Veteran journalist Ken Reich, a 39-year employee of the Los Angeles Times, died in his sleep last night. He posted his final entry on Take Back the Times just hours before he died. Reich retired from the Times four years ago and almost immediately began blogging. His blog was notable for its fine writing, its insight into the inner workings of the paper and its withering criticism of Tribune Co. management. Reich was a friend to executives and pressmen alike and his voice of loyal opposition will be missed.

His daughter, Kathy, is asking visitors to Take Back the Times to share their memories and condolences.

(photo by FullDisclosure.net)

Tribune Co. CEO Sam Zell was interviewed on CNBC’s Squawk Box show last Friday morning and took the opportunity to reinforce his position as a change agent. “Because newspapers have historically been monopolies, I think they’ve been insulated from reality,” he said. Actually, newspapers have historically been competitive, but no so much for the last 30 years or so. Zell also made it clear that business sucks far more than he expected. “Are you talking about the people who buy ads? I’m trying to find one of them,” he says in only partial jest. Romenesko has a transcript.

The Washington Post quotes bond analysts saying Tribune Co. will be able to meet its debt obligations through mid-2009, but that’s when things might get ugly. A big bond payment is due at about that time and no asset in the portfolio is going to raise enough money to make that nut. The story also has a rundown of recent cost-cutting efforts at Tribune Co., all of which have been documented here.

Add Tell Zell to your RSS reader because this blog is not only snarky but fun. It’s got a new tool called the Hackinator that enables users to compose letters of resignation to various Tribune Co. managers using an assortment of menu-driven insults. Tell Zell is also publicizing an Orlando Sentinel staffer’s call for a company-wide sickout by Tribune Co. employees on July 9. As of Monday morning, sentiment was running 70% in favor. But will they actually follow through?

Miscellany

From across the pond, the Guardian sums up the wretched state of the US newspaper industry. While there’s no news here you haven’t read in NDW before, the quotes from screenwriter David Simon are interesting. He compares newspapers to the Napster-era music industry and says what’s needed is an iTunes for newspapers. The piece also hints at a theory we floated last week: Rupert Murdoch may be the big winner in all this.

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Mark Potts was busy on Friday, posting a 10-point manifesto for fixing major metro dailies. While not everything in the blog entry is new (we know it’s all about going local), advice like “zero-base the news operation” and “lose the editorial page” are compelling. The latter idea really stuck with us. The editorial page is a vestige of bygone days when institutional voices ruled the land. Today, it’s all about community, yet all major metro dailies march on with this outdated and increasingly irrelevant daily opinion. Potts closes with the sad observation that the greatest innovation in newspapers of the last decade has been Sudoku. For which we are profoundly grateful.

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A day earlier, Potts rounded up the week’s carnage and figured about 900 jobs were eliminated during the week on top of the 1,400 cut by McClatchy the week before. He quotes Simon Dumenco writing in Advertising Age that reading Romenesko these days is like “reading the obits.”

Layoff Log

The Bay Area News Group, which operates eight regional papers in the San Francisco area, will lay off 13% of its workforce. The actual number wasn’t announced. The company will also lay off 29 out of 226 employees in a newsroom that voted for unionize early this month. A 17% decline in first-half business was cited. One of its member papers, the Palo Alto Daily News, will also eliminate its Monday edition.

The Albany Newspaper Guild says 14 people took buyouts, but it doesn’t say where. We’re not aware of any cost-cutting going on at the Times-Union, which actually recently announced expanion plans. Let us know if you can shed light on this announcement.

And Finally…

In Romania, they apparently like things simple. So the Romanian Senate just passed a law requiring the media to provide a 50-50 balance of positive and negative news. Fortunately, the government council designated to arbitrate the rule quickly denounced the law as ludicrous.

Tribune Co. CEO Sam Zell must be relieved to be back on familiar territory in the real estate business. He’s just put the neo-Gothic Tribune Tower up for sale as well as Los Angeles Times property in historic Times Mirror Square. Technically, Zell says he’s only seeking ways to maximize the value of the properties, but it’s hard to imagine that his options would include making the investment required to redevelop the buildings for the long term. He’s putting them up for sale and potentially buying another year of life for his highly leveraged company. The Wall Street Journal quotes sources estimating the two properties could fetch $385 million.

