Nygaard Notes #354

Nygaard Notes
Independent Periodic News and Analysis
Number 354, November 24, 2006

On the Web at http://www.nygaardnotes.org/

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This Week: Journalism Sacrificed for Profit (Again)

1. “Quote” of the Week
2. Update on Some Heroes in Los Angeles
3. Layoffs, Layoffs, Layoffs: “This Is a Newspaper Industry Thing”

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Greetings,

I sort-of promised last week that this week’s edition of Nygaard Notes would have a few comments about the recent elections in the U.S. of A. But it doesn’t. Since I made that sort-of promise, a little bit of news came up about even more layoffs in the nation’s newsrooms, specifically in the newsroom of one of my local papers, the St. Paul Pioneer Press. I was sufficiently upset about it that I wrote up a piece for the online newspaper the Twin Cities Daily Planet. Then I ended up liking that piece, so I thought I would publish it here, as well.

All of that is to say that I really do have a few comments to pass on about the elections, but just not this week. Maybe next week. Certainly before the new Congress goes into action (or inaction, or whatever they officially do or fail to do) in January.

Until next week,

Nygaard

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1.
“Quote” of the Week

On November 19th the New York Times reported on “President” Bush’s visit to Vietnam, under the headline “Unlike Clinton, Bush Sees Hanoi in Bit of a Hurry.”

The report compared Mr. Bush’s visit to an earlier visit by then-President Bill Clinton “exactly six years ago this weekend, when [Mr. Clinton] seemed to be everywhere.” During that visit, “Mr. Clinton toured the thousand-year-old Temple of Literature, grabbed lunch at a noodle shop, argued with Communist Party leaders about American imperialism and sifted the earth for the remains of a missing airman.”

Mr. Bush, in contrast, had “only one nonofficial event, a 15-minute visit to the Joint P.O.W./M.I.A. Accounting Command” during which “there were almost no Vietnamese present, just a series of tables... [Mr. Bush] asked a few questions and then sped off in his motorcade.”

Apparently conceding that it would be a good thing for a head of state to “connect” with the citizens of a nation that was devastated by a U.S. invasion not all that long ago, Mr. Bush’s national security adviser, Stephen J. Hadley, had some amazing things to say. The Times reports that Mr. Hadley “conceded that the president had not come into direct contact with ordinary Vietnamese, but said that they connected anyway.” Said Mr. Hadley:

“If you’d been part of the president’s motorcade as we’ve shuttled back and forth” reporters would have seen that “the president has been doing a lot of waving and getting a lot of waving and smiles. I think he’s gotten a real sense of the warmth of the Vietnamese people and their willingness to put a very difficult period for both the United States and Vietnam behind them.”

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2.
Update on Some Heroes in Los Angeles

In early October I reported that the Tribune Company, which owns the Los Angeles Times, recently ordered the editor of the Times to cut 200 jobs in their newsrooms in order to boost the profits from the current 20 percent to a figure closer to the 30 percent that the Chicago Tribune “earns.”

Amazingly, as I reported, the editor of the Times, backed by the publisher, simply refused to make the cuts, saying that the cuts “would significantly damage the quality of the paper.” I remarked at the time that “The media world is watching this showdown closely to see if the editor will keep his job.” I made my prediction. “I don’t think he will,” I said.

As it turns out, neither the editor, Dean Baquet, nor the publisher, Jeff Johnson, kept their jobs.

Publisher Johnson, had “really emerged as a hero to a lot of us in the newsroom,” said an LA Times reporter. He was replaced as the Los Angeles Times publisher on October 5th by the CEO of the much-more-profitable Chicago Tribune. The New York Times reported on October 27th that “Many [in the media industry] wondered if Mr. Baquet would step down in solidarity. He did not, and ... was criticized for not doing so. Mr. Baquet said he had considered quitting but decided ‘the best way to protect the paper was for me to stay.’”

He not only stayed, but he went out into the world to encourage others in the industry to stand up for maintaining their staffs in the face of Wall Street pressure. At the annual meeting of the Associated Press Managing Editors on October 26th, Mr. Baquet, “encouraged other editors to push back more against newspaper owners when they propose such cuts,” said the Times.

Journalists around the country cheered when Baquet spoke to his fellow editors about resisting their owners’ calls for profit-boosting cuts to their news staffs, saying, “It is the job of editors of newspapers to put up a little bit more of a fight than we have put up in the past. Don't be shy about making the public service argument.”

Well, that did it. On November 7th, as the Los Angeles Times was preparing for election-night coverage, Dean Baquet was fired. Some reporters at the Times refer to it as “the election day massacre.”

