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News Investment

News Investment

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

May 8, 2006 Update

The American Society of Newspaper Editor’s annual newsroom census* found that full-time professional employment at daily newspapers fell by 600 during 2005. This roughly equals the number of announced job cuts during the year and is considerably less than the 1,200 to 1,500 reduction we had projected when State of the Media 2006 was published in mid-March.

Why were the losses not as bad? Three factors mentioned in the report probably provide the explanation:

  • The job losses were almost completely concentrated at large metros. Smaller papers did much better.
  • In any given year, many newspapers hold staffing steady and a few make modest increases, unannounced.
  • Some of the cuts announced in 2005 were still being carried out in early 2006 – and thus will impact next year’s census rather than this one.

With circulation declining and advertising flat, 2005 brought cuts in newsroom staffing nearly as alarming as those during the newspaper recession of 2001.

Large cuts, especially at highly regarded big regional newspapers, took place all through the year. Many made headlines — 100 jobs at the Philadelphia Inquirer and Daily News, 50 at the San Jose Mercury News and 45 at the New York Times.

How severe were the cuts, and what do they portend? Were they cyclical responses to a flat advertising year and a temporary response to newspapers cleaning house of some shaky circulation? Or do they signal a turning point in which newsrooms are likely to shrink from here on as the industry begins an accelerated decline?

Those are the questions that people inside and outside the industry seemed to be asking as 2006 began.

The Numbers

A firm total for 2005 was expected by April 2006. But with between 600 and 700 newsroom job cuts announced, mostly at large papers, our estimate is that the industry’s total loss will be roughly twice that, somewhere between 1,250 and 1,500. As noted, that is roughly the same percentages as the year-to-year circulation losses through September 2005 — 2.5% to 3.1%.

While the job losses are large, it is probably overly dramatic to suggest the industry is somehow now crippled. Newspapers remain far and away the largest news organizations in their communities.

The week in September when 300 of those cuts were announced, one highly respected retired publisher commented, “Well, I don’t think the sky is falling in.” The industry would still field more than 52,000 full-time professionals gathering, writing and editing the news in 2006.

Hard-hit papers like the Dallas Morning News and Philadelphia Inquirer retained news staffs of 400-plus. Yet readers of those papers may well feel they can clearly see the difference in the product. As the editor of one Knight Ridder paper put it in a private conversation, “I think we have reached the bone.” Said another, about a different paper in the chain, “I think we hit it several years ago.”

Whatever one thinks of the cuts, the news-investment trend in 2005 and looking out to 2006, like so many trends in the industry, was downward. Some reduction programs spilled over into the new year, and fresh cuts were likely.

What’s more, they come after job losses in earlier years. After a “rally” of 300 new hires in 2002, the industry lost 500 jobs in 2003 and another 100 in 2004, according to data from ASNE. If our estimates are right, newspapers were heading into 2006 down 3,500 to 3,800 newsroom professionals from 2000, when the industry hit its near-historic peak in employment of 56,400.1

Prominent Losses

Among the most noteworthy staff cuts of 2005:

*The Philadelphia Inquirer eliminated 75 jobs and its smaller sister paper, the Daily News, 25, largely through buyouts of veteran reporters and editors. At the same time, its parent, Knight Ridder, ordered a reduction of 52 newsroom positions at the San Jose Mercury News. The Inquirer’s editor, Amanda Bennett, was widely quoted as saying the directive had made her literally sick to her stomach. But it was an occasion, she said, to reinvent the paper, jettisoning boring, dutiful meeting stories, trying to keep the best of investigative work and producing a “vibrant” daily report.2

*Nearly all Tribune papers trimmed their newsroom staffs. The Los Angeles Times cut 85 from a staff of roughly 1,000 (along the way precipitating the resignation of its esteemed editor, John Carroll). Newsday, still recovering from a nearly 20% overstatement of circulation, decimated its New York City staff, eliminating 45 news positions. Those were not the first cuts at either paper.3

The Baltimore Sun, Hartford Courant, Chicago Tribune, Orlando Sentinel, Allentown Morning Call and Newport News Press all announced smaller cuts near the end of the year.4

