After stating confidently last week that his deal to buy Newsday was as good as done, Rupert Murdoch abruptly pulled out of the bidding, ceding ownership to Cablevision. Thus ends a month of speculation about Murdoch’s supposedly devious strategy to corner the New York market and then spread is his publishing empire westward.

Maybe.

As Newsday points out in its own outstanding coverage of the saga, Murdoch walked away from the Dow Jones deal several times before eventually settling on the price he wanted. So the concession to Cablevision could be a ruse meant to force Tribune Co. owner Sam Zell to make a decision (Alan Mutter has a fine analysis of the dire circumstance at the Tribune, whose debt service obligations were an incredible 24% of revenues in the first quarter).

On the other hand, as Newsday points out, a sale to Murdoch could have raised significant antitrust and regulatory issues. With Zell under intense pressure to generate cash, a quick sale to the cash-rich Cablevision could be a more practical option.

For now, it appears that this story is over. Murdoch was reportedly having a grand old time at the Time 100 gala dinner in New York last week, while Mortimer Zuckerman sulked in a corner. Murdoch conceded to a reporter that he might have been a bit hasty in declaring victory in the bidding a day earlier. His demeanor didn’t indicate that he was tired or frustrated about the sudden collapse of the deal. Rather, his relaxed confidence may have been that of a skilled card player waiting to see if his bluff will be called.

Small Town News Outlet Writes New Rules

Columnist Jerry Large of the Seattle Times tells the story of a community newspaper that is thinking differently. The Orting News is an online service that’s filling a void left by the death of a local newspaper. It has ramped up to 14,000 subscribers with a model in which nearly all the reporting is done by members of the community. Anyone can submit an article, and the only fact-checking is an e-mail verification that the sender is who he or she says. Any disputes or corrections are sent directly to the writer. Paid writers cover the really important stuff.

An interesting comment Large’s column is this one: “The Orting News isn’t journalism.” Really? According to who?

Losses & Layoffs

• In what has become an all-too-common refrain of late, Gannett said it’s offering buyouts to about 160 workers at five of its six newspapers in New Jersey. If there aren’t enough takers, layoffs are likely.
• Editor & Publisher cites an SEC filing in which McClatchy estimates its 49.5% stake in the publisher of The Seattle Times has fallen more than a third since last December and 88% from its value at acquisition in late 2006.
• Community newspaper publisher GateHouse Media reported a first-quarter net loss of $28.8 million compared to a $6.1 million loss a year ago. Total revenues were up 78% but same-property revenues fell 4.2%. Gatehouse’s strategy is to buy up newspapers and then use free cash flow to pay out dividends that drive up it stock price. However, even that strategy doesn’t appear to be working these days.

Two once-formidable newspaper companies – Journal Register Co. (JRC) and Sun-Times Media Group (STMG) – have recently been delisted from the New York Stock Exchange and said they are “exploring strategic alternatives.” What exactly does that mean?

Sometimes, alternatives include ways to keep the business going, such as restructuring debt or selling assets. They can also include more radical actions such as a management buyout. More often, though, this term is code for “find a buyer.” The owners hope to get something – anything – out of their investment.

This is almost certainly the case for these two media companies. JRC traded at nearly $20 per share less than three years ago, and STMG was in that range in late 2004. Their current sub-50-cent prices probably have investors panicked.

Likely scenarios

When a company puts itself up for sale, there are typically two kinds of buyers. One is competitors in the current market, who see the opportunity to consolidate their positions and gain economies of scale. That’s unlikely in this scenario, however, because all the media companies are under debt pressures of their own. The other buy is typically a professional investment firm that has the resources and expertise to maximize the value of the distressed company’s assets. That’s the most likely outcome here.

In almost all cases, the professional investment firm carves up the company into pieces and sells them off. They can quickly make huge amounts of money from realizing the value of the parts. These investors aren’t long-term players. They generally hold an asset for a couple of years at most and then walk away.

The buyers of the piece parts usually do one of two things. They either cut costs dramatically with the intention of wringing whatever profits are left out of the company or they try something radically new. In the case of the newspapers that are likely to be sold in the JRC and STMG deals, the final buyers may be former employees, local businesses or other investment groups. Because the new owners get these assets for pennies on the dollar, they’re often free to try interesting and innovative things.

