Did you know they still do paste-up at the San Diego Union-Tribune? That’s just one of the revelations in a story about the new openness of the U-T’s management, an openness that is apparently playing very well with employees. Having laid off more than 300 people since taking control of the daily in May, Platinum Equity is now forecasting a profit of $5 million this year, which would be a major turnaround from the $8 million the paper was on track to lose when new management arrived.

The extent of the new ownership’s transparency about the paper’s finances and operations apparently surprised and pleased staffers, who had been privy to almost no financial information under former owners the Copley family. They learned that the U-T’s revenues have dropped 53% since 2006 while profitability has plummeted from $67 million that year to the expected $8 million loss this year. They also learned that the paper has shed nearly half its staff in the last 21 months. However, cuts like that are what set the stage for a return to profitability. Staffers apparently liked what they heard. They told Voice of San Diego that Platinum’s decisiveness was a welcome change from the plodding pace of change under the Copleys. Now they need to work on getting rid of those paste-up boards.

Platinum’s early success at the U-T is apparently not typical of private equity firms. Yesterday’s blockbuster announcement that Reader’s Digest is bankrupt cast a harsh spotlight on Ripplewood Holdings, which bought the publisher for $1.6 billion in 2007 and which has now seen that entire investment wiped out by bankruptcy. Reader’s Digest magazine, which was once a coffee-table staple, has suffered circulation declines of more than half over the last 30 years and 40% in the last decade. The company is staggering under $2.2 billion in debt. Under the proposed reorganization, creditors will now own 92.5% of the company, which publishes more than 100 titles. Even after the debt is restructured, though, Readers Digest will owe four times its annual earnings to lenders.

Meanwhile, the owner of Philadelphia’s two largest newspapers has proposed an audacious plan to get creditors off his back. Brian Tierney wants to swap $300 million in debt for $90 million in cash, real estate and bankruptcy costs. Under the proposed deal, creditors would get little ownership stake in Philadelphia Newspaper Holdings, while the company would walk away from most of its debt. Tierney appears to be betting that the alternative of total insolvency will scare lenders into accepting the deal, but an attorney for the creditors calls the plan a “horrible proposal.”

Miscellany

The Financial Times began charging for access to its website in 2002, and history is vindicating the London-based publisher. With media leaders like Rupert Murdoch now openly advocating for pay walls, the FT is stepping up its experimentation with new paid-content models. It plans to add a micropayment system for access to individual articles and it recently launched an online newsletter for investors in China that costs $4,138 a year for a subscription. The FT newspaper has only 117,000 paid online subscribers, compared to more than one million for The Wall Street Journal, but it charges $300 a year for Web access. CEO John Ridding says he’s pleased that the industry is finally coming around to seeing things the way the FT has seen them for many years. “Quality journalism has to be paid for,” he tells The New York Times.

A partnership of Microsoft and MSNBC made off with EveryBlock and Alan Mutter can’t quite believe it. “If ever there were an application designed to fast-forward newspapers into at least the late 20th Century, then this was it,” he writes. Funded by a Knight Foundation grant, EveryBlock (screen grab at right) is perhaps the nation’s most visible experiment in hyperlocal news. It covers 15 cities with news focused on tight geographic segments. Under Microsoft/MSNBC ownership, expect that coverage to expand dramatically. Microsoft was actually an early innovator in hyperlocal publishing with its Sidewalk city guides more than a decade ago. Sidewalk bombed, but the concept may simply have been ahead of its time.

Things continue to rock and roll under new ownership at the Waco Tribune. A few weeks ago, the paper made headlines when the new owner added the words “In God We Trust” under the front-page logo. Now it has jettisoned rock musician and gun activist Ted Nugent as a columnist after Nugent refused to tone down invective and personal attacks in a weekly guest column he writes. Editor Carlos Sanchez makes it clear that he was somewhat reluctant to carry out the new owner’s orders to reprimand Nugent, but he was stunned and outraged by the tactics Nugent used to lodge his protests.

The AP has one of those charming throwback pieces about The Budget, a 119-year-old newspaper that serves Amish and Mennonite communities and which seems to have none of the problems or pressures of its Internet-addled counterparts. In fact, the 20,000 readers seem to be quite militant about keeping The Budget in print and delivered by mail to their homes each week. The Budget’s owners and editors aren’t Amish, but they’re careful not to offend their pious readership. Ads for alcohol and tobacco aren’t accepted and much of the content consists of homespun diary entries submitted by a network of unpaid correspondents. To the geographically dispersed Amish, The Budget is kind of a hard-copy Facebook. It’s the way they keep up to date on births, deaths and the price of wheat. Circulation has stayed strong even during the economic downturn.