*The New York Times announced it was eliminating 45 newsroom jobs, after shedding 12 earlier in the year, a relatively modest hit on a staff of roughly 1,200 that had grown in 2004. The company’s Boston Globe took a proportionately bigger cut, losing 35 editorial positions out of 400.5

*The Dallas Morning News, like Newsday caught in a major circulation-padding scandal, trimmed more than 65 newsroom positions, just over 10%, at the end of 2004 and early in 2005.6

*The San Francisco Chronicle has shrunk its news staff from 575 to 440 since 2000. More cuts may well be on the way because the paper is one of a handful of dailies actually losing money.7

*The St. Louis Post Dispatch, under new management by Lee, eliminated 41 jobs through buyouts. Editor Ellen Soeteber resigned in protest.8

And that by no means exhausts the list.9

If in scope the cuts are worrisome but less than apocalyptic, what do they imply about the future? If there are patterns to the reductions, they are a pretty tight fit to companies and markets under the gun financially. Tribune and Knight Ridder papers are heavily represented (and the New York Times Co., less conspicuously, has been turning in disappointing revenue and earnings results, too).

Another message seems to be that times are especially tough in the biggest metro markets. Some, like Philadelphia , Chicago and Washington have heightened competition from an assortment of free dailies. The L.A. Times’s persistent circulation and advertising woes are a little more mysterious — perhaps a product of the area’s sprawl and unusual ethnic diversity.10 The Times also hurt itself, insiders tell us, with deep cuts to circulation promotion and by actually pulling out of distant suburbs.

The American Society of Newspaper Editors releases staffing data at its annual April convention, compiled as of the end of the year. That will be the test of whether the wave of cutting spread to mid-sized and smaller papers where reductions are measured in single digits and typically not announced. Business results have been better at mid-sized and small papers; Media General and Lee, whose properties are typically in that category, had the best results among public companies in 2005, suggesting that cuts in the sector would be more modest.

The 30 papers with circulation of 250,000 and above, where announced cuts in 2005 were focused, account for about a quarter of the full-time news professionals in the industry.11 Our guess is that unannounced cuts from smaller papers will roughly equal the 600 to 700 that were announced.

But we do know the cutting is not done, since 2006 will mark the completion of some of the staff reduction programs announced in 2005.

The pattern the industry has followed in recent years is that newsroom cutbacks during hard times are not followed by reinvesting during better times .

2006 and Beyond

The best hope for keeping staffs and news capacity whole turn on stabilizing circulation and ad-revenue trends. As recently as the end of 2004, an equal number of 250,000-plus papers had added news staff or held steady as had cut staff over a three-year period.12 So, best case, 2005 will be an aberration from relative stability in commitment of news resources.

The worst case is that a tipping point has been reached, that audience and ad revenue declines will prompt existing owners or new ones to make deeper cuts. The capacity of newspaper news staffs to offer thorough and aggressive coverage of their communities will erode subtly but steadily. Who will take up the slack? There is no obvious alternative .

Which is the more likely scenario is frankly hard to predict, and we doubt those who sound certain can really know. As the discussion of circulation and economics in this report has made clear, the industry has serious problems with its fundamentals, which is why stock prices are low. Yet the industry also appears to be more aggressive about innovation in new platforms and business models. Perhaps most important, if newspapers do not make the transition to online newsgathering, it is difficult to imagine who will.

Wall Street’s Reaction

Wall Street analysts, typically cheerleaders for budget tightening, were skeptical about this round of newsroom cuts. Peter Appert of Goldman Sachs told Editor & Publisher that the Philadelphia and San Jose downsizings were “dramatic to the point where readers will notice” and circulation and ad losses might follow.13 Visitors to San Jose who compared the paper today to the paper of a few years ago might be hard pressed not to notice. Consider that the business section of the paper — one of the core franchises of the Mercury News — five years earlier had a staff of more than 45, editors told the Project. After the latest round of cuts, the number was closer to 25.

The immediate signals suggested that investors thought management might have overreacted, or reacted the wrong way. Knight Ridder and New York Times shares fell the week their cuts were announced; by the year’s end Tribune had not moved the stock-price needle upward with all its talk and action on cost containment.14

Newspaper managers believe that using buyouts rather than layoffs has the advantage of making departures self-selective and sending many long-time staff people out the door with generous settlements. But buyouts also raise the suspicion that newsroom managers have an agenda of replacing the best paid with lower-salaried beginners and perhaps tilting staff to more computer-savvy young people in the process. Whether intended or not, it seems difficult to dispute that experience, institutional memory and deep knowledge of the local community are all casualties of this method of staff reduction.