Silver linings

This could be the silver lining in this whole financial mess. By the time the dust settles, the newspapers in these two companies’ portfolios may look very different from what they are today. Some might reduce frequency and drive toward a fully online model, unencumbered by the expectations of investors. Basically, the owners have little to lose. That’s where we might see some truly innovative models develop. In a worst-case scenario, the buyer is an investment firm that simply manages the asset into the ground in hopes of getting back more than it put in.

This process is enormously stressful for employees. Many can look forward to two or three rounds of ownership in the next few years. This often drives the best people away. By the time an owner takes over with a plan to grow the property, all that’s left is a shell of a workforce. Rebuilding often requires tearing apart the old, though, and asset sales are one of several ways to do this.

Two once-formidable newspaper companies – Journal Register Co. (JRC) and Sun-Times Media Group (STMG) – have recently been delisted from the New York Stock Exchange and said they are “exploring strategic alternatives.” What exactly does that mean?

Sometimes, alternatives include ways to keep the business going, such as restructuring debt or selling assets. They can also include more radical actions such as a management buyout. More often, though, this term is code for “find a buyer.” The owners hope to get something – anything – out of their investment.

This is almost certainly the case for these two media companies. JRC traded at nearly $20 per share less than three years ago, and STMG was in that range in late 2004. Their current sub-50-cent prices probably have investors panicked.

Likely scenarios

When a company puts itself up for sale, there are typically two kinds of buyers. One is competitors in the current market, who see the opportunity to consolidate their positions and gain economies of scale. That’s unlikely in this scenario, however, because all the media companies are under debt pressures of their own. The other buy is typically a professional investment firm that has the resources and expertise to maximize the value of the distressed company’s assets. That’s the most likely outcome here.

In almost all cases, the professional investment firm carves up the company into pieces and sells them off. They can quickly make huge amounts of money from realizing the value of the parts. These investors aren’t long-term players. They generally hold an asset for a couple of years at most and then walk away.

The buyers of the piece parts usually do one of two things. They either cut costs dramatically with the intention of wringing whatever profits are left out of the company or they try something radically new. In the case of the newspapers that are likely to be sold in the JRC and STMG deals, the final buyers may be former employees, local businesses or other investment groups. Because the new owners get these assets for pennies on the dollar, they’re often free to try interesting and innovative things.

Silver linings

This could be the silver lining in this whole financial mess. By the time the dust settles, the newspapers in these two companies’ portfolios may look very different from what they are today. Some might reduce frequency and drive toward a fully online model, unencumbered by the expectations of investors. Basically, the owners have little to lose. That’s where we might see some truly innovative models develop. In a worst-case scenario, the buyer is an investment firm that simply manages the asset into the ground in hopes of getting back more than it put in.

This process is enormously stressful for employees. Many can look forward to two or three rounds of ownership in the next few years. This often drives the best people away. By the time an owner takes over with a plan to grow the property, all that’s left is a shell of a workforce. Rebuilding often requires tearing apart the old, though, and asset sales are one of several ways to do this.

Nick Denton says the New York Times should abandon the news-opinion divide and let its reporters and editors insert commentary into their stories. They already do it by quoting sources sympathetic to their point of view, so why not stop pretending and inject a little color into a paper whose impartiality has become a liability? The arrival of blogs at the Times has effectively undermined any pretense of objectivity already and management’s efforts to clarify the wall between opinion and news look increasingly flimsy.

Denton is echoing points that Eric Alterman made a bit less pugnaciously in his New Yorker piece of two months ago. Newspapers started as vehicles for publishers to express their opinions. The concept of an impartial press is a recent phenomenon. Readers are smart enough to make up their own minds about what to believe. What’s wrong with opinion?

Jeff Jarvis agrees with Denton, noting that Times blogs have given him the opportunity to get the perspective of reporters whose work he’s read for years. These people know a lot about the subjects they cover. Why bottle up that perspective behind an artificial veil of neutrality.