So the man who said he was going to shake up the Tribune by challenging conventional thinking and breaking the mold is now going back to what he knows best: selling real estate. That kind of vision has got to inspire the troops, especially in the wake of major layoffs at two Tribune papers this week. Edward Padgett has Zell’s memo to employees urging them to keep their eye on the ball and not speculate about what’s up with the property sales.

Assume that more layoffs are on the way shortly. Edward Padgett has the text of a memo from Los Angeles Times Publisher David Hiller to his staff setting the stage for major cost cuts. We can assume there won’t be a lot of joy around the barbeque at LAT employee picnics this weekend.

The Atlantic has a Q&A with Tribune Chief Innovation Officer Lee Abrams in which he doesn’t come off sounding nearly as goofy as his memos make him out to be. Still, his comments are short on the kind of breakthrough insight that the Tribune probably needs right now.

In Other Layoff News…

• Gannett Co. is looking to cut 150 employees from the Detroit Free Press and the rival Detroit News. That’s about 7.5% of the total workforce, according to Gannett Blog. Management is hoping to make the cuts through buyouts rather than layoffs, but hasn’t ruled out the latter. Detroit is a joint operating agreement town, meaning that the two competing papers belong to the same corporate parent. That’s how bad the advertising climate is. (via Fading to Black)
• We noted yesterday that when the new round of layoffs at the Hartford Courant are complete, the news staff will have been reduced from 400 to 175, or 55%. That’s not the worst of it, though. Alan Mutter calculates following a small layoff just announced at the San Jose Mercury News, its staff will have been cut 63%. Commenters say that estimate might actually be on the low side.

The Future Takes Shape

Veteran journalists might scoff at the joint effort by MySpace and NBC to recruit citizen journalists to cover the upcoming political conventions, but we think it’s an innovative idea. Someone with a lot of talent but without a lot of connections is going to have the chance to gain a national audience for a few days this summer based solely on his or her creativity and hard work. And what the heck is wrong with that?

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Add the San Diego Union-Tribune to the growing list of newspapers that are republishing the best content submitted by users in print. The paper has launched a social network for residents of San Diego county. It’s got all the usual Facebook-like stuff, but editors will be monitoring the discussions and publishing good material in the company’s community weeklies.

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for information and some of the promise and challenge that presents. The NPR example is great.
Speaking of citizen journalism, the Guardian has been reporting on a conference about the future of journalism. Caitlin Fitzsimmons blogs a panel about how news organizations are tapping into crowds

Miscellany

Online Journalism blog has the first in a series of planned stories about semantic journalism. Nicolas Kayser-Bril kicks things off with a plain-English explanation of the semantic Web. Basically, if machines could do a better job of interpreting information, it would make all our lives a lot easier. And the Death Watch editor could catch another hour or two of sleep.

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We have intentionally avoided commenting on the pissing match between the Associated Press and a group of self-righteous bloggers over fair use of AP copy. We tend to side with the bloggers, but we think the AP also has a point. If you’re late to the party or haven’t been following it closely, Editors Weblog has done the legwork for you. This timeline of the dispute is full of links to relevant detail and covers the big issues succinctly.

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Alan Mutter has created the Default-O-Matic, a tool that rates the likelihood that various large newspaper companies will default on their debt. Journal Register Co., whose stock is almost literally not worth the paper it’s printed on, leads the funeral procession, while Washington Post Co. is the healthiest overall. Read this post if you want a quick tutorial on what “default” means. It’s more involved than we thought.

And Finally

LA Times Pressman Edward Padgett shares this gem: “A recent study conducted by Harvard University found that the average American walks about 900 miles a year. Another study by the American Medical Association found that Americans drink, on average, 22 gallons of alcohol per year. This means, on average, Americans get about 41 miles to the gallon!” Have a nice weekend everyone.