Mark Potts elucidates a criticism of pack journalism that we’ve been expressing for some time: Why do news organizations send so many people to cover the same event?  Potts observes that the Tribune Company “had 14 reporters, columnists and photogs at this year’s Super Bowl, even though neither Super Bowl team came from a city where Tribune actually has a newspaper.” Tribune Co. has apparently wised up and is consolidating some sports beats. Potts also points to the Dayton Daily News, which recently forced its Cincinnati Reds beat reporter into retirement. Potts estimates the paper was spending about $250,000 a year for the 37-year veteran to cover a baseball team 55 miles away that was already being covered by the AP. Perhaps that money would be better used to double up on coverage of local sports, although Potts doubts that’s what’ll happen.

We feel the same way whenever we watch a political convention or a Presidential press conference. Hundreds of journalists travel from far away, stay at expensive hotels and drink top-shelf booze to report the same things everyone can already see on TV. Is it possible that Super Bowl trips are used as rewards for treasured staffers? Could a couple of nice dinners out or a $1,000 bonus accomplish the same objective at less cost? We’re just asking.

Although we outsource most of our layoff coverage to the vastly superior work of Erica Smith, we occasionally see news that merits a comment. Such is the case in San Diego, where anyone who thought Platinum Equity would be the white knight to preserve jobs at the Union-Tribune should have those dreams dashed by the latest round of layoffs. The new owner cut 112 jobs this week on top of 192 announced shortly after Platinum assumed control in May. That means Platinum has laid off nearly 30% of the U-T’s workforce in less than four months. The story on the U-T website reads like a press release, mixing news of the job cuts with upbeat talk about investments in new pagination systems and improvements in local reporting. There is no effort to analyze the impact of Platinum Equity’s ownership on the staff or the product they produce, and no comments about the human impact. Perhaps that’s being held for a day two story.

We also have to give the Journal News of Westchester County a nod for their innovative idea of firing all 288 employees and inviting them to re-apply for 218 jobs. It’s not layoff, it’s a job fair! Seriously, the company plans to make all rehiring decisions final by the week of August 24, which means that managers must conduct 218 interviews within the next two weeks. Just shoot us. Fortunately, August is a slow week in the publishing business.

Journalism Online, LLC, the company formed by Steven Brill to help newspapers charge for content, said 506 publications have now signed up for its affiliate network. In a press release carefully crafted to avoid the gaze of antitrust regulators, the company said its customers are eyeing annual charges of $50 to $100 per subscriber “with little diminution of overall page views or online ad revenue.” Neat trick.

Sites with one million monthly page views can expect to earn an additional $5 million to $10 million annually through reader revenue, which figures out to about 40 to 80 cents per page view. Wow, if any plan can generate 40 cents per page view, sign us up! Journalism Online was cautious to stress that each individual publisher will make its own decisions about what, and whether, to charge. “We’re giving them all the dials to turn…but they will be the ones turning the dials,” Brill said.

Perhaps the best argument we’ve seen against citizen journalism is the parade of crazies showing up to criticize the Obama health care plan. The thought that some of these people could acquire a following is truly unsettling. Sacramento Bee cartoonist Rex Babin illustrates this brilliantly, provoking the usual rash of political diatribes.

Things are looking up in Seattle. Shortly after the closing of the Seattle Post-Intelligencer just five months ago, the surviving Seattle Times asked publicly if the city was about to become a “no-newspaper town.” Hardly. Since the P-I went under, circulation at the Times has shot up 30% to 260,000 daily readers. The paper has crept back into the black on a month-t0-month basis and is enjoying its best outlook in years.

One of the last family-owned major metros in the country, the Times has been weighed down for years by a joint operating agreement that required it to support the money-losing P-I. Fortunately for the Times, it managed circulation for both papers, so when the P-I went under, the Times simply switched subscribers to its circulation list and gave them the option to cancel. A remarkable 84% opted to stay with the Times.

But it gets better. The online remnant of the P-I is beating its numbers. Although SeattlePI.com has only one-eighth the editorial staff of the failed newspaper, it has focused its coverage and kept most of the reader traffic it had before the newspaper went under. Hearst won’t say if SeattlePI.com is making money, but it does say that audience and revenues are ahead of projections.

