About the only positive note in McClatchy Co.’s announcement that it will cut another 1,150 jobs is that the year-over-year decline in August revenues was a little better than in July. Other than that, what can you say? The stock, which closed at 60 as recently as early 2006, spiked briefly below $3 a share yesterday before recovering to close at $3.40. This is the third round of cost reductions this year by McClatchy, which operates 30 daily papers in the US. In June, it announced plans to cut its workforce by 1,400 people and on Sept. 1, it froze wages for a year. When the new cuts are completed, McClatchy will have reduced its workforce by about 16% this year. The company also cut its dividend for the first time in 20 years, saying that money would be better used to pay down its $2 billion debt.

There was a bit of good news. August revenue fell 15.7 percent from a year earlier to $142.8 million, and ad  sales were down 17.8 percent. This was a bit of an improvement over July, when revenue fell 16.4 percent. Online ad revenue was also up 7.4%, bucking an alarming recent trend toward declines in that critical area for many newspaper companies.

Troubles at a newspaper parent are felt most strongly at the local level. The Sacramento Bee expects to avoid being hit by this latest round of layoffs, but it is eliminating nine regional sections and scaling back newsstand sales. The Bee has already cut 219 employees, or nearly 10% of its workforce, this year.

Another company that’s struggling to survive, Cox Newspapers, said it will sell 29 newspapers, including the Austin American-Statesman. The Austin paper is one of the jewels in the Cox crown, showing consistent profitability and strong online growth. The paper has pared headcount judiciously and has expanded into contract printing and direct mail. Hearst Corp. and private equity firm Austin Ventures.

The piece in the American-Statesman has some interesting tidbits. According to media analyst John Morton, publicly traded newspapers made a pre-tax average of 22 cents for every dollar of sales in 2003. In comparison, Dell Computer  made about 5 cents on the dollar in its most recent quarter. Morton also said a rule of thumb for valuing a newspaper is $2,000 multiplied by the average daily circulation over a week. However, that ratio is probably much lower in the current economic climate. He added that five years ago, a newspaper typically sold at 12 or 13 times its pre-tax earnings, but that ratio is in the 5- to 7-times-earnings range today. 

The news was not as good at Gannett Co., which reported that ad revenues in  its publishing division were down  16.8% in August compared to last year. Repeating a familiar refrain, Gannett blamed the declines on a sharp drop in classified advertising revenue, which was down 28%. Real-estate advertising was off a mind-bending 40%, a figure that isn’t likely to improve amid the ongoing meltdown in the mortgage industry.

WSJ Evolves its Design

With online subscribership up 26% over the past two years and a growing base of visitors from social networks, The Wall Street Journal overhauled its website design this week. The most notable change is a departure from the print-like look of previous versions. The new site is horizontal, rather than vertical, and adopts the three-column structure used by USA Today and The Washington Post. One notable change is that all stories are now open to reader comments, a feature that was previously available only on blog entries. Each story now includes tabs for comments and multimedia elements, such as slide shows and video. There’s also a social network called Journal Community that mimics similar efforts by BusinessWeek and Fast Company.

Wired  likes the new look, but notes that the Journal still hasn’t bitten the bullet on giving away content for free. It quotes an exec saying that the newspaper is gradually ratcheting open its paid content wall to new readers. It adds that subscriber-only articles have always been readable through a back door for free by searching on Google News. Firewalled articles are also accessible through a new BlackBerry application and links from social networks.

The New York Times notes that the redesigned site has more advertising units and sponsored sections. It’s more colorfull, features photography more prominently and has a moving newsreel with headlines and photos linking to related content.

We like it. In ditching its old design, the Journal has fallen into step with the look and feel of other news sites, which makes for easier navigation. The comments feature is a lso a nice touch. With all national newspapers now acceptin g user feedback, it’s wonder all newspapers don’t adopt this openness.

Layoff Log

• The Wichita Eagle laid off six employees and accepted voluntary buyouts from 16 others. That amounts to 6% of its employees. The paper offered voluntary buyouts to all full-time staff in August.
• Phoenix Newspapers, which publishes The Arizona Republic,  announced 37 involuntary layoffs spread across several departments. That’s on top of  56 people who recently left in a buyout deal.

The Sacramento and Fresno Bee newspapers offered buyouts to employees and held out the possibility of layoffs if unspecified cost-reduction goals aren’t met. Sacramento’s buyout offer covers 55 percent of its full-time employees and a smaller number of part-timers, including most editorial employees. The Fresno Bee‘s offer is open to most of its full-time workers. The publisher called the current situation, “some of the worst economic times we’ve faced.” Both papers cut staff just two months ago.

