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News Investment

News Investment

By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute

On balance, 2004 was another discouraging year for editors hoping to rebuild the capacity of their newsrooms or citizens hoping to see broad improvements in the quality of their local newspapers.

Newsroom employment actually fell by 500 full-time professionals in 2003, or about 1%, to 54,200. That cancelled out a small gain in 2002, and returned to levels below 2001, when employment fell by 2,000 – or about 4% in a single year.1 Firm information on 2004 staffing or newsroom budgets is not available, but anecdotally it appears to have been a year of hold-downs and scattered cuts. More of the same seems likely in 2005.

There is good news in the number of minorities working in newsroom. While the overall number of staff members was down, the number of minority newsroom employees rose to 7,000, or about 13% of the total. Both of those numbers are the highest they have been.2

Newspaper Newsroom Work Force
1978-2004
Design Your Own Chart
Source: American Society of Newspaper Editors, Newsroom Employment Census, 2004
Minorities include Native Americans, African Americans, Latinos, and Asian Americans.

For chains, Gannett comes closest to matching the diversity of its community, followed by Knight Ridder, McClatchy and the New York Times Company.3

At the same time, newsrooms saw a slight increase in the number of women. In 2003, women constituted 37% of the newsroom workforce. Among supervisors, 34% were female, as were 40% of reporters.4

The first prominent cut was the reduction of 60 newsroom jobs at the Los Angeles Times in early summer 2004. Ironically it came just months after the Times won five Pulitzer Prizes. Tribune Company executives cited soft performance in the L.A. ad market. Earlier in the year, another Tribune Co. paper, The Baltimore Sun, dismissed its editor, William Marimow, noting conflicts but not specifying whether they were over newsroom resources. He ended up a managing editor at National Public Radio, recipient of a huge grant from the estate of Joan Kroc to expand news operations. The Washington Post completed a buyout program that resulted in the phased early retirement of many familiar bylines (though like the L.A Times, The Post retains an enormous and highly qualified staff).

In autumn the other shoe dropped for two of the circulation-scandal papers. The Dallas Morning News announced it was downsizing the newsroom by 60 positions, and Newsday announced in mid-November that up to 110 jobs would have to be eliminated through voluntary and involuntary buyouts.5 The Houston Chronicle announced cuts, and others were in prospect at other Tribune Company papers. Jack Fuller, the Pulitzer Prize winner who had run Tribune’s newspaper division for a number of years, took early retirement.

Other cuts came primarily from formal or informal job freezes and attrition. (This was the case at Knight-Ridder, for instance.) These cuts were not anything like the shocking wave of deep cuts experienced in 2001, which reached roughly 10% at Knight-Ridder papers alone.6 It certainly is possible that other papers were expanding staff unannounced, but the probable net reduction in industry staff will not become more apparent until April 2005, when ASNE releases its annual census, reflecting end-of-2004 staffing levels.

Differing Strategies

The story of newsroom investment in 2004 was not one of unrelieved gloom but rather of diverging strategies. The big five national papers, top regionals like The Boston Globe, several major chains and various independent operations seem to follow the theory that quality will build circulation and reader involvement, which constitute a net business plus for advertising performance and the long-term health of the franchise.

The McClatchy Company highlights a “Good Journalism = Good Business” banner in all its presentations to analysts and investors. “Keeping our newspapers compelling to readers,” CEO Gary Pruitt told the Mid-Year Media Review in June, is integral to the company’s 19 consecutive years of circulation gains. That – and strong markets like Minneapolis, Sacramento and Raleigh-Durham – in turn has led to a 50% better ad growth rate at McClatchy in the new century, compared to industry averages.7

The New York Times, even after Jayson Blair and related embarrassments, prides itself on running the Rolls Royce of news operations, and is priced accordingly. The Times realizes annual circulation revenue per customer of $474 a year, by far the highest in the industry. (Its ad revenue per average number sold is $905 a year, also the highest).8