As always, there were encouraging exceptions to the negative news-staffing trends. McClatchy newspapers, which has consistently trumpeted the business value of news investment, basically kept news staffs whole, even as it failed to increase circulation company-wide for the first time in 20 years.15 Most of the privately owned Advance Newspapers, controlled by the Newhouse family, are generously staffed. Two of Advance’s largest properties, the Oregonian in Portland and the Star Ledger in Newark , were among the very few papers to keep circulation even in 2004 and 2005.

In contrast with the New York Times, some national newspapers, including the Washington Post, kept their basic newsroom staffs whole in 2005 and appeared to be increasing news investment online, which we will explain more below. Moreover, there is a cadre of independents, led by the St. Petersburg Times, Arkansas Gazette, and Bakersfield Californian, for whom larger-than-standard news investment (and slightly more modest profit margins) are a consistent commitment and central to business strategy.

Minorities and Women

There was some good news in the number of minority people working in newsrooms across the country. By the end of 2004, minorities represented 13.42% of newsroom staff — an increase of nearly half a percentage point over 2003, according to the annual newsroom census conducted by the American Society of Newspaper Editors. That marks the fourth consecutive year of growth, and since 2001 newsrooms have added 700 minority employees, with the largest number being Asian Americans.

The percentage of women in newsrooms increased a bit in 2004, and women now account for 37.5% of all newsroom employees. Yet the total number of women has increased just half of 1% since 2001. And while the number of white women has declined nearly 7 percentage points since 2001, the number of minority women has surged 20%.16

Newspaper Newsroom Work Force
1977-2004
Design Your Own Chart
Source: American Society of Newspaper Editors, Newsroom Employment Census, 2005
* Minorities include Native Americans, African Americans, Latinos, and Asian Americans.

Newshole: The Other Newsroom Resource

A new wrinkle on downsizing began in 2005 and will become more visible in 2006 and beyond. That is to reduce newshole, sometimes in tandem with trimming the width or weight of the paper. With newsprint prices on the rise to the tune of nearly 10% both in 2005 and 2006, it is an obvious place to turn for savings.

Usual targets for a deep slash are stock tables and TV listings. The Seattle Times eliminated Sunday tables in January 2005; the Chicago Tribune, the Los Angeles Times and Newsday announced cutbacks in tables in January 2006.

Cutting tables and TV listings is also easier to manage in the newsroom than cutting room for stories or cutting people. Yet cuts in such material are also probably even more noticeable to the public, and thus could accelerate the effect on circulation and advertising. On the other hand, papers can rightfully argue that all of that material is easily found elsewhere, and if a paper wants it to be, on its own Web site.

Regardless, it is a trend to watch because staff and space reductions tend to be reinforcing. Reduce the newshole by 10% and, executives can argue, you logically don’t need as many people to fill it. By our scan, few if any editors or executives are directly claiming that less is more, but a number do claim that targeted content reductions will not be missed much. Maybe — but the concurrent claim that the most ambitious reporting and consistently careful editing can be kept seems unlikely.

If people are asked to do more in the same amount of time, there is ample evidence in business literature and in academic research on journalism that quality suffers and that readers notice. The other problem is that the tradeoff doesn’t apply if the paper is trying to offer more depth online, including some of the things that are being cut from the print edition .

Several newspapers undertook redesigns in which condensed format and quick reads played a part. Most closely watched were changes at the Minneapolis Star-Tribune, under study and development for more than a year with help from the Readership Institute at Northwestern University , before its introduction in the fall of 2005. In a general way it mandated much more rigorous attention to capturing reader interest, both with story selection and execution and design elements.17

The Baltimore Sun and St. Louis Post-Dispatch both did major makeovers. They solicited reader comment and got a deluge of objections from traditionalists who thought the new look was dumbed-down.

Meanwhile 2005 marked another year in which conversions to tabloid or other reduced-sized formats remained a worldwide trend in which American publishers participated only in a small way. Especially in Great Britain , those making the change have recorded circulation gains — but at significant expense in converting presses and at least transitional reductions in advertising rates.