Business Blues

Rupert Murdoch took an early victory lap, declaring that he’ll be the chosen owner of Newsday by next week, despite the existence of a richer bid from Cablevision and the likelihood that Mortimer Zuckerman will raise his offer. Murdoch pledged to continue Newsday’s commitment to strong local coverage and underlined his confidence by announcing a surprise doubling of the price of the New York Post to 50 cents. The E&P account also refers to Murdoch’s plans to build a single printing facility to publish Newsday, the Post and The Wall Street Journal. Zuckerman’s Daily News will have its hands full competing with those economies of scale.

With the newspaper industry suffering from the flu, Sun Times Media Group (STMG) has lapsed into pneumonia. The publisher reported a $35.8 million loss in the first quarter, compared to a loss of $4.8 million a year ago. Advertising revenue fell 12.6%, which is considerably more than declines at most papers. We wrote earlier about speculation that the Chicago Sun-Times may be the next big metro daily to fold, in part because of factors that transcend the industry’s crisis. STMG said it’s on track to cut expenses by $50 million by June 30 and is exploring strategic alternatives.

Tribune Co. posted an 8% drop in revenue, but the results were helped by growth in the broadcast sector. Newspaper revenue was off 11%. More worrisome is that cash flow shrank to $200 million from $239 million a year ago. That’s not good for a company that has a big debt payment looming at the end of the year.

And Finally…

• The Newark Star Ledger and hyperlocal website Baristanet.com are teaming up to launch a print product, a guide to Montclair, N.J. The magazine goes out to 70,000 readers next week. This is one example of how print/online partnerships can be win-win propositions.
• The San Diego Union-Tribune fired three top people who directed the company’s online products, but apparently didn’t do it very well. San Diego Weekly Reader says the trio positioned the online unit internally as competitive with the print news team, which didn’t do wonders for morale. There was also a disastrous radio venture.
• When all else fails, pray. That’s the mission of PrayingForPapers.com, a site that “is just asking that anyone who cares about their fellow journalists devote part of their prayer time to ‘Pray for Papers.'” The site’s tag line is an excerpt from Exodus that betrays the enormity of the industry’s task. (Via E&P)

Editor & Publisher has an interesting piece on the debate over paid subscription newspaper websites. It cites a rivalry between the well-established Watertown Daily Times of upstate New York and NewZjunky, a one-man link log that’s beating the tar out of the local newspaper online (That’s the Press, Baby had this story three months ago). The daily just took down its pay wall and is seeing Web traffic increase, but at what cost?

The quandary for newspaper publishers is whether to treat online audience as an extension of print subscribers or to level the playing field and compete for eyeballs with everybody else. The first scenario dictates that you circle the wagons around a paid model, and some 50 small newspapers have done exactly that. But the second option may be the only one that offers hope for long-term survival.

Business News

Newspaper Delisting Watch: Sun-Times Media Group (STMG) joins Journal Register on the list of newspaper companies recently kicked off the New York Stock Exchange. No matter, though. You’ll be able to invest via the Pink Sheets. STMG is exploring strategic alternatives, as are many others.

How to lose $75 million in 12 months: Avista Capital Partners, the owner of the Minneapolis Star Tribune, has taken a $75 million goodwill write-down on its investment because of declining circulation and advertising revenue. Avista bought the paper in late 2006 and took the write-down a year later. Star Tribune revenue fell $75 million between 2005 and 2007.

Miscellany

Alan Mutter documents a trend that many people in the business probably understood instinctively: newspaper advertising declines are proportional to growth in broadband adoption. The good news? There’s still money to be made in Mexico.

The Newspaper Guild has filed a grievance against The New York Times over a small number of layoffs that were necessary to meet the Times‘ goal of a headcount reduction of 100 people. Demonstrating logic that only a union leader can appreciate, New York Guild President Bill O’Meara said that his union “values quality journalism” and so would be filing a grievance because the layoffs were based on merit rather than seniority. (via Romenesko)

Editors Weblog has released more results of its Newsroom Barometer survey of more than 700 editors from around the world. Among them are detailed findings about the biggest threats to editorial independence, investment priorities and more.