In other good news, Cox Enterprises has pulled the Austin American-Statesman off the market, saying the bids it was receiving didn’t reflect the true value of the paper. The American-Statesman is one of 29 titles Cox put up for sale nearly a year ago. While there were many visitors and several bids, the offers were in the fire-sale range, said publisher Michael Vivio. “it just did not make sense to sell it for the prices offered.” The story quotes newspaper analyst Ed Atorino speculating that “there are signs that the newspaper industry may have bottomed out. ‘We see hopes for better conditions by the end of 2010,’ Atorino said. ‘It’s been very difficult, and now, maybe, the worst is over.’”

A Reader Revenue Model That Works

Amid the wreckage of the media industry, there is at least one publisher who’s charging readers for content and making a lot of money at it. He’s Christopher Kimball, the intense, non-nonsense publisher of Cook’s Illustrated and Cook’s Country magazines. The flagship Cook’s Illustrated has nearly a million subscribers who pay between $25 and $35 a year for six issues. There’s no advertising. The business is reportedly insanely profitable.

Kimball’s recipe is to give readers exactly what they want: no-fail recipes vetted with exhaustive trial and error in kitchens outfitted with the best gadgetry money can by. You won’t find exotic dishes in the Cook’s magazines. What you’ll find is instructions on how to make the perfect pancake, combined with exhaustive background information on details such as the role of baking powder in the process.

The Boston Globe profile says Cook’s Illustrated enjoys an almost unheard-of 78% renewal rate. Kimball charge for website access and finds readers through intensive direct-mail campaigns and a successful spinoff cooking show called America’s Test Kitchen. Though he’s a multi-millionaire, Kimball can usually be found on weekends at his Vermont farm, testing new recipes. He’s a rigid perfectionist who believes advertising is an unholy alliance that does a disservice to readers. So far, he’s confounding the critics.

Miscellany

The 23^rd annual Veronis Suhler Stevenson media survey is out (TG; we’ve been on pins and needles) and  finds that for the first time last year, consumers spent more time with media they paid for – like books and cable TV – than with primiarly ad-supported media. The study also forecasts somewhat counter-intuitively that media/communications will be the third fastest-growing industry in the US over the next five years, trailing only mining and construction. The growth won’t come from traditional media, though. Rather, it will be driven by new areas like paid product placement, e-mail marketing, in-game advertisements, mobile advertising and video downloads.

The New York Daily News is hiring a social media manager.  It’s joins crosstown rivals New York Times and New York Post in recently putting some bucks behind the explosion of interest in Facebook and the link. The Daily News has a long way to go: it’s roster of Twitter followers is about 1/10^th that of the Post’s.

The Boston Globe interviews New York Times Co. chairman Arthur Sulzberger and CEO Janet Robinson. They say the threat to shut down the Globe unless major union concessions were made was not a bluff. They also don’t plan to sell the paper to the highest bidder. They want someone who’s going to continue a history of quality journalism. And they think the Times Co. has been a splendid custodian of the Globe’s reputation. Sheesh.

We stumbled across a new search engine: Yebol that “utilizes a combination of patented algorithms paired with human knowledge to build a Web directory for each query and each user.” We’re not so sure what that means, but the search results pages are very cool.

Has the newspaper advertising market contracted enough and publishers adjusted their business models enough to make subscription revenue a meaningful contributor to the business? Recent financial results indicate that the industry may be at an inflection point that could form the basis for meaningful change.

Ken Doctor has been analyzing the changing shape of the newspaper industry on his Content Bridges blog, which should be on every newspaper executive’s reading list. We shared a panel with Doctor a few months ago when he said that the industry would probably bottom out in the second quarter and enjoy a 12- to 18-month reprieve before  business began to slide again. So far, he’s right on the money.

Analyzing the latest round of financial figures emanating from publishers, Doctor sees clear signs of a bottom. Not a soft landing, mind you, but evidence that the gut-wrenching death spiral has begun to flatten out. He notes that the latest results showing continuing year-over-year revenue declines of 25% to 30% would have been cause for panic a year ago, but we’re so used to the bad news now that we can actually see a silver lining in the slowing rate of descent.

The encouraging news, Doctor notes, is that publishers are beginning to speak of light at the end of the tunnel while actually beginning to pay down the debt that has been threatening to crush them. McClatchy trimmed $100 million worth of debt this quarter and the New York Times Co. (NYT) has reduced its debt by nearly 25% this year. If these companies are to have any chance of growing again, they must get out from under this burden, so this progress, while not remarkable, is a start.