The Baltimore Sun Media Group announced this morning that it will lay off 100 people out of its 1,400-person staff, with a disproportionate percentage of the cuts coming from the newsroom. The unit, which owns the Baltimore Sun and several community newspapers, told the Newspaper Guild that 55 to 60 jobs would be cut on the Sun’s editorial staff, or about 20% of total newsroom employment. The paper will offer buyouts through July 18 and then use layoffs to meet its total job reduction goal.

The Hartfort Courant will cut 57 newsroom jobs, or nearly a quarter of its total editorial staff, along with a corresponding reduction in news pages. At its peak in 1994, the Courant employed 400 journalists. With the most recent cuts, that number falls to 175.

The focus on the editorial department is interesting in light of recent criticism by Tribune Co. executives of journalist productivity. CEO Sam Zell and COO Randy Michaels made it clear in a call with investors early this month that writers and editors would increasingly be measured by the quantity of their output. They said that most papers in the Tribune portfolio would lose pages and staff in the coming months and outlined plans for a series of redesigns that kicked off with a new look for the Orlando Sentinel this week.

Tribune Co. stands alone in its focus on cutting editorial staff. Most publishers have tried to limit newsroom layoffs out of concern about harming the quality of the product. Tribune Co. executives appear to have no such reservations. Zell and Co. are making a big bet that cuts in quality won’t significantly damage circulation, which is the key to advertising revenue. In a quote on Courant.com, Journalism Professor Rich Hanley of Quinnipiac University said of the shrinking Courant, “People could look at it and say, ‘This is nothing but a shopper on steroids.”

Here’s the memo from Sun Publisher Tim Ryan to employees:

The two key factors that will sustain our company for the future are customer satisfaction and financial stability. Achieving both goals is challenging in the very best of market conditions. In the face of today’s tough economy, adapting to consumer trends while maintaining our fiscal strength is proving to be even more difficult – yet even more critical.

Our long-term strategy of going on offense and creating growth opportunities will continue to get us closer to our goals. Already this year, we generated incremental Sun circulation gains, launched a new, free daily publication, b, which is the first of its kind in the market and, through our “explore” websites, delivered highly-localized news and information for the region’s consumers.

In spite of these early, significant wins, we struggled to achieve our performance goals. So, while we will stay on the offense, we are altering our game plan. In order to align ourselves more closely with our customers, we are retooling our business model, which will include enhancements to our newspaper. In August, 2008, The Sun redesign will debut, giving readers more of what they want – a more concise newspaper with more local news, personally relevant and useful content, consumer information, watchdog coverage, more graphics and better navigation.

By adjusting our business model and redesigning our core publication, we expect to stimulate readership growth and improve our financial performance. Regrettably, our new course also requires us to reduce our workforce by about 100 positions across BSMG. These actions are necessary for us to remain competitive and win in the future, and will enable us to create new targeted print and interactive media for the marketplace that satisfy both consumers and advertisers.

Transition Timeframe

The workforce reduction will include a combination of closing open positions, attrition, and voluntary and involuntary separation plans according to this timeline:

• Friday, June 27 – Voluntary separation packets will be available to all employees (availability to Guild-represented employees is being negotiated with the Guild). Volunteers will have two weeks, through Friday, July 11, to apply.
• Friday, July 11 – Thursday, July 17 – Volunteers will be notified whether their applications were accepted or not; decisions on involuntary separations will be made based upon voluntary results.
• Â Friday, July 18- Employees who are part of the involuntary separation plan will be notified. Voluntary and involuntary separations will occur in early August.

Human Resources, your leadership and plan documentation will provide further detail of plan terms, including compensation, savings/retirement funds and medical benefits. While Tribune does not have a formal severance policy, the formula that the company is using to determine benefits payable to employees affected by the current workforce reductions is more generous than any formula that the company may use after 2008.

Moving Forward

It is extremely difficult for all of us to lose colleagues and friends. However, while we cannot control the current economy, we can control what action we take to create a stronger future. We are, by far, Baltimore’s media leader, and through ongoing innovation to introduce new and exciting media for our marketplace, we will maintain our competitive position.