Boston Globe EVP Al Larkin is retiring after a 36-year career. His job will be redistributed among other people. Larkin oversaw the Globe’s Pulitzer-winning coverage of school desegregation in the 1970s. The paper’s work at that time really put it on the national map.

LAmag.com rounds up a group of former LA Times editors for one-on-ones about the past and future of the newspaper. The conversation is pleasant until you hit the jump page, when former EICs Dean Baquet and James O’Shea unload on owner Sam Zell.

Quoting from Baquet:

“Tribune was not a good steward, but Zell seems to be worse. Tribune didn’t like the L.A. Times, but Zell seems to be flailing and making it up as he goes along. At least with Tribune, you could have a rational fight—they never shouted obscenities at me. I wish somebody could tell this guy that he’s presiding over important newspapers and that sounding like a knucklehead won’t work in the newspaper business. Doesn’t he understand that the best people at the Times are floating résumés across the country because of his bullying?”

And from O’Shea:

“I think Mr. Zell looks at newspapers as he looks at any business, but a newspaper isn’t any other business. It’s a public service. If you do a good job serving the public, then business will be good. Public service is not a dividend you decrease or increase when profits fall or grow. What the L.A. Times becomes will depend on Mr. Zell’s understanding of that.”

Survey says Newspaper Websites Attract Smart, Rich People

A Nielsen survey commissioned by the Newspaper Association of America reports that newspaper websites attracted more than 66.4 million unique visitors in the first quarter, up 12.3% from last year. Page views were up a more modest five percent. In addition, the survey found that regular online newspaper readers are richer, better educated, more likely to travel and more likely to use iTunes. They have all kinds of other desirable characteristics, which you can read about in the press release.

Murdoch Still Favored to Win Newsday

Newsday continues to provide the best coverage of its own impending sale. You’d think that with Cablevision outbidding two other suitors by $70 million, the deal would be a no-brainer.  Not so, says this report. For one thing, Sam Zell may be reluctant to snub his new buddy, Rupert Murdoch. Cablevision may also face the same kind of cross-ownership regulatory hurdles as News Corp. And the whole deal needs to be rubber-stamped by a watchdog group of Tribune Co. employees, who may or may not agree with their boss. The whole thing could drag on for months. (via Romenesko)

Envisioning the Future of News

Susan Edgerley, assistant managing editor of The New York Times, is answering questions from readers. She’s focused on reinventing the newsroom. Some notable quotes:

“Two years ago, we might have been hesitant to break a scoop on the Web — we would have worried about the competition catching up to us before our print deadline. No more. Now we put the story out there and figure out how to advance it for the next day’s paper.”

 “The Web staff used to be in a different building a couple of blocks from our old Times Square office. When we moved into our new building about a year ago, we had the space to sit together for the first time.”

 “I don’t think you’re wasting your time getting a print journalism degree. Telling stories fairly and compellingly will always be at the center of what we do.”

 “We’re hiring people, some of them straight out of school, for their Web skills.”

 “Finally, NYTimes.com is more than the stories, pictures and graphics you see everyday in The New York Times. It is more than a newspaper on the Web. We want to use its blogs and reader comments and Topics pages and interactivity to talk more directly to our readers and find ways for them to share information with us.”

ReinventingClassifieds.com has a prescription for resuscitating the dying business. Newspapers should put all their classifieds into one distributed, constantly updated database and then distribute them freely to bloggers, who can sell display ads against them. Bloggers can offer free classifieds to their readers, which become part of the master database. It’s an interesting idea, although we question how much interest bloggers – or display advertisers – will have in running ads next to ads. (via Romenesko)

For the true TV news junkie, check out LiveNewsCameras.com. The site aggregates video feeds from more than 100 stations around the U.S. The project is the brainchild of a former Bay Area TV producer, says the San Francisco Peninsula Press Club.

Editors Weblog reports on Sunlight Foundation’s new tools for online journalists. They include a Google Maps mash-up of earmarks from last year’s Labor, Health and Human Services appropriations bill.

There’s also an item on the innovative uses of Twitter by the Evening Leader in the UK. The group text-messaging service recently enabled the paper to cover local election results, scooping its competition and setting up the print edition for more thoughtful next-day coverage. Will Twitter become an essential tool for journalists in the future? Let’s hear your comments.