Assuming we’re reaching some kind of stability, what happens next? Most likely, we’ll see some experimentation with alternatives to the ad-heavy revenue model. In last week’s earnings call, NYT CEO Janet Robinson all but confirmed that the Gray Lady will set up a pay wall in the near future. Even though Times Select was a short-lived disaster, enough new models for monetizing subscriptions have emerged that the Times may be ready for another go.

Another factor is that circulation revenue is actually showing more stability than advertising revenue during this downturn. Check out the analyses by Ryan Chittum on CJR documenting that last week’s McClatchy results showed 5% growth in circulation revenue. He also makes the remarkable observation that, following a 1.5% increase in circ revenue in the second quarter, NYT Media group now derives almost as much money from circulation as from advertising:

“In the second quarter, the Times brought in $185 million in advertising revenue, while it reaped $166 million from its subscribers. Three years ago, those numbers were $316 million and $156 million respectively. The ad-to-circ revenue ratio at The New York Times has gone from two-to-one to one-to-one. Stunning.”

True that. Part of the reason the ratio has changed, of course, is that advertising revenues have fallen so far. But if, as Ken Doctor points out, publishers are learning to run much tighter operations, then the possibility of a balanced circ/ad revenue model becomes more real.

That doesn’t mean an answer has been found. Writing in The Wall Street Journal, itself a testament to the viability of reader revenues, Brett Arends points out that NYT bonds are currently yielding 11%, which is in junk bond territory. In other words, investors still think there’s a high likelihood that the Times Co. will default on its debt. Like many other observers, Arends sees no hope in online advertising revenue as salvation:

“The Times’ websites had about 52 million online readers in the first quarter. Internet revenues? Just $78 million. That’s 50 cents per reader per month. That’s not even a box of tic tacs. Company operating costs during the same period: $654 million. Payroll alone was $145 million.”

Ugly? Yes. But it’s at least an acknowledgement that online sales won’t solve the problem. Online ad inventory is continually expanding and CPMs have declined steadily for the last five years. There’s no reason to believe that trend will reverse itself, so publishers have to take a more serious look at reader revenues. A number of new models have emerged recently, including Alan Mutter’s ViewPass and Martin Langeveld’s CircLabs. Meanwhile, some half-serious schemes to regulate the proliferation of free content through licensing or legal means have also begun to spring up. Jeffrey Neuburger outlines a few of these on MediaShift; we don’t think any of these proposals holds water on its own, but they are collectively an indication that all is not yet lost in the battle to derive value from intellectual property.

To paraphrase Ken Doctor, publishers may finally be due for a breather. They have a chance to take stock of their new organizations and see if there’s a chance to grow the businesses again, or they can go back to trying to wring historic profits out of their operations. If they choose the latter, they will find themselves once again caught in the death spiral so eloquently described in this recent brief essay by Seth Godin. Let’s hope the past two years has at least taught them the dangers of staying with the status quo.

Another group of Rocky Mountain News ex-pats is taking a run at a new-media publishing model with a paid-subscription component. The Rocky Mountain Independent debuted yesterday with a staff of 14 ex-Rocky employees and a determination not to repeat the mistakes that were made by InDenverTimes, a startup that struggles along on life support after badly missing its goal of recruiting 50,000 paying subscribers. Several members of the Independent staff also worked at InDenver Times.

The new site will be mostly free but with a small collection of columns and in-depth pieces behind a $4/mo. pay wall. Staffer Steve Foster (right), a former assistant sports editor at the Rocky Mountain News, likened the model to ESPN, which is mostly ad-supported but which also has a small amount of subscriber-only material for diehard sports enthusiasts. Foster said editorial content will focus on “larger, broader stories…We’re not as interested in following somebody on the campaign trail on a daily basis. We’d rather step back and assess someone’s chances in an election.” If anyone can detect a difference between that approach and a daily newspaper’s please let us know. Foster also said the Independent will run long pieces, too, which challenges conventional wisdom that online readers don’t have the attention span for that kind of material. The reason? As magazines and newspapers shrink, there’s less long-form journalism being published any more. That creates demand.

Some Good News, Some Bad News on Ad Front

ZenithOptimedia sees some light at the end of the tunnel for advertising. The plunge in global advertising appears to have reached bottom in the second quarter and is poised for some recovery. The agency also trimmed its forecast of a 6.9% decline in advertising spending for 2009. Growth will come mainly in online ads, which is the only segment to expand this year. Within that segment, search advertising has the greatest momentum, with expected growth of 20% this year. The big losers are newspaper and magazine advertising, which the agency expects to decline nearly 15% this year.