The leadership team and I will continue to keep you informed throughout this transition. Thank you for your patience, continuing contributions and commitment to our company

Tim

Another Boston Massacre is in the works, with the Herald and Globe both planning cost cuts. The Herald is taking the worst of the blows, announcing that it will lay off between 130 and 160 press operators, electricians and other production workers this summer and outsource its printing to presses in two towns, one of which is nearly 90 miles from its headquarters. The current presses are creaking with age and the paper has been exploring alternatives for some time, including possibly contracting with the rival Globe for printing (that didn’t happen).

Herald Publisher Patrick Purcell made a daring bid for expansion in 2001 with the purchase of the suburban newspaper chain Community Newspapers Co., but he sold the business five years later. The Herald is the perennial also-ran to the Globe in Boston and the loss of so many staffers is a major blow. The move to a printing press in faraway Chicopee also can’t help the paper’s ability to provide timely scores to the sports-crazed Boston fans. Neither of the accounts in the Herald or the Globe mentioned the size of the Herald’s total employee base.

The Globe’s news was less dire: it has asked the unions to agree to a 10% wage cut and is threatening to consolidate printing plans, a move that would strike the unionized workers hardest. The union is pissed, but there may be little they can do. The economic climate doesn’t leave them much negotiating room. The Globe has already been through two rounds of layoffs in the last three years.

Orange County Register Tests Offshoring

The Orange County Register will steal a page from the high tech and customer support industries and outsource some copy-editing to India on a trial basis. The one-month experiment is the first of its kind that we’re aware of, although some newspapers have reportedly toyed with covering routine local government meetings remotely in recent months. Officials at Orange County Register Communications made every effort to characterize the project as experimental and non-threatening to US-based employees, but that’s what tech executives said a decade ago when their industry was first considering offshore outsourcing. Forrester Research now estimates that 450,000 tech jobs a year will migrate overseas by 2012.

There’s no reason for the Register not to do this. Most educated Indians already speak English better than most educated Americans, and minor cultural nuances can be dealt with by domestic editors. What surprised us about this deal is that the Register limited it to one month. It will be impossible to assess success in that short a time, so our guess is that the Register either isn’t serious about the idea deal or that, more likely, its management is trying to minimize the negative public relations impact. In our opinion, it’s a bold approach that could quickly be imitated by many others.

Miscellany:

• When news leaked last week that the Orlando Sentinel was planning a major design overhaul as part of a campaign to change the look and feel of many of the papers in the Tribune Co. portfolio, the Death Watch suggested that readers would care less. Our skepticism has apparently been borne out, as Alan Mutter reports. Less than .05% of Sentinel readers voiced an opinion over the redesign. While eight people felt strongly enough to cancel their subscriptions, the 126 comments voiced in the first couple of days amount to a drop in the bucket. All told, the change is much ado about nothing.
• Palm Beach Newspapers Inc., owner of The Palm Beach Post, the Palm Beach Daily News, the Florida Pennysaver and La Palma, will cut 300 workers from its 1,350-person payroll. The company said it hopes to achieve the reductions through attrition and buyouts instead of layoffs. However, the likelihood of reducing staff by 22% through those means is low. “We are the last major Florida newspaper to implement staff reductions,” the publisher told the Post. However, the percentage of cuts is by far the largest of any nearby paper.
• The newspaper industry has always been able to take some consolation in the fact that (presumably older) C-level executives would continue to prefer newspapers to online alternatives. However, a new study by a Forbes and Gartner finds the opposite. The research determined that the percentage of senior executives who choose the Internet over newspapers as their primary source of business information has increased 37% in the last four years, while preference for newspapers and dropped by the same amount. Quoting from the Editor & Publisher account: “Before starting the work day, C-level executives prefer to access the Web rather than read the newspaper. The number of C-level executives who prefer the Internet first thing in the morning has increased 22% since 2004, while those who prefer to read the newspaper first thing in the morning has declined 11% over the same time period. C-level executives consume media on the Web more than any other medium.”
• Lost in the shuffle of McClatchy’s dramatic cost-cutting moves last week was the news that the Clovis Independent, a weekly serving the Fresno, CA region, would be closed after 103 years. Weeklies tend to rate little attention from big publishers or the media, but they are often tightly woven into the culture of their communities, especially after a century of operation.
• Danny Sanchez reminds us that newspapers are good for more than just reading. You can use them to remove odors from wet tennis shoes, for example. We never knew that!