Layoff Log

• The Lexington Herald-Leader is offering a voluntary buyout program, looking to reduce its staff of 385 employees by about four percent. Layoffs are possible if the offer doesn’t generate enough interest.
• The Camera of Boulder, Colo. laid off nine employees — 6 percent of its staff — in response to declining advertising revenues. The president of the company described the newspaper’s business as “healthy.” You figure it out.

The New York Times tells the story of International Data Group’s (IDG) successful transition from the print to the online model, proving that it can be done (full disclosure: I worked for IDG for 15 years). IDG still has a lot of print publications, but the print component of its publishing revenue model has dropped from 86% in 2002 to 48% online today. The Web has not only picked up the slack but is actually driving growth of 10% annually, according to CEO Pat McGovern.

This story focuses on Infoworld, which was once a top technology title in the U.S. Buffeted by the rapid shift of its techie readers from print to the Web, Infoworld shut down its print edition a year ago. Today, it’s bringing in just as much money online as it did in print, only lthe margins are much better.

The technology trade media market is unique in several ways, but publishers should take heart that an online business model really does exist and that you really can get there.

Stirring Story From the Heartland

When The Times of Liberal, Ks., cut back from daily to three days a week last fall, readers took it as a slap in the face. The proud town of 20,000 thought it deserved better. So the publisher of the Times packed up, took 70% of his staff with him and launched the High Plains Daily Leader, a new daily newspaper (yes, you read that right) that distributed its first 7,000 copies on Sunday. Key details are unclear; the paper has no website yet and the AP report says nothing about who’s funding the venture. But its kind of thrilling to see that entrepreneurial spirit and reader advocacy are alive and well amid the pervasive gloom in the industry.

Labor Struggle Amid the Palms

The Santa Barbara News-Press laid off 10 employees last week, including two newsroom managers, in part because of financial damage caused by a Teamsters boycott. The trouble started two years ago, when most of the top editors collectively quit over allegations that the owner was interfering with editorial coverage. The owner shot back that all she was doing was preventing the editors from injecting their opinions into their reporting. So the editors voted to organize, the owner resisted, the Teamsters urged readers to cancel their subscriptions and apparently a lot of them did. Now we supposed the next move is up to the union. It’s hard to imagine all this unrest in such a pretty Pacific coast town.

Update: Craig Smith offers a lengthy perspective on the  News-Press‘ problems, laying the blame squarely at the feet of owner Wendy McCaw. Smith says McCaw has run the paper like a personal blog, micro-managing the editors and using threats and intimidation to keep staff in line. The large number of recent stories about animals is a consequence of McCaw’s passion for animal rights, he claims. Staff members live in fear.

Veteran Editors Sound Off on Industry Woes

Doug Fisher does what a good columnist should and challenges conventional wisdom by arguing that the newspaper industry should stop panicking and starting finding out where the readers are. Reporters and editors are too inclined to make assumptions, says Fisher, and a lot of the headlong rush to online delivery is driven by their gut belief that readers prefer to get their news that way. In fact, Fisher believes a lot of readers would gladly start taking a daily newspaper again if publishers could figure out how to make the product more useful.

Veteran editor Jerry Ceppos says it’s time for the American Society of Newspaper Editors (ASNE) and the Associated Press Managing Editors (APME) organizations to merge. The existence of two groups with similar charters and declining memberships is weakening both, says Ceppos, who’s a past APME president. He describes attendance at the recent ASNE meeting as being the worst he’s seen in 25 years. In writing this Poynter opinion piece, Ceppos ran the merger idea by officials from both groups. The APME basically trashed it while the ASNE sounded interested. The best part of the article is excerpts from the groups’ mission statements, which read like they were written on the back of cocktail napkins.

Survey Reveals Editors Realistic About Industry’s Future

The results of the annual Newsroom Barometer survey of 700 editors from around the world was just released, and it’s worth a scan at Editors Weblog. We found few big surprises in the numbers. Most editors believe news will be free in the future, the Internet will be the preferred delivery platform and journalists will need to use every medium at their disposal to tell a story. Nearly 60% think the decline in young readership is the industry’s biggest threat. Almost two-thirds expect some editorial operations to be outsourced.