Baquet was not shy in his defense of news over excessive profit. Now he’s gone. And the following article continues on the same theme, focusing on some cutbacks on one of my local newspapers, the St. Paul Pioneer Press.

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3.
Layoffs, Layoffs, Layoffs: “This Is a Newspaper Industry Thing”

A version of this article originally appeared in the Twin Cities Daily Planet http://www.tcdailyplanet.net/media

The announcement on November 13th by the St. Paul Pioneer Press that it plans to lay off 40 full-time workers—20 of them from the newsroom—occurs in the context of widespread layoffs throughout the newspaper industry. Unfortunately, the local reporting on the Pioneer Press layoffs, like much of the reporting all over the country on the larger context, fails to make clear the dynamic that is driving this dismaying trend. That dynamic is greed. And it’s not a Scrooge McDuck type of personal greed, but rather a greed that is built into the world of the publicly-traded corporations which own most of our modern media.

Both the Star Tribune (Newspaper of the Twin Cities!) and the Pioneer Press (I affectionately refer to the two of them as the Strib and the PiPress) had brief stories on the layoffs. Both appeared in the “Business” section, and focused on “steep declines in advertising” as the reason for the layoffs. The Strib quoted PiPress publisher Par Ridder as saying that “if you want to be in the newspaper business in 2006, these [layoffs] are the kind of things you have to do.”

Both articles took pains to point out that the PiPress is not unique. The St. Paul paper tells us that “a wave of layoff announcements has swept across the [newspaper] industry in recent weeks,” and the Strib has Ridder saying “This is a newspaper industry thing.”

It is, indeed, a newspaper industry thing. The owners of the Los Angeles Daily News recently laid off the paper's publisher and 20 other employees. 101 jobs are being eliminated at the San Jose Mercury News. Another 111 at the Dallas Morning News. The Cleveland Plain Dealer plans to cut 17 percent of its staff. The 200 layoffs at the Los Angeles Times that I mention elsewhere in this issue were the second round. The previous round, in 2004, saw 200 newsroom jobs lost.

Columbia University’s Project for Excellence in Journalism reported in March that “By the time the tallies are in later this year, the [newspaper] industry is expected to lose between 1,250 and 1,500 newsroom professionals—editors and reporters.” That would mean that the newspaper industry would have lost 3,500 to 3,800 newsroom professionals since 2000, or roughly 7%. The 5 percent cuts proposed last week for the PiPress are in line with this industry number.

Losing Money? No.

What is the “newspaper industry thing” that makes Ridder say that publishers “have to” diminish their capacity to cover the news? The coverage of the PiPress layoffs might lead one to imagine that the St. Paul paper, and newspapers generally, must be losing money, or at least making a small enough profit that such major cuts must be unavoidable. So, let’s look at some numbers.

The average profit margin for publicly-traded corporations in the U.S. these days is about 6.8 percent. Oil and gas industry profits—which have drawn angry calls for a windfall-profits tax on the industry—came to 8.2 percent in 2005. Meanwhile, the newspaper industry, as a whole, posts average profits of 20 percent.

The Pioneer Press is one of the least profitable among major daily newspapers, yet it still earns a profit of about 10 percent, or just about 50 percent above the average for publicly-traded corporations.

A former Providence Journal reporter, writing in that newspaper earlier this year, explains that “even with these fat newspaper profit margins, newspaper stocks are tumbling. On average, newspaper-company share prices last year fell 20 percent.” In the world of Wall Street, the concept of “enough” profit is relative. If there’s any doubt, The Market says “Sell!”

Consider the recently-traumatized Los Angeles Times, the nation’s fourth-largest newspaper and winner of numerous Pulitzer Prizes in recent years. That paper has been earning a profit of 20 percent, which is about the (very-profitable) industry average. Still, that’s a lot lower than the 30 percent that the Chicago Tribune—flagship of the Tribune Company, owner of the LA Times—“earns,” which explains why the Tribune Company ordered the editor in LA to cut 200 jobs in their newsrooms. 20 percent is, after all, not as good as 30 percent. Right?

As I point out elsewhere in this issue, when the editor at the LA Times tried to resist those cuts, saying that “To make substantial reductions would significantly damage the quality of the paper,” he was fired. It’s safe to assume that the message sent by the Tribune Company has been received by editors and publishers around the country. And it’s REALLY safe to assume that it was heard at the St. Paul Pioneer Press, which was recently purchased by MediaNews Group, one of the largest newspaper companies in the United States. MediaNews Group’s CEO, Dean Singleton, has been referred to by the NY Times as “the industry's leading skinflint,” and by James Squires, a former editor of the Chicago Tribune, as a “bone-picker publisher . . . who can wring blood from a turnip.”