Another newspaper that probably should be cited as a stalwart on news investment is The Wall Street Journal. Despite the worst ad losses and stock performance in the industry over the last five years, the company has reinvested in the product with enhanced color reproduction and the successful launch of a Weekend section and a reformatted Personal Journal daily section (all ad-friendly as well). In the same vein, The Journal has announced the September 2005 launch of a Saturday edition, a vehicle for yet more ad sales and daily reporting of breaking Friday business news that will require 150 additional editorial and business-side employees.9

Some analysts and academics also offered new support for this “virtuous cycle” approach to news investments:

There are also strategies in place to maintain or improve quality within a context of cost constraints. Many chains are using the findings of the Readership Institute (which doesn’t bill its recommendations as cost-free) to produce more of the material and presentation found to be most engaging to readers, using existing staff and budget. This approach has taken root in two companies frequently faulted for putting profits ahead of maintaining a strong level of news investment. It may be more accurate to say they have become prescriptive about what they want the tightened staff to do:

Critics of both companies might consider those efforts modest at best. The purpose of this chapter is not to make such evaluations company by company. But we think it fair to note that both have decided in the current context to take such actions, and to communicate them to the investment community.17

Some also might find modestly encouraging the fact that so many newspapers are venturing into new youth publications and foreign-language papers or supplements, together with other kinds of niche publications. But many of these are small-stakes bets. Turning to the main event of developing an online report, the national publications have strong sites. Regional newspaper sites typically have the highest traffic in their markets.

Some degree of interactive discussions is typical of all sites. But there are serious questions still about whether the level of investment online represents real innovation adequate to the long term or whether the industry is being tight-fisted and perhaps shortsighted. Rob Burnett, the Newspaper Association of America’s own analyst, faulted the industry for a lopsided emphasis on developing online advertising, with little exciting to show yet in content or display. A July 2004 study from the University of Texas showed that of 30 newspaper sites monitored, only 12 made any substantial changes during the course of the day. The rest were stocked with so-called “shovel-ware” from the once-a-day print edition.18

While newspapers cling to the mantra that they own the local news franchise in their communities, this cautious, defensive posture could leave them vulnerable the day (and it’s coming soon) when Google, Yahoo and others roll out more sophisticated, tailored-to-the-individual information products with a local mix.19

An international comparison also suggests a relative complacency in American newspapers. England is a very different sort of market: predominantly national, highly competitive among a dozen titles and reliant on single-copy sales. Starting in late 2003 and continuing through 2004, all three of the high-end papers – The Times, The Independent and The Guardian – have begun conversion to tabloid format. Especially at The Independent, first to convert, there was strong reader preference for the tabs, a surge in circulation, and little or no diminution of the paper’s serious tone.

But the change involves enormous capital expense and a range of complicated issues with advertisers. The Miami Herald included a tab-shaped two-page news summary in its 2003 redesign. The Fort Worth Star-Telegram and the St. Paul Pioneer Press (Knight-Ridder papers, like the Herald) began experiments in 2004 with prominent summaries in place of a conventional front page or page two. But no U.S. paper of any size has changed over entirely; the free youth papers are the closest to a test, and senior executives have indicated little interest in the tabloid option.

A somber assessment of the state of news investment and public service reporting also came during the joint portion of the annual conventions of the ASNE and NAA in April 2004 in Washington. The ethicist Matthew Josephson kicked off a panel discussion pegged to the Jayson Blair and Jack Kelley controversies by asking whether inadequate news-side resources were partly at the root of a broader problem for newsrooms.

“That is a reality,” replied Greg Moore, editor of The Denver Post. “Either through attrition or budget cuts, we don’t have the resources as an industry to do the job that we used to do or that we expect to do. Quite frankly, when you talk about the potential for calamities, one of the reasons for that …is that the supervisory level has suffered the most.”

Asked how he would grade the industry on its public service, Moore said, “I’m a tough grader. I would say that we are probably about a C+.”