If anything is remarkable about this survey, it’s that a significant minority of editors continues to curse the darkness. Nearly a third still believe that print “will be the most common way of reading the news in your country” in a decade. One-third also believe that readers will pay for news (although the ambiguous wording of this question may have skewed the results). Sadly, only 45% believe the quality of journalism will improve over the next decade, down from 50% in 2006. The research was conducted by Zogby International and commissioned by the World Editors Forum and Reuters.

And Finally…

• Trading volume of McClatchy stock was seven times higher than normal on the New York Stock Exchange yesterday. Nobody knows why.
• The New York Post has cut its trim size by about an inch and a half over the last two weeks, making itself almost square. True to its mission of informing the public, the paper won’t comment about why it did this or how much it expects to save.
• The Charlotte Observer has eliminated its telemarketing operation and laid off 13 employees, or about five percent of the paper’s total workforce. The Observer statement didn’t say the operation was being outsourced, but rather eliminated entirely. It will be interesting to see the effect on circulation.

The owner of the Minneapolis Star Tribune is disputing a report in the New York Post that the paper is on the brink of bankruptcy. In a statement issued late Friday, Publisher and Chairman Chris Harte said the Star Tribune “currently has sufficient liquidity and is current on all its debt payment obligations.” However, he acknowledged that the company has hired a private equity firm to advise it on business options.

There’s no question things are grim at the “Strib.” The paper has cut 10% of its workforce over the last two years and was one of the leading losers in the ABC audit report published last week. In February, Harte told his people “Total revenue is down almost $75 million in the last two years… classified revenue was down over 50 percent from what it was at the start of the decade.”

A Star Tribune bankruptcy raises the likelihood that the paper’s creditors could end up owning it, and you know how committed banks are to quality journalism. The most likely scenario is massive expense cuts and a fire sale. The Star Tribune’s near-monopoly position does buy it some breathing room, but it’s hard to imagine there would be much hope of attracting new readers from such a crippled state. Ironically, as we noted two weeks ago, readers of the Star Tribune’s website spend almost as much time there as readers of The Wall Street Journal’s wsj.com.

Do J-Schools Hinder Progress?

Vin Crosbie writes a searing commentary on ClickZ about why journalism schools are part of the problem in the newspaper industry, rather than part of the solution. Having spent most of the last year on a sabbatical from consulting to teach journalism, Crosbie says he’s been astounded by the refusal of faculty at various academic institutions to change the ways in which they teach their craft in the face of seismic industry disruption (he’s careful not to point the finger at his own). “What I found were faculties resistant to change and students whose insights and mastery of new media were being eroded by the authoritative resistance to change of so many professors,” he writes.

He estimates that a quarter of J-school professors are actively blocking curriculum change and that they’re intimidating the 50% of the teachers who do want to move forward. Surprisingly, it’s the academics in their 30s and 40s who seem to be most in denial.

Union Agitation in the East Bay

It didn’t take long for union organizers to return to the East Bay. More than half the employees of a chain of newspapers in the region have signed cards demanding that they get union representation. They’ve filed their petition with the National Labor Relations Board, which will probably clear them for a vote.

The unit of MediaNews Group that runs the papers in the area probably thought it had scored an end run around the union nine months ago when it combined enough operations to dilute union membership below the 50% level required for recognition. Now employees of the combined operations have struck back. It’s hard to imagine what either side stands to gain. As a commenter on Los Angeles Times Pressmens 20-Year Club notes, “Gee, now they get to be laid off in order of seniority instead on who can do the job best.”

Your Daily Murdoch

As expected, Cablevision bid $650 for Newsday, which means Murdoch will have to match the ante. Speculation is that he’ll do just that and will eventually walk away with the prize, in part because his offer cuts Tribune Co. in for a tax-efficient minority stake and in part because he and Sam Zell are now good buddies.