Here’s the redesigned home page of the Orlando Sentinel. This will apparently serve as a model for redesigns of several other Tribune Co. properties. What do you think? Ping us in the comments area below.

Tribune Co.’s Chief Innovation Officer Lee Abrams has already weighed in and HE LOVES IT! The Wall Street Journal explains the background of the ambitious company-wide effort and says the South Florida Sun-Sentinel and the Baltimore Sun are next on the redesign list, followed by the Chicago Tribune. Whether a visual makeover can repair the problems all these papers are suffering in their core markets is a matter of speculation, but there’s no doubt Zell & Co. are trying some new tactics.

A Modest Proposal for Miami

Could Miami become a one-newspaper town? Alan Mutter thinks so, and he puts forth a persuasive argument for restructuring the Herald and the Sun-Sentinel under a joint operating agreement (JOA). JOAs were a 1970s gift from the government to the newspaper industry that enabled competing newspapers to consolidate operations and do business as a legal duopoly. For the last 30 years, it’s been a license to print money. Today, it may be a lifeline to publishers whose only alternative is closure. Unfortunately, JOAs have also historically been a license for publishers to become fat and complacent as competition is removed from the landscape. They’re one of the reasons the industry is in so much trouble today.

Editors Debate Newspaper Survival

A group of Chicago journalists got together last week to discuss the topic of “Will Newspapers Survive?” The panelists were all working reporters and editors who are realistic about the future and their attitudes were strikingly sanguine, as reported by Chicago Reader. Tom McNamee, editorial page editor of the Chicago Sun-Times, offered the most dispassionate perspective: “We may not all be making fortunes. Our 30 percent profit days are over. We may not survive. But you know what — that’s our problem. Not to say that the world’s in crisis because newspapers may not survive in the form that we recognize now.” Other panelists blamed the business side for not innovating quickly enough. The editors are psyched to change, they said, but the sales and management suits are too stuck on their historic profit margins. (via Editors Weblog )

Miscellany

• Washington Post Executive Editor Leonard Downier, who led the newsroom to 25 Pulitzer Prizes, will step down after 17 years in the position and 44 years with the newspaper. Downie, 66, said new blood is needed to accommodate rapid changes in the business. “So much further change now needs to take place at the newspaper and Web site, and someone else should be tackling that,” he said. He is a true class act.
• The Georgetown (Kentucky) News-Graphic will switch from afternoon to morning delivery, saying that the cost benefits are compelling in this day of stratospheric gas prices. Publisher Mike Scogin notes “In the outer parts of the county…carriers sometimes travel several miles to deliver just a couple of newspapers.” (via Fade to Black )
• As the Daytona Beach News-Journal waits to be sold, its publisher talks straight to the staff. Gone are 99 positions and a whole slew of tasks are being transferred to other departments or outsourced entirely. Bureaus will close, stock tables will be cut and business sections will be consolidated. It all adds up to one big morale hemorrhage, but the News-Journal publisher’s message is realistic: “Despite the unavoidable disruptions and distractions this week, we still have jobs to do, and it is in everybody’s best interest that we do them professionally and well.”
• If your newspaper is considering a 10% staff cut, be glad you aren’t in Taiwan. The China Times will lay off almost half its staff due to the weak economy.
• It seems like you could spend all day just reading gossip and analysis blog (like this one) about the newspaper industry. Danny Sanchez has gone and assembled a pretty fine directory of them.