The Harrisburg Patriot-News, an Advance paper, began in July offering readers a choice between broadsheet or tab, with slight differences in content, too. The tab alternative never got as high as 10% of total print circulation and was abandoned in October with the curt explanation that “it didn’t catch on.”18

Gannett announced that its 37,000-circulation Journal Courier in Lafayette , Ind. , would convert to Berliner format (a taller and narrower tab format) when new presses were installed in August 2006.19

Research

Philip Meyer’s “The Vanishing Newspaper” was published in December 2004 and drew attention all through 2005. In a series of case studies, Meyer, of the University of North Carolina , argues that quality and investments in news capacity help circulation and business results. The evidence is strong, but, he concedes, not airtight. As a matter of logic, he adds, newspapers that are the most authoritative and accurate gain the most influence, an attribute of value to advertisers.20

When newspapers instead cut investment in news, according to Meyer, they risk a “death spiral” in which circulation falls, revenue growth slows and those developments are the rationale for further cuts. The fit of Meyer’s thesis to the events of 2005 was uncanny.21

In less formal fashion, a second book, “Knightfall,” by W. Davis “Buzz” Merritt, charged Knight Ridder management with cutting the news core of its newspapers in self-destructive fashion. Merritt offered his own experience (as editor of the Wichita Eagle) as an example of how a mid-sized paper can lose its edge, public-service focus and statewide influence when the cutting gets too deep.22

Jill Geisler of the Poynter Institute took the measure of years of cutting at newspapers and local television stations with a survey and an open-ended question of what news staff members would tell their bosses. Her key finding: besides leaving fewer people to do the work, persistent cuts do their damage by leaving those who remain harried, with little time for ambitious work. The survivors also have difficulty getting much attention from stretched-thin editors, leadership that is especially essential in a period of managing change.23

In scholarly research, Esther Thorson and associates at the University of Missouri continued a series of studies of small and mid-sized papers based on Inland Press Association data. They again found a strong correlation between above-average news investment and advertising revenue per copy. Put another way, they estimated that news investment accounted for 20% of the variance among papers.24

Scott Maier of the University of Oregon continued his studies of error rates in news stories with a group of 14 newspapers. As in an earlier study, more than half the stories were found by their subjects to have some kind of error, from misspelling to lack of context. The more frequent and severe the errors, the greater the decline in the newspapers’ overall credibility.25

A contrarian study by Jack Rosenberry of St. John Fisher College took a broad sample of papers of varying sizes and found no correlation between content mix and circulation penetration. That would seem to dash some cold water on the thesis that intensely local coverage builds readership, though Rosenberry conceded that his methodology treated an investigative city hall story and a routine police report the same.26

For whatever reasons, the body of research on quality’s relationship to business results doesn’t seem to change minds within the business. Those in the pinching and cutting mode express occasional regret that they cannot afford more journalism while meeting financial targets, but they go right on cutting.

Online and Niche Publications

The contrast to all the cutting is in two specific areas. A year ago we characterized investment in the news effort of online newspaper sites as minimal at all but the largest newspapers. “Shovelware” — a rehash of a day’s newspaper — was more often than not the extent of the offerings. Though hard information for any but the largest newspapers is hard to come by, there is evidence that neglect gave way to some improved efforts in 2005, and that upgrades may become even more visible in 2006.

Given that online and niche publications are the bright spots in revenue growth in 2005, it only stands to reason that what news investment growth there is will be directed to online and niche. Over time, we would expect new metrics measuring total news investment across platforms to supercede traditional benchmarks like newshole , news budget, and newspaper staff count.

To date, though, there is little uniformity or visibility within the industry in documenting a broader news investment story that might soften the picture of pinched resources in the print edition. At least one explanation, we have heard anecdotally, is that much of the work of feeding content to online and niche publications comes from re-deploying existing newsroom people rather than springing for big staff and budget increases dedicated to the new products.

Case in point: New York Times online has only 40 news people of its own, but is being fed more generously all the time by the newspaper’s staff of 1,200. The New York Times and USA Today both announced in 2005 that they were combining print and online staffs, projects expected to take well into 2006 to execute. The Washington Post’s online staff remains separately located and organized, but is now coordinated with the mother newspaper with a special 24-hour-desk. A Post spokesman said the operation’s total staff was well over 200, declining to specify how many of those are reporters, editors and producers. Our estimate is more than 100, making the Post the best-staffed newspaper online site (USA Today online, by our estimate, has between 80 and 100).