Alan Mutter thinks Zell has a secret agenda in cozying up to Murdoch: he sees News Corp. as his exit strategy. Mutter sketches a scenario in which Tribune Co., on the brink of default, sells to News Corp., giving News Corp. cross-ownership of multiple print and TV properties in key cities. Murdoch and Zell then argue before the Federal Trade Commission that such consolidation is necessary for survival in the face of Internet competition. If the FTC modifies the rules, then News Corp. goes on a shopping spree. Intriguing idea.

And Finally

Editor & Publisher has a nice analysis of recent shakeups in D.C. newsrooms, including the ousters of the Associated Press bureau chief and a top national editor at The Washington Post. The common thread appears to be that these people were the victims of political struggles touched off by industry change.

The Economist summarizes the trials of the U.S. newspaper industry. It’s nothing you haven’t read here already, but it’s done in that crisp, efficient Economist style.

Blogging for Time, Justin Fox says newspapers will milk their current business until they die because they just can’t bring themselves to change their print-centric mentality. This statement is followed, curiously, by a discussion of his lunch.

Final Earnings Reports Trickle In

The Ontario-based publisher of the Toronto Star and dozens of community weeklies reported a $3.5 million loss on a 3.4% decline in revenue. A big factor in the swing from last year’s $15.7 million same-quarter profit was a $21 million restructuring charge associated with the elimination of 160 jobs at the flagship. Less than a month ago, news reports were marveling at the resilience of the Canadian newspaper market, but that optimism seems to have all but disappeared. The Globe and Mail says executives from other Canadian publishers like CanWest Global and Astral Media are also seeing rough times ahead.

American Community Newspapers (ACN), which publishes three dailies and 100 mostly free non-dailies, lost $4.5 million in the first quarter on an 11.7% revenue decline. It blamed the 44 papers in its Minneapolis/St. Paul cluster. More ominous was its statement that “for the second quarter of fiscal 2008 ACN does not expect to be in compliance with financial ratio covenants contained in its credit agreements.” In other words, it’s hoping creditors will be feeling generous, which isn’t too likely given the ugly state of the market since the Bear Stearns implosion.

Journal Register Co. will stop acting like a public company, even though it’ll still be publicly held. Beaten, bedraggled and delisted, the publisher of 21 dailies and 300 community papers said the cost of filing SEC reports and publishing shareholder communications just wasn’t worth it, in light of its stock being priced below that of a gumball. You’ll still be able to buy the stock on the Pink Sheets market, but you might just want to use the Pink Sheets to dispose of that wad of gum. Journal Register has applied for the necessary SEC exemptions.

Layoff Log

Fresh on the heels of a whopping 8.5% loss in daily circulation, the Atlanta Journal-Constitution said it’s cutting 62 positions and cutting back its distribution area from 74 to 49 counties. As recently as two years ago, the paper was distributed to 200 counties in five states.

Craig Smith says the Santa Barbara News-Press has laid off 16 people and names some names. He quotes a memo from the publishers saying that the Teamsters Union, which represents newsroom employees, has been doing things like calling people and urging them to cancel their subscriptions. One wonders how union members could think this would be constructive activity in the current environment. There’s no mention of total employment at the paper.

Where Will All the Dollars Go?

Respected market analyst Henry Blodgett speculates on Silicon Valley Insider about where $42 billion in newspaper advertising revenue will go. Describing a scenario that’s been outlined on this blog many times, he envisions a future in which circulation declines eventually reverse economies of scale and send newsapers into a tailspin. He adds that the green movement will pile on with its general distaste for anything on paper. Blodgett sees newspapers and their associated websites capturing maybe a third of those ad dollars, most of which will go online elsewhere. A spirited debate ensues in the comments section.

Department of Unintended Consequences

Washington City Paper analyzes the newspaper classified advertising business and finds that it is actually surprisingly healthy in the Beltway area. But the reason is that foreclosure notices have replaced “for sale” advertising as the engine of growth in the deflating real estate market . “On March 13, the Washington Post’s classifieds section totaled 22 pages, approximately 14 of which were devoted to what are technically known as ‘trustee’s sales,'” the website reports. This revenue is a legacy subsidy from area municipalities, which require foreclosure notices to be listed in local newspapers at several hundred dollars a pop. Which proves you can always find a silver lining.