And Finally…

The editors of the Washington Post have recently been quoted as saying that the paper could do with fewer copy editors. The Post’s Gene Weingarten has some fun with that idea. Thanks for reminding us that the wizards of grammar and spelling do play a vital role. (via Mark Hamilton)

Could Rupert Murdoch save the US newspaper industry? He may have his chance sooner than anyone imagined because things are worse than anyone predicted

The New York Times sums up the industry’s recent gruesome financial news and speculates that continued losses are “raising serious questions about the survival of some papers and the solvency of their parent companies.” Richard Perez-Pena’s piece says that 14% revenue declines in May against already weak 2007 numbers were worse than anyone expected and no one knows where the bottom is. While analysts agree that the bleeding has to stop sometime, they have no idea how bad things will get before that time arrives. With debt defaults looming, the most likely scenario is that weak players will consolidate with stronger ones.

If consolidation is the trend, then who will be the consolidators? Looking at the current sorry lineup of candidates, News Corp. looks like the only logical winner. If Rupert Murdoch plays his cards right, he could end up sitting on top of a much bigger empire than anyone envisioned when he made his daring bid for The Wall Street Journal less than a year ago.

Murdoch and his COO, Peter Chernin, were at the Cannes International Advertising Festival last week and were asked about the industry downturn. “We are going to plough right ahead and hopefully increase our share of the market wherever we can,” Murdoch said. Chernin added that it was “time to take market share if weaker competitors go away.”

That time may be soon. There is widespread anticipation that either Tribune Co., McClatchy and/or Philadelphia Media Holdings will default on loan covenants this year, which would immediately put them in play. Journal Register and Sun-Times Media Group are on life support. These companies collectively represent scores of US newspapers that could conceivably be bought for pennies on the dollar within the next year.

And who better to buy them that News Corp.? The company has a diversified media business with strength in its Fox television holdings and MySpace social network. Murdoch is confounding his critics by messing with the inviolate Wall Street Journal editorial model and actually gaining market share against The New York Times, which must be freaking out right now. Sure, Murodch walked away from the bidding for Newsday, but perhaps he’s simply waiting for a much bigger opportunity: the chance to own a publishing empire that includes Chicago, Los Angeles and much of the southeastern US. With Tribune and McClatchy, he’d have that. For a few dollars more, he could add Journal Register’s extensive midwesern holdings and the Philadelphia Inquirer.

With that kind of throw weight, Murdoch could do some interesting things to leverage economies of scale. And those properties could do a lot worse than to have Rupert as the boss. When you consider the alternative scenarios of bankers or professional investors taking over businesses they know nothing about, then the prospect of ownership by a savvy and successful media tycoon looks pretty palatable. As controversial as Murdoch’s tactics sometimes are, the man has a remarkable track record and a vision for the future of media. He is also one of the few publishers in the world who is investing in newspapers right now. Over the next 12 months, Murdoch could have an unprecedented opportunity to turn his vision into action on a much larger scale.

What do you think? Please weigh in with your comments.

Continuing fallout from McClatchy’s 1,400-person layoff last week: PaidContent.org’s Joseph Weisenthal remarks on all the attention to CEO Gary Pruitt’s pay, noting that you have to offer a competitive salary to get a good executive these days. He’s right. Tempers also flared at the Raleigh News & Observer over an executive’s decision to stay at a $210-per-night hotel on a recent visit to the paper just before the layoffs. The Raleigh Chronicle has the dirt, including links to executive blog postings on the topic. The Chronicle also claims that, in blaming the Internet for the company’s fortunates, McClatchy execs failed to note the impact of a strong alternative publishing market on the N&O’s business. Editor & Publisher’s Mark Fitzgerald analyzes McClatchy’s $4 billion debt, which seemed worth taking on at the time but which, in retrospect, was horribly timed. Still, McClatchy may be better positioned than most publishers to survive the industry’s collapse, he concludes. Analysts say it’s one of the better managed companies in the business.