The Gainesville Sun and Ocala Star-Banner will merge news operations, with the editor of the Sun running the show. News, copy desk, design, layout and pagination for both papers will move to Gainesville. Executives at both papers stressed their intent to remain committed to their local communities. However, they also said jobs will be cut at each newspaper, although specifics haven’t been determined. (via Romenesko).

Management and union executives are cooperating in Philadelphia as the owners of the Philadelphia Inquirer and Daily News seeks to cut staff amid a growing financial crisis. Responding to union concerns, the owners are targeting newsroom managers for cuts instead of unionized reporters. No numbers were specified. Standard & Poor’s recently reported, that owner Philadelphia Media Holdings (PMH) was trading at less than 50 cents on the dollar, meaning that the risk of bankruptcy is high. PMH missed a key interest payment in June, forcing it into a forbearance agreement with its creditors that lasts through September 10th.

Miscellany

GateHouse Media Inc. and American Community Newspapers (ACN) could become the third and fourth newspaper companies to be delisted from a major stock exchange this year.  ACN disclosed on Friday that it has been warned that it may be delisted from the American Stock Exchange for failing to file a 10-Q report. ACN publishes more than 100 community papers and shoppers. The company has until Sept. 4 to file a report telling how it will come into compliance. GateHouse has been notified by the New York Stock Exchange that it could be delisted if it doesn’t get its stock price over $1 a share (it’s at 60 cents now) and maintain a market capitalization above $75 million.

Yahoo Japan is experimenting with user-generated editorial content. The Japanese Yahoo News page now features large amounts of material suggested and edited by readers. It’s a variation on Wikipedia and Google’s Knol, which are two experiments in community journalism. Unlike those two examples, though, Yahoo requires user editors to apply and take a test before they can contribute. (via Editors Weblog)

The Editor of the McDowell (N.C.) News remembers fondly the days when a good monkey story merited a trip to Tokyo and a phalanx of support staff. Now all people want to read about is presidential candidates and their love children. Sheesh.

And Finally…

Editors at the annoyingly elitist Wine Spectator must be red-faced after their magazine bestowed a coveted Award of Excellence on a non-existent restaurant named Osteria L’Intrepido. The prank was dreamed up by Robin Goldstein, author of The Wine Trials, as part of a research project. Goldstein concocted a website featuring a menu assembled from recipes found in an Italian cookbook and submitted it as an entry in the magazine’s contest, along with a $250 entry fee. To twist the knife a little, he put together a reserve wine list “largely chosen from among some of the lowest-scoring Italian wines in Wine Spectator over the past few decades.” His blog entry lists some of the reviews Wine Spectator published of his choices:

“Sweet and cloying. Smells like bug spray.”

“Smells barnyardy and tastes decayed.”

“Turpentine. Medium-bodied, with hard, acidic character.”

These reviews apparently missed the fact-checkers at the magazine, which awarded it a top honor anyway. We suppose $250 will buy you a lot these days.

The ax has fallen at Sam Zell’s hometown Chicago Tribune, although not as hard as it did at sister papers in Los Angeles, Baltimore and Hartford. The Trib will cut 80 of its 578 newsroom positions – that’s about 14% – but less than 60 people are actually expected to lose their jobs because some vacancies won’t be filled. The news hole will also shrink by up to 14%, which is in line with the cuts Tribune Co. is making elsewhere.

The story on chicagotribune.com also notes that Tribune Co. sold its stake in Shoplocal.com to Gannett for $22 million.  That values the 141st most popular site on the Web at about $50 million.  The expected sale of the Chicago Cubs and Wrigley Field should cover Tribune’s 2009 debt obligation, but after that, things get dicey.

Alan Mutter looks at the market for newspaper properties and finds it to be a wasteland.   Playing off of News Corp.’s abandoned plans to sell its Ottaway line of small newspapers and other frustrations at Landmark Communications and Sun-Times Media Group, he concludes that there simply aren’t any buyers at the moment. With so many publishers teetering on the brink of bankruptcy, there’s a possibility that scores of newspapers could hit the market within the next year selling for pennies on the dollar. It’ll be a buying opportunity for somebody, but the most likely buyers are frozen right now, either because they have debt issues of their own or they don’t know where the bottom is.

For highly leveraged giants like Tribune, this is a particularly worrisome trend. Zell got good money for Newsday, but there isn’t a Cablevision lurking in every market looking to buy up the hometown daily. It’s unlikely that anyone is going to want to do a big deal until revenues stabilize. This is a race against time. If the market bottoms out by the middle of next year, Zell can start selling off titles like the LA Times and Baltimore Sun to keep the company afloat. If the market is still in free-fall, it’s unlikely he’ll find anyone willing to put up the cash that Tribune needs to service its debt.

