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News Investment

News Investment

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

With every business indicator down for 2006 and looking little better in 2007, the newspaper industry continues to downsize. Newspapers, especially big metros, are not only shedding reporting and editing staff, they are shrinking in physical dimensions — paper width, paper weight — and in the space allocated for news.

The predominantly bad news of 2006 broke down this way:

  • Newsroom staffing continued to fall, not as precipitously as in 2005, but with no end in sight. The layoffs and buyouts are still not as great as in other industries, and it would be a mistake to exaggerate them.
  • Nonetheless, when combined with smaller paper sizes and reduced newshole, the result is that American newspapers have diminished ambitions. The metros are pulling back to a much more local orientation.
  • At the same time, Wall Street seems to have reached a point where it wants more from companies than simply cutting. Growth on the top line (revenue) is more important.
  • The effort online continues to become more serious. No reliable count of online staff growth is available, but it clearly does not equal the losses on the print side.

Over all, the industry enters 2007 with a flurry of redesigns for both online and print products. This may well be the year when a smaller American newspaper, more analytical and targeted to older, well-educated readers, emerges as the new model.

Staffing

The most fundamental metric of American newspapers’ ability to cover the country is the overall workforce, the number of people dedicated to gathering and editing the news. In contrast with most other news media such as network television and radio, the newspaper industry has stood out because it sustained and in many cases enlarged its newsrooms in the 1980s and 1990s, even as its share of the audience declined.

That trend is now over, probably permanently. The newsrooms of America’s newspapers are shrinking.

The industry began 2006 with roughly 3,000 fewer full-time newsroom staff people than it had at its recent peak of 56,400 in 2000.3 Over the course of the year, that number fell further, and more cuts are coming in 2007.

How much did newsrooms shrink? Our prediction of the 2005 losses in last year’s report proved more severe than the actual estimated result as calculated by the Newspaper Editors in their annual census, released in April 2006. That showed an industry with 53,500 full-time professionals in 2005, a drop of just over 1% from the year before, but less than the 2.5% drop we had forecast.2 Once burned, we are inclined to be twice shy on projections. Still, weighing the numbers that have already been announced (many are not) we would be astonished if the job loss was less than 500 to 1,000 in 2006. And it could be as bad, or worse, in 2007. If so, that would amount to an accumulated drop in newsrooms since 2000 of roughly 7% by the end of 2007.1 But in certain newsrooms the cuts go far beyond that — as high as 40%.

Newspaper Newsroom Work Force
1977-2005
Design Your Own Chart
Source: American Society of Newspaper Editors, Newsroom Employment Census, 2006
Note: Minorities include Native Americans, African Americans, Latinos, and Asian Americans. ASNE dates its data according to the release date. PEJ presents the data according to the year the data was compiled.

Just as the circulation and advertising losses were worst at metro newspapers, the buyouts and layoffs were concentrated at prominent big-city papers, too. Among those that made headlines were the Dallas Morning News, the Philadelphia Inquirer, the Washington Post, the Cleveland Plain Dealer and late in the year the Boston Globe.

There were also deep cuts, however, at mid-sized papers. Under new ownership the Akron Beacon Journal lost a quarter of its 160-person news staff. MediaNews acquired the San Jose Mercury News and made cuts both there and at the St. Paul Pioneer Press, which it operates under an agreement with the new owner, Hearst. For all those papers, save the Plain Dealer, it was the second or third wave of cuts this decade.

Once again most companies opted for buyouts — offering veteran employees sweetened severance packages — as the preferred method of staff reduction. On the one hand, the practice allows for voluntary departure, and some of the takers may be ready for a change or near retirement . On the other, it tends to strip the papers of experienced, talented professionals and depletes their institutional and community memory

With fewer people, papers also pulled back on their reach. The Baltimore Sun closed down its venerable network of foreign bureaus. In January 2007, the Boston Globe announced that it would do the same. The Washington bureau of the Toledo Blade and Pittsburgh Post-Gazette, which generated the lead for a recent Pulitzer Prize in national reporting, was cut from five reporters to one. The Sacramento Bee called home its Los Angeles and San Francisco correspondents.

At another Tribune paper hit with repeated cuts, the Hartford Courant, publisher Jack Davis retired and editor Brian Toolan quit for a national editing job at the Associated Press.