Meanwhile, McClatchy editors and columnists weighed in on what comes next. Dave Zeeck at the Tacoma News quotes Mark Twain reasoning that there’ll always be jobs for reporters. Sacramento Bee Editor Melanie Sill is defiant. She points out all the good work the paper is still doing and says the loss of seven editors will just force everyone to be a little more innovative. Meanwhile, Miami Herald ombudsman Edward Schumacher-Matos takes the novel approach of asking readers to tell him what choices they think the paper should make. And Bob Ray Sanders of the Fort Worth Star Telegram compares the whole thing to a funeral in a dour, backward-looking essay.

And in Non-McClatchy News…

Add Hearst Corp. to the list of publishers struggling with the shifting winds of the industry. The publisher of 15 dailies and more than 200 magazines lost its CEO of 15 years last week over an apparent policy dispute with the board. Hearst has managed to make some smart bets online over the last decade, buying it a degree of insulation from the industry’s troubles, but with its San Francisco Chronicle serving as the poster child for newspaper collapse, it perhaps can’t change strategy quickly enough. Poynter’s Rick Edmonds speculates about what’s been going on in the Hearst board room and remarks upon Hearst’s unusual management trust, which expires upon the death of the last family member who was living at the time of William Randolph’s death in 1951.

By the way, where’s Belo Corp. in all the recent layoff activity? Jeff Siegel notes that last week’s bloodbath at the Fort Worth Star-Telegram should be putting pressure on the Dallas Morning News to cut back, but owner Belo has been strangely silent. So the stock market is speaking, knocking Belo shares about 6% lower last week. If the Star-Telegram can cut a sixth of its editorial staff with impunity, can the Morning News afford not to notice?

Forecasts of the impending death of the Sun-Times Media Group are greatly exaggerated, at least according to company executives. The struggling company, which has been saddled by the misdeeds of former executives, has $120 million in the bank and is ready for the worst, top managers told shareholders last week. In fact, CEO Cyrus Freidheim actually believes newspapers will rebound when the economy does in a year or two. His optimism is striking in light of the company’s recent announcement that it is “exploring strategic alternatives,” which is a euphemism for finding a buyer.

Tribune Exec’s Memos Invite Staff Derision

When chief scientists from Google speak, the technology media hang on their every word. Contrast that to Tribune Co., whose executives increasingly look like the village idiots of the newspaper world. The company’s chief innovation officer, Lee Abrams, is fond of sending memos about how the industry can reinvent itself. They’re a rambling brain dump from someone whose lack of insight is almost painful to read. Now parodies are springing up, and P.J. Gladnick excerpts a few from the Poynter discussion forums. Read one of Abrams’ original works on LA Observed before looking at the knock-offs. This is some great satirical writing which is unfortunately being shared amongst only a few insiders. Steve Outing comments that Abrams probably disenfranchised his audience at the outset by admitting that he had “NO idea that reporters were around the globe reporting the news.” Outing titles his blog post bluntly: “Are we watching a Tribune train wreck in progress?”

Layoff Log

• The Eugene Register-Guard will cut its work force by 30 employees, or 12 percent of its 260-person full-time workforce. The paper will try to achieve the reductions through a combination of buyouts and unfilled vacancies, although the publisher wouldn’t rule out layoffs.
• The Cleveland Plain Dealer isn’t laying off – yet. Although two news outlets have reported that dozens of jobs have been cut, Publisher Terrance Egger issued a denial, saying the reports are “100% not accurate.” However, the debate may be a matter of semantics. “Given the current economic conditions and trends, we cannot maintain the current expense base and stay viable,” Egger told Editor & Publisher. A local alternative reporter wrote on his blog last week that executives have told staff that they plan “to cut 35 pages a week from its news pages and 20 percent of its workforce.” The paper employs 304 newsroom staffers.

Miscellany

Miami Herald columnist Leonard Pitts shows why the people who run newspapers now are not the ones who will reinvent the industry. In a column that is striking in its lack of insight into the troubles facing his own industry, Pitts announces that he’s changed his thinking and now believes that maybe online should come first, that newspaper websites should be the principal online destination for local residents and that people should pay for that service. This was conventional industry wisdom circa 2001. Then Pitts notes that he’s come to this view reluctantly and mainly because he’s afraid of losing his job. Unfortunately, folks like Leonard will lose their jobs anyway because they’re being dragged kicking and screaming into the future. Cynical attempts at defining a solution only make them look more clueless. And solutions like those he proposes are what got the industry in trouble in the first place.