What is plain to readers of any of these sites is that newspaper reporters are now charged with filing major breaking stories online rather than hoarding the good stuff for the next day’s paper. A mid-afternoon check of any of those will turn up a half-dozen staff-written updates since that morning’s publication.

Much the same has taken place at the Associated Press, whose 3,000 reporters and editors worldwide are now charged with producing an online version first, then turning their attention to a newspaper or broadcast version. That may even represent a step beyond what newspapers are doing, and may offer a model of where newspapers might go.

The Wall Street Journal is a special case with more than 764,000 paid subscribers to its online version, and profits of its extended online operations, including indexes and “Marketwatch,” now outstripping those of the print edition. The Wall Street Journal Online has a news staff of 60, according to the Dow Jones Web site, and draws on the work of 1,900 Dow Jones journalists worldwide.

The second breakthrough of 2005 was the widespread addition of nontraditional content to the sites. Audio is now standard. When Harriet Miers withdrew her Supreme Court nomination, the New York Timess Elizabeth Bumiller had filed both an online news story and an online voice commentary before noon . Fuller coverage by Bumiller and others followed in the next day’s print edition. Video is also becoming more common online with improvements in quality and the rise of podcasting.

There has also been a cautious embrace of blogs and citizen journalism. The Greensboro News-Record and Dallas Morning News editorial pages are both deeply engaged in staff blogs, designed to elicit reader response. Some of the more prominent experiments in citizen journalism are “Northwest Voice” at the Bakersfield Californian and a network of neighborhood “Hub” supplements to the Rocky Mountain News. Such efforts require a minimal commitment of an editor or two; but the jury remains out on whether they are attracting audience or delivering news of any consequence.27

Conclusion

We are left with a question raised in the first two editions of this report: Why do some newspaper companies, but so few, see logic in reinvesting in the core strength of their newsrooms and news quality? The national papers do. McClatchy does. So do several private companies and independents. They believe in putting the journalism first as a matter of principle, AND they make it work in a business way, too. The potential for circulation and advertising growth, however, appears much better in communities whose populations are growing rather than those that are stagnant and must be sustained over decades. But to take the obvious example, the Washington Post, consistently posting among the lowest margins in the business (12% or so in 2005) has performed fine as an investment over time.

The majority of companies, however, have appeared to be practicing a version of hard-nosed capitalism in which you reduce investments in those products or markets among your company portfolio that have lagging returns. Even as a business proposition, though, that viewpoint is subject to challenge when applied to the newsgathering capacity of a newspaper. The Boston Consulting Group matrix advocated liquidating “dogs” — low-profit businesses with limited growth potential. But “cash cows” are another story. A cash cow is a very good thing that pays everyone’s salaries and provides the kitty for new ventures. They should be kept as strong as possible for as long as possible.

Our sense based on the data is that deep news-staff cuts, however logical a response to tough times, may be undermining the core product in dangerous ways. The practice is certainly eating away at the range and depth of newspaper journalism in many communities.

Note on updated employment figures dated May 8, 2006: The census, conducted primarily to measure industry progress on diversity goals, has been conducted for more than 25 years. This year 928 of 1,417 American dailies responded, and the response rate is the highest among the biggest circulation papers. The industry total is reached by projecting employment at non-responding papers according to their circulation.

This year the census added an estimate for 11 free dailies, most in large cities. With a smaller universe and several key non-respondents, ASNE is estimating employment of 1,300 in this group. It is also unclear whether the census captures newspaper online editorial employees, particularly at newspapers where online is treated as a separate unit organizationally.

Including the latest numbers, the industry has lost about 2,800 fulltime professional newsroom jobs so far this decade. But an important part of the jobs story is redeployment to online, free, youth-targeted, ethnic and non-newspaper publications, all important growth areas as traditional newspaper growth has stalled.

Footnotes

1. American Society of Newspaper Editors, “Newsroom Employment Survey,” Table A, published April 12, 2005 . Available online at: http://www.asne.org/index.cfm?id=5646.