The threat of deep cuts was also central to a mutinous struggle at the Los Angeles Times and the ouster of its highly esteemed editor, Dean Baquet. In Chicago, Tribune was insisting that the paper cut as many 140 newsroom jobs, trimming a staff that was at about 940 people.4 The paper’s publisher, Jeffrey Johnson, and Baquet both refused, arguing that the cuts would materially damage the quality of the paper. Still others at the Times were more alarmed by their sense that Tribune had no long-term plan. Each year, it wanted more cuts. “I think we can produce a great newspaper with 800 people,” one senior manager told PEJ. “I’m worried that next year they will just say, now cut to 600.”

Tribune ousted Johnson for resisting. Baquet remained, and launched a project in which the newsroom began to form a long-term plan for the paper’s future — the Spring Street Project — sending out some of his best reporters to investigate the future of the business. Before it was completed, the paper’s new publisher, who had been sent from Chicago, became incensed when Baquet continued to speak out against newsroom cutbacks. Shortly after Baquet returned from a speech at the Associated Press Managing Editors conference in New Orleans, in which he talked about editors pushing back on excessive staff cuts, he was fired. Baquet was eventually hired by the New York Times as Washington bureau chief.

The company’s proposed reductions for the Times are surely coming in 2007 if Tribune Company retains control.

Where the Cuts Came

The details of the cuts show their range and seriousness.

According to ASNE’s projection from its annual newsroom census, the industry lost 2,000 full-time newsroom jobs during the advertising recession of 2001 and a net of about 1,000 more in the next four years.

That set the stage for some drastic reductions during 2006:

*At the Belo Corp.’s Dallas Morning News, 111 news staff members accepted buyouts.5 That reduced the staff, which numbered 575 at the start of 2004 and stood at roughly 500 at the beginning of the year, to fewer than 400.6 Besides the typical financial pressures, the Morning News was one of four papers caught in 2004 padding its circulation. So as publisher Jim Moroney put it, the business was smaller — by at least 10% — than it had thought it was.7 During its heyday in the 1980s and 1990s under Burl Osborne, editor and then publisher, the Morning News was considered among the top 10 or even the top 5 papers in the country. In 2006, editor Bob Mong told an interviewer from a local weekly that it would aim to be “a leading paper in the region.”8 Belo’s Press Enterprise in Riverside, Calif., also bought out 50 newsroom employees.

*At the Washington Post, 70 senior staff people accepted buyouts early in June.9 Another 54 had accepted a similar offer in 2003. While the latest action stripped experienced talent from the newsroom, especially in the business news section, the Post remains well-staffed. And its Web site, WashingtonPost.com, is among the strongest editorially and best at generating revenue, with 75 to 100 news people assigned to it full-time.10

*The Philadelphia Inquirer, which absorbed 75 buyouts in 2005, seemed poised for an upswing when the local investors headed by Brian Tierney, the PR executive, bought the paper in July.11 But the industry’s third-quarter advertising shortfall resulted in Tierney’s October announcement that he would need concessions and further reductions in staff to meet his group’s bank obligations in 2007. In the first week of the new year the layoffs of another 68 in the newsroom, about a sixth of the staff were announced.12 In its glory days in the 1970s and 1980s under the legendary editor Gene Roberts, the Inquirer, too, was considered a top regional, winning numerous Pulitzers and becoming a destination for talent.

*At the Cleveland Plain Dealer, 65 news staff members accepted buyouts, reducing the staff by 17%, to 308.13 The paper’s owner, the Newhouse family’s Advance Publications, has a reputation in recent years for running good and well-staffed papers, including The Oregonian of Portland and the Times Picayune of New Orleans, while accepting more modest profit levels than Wall Street would demand if the properties were publicly owned. But Editor Doug Clifton told a local magazine that margins had slipped to “passbook savings levels” — presumably about 3%.14 That was too low and the paper was overstaffed for its sliding revenue base, he said. In January 2007, Clifton announced plans to retire later in the year.

*At privately held Copley, 45 staffers, including 19 in the newsroom at its flagship San Diego Union Tribune, accepted buyouts early in 2007.15 That represented a cut of approximately 7% to the newsroom.