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One of the week’s more convoluted exercises in deductive reasoning comes from the Mercury News‘ Dale Bryant. In an unusual inversion of the rules of supply and demand, she blames the surging price of newsprint on the lack of demand: “With less construction, there is less wood waste that would have found its way to pulp mills and eventually to newsprint. In response to rising costs, newspapers have cut back on the use of newsprint, trimming the size of papers as well as turning to the Internet. That has caused prices to go even higher,” she writes. The result is that the Merc is cutting back on some of its print sections, but that’s actually in the readers’ interests. “[T]he choices we’ve made are based on our belief that what’s most important to our readers is that we continue providing news about your local community,” Bryant concludes, bringing new meaning to the concept of “less is more.”

Perhaps hoping that no one would notice bad news if it was released on a post-Memorial Day Friday afternoon, the Newspaper Association of America quietly reported that advertising sales by US newspapers fell a record 14% in the first quarter, with real estate and recruitment ads both shrinking 35%. The results are worse than even the most pessimistic skeptics predicted and may indicate that the industry has entered an irreversible death spiral.

BusinessWeek’s Jon Fine thinks the unthinkable: one or more major metro dailies will go under within the next 18 months. It isn’t such an outrageous idea. Rising newsprint and gasoline prices are layering more burdens on top of an already troubled industry that distributes its product by truck. Some publishers have seriously floated the idea of cutting out unprofitable Monday and Tuesday editions. MediaNews CEO Dean Singleton recently estimated that 19 of the top 50 US newspapers are losing money.

If more than a third of top US titles are losing money, then the spiral has probably begun. The only way to stop it is to cut deeply and painfully, with staff cuts of 40% or more and a primary focus on online delivery.

However, that’s not likely to happen. Businesses in trouble rarely have the stomach or the investor support for substantive change. Instead, they do what all of them are doing today: cut 5% to 10% here and there until they slowly bleed to death. I outlined this scenario in my 2006 essay on the collapse of newspapers and the reinvention of journalism:

Newspapers will be forced to lay off staff in order to maintain margins. Cuts in services will lead to cuts in editorial coverage, making papers less relevant to subscribers. As circulation declines, advertising rates will have to come down to remain competitive. This will put more pressure on margins, leading to more layoffs, more cost cuts, more circulation declines and more pressure on margins. Once this spiral begins, it will accelerate with breathtaking speed.

If you look at Alan Mutter’s analysis of the McClatchy layoffs, you can see how this scenario could play out. In Mutter’s view, the cuts won’t even cover a quarter of McClatchy’s revenue shortfall. That means more cuts will have to be made, further hobbling the capacity for its papers to produce a quality product. Reader attrition continues. And so on and so on.

Each of these trends is playing out right now, only a lot faster than I predicted. The longer publishers fiddle with hiring freezes and redesigns, the longer they put off the tough decisions that could still save some of them. Unfortunately, for the majority of US newspapers, it’s already too late.

Big Changes in Store at the LA Times?

Speculation has swirled for a few weeks that Los Angeles Times Publisher David Hiller won’t last the summer, but now the rumors are getting louder. After losing out in an attempt to undermine his own editor last week, Hiller now looks vulnerable, and there are reports that he could be gone as early as July. The changes could also be accompanied by deep cuts in the LA Times editorial staff. We’ve heard up to 19% of the newsroom could be let go, though no decision has been made yet. The LA Times was one of the papers recently singled out by Tribune Co. CEO Sam Zell and COO Randy Michaels for poor journalist productivity.

And Finally…

CNN reports on a Yahoo employee who Twittered his layoff in February and gained an eager following. Ryan Kuder recently took a job from the hundreds of leads contributed by his Twitter followers . His story was covered on prominent blogs and has now jumped to mainstream media. All of which shows how one person can make a difference these days.