This is particularly tragic for the 21,000 employees of Tribune Co., since they own the company. If Tribune defaults and debtors step in to sell off assets, the actual value of the company will be set by the market. There’s no way to tell what the value will be, but the hard reality at the moment is that thousands of retirement plans are tied up in assets that, for the moment at least, no one seems to want to buy.

More on Editorial Outsourcing

Yesterday we noted a piece in the Hindustan Times about the emergence of a fledgling editorial outsourcing business in India. Now BusinessWeek has done a deeper dive on the issue, sending reporters to visit the modestly titled Mindworks Global Media near New Delhi, where 90 employees are doing jobs once done in U.S. newsrooms. The story notes that Mindworks stumbled into this line of business by accident. It began as a custom publisher for local companies, but then got an assignment to write a story for a British airline magazine. The editors found they could report the story from 6,000 miles away. That gave them the idea to take the operation global and a new business was born.

BusinessWeek reports that venture capital firm Helion Venture Partners  has pumped a staggering $350 million into Mindworks. Yes, you read that right – $350 million. The story quotes Helion’s managing director as saying media outsourcing could be a $2 billion industry. Mindworks is planning to grow from 100 to 1,500 employees over the next two years.

You can be certain that this will be a major growth business for India and an equally large source of angst for US journalists and publishers.  Forner newspaper editor David Stancliff kicks it off in this opinion piece in the Eureka Reporter, which reads like something steelworkers were saying in the early 1970s.

The migration of jobs offshore will happen if it makes economic sense. Patriotism, loyalty and tradition have nothing to do with it. Sadly, that’s a fact. Journalists need to look at the value they provide, determine whether their job can be done more cheaply by somebody else and adjust their skills accordingly. An industry that’s flush with cash can afford luxuries like loyalty, but in the do-or-die environment like most publishers face today, those options aren’t available. (via Romenesko)

Miscellany

The Charlottesville Daily Progress buries the lead in announcing that it will lay off its entire pressroom and move printing operations to neighboring Richmond. Its headlines the story “Daily Progress moves printing to Richmond facility” and mentions in the second paragraph that the move “affects 25 employees whose positions were eliminated.” Can you spell “layoff.” Apparently not at the Daily Progress.

The Washington Post has named ousted Wall Street Journal editor Marcus Brauchli executive editor. That’s a cultural shift for the Post, which has a tradition of promoting internally. Brauchli called the assignment “possibly the most challenging thing I have ever done.”

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.

Media General expanded its cost-cutting initiative, announcing plans to lay off 500 employees by July on top of the 250 laid off last year. The reduction amounts to 11% of the company’s 6,900-person workforce, an unusually deep cut even in these troubled times. Media General has been hammered by its exposure to weak Florida and California markets, where real estate advertising has shriveled and the recession is being felt more deeply than in other parts of the country. Most of the job cuts will come in the publishing division. Media General also owns 22 broadcast stations. The company will add 60 jobs in interactive media.

StopBigMedia.com smells a rat. The advocacy blog notes that Media General was one of the biggest beneficiaries of the FCC’s decision to lift its 30-year-old ban on media cross-ownership. The layoffs are thus hitting geographies where readers already have little choice in media, meaning that Media General will simply hack away at quality in the name of profitability, the blogger alleges. It appears, though, that the FCC’s decision will be reversed by Congress.

The Beaver County Times of Pennsylvania is shutting down its printing operation and consolidating production with the New Castle News. The move was necessitated by th deteriorating condition of the Times’ 44-year-old press, the publisher said. The paper will cut 16 full-time and 80 part-time positions. The News plans to hire six full-timers to handle the additional work.

Editor & Publisher reports that editorial cartoonists have been especially hard-hit by the newspaper downturn. Two decades ago, the industry employed about 200 cartoonists. Only about 85 are left. Latest casualties: Jake Fuller of the Gainesville Sun and Dave Granlund of the Metro West Daily News.

Miscellany

The Washington Post’s Howard Kurtz pens an unusually frank column on the state of the newspaper industry. Kurtz lists the names of talented colleagues who are leaving the paper and speculates about political maneuvering, but then closes with an honest account of the management mistakes and demographic trends that have led to this predicament. Quoting: “If newspapers wither and die, it will be in part because the next generation blew us off in favor of Xbox and Wii and full-length movies on their iPods. Network news faces the same erosion. Maybe, in the end, we get the media we deserve.”