John Carroll, editor of the Los Angeles Times, said he was fortunate to have a lot of resources (though like any editor he could do more with more), but agreed with the C+. When operations are bled for profit, he said, “they just squeeze the life out of a paper, and it really is impossible for the editor to make much headway….You are not paying salaries or the people are turning over, and it is just a struggle to get the thing out.”

Jack Fuller, then running Tribune Company’s newspapers and Carroll’s boss, took a more politic line. He was focused, he said, on Tribune’s own 12 papers and would give them a B+.

“How would you grade your papers?” Josephson next asked Tony Ridder, CEO of Knight Ridder and outgoing president of the NAA.

“Well, I think it varies,” Ridder said. “I think it varies with the size of the newspaper. Some of our larger papers have the resources to do a lot more. But I would say it wouldn’t be any higher than probably a C.”20

Footnotes

1. American Society of Newspaper Editors, “Newsroom Employment Survey,” Table A, http://www.asne.org/index.cfm?id=5147 (Data as of the end of 2003).

2. Ibid.

3. Mark Fitzgerald, “Diversity Analysis Says Only 13% of Daily Newsrooms Reflect Populations of Their Communities.” Editor&Publisher.com, May 12, 2004.

4. American Society of Newspaper Editors, “Newsroom Employment Survey,” Table M (Data as of the end of 2003), and Newspaper Association of America resource at http://www.naa.org/info/facts04/diversity.html

5. Associated Press Wire, “Newspapers cut hundreds of jobs.” October 28, 2004.

6. Rick Edmonds, “Public Companies No Worse than Private.” Poynteronline, December 5, 2002. Available on line at: http://www.poynter.org/content/content_view.asp?id=12122

7. Rick Edmonds, “What Top Executives are Talking About.” Poynteronline, June 25, 2004. Available on line at: http://www.poynter.org/content/content_view.asp?id=67538

8. Merrill Lynch (New York, New York). “The Newspaper Industry.” Lauren Rich Fine. Published June 21, 2004.

9. Businessjournalism.org staff, “Wall Street Journal announces expansion plans.” September 16, 2004. Available on line at: http://www.businessjournalism.org/content/5316.cfm?print=yes.

10. Deutsche Bank Securities (New York, New York). “Keeping cash in circulation.” Paul Ginocchio et al. Published August 11, 2003.

11. James Hamilton. “All the News That’s Fit to Sell.” (Princeton, N.J.: Princeton University Press, 2004).

12. Philip Meyer. “The Vanishing Newspaper: Saving Journalism in the Information Age.” (Columbia, MO: University of Missouri Press, 2004).

13. Various studies from the Readership Institute at Northwestern University (Available online at www.readership.org)

14. Various studies from the Readership Institute at Northwestern University (www.readership.org)
Stephen Lacy, David Coulson, and Hugh Martin, “Ownership and Barriers to Entry in Non-Metropolitan Daily Newspaper Markets.” Journalism and Mass Communication Quarterly, Summer 2004.

15. Rick Edmonds, “Who’s Putting More Tomatoes in the Soup?” Poynteronline, April 20, 2004. Available on line at: http://www.poynter.org/content/content_view.asp?id=64283

16. Rick Edmonds, “Improving Editorial Quality from the Top Down.” Poynteronline, February 23, 2004. Available on line at: http://www.poynter.org/content/content_view.asp?id=61139

17. These strategies are supported by the findings of the Newspaper Readership Institute, but they are not direct adaptations of that research as are programs at Lee, Media General and others.

18. Rosental Calmon Alves, “Many Newspaper Sites Still Cling to Once-A-Day Publish Cycle.” USC Annenberg Online Journalism Review, July 21, 2004. Available on line at: http://209.200.80.136/ojr/workplace/1090395903.php

19. Rick Edmonds, “Forecast 2005: For Newspapers, Competition Too Big to Ignore.” Poynteronline, January 3, 2005.Available on line at: http://www.poynter.org/content/content_view.asp?id=76364

20. American Society of Newspaper Editors and Newspaper Association of America joint meeting April 2004. Transcript provided to Rick Edmonds by ASNE.