*Privately held MediaNews trimmed 16 positions from the San Jose Mercury News (6%) and cut 21 from the St. Paul Pioneer Press (about 10%).16 Another buyer of the 12 papers McClatchy chose to divest, Black Press, cut 40 positions from a staff of 160 at the Akron Beacon Journal (25%).17 All three of those papers had experienced deep cuts earlier in this decade under Knight Ridder ownership.

*Other well-regarded newsrooms labor under the sword of Damocles. Tribune is expected to cut at least 100 reporting and editing jobs if it retains ownership of the Los Angeles Times. A new generation of leadership at Block Communications has said publicly it need concessions and cuts at the Pittsburgh Post-Gazette and Toledo Blade or it will sell the papers.18

*The surprise sale the day after Christmas of the Star Tribune of Minneapolis to a private equity group raises worry that staff cuts are on the way, even though the buyers, Avista Capital Partners, have said otherwise.

*Smaller papers don’t make headlines, but there are cuts there too — five in the newsroom at Media General’s Winston-Salem Journal, 44 part-timers, company-wide, at Advance’s Union-News of Springfield, Mass.19

*Plenty of papers — Tribune properties in particular —did not experience new announced layoffs or cuts in 2006 but have been on the attrition train for a long time. The Hartford Courant, for instance, has shrunk from a newsroom staff of 355 in 1998 to 265.20 More cuts could be on the way in 2007. Besides the deep cuts at the Philadelphia Inquirer, the New York Times Company’s Boston Globe announced in January 2007 that it would eliminate 19 newsroom positions through buyouts, a reduction of about 5%.21

As this report was being prepared in early 2007, the Columbus Dispatch, the Sun Sentinel of Fort Lauderdale, and the Ann Arbor News all announced buyout plans. The Atlanta Journal Constitution has offered up to 80 buyouts to a newsroom of roughly 475 as part of a plan to reorganize print and online reporting and editing and reduce distribution and coverage from a multi-state region to, basically, metropolitan Atlanta.

Paper Size and Newshole

The year 2006 was also one in which the few holdouts for wide broadsheet design capitulated to the trend of trimming the physical size of the paper sheet. The Wall Street Journal’s first edition of the New Year packaged a thoroughgoing redesign with a substantial trim in web width and a reduction from six columns to five. The St. Petersburg Times, following the same game plan, reduced both paper weight and page width in a redesign in October. The New York Times plans to trim its width in August 2007.

The new dimensions may be easier for readers to handle and may be readily accepted, but there is no mistaking the guiding agenda of saving on paper expense. It also means less space, page for page, for news and ads.

Reductions in newshole (the daily space for news content) typically are not announced as big staff cuts are, but we would venture that the typical metro is printing 10% to 20% less news than in the good old days of 2000.22 Of course, papers with a lesser volume of ads are smaller, but here, too, budget-minded managers are capturing some savings on paper.

Among larger papers, the Wall Street Journal reduced newshole by 10% with the redesign, about half of that from financial tables.23 The New York Times plans a 5% reduction when it trims width.24 And in a memo to the newsroom in 2006, editor Len Downie of the Washington Post mandated an unspecified percentage of further “tightening” of the total space for news and individual story lengths.25

Is the Sky Falling?

Anyone who wants to make the case that despite all this negative news, the sky is not falling, might cite these factors:

*Medium-sized and small papers are not experiencing the severe financial setbacks of the metros and are not cutting their staffs as deeply. That would explain, for instance, why the net job loss, by the Newspaper Editors’ count, during 2005 really was not much more than the cuts announced by big papers (though the census does show some losses at smaller papers).

*Cuts and threatened cuts get the notice, but stability is invisible. The co-author of this report on newspapers, Rick Edmonds of the Poynter Institute, is given access to the paper-by-paper results on the condition that individual titles are not named. At the end of 2005 about as many papers with 250,000-plus circulation had increased staff size or held it equal since the end of 2001 as had experienced losses. In total, however, losses well outnumber gains.

*The trims are being paired with development and increased staffing of online sites. Not even rough counts of online-dedicated news staff are available, and it is unclear whether the reports papers file for the ASNE census consistently include those positions. It is fair to say, though, that the increases in no way cancel the losses. Belo, for example, paired the announcement of 111 buyouts at the Dallas Morning News with a planned increase of 30 positions in its Dallas online operations. At the same time, the responsibility of creating content for the new platforms also adds to the workload of the remaining staff in the newsroom.

