By paulgillin | July 9, 2008 - 7:07 am - Posted in Business News, BusinessModel, Layoffs, Murdoch, NewMedia, Newspapers

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.”

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This entry was posted on Wednesday, July 9th, 2008 at 7:07 am and is filed under Business News, BusinessModel, Layoffs, Murdoch, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments Off on Layoffs Hit Home at Tribune Co.

Comments

  1. July 12, 2008 @ 8:57 pm



    Everyone at the Tribune says more entertainment, more soft news and more yunger customers. They are myopic. They assume they lose yung folks because of a lack of “lifestyle” fluff? They lose readers because of soft news. The business section, once a giant is now a joke. Maybe reduce the paper to real news and editorials of fine quality and concentrate on your core news reading customers. TMZ can have the rest. I know plenty of 25-35 year olds who have given up on the Chicago Tribune because of it’s ever decreasing quality content. I know none who want more entertainment. The newspaper will never be the place for entertainment, fashion and lifestyle – so dont even bother. Be a newspaper for news readers, the market might shrink, but it will still be your market. Trying to do both is a recipie for assured failure in both worlds.

    Posted by Mark
  2. July 13, 2008 @ 7:17 am



    Surely they have research to support this strategic shift! They do share with their staff the studies that prove that young people want more soft news? Right? Right?

    Posted by Paul Gillin
  3. July 14, 2008 @ 11:41 am



    I think Helion invested $10-15 Million (which translates to 430-645 Million Rupees) in Mindworks.

    Posted by PR Ganapathy