'll be able to calculate the hit when new numbers come out.

Number of editors: 63,930
Above rule applies.