*There needs to be some correspondence of news staff and budget to revenues and revenue prospects. As the business shrinks, so must newsrooms.

*With cuts to news space and the elimination of features like long-form stock tables and TV listings, not as many people are needed. Probably, technology from Google to cell phones to electronic page design has made the work of the newsroom at least somewhat more efficient.

*The industry still comfortably fields more than 50,000 full-time professionals. Losses for the decade are well under 10%.26

All that said, the fairest assessment must include an acknowledgement that the cuts have an effect, one that is only like to grow.

The Ambitions of the American Newspaper

Collectively, the effects of smaller staff, smaller sheets of paper, and smaller newshole add up to something more significant. The logical next phase for the industry is defining a newspaper of more modest ambitions and proportions.

What that will mean to citizens is hard to say definitively. Where are the cuts being made? What does more localism mean? How does building up the Web affect original newsgathering? Are the hires online technical people or reportorial? How will citizen contributors be used? The answers to all those questions are still emerging.

For now, this much can probably be safely determined.

Concentrated at metros, the staff reductions are gutting once-great and ambitious publications. In effect, the industry ends up ceding national and international coverage to four papers and the Associated Press. That means less effort, less variety.

Newspaper editors say one of the last things to go will be investigative public service work. Certainly the flow hasn’t stopped. But retaining an investigative team is not the whole story. The work at its best entails a willingness to let a number of reporters explore leads that may not pan out. That requires generous staffing rather than lean.

And the watchdog function is more than big-splash special investigation. The novelist Carl Hiaasen’s 2003 book, “Basket Case,” a screed against corporate newspapering and a villainous CEO with more than a passing resemblance to Tony Ridder, puts the matter pungently. A hiring freeze at the fictional Union-Register leaves a single reporter covering first two communities, then three, all of whose city councils meet on Tuesday. “The politicians in Beckersville and Palm River are not exceptionally astute,” Hiaasen writes, “but soon figured out that every other meeting was pretty much a freebie and composed their venal agendas accordingly.”27 Management racks up a 23% profit margin while readers “were semi-regularly being reamed and ripped off by their elected representatives, all because the newspaper could no longer afford to show up.”

The curmudgeonly alt-weekly columnist Jack Lessenberry offered this real-life example from Detroit. A local woman, Iris Ovshinsky, who with her husband was a prominent inventor and scientist, died. Neither the Detroit Free Press nor the Detroit News nor the suburban Oakland Press provided more than passing notice. Compounding the offense, Lessenberry said, two of the three mistakenly reported she had drowned when she in fact had suffered a heart attack while swimming.

So loss of people along with newsgathering and editing capacity translates into loss of what people come to a newspaper looking for. There is a downside, too, for those who stay. News people aren’t known for their cheery dispositions, but the last few years have left morale in many places, as a colleague used to say, “lower than a snake in snowshoes.” A Pulitzer-Prize winning reporter, who had surveyed contacts at other regional and mid-sized papers, privately put it this way: “In the trenches, people are scared, panicking. They look to the glass offices for leadership but aren’t finding it. Where are we going? Are we doomed?”

The response of companies is no. Doom is an extravagant and emotional overreaction. Rather than giving up, the industry is becoming more local. By the end of 2006, that new phase — the micro-local mantra — was spreading from small and mid-sized papers to the likes of the Philadelphia Inquirer, Dallas Morning News, and Boston Globe. The extended debate over the future of the Los Angeles Times could be framed as a question of whether it should scale way back on its national and international news effort in favor of more intense Los Angeles coverage.

Skeptics are dubious. The big metros are not equipped to cover civic clubs and little leagues as a suburban weekly or daily might. Part of the economizing, indeed, has been pulling back staff from the outer edges of the metro area. Hence, some of those communities won’t get local coverage at all.

Part of the re-imagining of print newspapers involves seeing them as complementary to the online edition and/or targeted to a narrower, older audience.

The Wall Street Journal billed its redesign project as Journal 3.0, suggesting that online and print would play in tandem in new ways. USA Today has a version of the process in progress, to be unveiled around the date of publication of this report.