Mother Jones has published photos of the empty San Jose Mercury News offices taken by staff designer Michael Martin Gee in April. The whole set is available on Flickr.

Bay Area Newspaper Group (BANG) was able to avoid involuntary layoffs because 107 out of 1,100 employees took a recent buyout offer. The cuts affect the Contra Costa Times, Oakland Tribune and 14 other daily and weekly newspapers. The president of the company said he couldn’t guarantee there wouldn’t be more cuts. BANG executives cited a “drastic economic slump.”

• Ryan Sholin offers proscriptions for the Merc on his blog. They including ending the ghettoization of bloggers and podcasters, ditching the focus on national news and switching software platforms.
• Meanwhile, more than 100 members of the San Jose Newspaper Guild’s Mercury News unit dressed in black and rallied in front of the paper to show their support for laid-off workers. Oft-quoted Guild unit president Sylvia Ulloa vowed to show management that employees are “united, not intimidated.” That works okay when the owners are making money, but that doesn’t seem to be the case these days.
• Michael Bazeley writes an early obit for the Merc. He doesn’t blame the new owners as much as some other disenfranchised ex-employees, but rather sees the Merc’s troubles as being rooted in rudderless leadership and lack of vision. When technology journalism exploded, the Merc stood still, he says. That was its big opportunity and the paper blew it. Now, he concludes, “I fear the paper will not recover.”
• Robert Butche writes not about the Merc but about the shockwaves of fear that the firing of LA Times editor James O’Shea sent through newsrooms and protests that “owners devoid of newspaper experience have been lulled into believing that a newspaper can flourish and survive by downsizing.” True ’nuff. The problem is that when the business shows declining readership, declining advertiser interest and no long-term hope of reversing those trends, an aggressive investment strategy isn’t a very palatable option, either.

This remarkable exercise in community journalism from last June just came to my attention from reading Jay Rosen’s PressThink post. Working from a terse report by the Greensboro News & Record of layoffs of 41 of its own employees (why are newspapers so timid about covering their own bad news?), Ed Cone decided to let the people affected by the layoffs tell their own story.

And they did. As you can see from the frequent updates to Cone’s original post, affected staff members named names, told of the subdued atmosphere in the newsroom and fretted about the future. Some of their comments are touching. This account certainly adds depth and clarity to the unspecific report from the newspaper itself.

But I guess Ed Cone shouldn’t be taking seriously. After all, he isn’t a “journalist.”

The Sarasota Herald-Tribune is the latest casualty of the overall decline of newspaper advertising. The paper, which is one of several in south Florida owned by The New York Times Co., will consolidate several offices and lay off an unspecified number of people.

While shutting down one of its regional print editions, “[T]he Herald-Tribune will start new interactive Web sites geared toward allowing the public to share their news, photos and videos.” Hmmm. Photo- and video-sharing might have been interesting two years ago, but it’s very me-too today. And what’s this about “share their news?” Is this a citizen journalism experiment?

Mark Hamilton notes the difficulty newspapers have reporting this kind of bad news about themselves. It is indeed a fine line to walk. While the reporters and editors no doubt have strong opinions about this story and its importance, they also have a responsibility to their readers to keep it in context and to report it straight. The WSJ’s coverage of the Murdoch takeover is particularly challenging in that respect.

It’s interesting to see the paper deciding to scale back on local coverage in favor of big features. In my opinion, local newspapers will be the big growth area in the business in coming years. Who needs another food section? But perhaps the economics just didn’t work here.

CNN Senior Media Reporter Oliver Darcy has a searing send-up of the free pass legislators and the reading public give to social media companies while holding mainstream outlets to higher standards.

Noting the recent shutdown of The Messenger, layoffs at the already tottering BuzzFeed and the gutting of one-time high-flyer Vice, Darcy contrasts the principles these outlets are expected to uphold with the sewer that is big social media.

“Time and time again, companies like Instagram, YouTube, TikTok, Snapchat and others have been caught allowing harmful content to exist on their platforms,” he writes. “In many cases, such content has not only been permitted to exist but turbocharged via powerful algorithms. Child exploitation? Check. Promoting eating disorders? Check. Batshit crazy conspiracy theories that radicalize audiences? Check.”

Yet when confronted about this bad behavior, executives at these firms feign ignorance or hide behind the First Amendment. The New York Times would be pilloried for promoting child exploitation, but the same stuff gets by on Facebook and Instagram with a wink and a nod.

“News organizations, crucial to a functioning society, are being hollowed out if not outright dying. Meanwhile, technology giants, which have allowed harmful content to gain a foothold in the digital public square, are thriving,” Darcy writes. Sadly, the consuming public sees nothing wrong with this double standard.