It is no doubt true that advertising revenues, the lifeblood of any corporate newspaper, are declining at the Pioneer Press, as reported. Yet it is also true, as NOT reported, that the Pioneer Press remains highly profitable, if less so than the industry as a whole.

And the reason for the high profitability of the nation’s daily newspapers in the face of declining advertising revenue, according to Quinnipiac University journalism professor Paul Janensch, is: “Simple. The top managers of most media companies are cutting news expenses to pump up the bottom line and, for publicly-traded companies, to look good on Wall Street.”

Los Angeles Times reporter Michael Hiltzik led off a recent article with this anecdote: “Many years ago, a veteran editor at what was then the Chandler-owned Los Angeles Times made the following observation about that family and its dividends from their newspaper: ‘They're either rolling in it, or they're really rolling in it. And when they're only rolling in it, they start to panic.’

Adds Hiltzick, “The era when insufficiently huge newspaper profits would give the shivers only to the members of a wealthy family seems quaintly distant today. With most major American newspapers, including the Times, now owned by publicly traded corporations, the conniptions are more likely to be thrown by Wall Street securities analysts and institutional money managers.”

The PiPress, unlike many papers in the country, is actually experiencing continued circulation growth, reports the Strib, so they must be doing something right. At least as far as their readers are concerned. But readers don’t pay the bills.

Neither of the local reports tell us exactly how much the PiPress’s advertising revenue has declined in recent months, but it would appear that advertising revenue would have to decline by more than 30 percent to even bring the profit level down to the average for corporate America.

So, PiPress readership is up. And PiPress profits are still far better than the corporate—if not the newspaper industry—average. Yet the PiPress publisher says that “if you want to be in the newspaper business in 2006, these are the kind of things you have to do.” The reason he says this is that somebody is having conniptions.

To put it plainly, what we appear to be seeing in St. Paul is that the MediaNews Group’s recent acquisition, the Pioneer Press, is “only rolling in it” with their 10-percent profit level, rather than “really rolling in it” at the industry average of 20 percent-plus. Wall Street is unhappy. Heads must roll.

I’ll close by quoting from the third annual report on “The State of The News Media” released by the Project for Excellence in Journalism in March of this year. In the “Ownership” section of that report, the authors note that there is growing concern in the journalism community “that the publicly traded corporation may not be positioned to address the problems of journalism to the satisfaction of society.”

That statement seems more accurate with every announcement of a new round of layoffs in the nation’s newsrooms.

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--
Jeff Nygaard
National Writers Union
Twin Cities Local #13 UAW
Nygaard Notes
http://www.nygaardnotes.org

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OWNERS STARVE NEWSPAPERS, SPEND BIG BUCKS ON BASEBALL TEAM

JON FRIEDMAN, MARKET WATCH - Tribune Co. looks like a real turkey at 
Thanksgiving. With its newspaper operations in distress and its 
corporate image in tatters, the company is spending hundreds of millions 
of dollars to shore up its baseball team, the Chicago Cubs. Tribune owns 
the Chicago Tribune and the Los Angeles Times, two venerable newspapers 
that are in disarray because the parent company can't seem to generate 
big enough profits to satisfy its investors on Wall Street. Life at the 
L.A. Times is so chaotic that the paper's editor and publisher both quit 
recently, rather than submit to Tribune Co.'s seemingly endless 
cost-cutting. 

Then we have the woeful Cubbies. In parallel with the newspaper 
franchises, the Cubs also recently replaced their leader, Manager Dusty 
Baker. The team limped to a 66-96 record this year, finishing last in 
the National League. Your newspaper operations are a mess and your 
baseball team is a disaster. So, what do you do? Why, invest heavily in 
the baseball team, of course. On Monday, Tribune confirmed that it would 
pay free-agent slugger Alfonso Soriano $136 million over eight years. 
It's spending more than $200 million total on many players this 
off-season, as well as hiring a new manager, veteran Lou Piniella. . . 
As ESPN.com has pointed out, Soriano would get the fifth-largest pay 
package ever given to a major league player. . . 

Look, I hope Soriano helps lead the Cubs to a National League pennant, I 
hope the Tribune and the L.A. Times cover the hell out of the story, 
too. Maybe the parent company would even give World Series tickets to 
the employees! . . . 

I understand that the entertainment business is all about spending money 
on talented performers. The players and their agents exhibit virtually 
no loyalty and the highest bidder usually comes out on top. Still, it 
smells bad when Tribune claims it has to lay off journalists while it 
can lavish millions on baseball players. 

http://www.marketwatch.com/news/story/thanksgiving-tribune-co-looks-turkey/
story.aspx?guid=%7B7833D043%2D5F9F%2D4335%2D9430%2D8FBB314BB8F5%7D&siteId=

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