As the story of Wall Street Journal Managing Editor Marcus Brauchli’s abrupt resignation last week continues to unfold, media critics are piling on with withering commentary about the Journal’s toothless “Special Committee” on editorial independence. At a time when commentators should be training their guns on Murdoch, they’re focusing instead on the group that’s supposed to protect the paper’s editorial integrity from Murdoch.
Jack Shafer’s column in Slate is snarky commentary at its best. Shafer says the committed was publicly humiliated by Murdoch, and isn’t it curious that no one has resigned in protest?

“The denutted Dow Jones Special Committee issued its wimpy statement yesterday…What they meant to say was, ‘We’re each paid $100,000 annually, a lot of money for very little work, so if Rupert wants to drive by and hose us down with a swift, hard piss again, just make sure the checks clear.'”

“Denutted?” Brilliant.

Shafer makes no effort to hide his contempt for Murdoch, but he gives the man his due: Murdoch owns the Journal and he’s entitled to do what he wants. The half million a year the owner pays the Special Committee is basically hush money and his recent actions have only demonstrated how little respect he has for the group.

Dean Starkman writes in Columbia Journalism Review that the saga is “getting awfully close to clown-car territory.” He calls out the committee for admitting that it was powerless to prevent Brauchli’s resignation. “It’s stunning to think that a 7,000-word agreement, crafted by some of the most expensive lawyers in the world, does not even contemplate the possibility that an editor might resign.” Of the committee’s admitted surprise at Brauchli’s departure, he adds, “The committee, remember, includes three crack newshounds, supposedly. Woof woof.”

Someone on the committee – most likely Chairman Thomas Bray – should resign in protest. The fact that no one has done so only makes the group look worse. The media’s increasing focus on the committee members’ lavish compensation is making this supposedly noble effort look more and more like a boondoggle for self-indulgent former journalists.

Gawker has more dirt on the internal politicking at the journalism world’s biggest ongoing soap opera. If you’re into that kind of thing.

Murdoch Moves in on Newsday

Murdoch has a clear path to buy Newsday, says the paper itself, even though threats of an FCC penalty loom. Technically, the Newsday purchase would endanger Murdoch’s licenses for his two regional TV stations, WNYW and WWOR. However, any action by the FCC would probably be tied up in court for years, during which time Murdoch could act with impunity and wait for turnover at the FCC and in Congress to change the regulatory scene.

Maybe we’re missing something, but all this talk of Murdoch’s waiting strategy seems to overlook one essential point: the man is 77 years old. Unless Murdoch has discovered a fountain of youth, his “long term” is probably eight to 10 years at most. Whatever legacy he intends to leave in the U.S. media market will have to be played out by then or handed over to a clone. None seems to be standing by.

Newspaper Stocks May be a Bargain

Max Zeledon makes a wordy case for why Gannett, News Corp. and New York Times Co. are three newspaper stocks to buy. He has confidence in the industry’s ability to survive, pointing out that newspapers adapted to the coming of TV, radio and cable and emerged stronger for the experience. Zeledon says his three picks are fundamentally sound companies with diversified holdings and the opportunity to gain share as the industry emerges from its troubles. They appear to be the best of the bunch. However, we’d argue with the comparison of the Internet to radio or cable TV. Neither of those technologies devalued newspapers’ core product the way online competition does.

Edward R. Murrow Rolls Over

The New York Times says CBS is talking with CNN about outsourcing some of its reporting operations to the cable network. The talks are apparently a consequence of the abysmal ratings for CBS’s news programs, which are mired in last place despite the $15 million the network is paying Katie Couric each year to drag the ratings even lower. CBS reportedly laid off 160 employees in 13 cities early last month.

And Finally…

If you aren’t using Twitter, you should be. It’s the most disruptive online technology since YouTube, despite its seeming simplicity, and its technology will change journalism. Last month it saved a man from an Egyptian prison. The guy is a UC Berkeley grad student and he was arrested and imprisoned without charges for photographing a demonstration, TechCrunch reports. He twittered “Arrested” to his 48 followers, who acted quickly to spring him.