2. Jay DeFoore, “More Than 2,000 Newspaper Jobs Lost in 2005,” Editor & Publisher November 17, 2005. (The 2,000 total includes jobs in all departments, not just news.) Katherine Seelye, “At Newspapers, Some Clipping,” The New York Times, October 10, 2005.

3. Jay DeFoore, “More Than 2,000 Newspaper Jobs Lost in 2005,” Editor & Publisher, November 17, 2005.

4. Gary Gentile, “Five Tribune Papers to Seek Job Cuts,” Chicago Tribune, November 17, 2005. (The Hartford Courant announced its cuts later).

5. Jay DeFoore, “More Than 2,000 Newspaper Jobs Lost in 2005,” Editor & Publisher, November 17, 2005.

6. Charles Layton, “The Dallas Mourning News,” American Journalism Review, April/May 2005.

7. Lori Robertson, “The Chronicle Chronicles,” American Journalism Review, October/November 2005.

8. Joe Strupp, “Post-Dispatch Cuts Nearly 12% of News Staff Through Buyouts,” Editor & Publisher, November 1, 2005.

9. This list could also include 45 at the Boston Herald. Mark Jurkowitz, “Amid cuts, Herald loses newsroom veterans,” Boston Globe, June 11, 2005.

10. The Los Angeles Times closed a number of its suburban bureaus in the process. Kevin Roderick, interviewed on NPR’s “On the Media,” November 25, 2005. Online at: http://www.onthemedia.org/transcripts/transcripts_112505_la.htm.

11. Paper-by-paper totals are made available to co-author Edmonds for research purposes. American Society of Newspaper Editors, “Newsroom Employment Survey,” published April 12, 2005.

12. Ibid.

13. Jennifer Saba, “Analysts Worry About Newsroom Cuts, As Top Editors in Philly and San Jose Review Options,” Editor & Publisher online, September 28, 2005.

14. Yahoo Finance.

15. American Society of Newspaper Editors, “Newsroom Employment Survey,” published April 12, 2005.

16. Ibid.

17. Keith Moyer, et al. “10 Ways our new design will work for you,” startribune.com (flash presentation). Available online at: http://www.startribune.com/style/graphics/redesign_guide/

18. “Patriot tab meets end in Harrisburg , Pa. ” News & Technology, November 2005. Available online at: http://www.newsandtech.com/issues/2005/11-05/nt/11-05_patriot.htm

19. “A midwestern newspaper recently made a surprising declaration in big, brash Texas : Smaller is better,” PRESSTIME, June/July 2005. Available online at: http://www.naa.org/Presstime/PTArtPage.cfm?AID=7063

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

21. A case in point of the “death spiral” appears to be playing out in Meyer’s backyard. New owners began the year in January 2005 with deep and abrupt staff cuts at the Durham Herald-Sun. For the six months ending September 30, 2005 , the Herald-Sun’s daily and Sunday circulation were each down roughly 20% year to year. The Raleigh News and Observer’s publisher, Orage Quarles, told us his paper had increased its Durham circulation by a comparable amount during 2005.

22. Davis Merritt, “Knightfall: Knight Ridder and How the Erosion of Newspaper Journalism is Putting Democracy at Risk.” (New York, N.Y.: AMACOM Books, 2005)

23. Jill Geisler, “Morale, Motivation and Balance,” Poynter Online, March 7,2005. Available online at: http://www.poynter.org/column.asp?id=34&aid=79346.

24. Renee Chen, Esther Thorson and Stephen Lacy, “The Impact of Newsroom Investment on Newspaper Revenues and Profits at Small and Medium Newspapers, 1998-2002,” Journalism and Mass Communications Quarterly, Autumn 2005.

25. Scott Maier, “Accuracy Matters: A Cross-Market Study of Newspaper Error and Credibility,” Journalism and Mass Communications Quarterly, Autumn 2005.

26. Jack Rosenberry, “The Effect of Content Mix on Circulation Penetration for U.S. Daily Newspapers,” Journalism and Mass Communications Quarterly, Summer 2005.

27. Rick Edmonds, “As Blogs and Citizen Journalism Grow, Where’s the News?” Poynter Online, November 14, 2005 . Available online at: http://www.poynter.org/content/content_view.asp?id=9139.