Wall Street Reaction

In many a telling of this story, analysts and investors are the heavies, driving public-company executives to make imprudent cuts for shot-term profits. That is not all wrong. Institutional investors are in the newspaper game to make money. Perhaps going public was, in retrospect, a deal with the devil for many companies (though most of their executives insist otherwise). (See Ownership).

But there is some over-simplification at work here. In the roster of staff-cutters earlier in this section, private companies — Advance, Copley, MediaNews and Brian Tierney’s Philadelphia group — are generously represented. Financial pressures are now significant for any good-sized newspaper, so inattentiveness to cost control is not an option.

And Wall Street, while it still likes cost control, has also come to see that newsroom cuts are no cure-all. Both Knight Ridder and now Tribune sought to placate shareholders with high-profile cuts, and neither stock recorded any forward movement of note as a result. Journal Register, proudly skinflint in its news operations, had the worst stock performance of any public newspaper company in 2006.

That squares with what we hear from the three analysts we read and talk to frequently — Lauren Rich Fine of Merrill Lynch, Paul Ginocchio of Deutsche Bank Securities and Peter Appert of Goldman Sachs. All agree that excessive newsroom cuts will lessen reader appeal, circulation and value to advertisers. And they say that to build online, investments in content will be needed. They contend that revenue growth rather than profit margin is the key to getting more favorable valuation in the market. Ginocchio and Fine add that newspapers, while whacking at their newsrooms, have been relatively slow in upgrading their ad-sales staff or identifying potential savings in production and distribution.

Attention to cost control is still viewed as a plus. But these days deep newsroom cuts are likely to be seen more as a symptom of financial distress and lack of a strategic plan than as a remedy.

Online: The Good-News Story of 2006

In last year’s report, we noted that after languishing for years, newspaper online sites showed a better effort in 2005 and might be in for more visible upgrades in 2006. That came to pass, and rather quickly.

Rick Edmonds and colleagues of his at the Poynter Institute surveyed a dozen online news operations in spring 2006. PEJ also included another 38 sites in its own study. Both found two dominant trends: (1) All the sites were aiming for rapid posts of breaking news. The practice of saving good stories (at least those with a strong time element) for the next day has become passé. (2) Sites are experimenting with all manner of multi-media enhancements – blogs, audio, video, slide shows, podcasts and interactive features . No one model or even two or three models have yet emerged as dominant. It’s reasonable to think some approaches will become more successful and popular than others, but for now a lot of experimentation by itself represents a new level of commitment.

The initiatives were typically supported by what might be called a “some-of-both” staffing effort. The main newsroom staff is increasingly being asked to contribute breaking news and multimedia efforts. At the same time sites are adding producers, tech specialists and reporters and editors with special skill at tailoring their work to the medium. We heard almost everywhere of bottlenecks: not enough people to teach print people the new formats or work with them to execute ideas.

Unfortunately, there is a dearth of information on even such basic questions as how many full-time news professionals now work predominantly online. A fuller set of metrics paralleling print basics like staff, budget and newshole, is several years away. So is any measurement of combined news effort in print and online, though companies have been quick to add faster-growing online advertising revenue into their reports of financial results.

National web sites — the Wall Street Journal, the New York Times, USA Today and the Washington Post — have dedicated news staffs of 50 to 100 and participation (even full integration) with the legacy newsroom. It shows in sites that are freshened hourly and have a rich offering of Web-specific features and a steady stream of innovations. On the day the draft of this section is being written, NYTimes.com offered a first-of-its-kind video clip that opened, “Hi, I’m Art Buchwald, and I just died.”

A growing number of smaller-city sites are drawing attention for excellence or innovation — Lawrence, Kan.; Naples, Fla.; Spokane, Wash.; Bluffton, S.C.; Milwaukee. Typically they have a high degree of interactivity and reader-contributed material. Bluffton Today, for instance, was launched in a growing community near Hilton Head Island, conceived as a participative Web site first with some of that material repackaged in a free print daily. Such operations begin to suggest the shape of an idealized Web site that has not just news but all you might want to know about your local community and a flavor of continuous discussion.