The pickup can’t come too soon for the beleaguered magazine industry, which has seen 279 titles close their doors this year already and another 43 end their print versions. The good news: there have also been 187 new launches. However, the trend is in the wrong direction, according to MediaFinder, which notes that in the second quarter alone, 77 magazines have launched while 184 have folded.

Overzealous WaPo Marketer Ruffles Feathers

Washington Post publisher Katharine Weymouth cancelled plans for a series of dinners at her home after an overzealous Post marketing executive issued flyers positioning the events as a way for sponsors to buy access to the paper’s journalists and members of Congress. Weymouth said the promotions “should never have happened… We’re not going to do any dinners that would impugn the integrity of the newsroom.” Post Editor Marcus Brauchli said he was “appalled” by the promotions that promised “an exclusive opportunity to participate in the health-care reform debate among the select few who will actually get it done.”

The whole affair was a platform for strong language on the part of participants and observers. Boston University’s Tom Fiedler said he was “astonished” at the Post’s “crossing a boundary line that seems to me painted so brightly white.” Charles Pelton, the Post marketing executive who created the flyers, said he had been “sloppy” in allowing them to go out. A spokesman for Rep. Jim Cooper, a Tennessee Democrat, called the dinner as advertised “a radioactive event.” Everyone flagellated themselves fully and promised not to let it happen again.

Miscellany

Gannett Blog has a letter that was apparently sent to employees of Gannett’s 10-paper Newspaper Network of Central Ohio that outlines plans to consolidate 10 regional newspapers under a single editor. The letter is from Linda Greiwe, publisher of the Newark (Ohio) Advocate. It outlines plans to consolidate page production into two locations and to form an “enterprise and data reporting team of two people” who will “write in-depth daily and project stories on issues that impact as many NNCO markets as possible.” Headcount will be reduced but the job losses are not part of Gannett’s larger 1,400-employee layoff announced last week.

Talking Points Memo, the fledgling new-journalism venture run by Josh Marshall, just took a venture funding round from Marc Andreessen, creator of the Netscape browser. The investment is small – less than $1 million – but it’s an important step for TPM, which has been bootstrap-funded until now. Marshall told TechCrunch the company is profitable and has 11 full-time employees. After this cash infusion, it will no doubt have more.

The bankrupt Tribune Co. may be under legal protection from debtors, but it isn’t protected from the realities of the market. The company’s revenue slid 23% in the first five months of the year and its profit margins have dwindled from 19% to 8% during that time, according to a Morningstar analysis. Tribune Co. doesn’t have to report financial results while in bankruptcy, so Morningstar derved the financial picture from an analysis of “operating receipts” reported so far this year. While the company is still cash flow positive, the declining margins would indicate that its debts will have to be significantly restructured to enable it to emerge from bankruptcy. The good news is that the company appears to be close to selling the Chicago Cubs to a local family for a reported $900 million. The Cubs have been for sale for two years. Tribune bought the team and the stadium for $20.5 million in 1981, representing a capital gain of nearly 4,500% in 28 years.

A new study finds that small newspapers are faring better than large ones, although only marginally. Media Post reports on the study by Inland Press that found that papers with less than 15,000 circulation actually saw revenue increases of 2.4% over the last five years. While that’s tiny, it’s a lot better than the 22% decline experienced by the overall newspaper business. However, the study also found that there’s plenty of pain in small markets, particularly at papers in the 25,000-to-50,000 circulation range that are under heavy debt loads. “If this trend continues, bankruptcy and sale or closure could follow for scores of newspapers, as the plague afflicting big metro dailies infects smaller markets,” it asserts. The problem many markets, of course, is debt. Heavy debt burdens are forcing big publishers to plow profits into loan payments instead of investing in their properties. Small publishers without much debt are better positioned overall to weather the crisis.

Trying to come up with someone to blame for the newspaper industry’s crisis? Try Macy’s. The department store chain has chopped more than half of its spending on newspaper advertising since 2005, Alan Mutter reports. He estimates the bite at $616 million annually. And considering that Macy’s it itself a chimera of smaller department store chains, the aggregate loss may be even larger. Macy’s was the second-largest newspaper advertiser in 2008, surpassed only by Verizon.

Tomorrow is the deadline to get in bids to buy the Boston Globe, so hurry!

The Houston Business Journal conducted a non-scientific poll asking readers, “If your local daily newspaper stopped its print edition, would you miss it?” Fifty-six percent said they wouldn’t, with many adding that biased coverage is their biggest complaint.

The San Francisco Chronicle shut down its presses on Sunday after more than 140 years in the printing business. The function has been outsourced to Transcontinental, Inc., the sixth largest printer in North America. More than 200 unionized pressmen lost their jobs.

Time magazine writes about the first crop of graduates from a new master’s program at the Medill School of Journalism that aims to blend programming and journalism skills. Medill is the most prominent of several academic institutions that are dabbling with crossover programs that seek to make the news more accessible and multi-dimensional through technology. One outcome of the students’ labors has been NewsMixer (right), a site that enhances the reader commenting experience by enabling contributors to start discussions, post quick tweet-like messages or write thoughtful letters to the editor about stories or elements within stories. The text is annotated with these comments and questions and Facebook Connect integration takes the conversations to other venues.

Most of the students in the Medill program are techies. They spend three quarters learning the craft of traditional reporting and then team up with students from the traditional journalism side to develop an application that delivers information in a new way, enhances the reader experience or makes journalists more productive.

Speaking of new ways of presenting news, a group of senators began working on a bill to overhaul of the US health care system this week, but NPR turned the camera around on the swarm of lobbyists who filled the hearing room. The radio network published photos of the scene, annotated with information about the lobbyists pictured there. And it’s asking readers to contribute information about people the staffers couldn’t identify.

Also, take a look at Newsy, an online video site that aggregates perspectives on important stories. Jessi Stafford, a recent University of Missouri graduate and Newsy intern, told us about it. “Newsy.com creates videos that analyze and synthesize news coverage of important global issues from multiple sources. Its method of presenting the ways in which different media outlets around the world are covering a story lends itself well to understanding complexities.” Newsy aggregates coverage from all kinds of news outlets and presents it in a packaged video format similar to what you might see on the evening news. A newsy “anchor” guides the viewer through a variety of perspectives and attempts to explain what’s going on using these multiple sources. We’re not sure it’s easier to follow than a print digest, but it’s certainly different. See an example below.

You Are What You Tweet

The Australian media watchdog site New Matilda comments upon the ethical dilemmas presented by Twitter. It tells the story of Sydney Morning Herald technology writer Asher Moses, who was publicly embarrassed recently over comments he made about a sex scandal involving a prominent former rugby star. Moses’ comments were made during his off hours, but hasn’t stopped many Australians from questioning the journalist’s impartiality.

Julie Posetti wonders whether Twitter’s humanizing capacity is a blessing or a curse for journalists. Twitter “merges the professional and the personal, the public and the private — blurring the lines of engagement for journalists trained to be didactic observers and commentators rather than participants in debates and characters within stories,” she writes. Twitter makes journalists more accessible and thus more appealing, Posetti notes, but should people who are supposed to be rigidly unbiased be allowed to share their views on anything? Moses says he’s made up his mind. “He’s now decided to restrict his Tweeting to purely work-related messages.” BTW, it’s worth checking out Posetti’s Top 20 Tips for Journo Twits.

Miscellany

Small and mid-sized newspapers may be a bargain in the current market, according to a study by brokerage firm Cribb, Greene & Associates. Despite the fact that smaller papers haven’t suffered the steep losses of their big-city brethren, many publishers are putting them up for sale out of fear of losing further asset value. Asking prices are between four and eight times earnings before income tax, depreciation and amortization (EBITDA), compared to 10 to 14 times EBITDA a few years ago, the firm said. This is despite the fact that revenue declines at these papers have been only about half that of major metro dailies.

At least two potential buyers for the Boston Globe have emerged, and owner New York Times Co. is doing everything it can to welcome them. Former advertising executive Jack Connors and private equity investor Stephen Pagliuca have received permission to team up on a bid. There is also reportedly a rival bid by former Globe executive Stephen Taylor, whose family originally sold the paper to the Times Co. for $1.1 billion in 1993. The Times Co. sweetened the pot by announcing that buyers would only have to assume $51 million worth of pension obligations for the Globe and another $8 million for the Worcester Telegram instead of the full $200 million+ for which the current owners are liable. In an unrelated event, the paper’s editorial page editor, Renée Loth, announced she is leaving the paper after 24 years for unspecified new adventures.

Circulation at the Los Angeles Times passed one million in 1961. Last month it passed one million again – only headed the other way. Edward Padgett remembers. Meanwhile, the revolving door continues in the top editorial ranks: John Arthur (left) is out as executive editor after 23 years at the paper. A memo from Editor Russ Stanton makes it clear that the decision wasn’t Arthur’s.