In recent years, companies have included niche publications and some forays into ethnic media in a claim that they offer an array of products that increase options and total audience reach to advertisers. Neither faded away in 2006; Gannett’s 90 papers now have more than 1,000 such publications.28 The Dallas Morning News still published both a free youth-targeted tabloid and a Spanish-language daily. Our sense, though, is that the best opportunities have been seized and that indigenous ethnic media offered stronger than anticipated competition.

Our forecast for 2007 is for more growth in online and the emergence of winning formats that become standards. As the volume of online content grows, sites have become cluttered and hard to navigate. We look for a wave of redesigns in 2007, aimed both at better organization and better display opportunities for advertisers.

We also think that the emerging top priority among many is going to be interactivity — both in content that has rich citizen input and in how a user can find his or her way into, around and out of the site. By the end of 2008, today’s typical newspaper site will probably look quaint.

Defining the New Print Newspaper

For some years we have been saying that the print newspaper is not about to die, but it is about to morph. Newspapers are almost certain to become smaller, targeted to an older and educated audience, perhaps more expensive and operated in tandem with a distinctive Web site.

At the end of 2006 and the beginning of 2007, two major newspaper companies announced changes of just that kind. The Wall Street Journal redesign, begun on January 2, 2007, didn’t strike most readers or industry commentators as radical. But the shift in angle-of-attack in stories was seismic. Most Journal print stories (80%, the company estimates) are now what used to be called second-day pieces, analyses of what happened yesterday. Many carry forward-looking “will” headlines. Less and less is duplicated online, creating incentive for a subscriber to get and use both versions in different ways throughout the day.

The Journal has a specialized business audience and one of only a few sites that successfully charges for most content (though the paper has been making more material available free). Still, there does not appear to be a reason some of the principles of the makeover could not be adapted by a more typical paper.

A second strong vote for rethinking print and online came in November 2006 when Gannett announced it would transform newsrooms at all 90 of its papers to “information centers.”29 The program incorporated some existing practices and others that had been field-tested through the year, but embodied a hard-edged agenda of kicking news operations out of the traditional focus on the 24-hour cycle of getting a daily print edition out. In fact, Gannett anticipates that print editions will eventually target more educated and affluent readers, 45 and older.

Gannett charges its newsrooms with seven tasks. On the traditional side are a strong watchdog function and local news effort. In addition, though, the newsrooms are asked to develop rich databases, convene community conversations, develop custom content for consumers, and expand multimedia and varied digital content.30

In a presentation to investors and analysts in December, Gannett led with its new plans for news and offered these examples:31

*A three-week old Web site, Indy Moms, produced by the Indianapolis Star, which was rich with listings and ad opportunities and had already attracted 100,000 users. (Watch for a wave of “mom” Web sites in 2007).

*Video of a fire in Palm Springs, Calif., that spliced film shot by a golf writer for the paper and a citizen contributor.

*A successful investigation by the News Press in Fort Myers, Fla., of excessive sewer hookup charges that drew on citizens not just for examples but for volunteer expert analysis, which was then combined with the work of professional reporters.

Gannett has a reputation in the business for high margins and modest newsroom investment. But it also is frequently ahead of the curve — as in a 2001 directive to publishers to build audience in whatever medium, whether the newspaper, online or niche. The Information Center initiative, doubtless subject to tweaking as it goes along, puts the company and its newspapers in the attractive position of wholeheartedly trying something new instead of drifting.

Conclusion

We have described here an editorial plunge into transformation. The direction is clear, but the destination and success are uncertain. For journalists, who tend to want freedom to practice what they consider a public service, the abruptness of the change and what they think is at stake make all of this unnerving.

The first outlines of a potential solution, in which newsrooms maintain their commitment to informing citizens while doing a lot of things differently, are starting to emerge.

One concern is that 2007 is likely to present more of the same business reversals, prompting a fresh wave of reductions of news staff and news capacity — capacity that cannot be readily be restored.

In the long run, if print dies, newspapers can benefit from the cost savings involved in transferring distribution from paper and truck delivery to online. Those savings could be used to improve content. Or they may simply be eaten in covering shrinking revenues. The problem is that no one knows at this point which of those will happen. Even optimists who believe the economics of the Web will work out worry about the transition. Assuming the Web does provide substantial revenue, what will newsrooms look like by the time that occurs?