Microsoft CEO Steve Ballmer says media companies should stop waiting for the market to bounce back because it isn’t going to bounce back. In the future, “All content consumed will be digital, we can [only] debate if that may be in one, two, five or 10 years,” he told the Cannes Lions International Advertising Festival, where he was named media person of the year. What’s more, advertising will continue to migrate online, leaving a smaller pie for traditional media companies to share.

Gannett Co. will lay off 1,400 people, not the 4,500 that was rumored. Still, that brings to 5,400 the total layoffs in the past year, which is about 12% of the company’s workforce. Gannett Blog is tracking the reductions, both announced and unannounced, from reports submitted by employees at local Gannett offices. As of this morning, the count is up to 205.

Magazine publishers might want to catch the next flight to London to find out what the heck they’re doing right at The Economist Group. The publisher of The Economist just reported a 26% jump in profit on a 17% increase in sales in the first quarter. Circulation grew 6.4% to nearly 1.4 million while Economist.com ad revenue leapt 29% and page views climbed 53%. Don’t these people know the media is dying? Interestingly, The Economist enjoys a much hipper image in the US than it does in its native land. In fact, the company just launched a new video ad that portrays a young man walking on high wires across a European city, seeking to highlight its appeal to young readers.  The average Economist reader in the US is 39 years old. In the UK, where the magazine has a more serious image, the average if 47.

Following up on last week’s excellent report on the subtle disruptions caused by newspaper frequency changes, Editor & Publisher looks at the link between reduced frequency and online traffic. Its findings, while preliminary, indicate that newspapers that have backed off from a daily schedule are seeing encouraging reader migration to their websites. At Seattlepi.com, the online successor to the shuttered Post-Intelligencer, unique visitors have grown steadily since the paper went online-only in March, according to executive producer Michelle Nicolosi. “We haven’t lost readers,” she tells Jennifer Saba.

In Detroit, the first major city to lose home-delivered daily newspapers, readers have flocked to websites for the Detroit Free Press and the Detroit News, with April traffic at the Freep shooting up 74%. Also notable is that downloads of the e-editions – or electronic newsprint equivalents — of the two papers increased sevenfold when daily home delivery ended. Executives at other, smaller papers that have trimmed frequency also report encouraging trends online. Although it’s still too early to tell, initial indications are that print readers retain loyalty to their local brands.

St. Pete Times Shows How It’s Done

The St. Petersburg Times has a 15,000 word exposé on the Church of Scientology that serves as an example of how news organizations can transcend the traditional walls between words and other media.  The package includes a mini video documentary on the home page that looks like it was done by a television crew.  In addition, video interviews with church defectors are aired out for those who want more detail. There’s also a short narrative about how the package was reported, an audio clip of a church spokesman denying the allegations and even an indignant letter from church leader David Miscavige, who is the bad boy in the whole affair.  There’s also a rather self-serving list of references from other media outlets to the work done by the Times.

Online Journalism Blog critiques the package, giving a generally favorable remarks.  It compliments the paper’s use of links to other sources as a way of providing background rather than rewriting everything in its own words.  The blog points out some shortcomings, including spotty use of social media tools to promote and brand the story as its own.  Online Journalism Blog should not throw stones, however.  Its links to the source material on Tampa Bay.com are mostly dead because of a improper use of a referral URL.

Regrettable Error

Would you fire a reporter over this story? the New Brunswick Telegraph-Journal did.  Journalism student and intern Matt McCann was canned for “errors of fact and judgment [that] don’t constitute acceptable journalism at the Telegraph-Journal,” according to a statement by the newspapers editor.  McCann’s transgressions included misspelling a name, getting a title wrong and incorrectly identifying the college major of New Brunswick Premier Shawn Graham. That’s sloppy reporting, but the penalty seems a bit out of proportion, especially considering that Maureen Dowd and Chris Anderson have both recently admitted to plagiarism.

Writing in Columbia Journalism Review, Craig Silverman is clearly sympathetic to McCann, going so far as to quote McCann’s own professor saying that he never would have lasted in journalism if such punishments had been meted out in his day.  He also quotes a former Telegraph-Journal editor saying that the decision was more likely a political one intended to curry favor with the University than a punishment for sloppy journalism.

Miscellany

The New York Times Co. will throw in the Worcester Telegram as a pot sweetener for anyone willing to take the Boston Globe off its hands, according to a memo obtained by The New York Times. The offer might increase the Globe’s appeal, since the Telegram is reportedly losing money at a far slower rate than its neighbor to the east and effectively has no competition in its local area.

The UK’s Guardian newspaper assembled a gallery of 25 front pages from around the world covering the death of Michael Jackson.  The Wall Street Journal also weighs in with the three
different stippling images of Jackson it has run over the past 29 years.

We’re back from filing an 80,000-word manuscript for a book about using billions of dollars worth of high-tech satellite equipment to find Tupperware in the woods. Really. And not much has changed in the last 10 days.

Murdoch Now Struggles Online

Rupert Murdoch was hailed as a visionary when he paid the then-bargain price of $580 million for MySpace in 2005, but now it appears that the newspaper mogul may not know that much about running an Internet community after all. MySpace just laid off 400 employees in the US and could cut another 100 internationally. That would amount to more than 15% of the company’s 3,000-employee workforce.

Crain’s New York quotes eMarketer forecasting a 15% drop in MySpace ad revenue this year, while Facebook is expected to gain 10%. MySpace is still bigger, but it’s headed in the wrong direction, with a 2% decline in visitors in April, compared to an 89% gain at Facebook. Murdoch has fired some executives and promised to rejuvenate MySpace, but the site has lost its utility to the older audience, which is flocking to Facebook. MySpace is still the preferred destination for rock bands and entertainment companies, but that doesn’t give it much cachet with the wealthier audience that Facebook is attracting.

Post Publisher Just an Ordinary Mom

Vogue has a feature on Katharine Weymouth, publisher of the Washington Post and granddaughter of the revered Katharine Graham. Nancy Hass portrays Weymouth as an unpretentious, down to earth mother of three who just happens to run one of the world’s most prominent media properties.  “She’s a mother first,” says her friend Molly Elkin, a labor lawyer.

The Post‘s new managing editor, Marcus Brauchli, calls Weymouth “an amazing listener” who isn’t afraid of criticism and who seems more at home with her people that the glitterati. She moved her office off the Post‘s executive floor and down into the advertising department, where she easily banters with her employees. Her home is a modest four-bedroom affair in Chevy Chase, where she greets visitors amid the barely controlled chaos of a living room full of toys.

Although she faces a huge task in reinvigorating a paper whose circulation has dropped 20% since its heyday, she says she has no grand plan. In fact, the piece makes out Weymouth to be a smart (Harvard magna cum laud and Stanford Law) achiever who makes it up as she goes along. Her attitude toward the Huffington Post and The Daily Beast, which both use Post content without paying: “Good for them. All’s fair, you know.”

Miscellany

The Associated Press is struggling to change its business model in light of the collapsing fortunes of the newspaper industry. The cooperative is trying to negotiate more lucrative licensing deals from major Internet news sites while cutting prices to newspapers in an effort to prop them up. The AP will reduce fees by $45 million for newspapers and broadcasters next year, or about $10 million more than the rate cut it announced in April, CEO Tom Curley said earlier this week. But that won’t stop the decline in revenue, which is expected to continue through at least next year. Curley said the AP aims to reduce its 4,100-person workforce by 10% through attrition, but that layoffs may be necessary.

After 18 months on the market, the Portland (Me.) Press Herald finally has a new owner who has promised to reinvigorate the troubled paper and restore it to profitability by the end of the year. Bangor native Richard Connor officially took the helm this week and said readers will immediately notice a thicker paper and better integration with the website. But there will be pain, with layoffs of up to 100 employees likely.  Remaining employees will get a percentage of the operation and two seats on the board. A conciliatory Guild executive said the layoffs will prevent much bigger job losses that would have occurred if the Press Herald had gone under.

The Knight Foundation is funding nine new-media projects to the tune of $5.1 million. The biggest winner is DocumentCloud, a project conceived by journalists from The New York Times and ProPublica to create a set of open standards for sharing documents. Other projects receiving support include one to help citizens use cell phones to report and distribute news, an effort to develop a media toolkit for developing mobile applications and an online space where the people can report and track errors in the media.

Yahoo’s Newspaper Consortium continues to be a bright spot for the industry. Yahoo reported that five new members just joined the ad-sharing cooperative: the Orange County Register, Colorado Springs Gazette, North Jersey’s Record and Herald News and the San Diego Union-Tribune. The group’s 814 newspaper members account for 51 percent of all Sunday circulation in the US.

Newspaper Guild members at the Albany Times Union have rejected a management proposal that would have eliminated seniority considerations in layoffs and permitted outsourcing of Guild jobs. The vote was 125 to 35. No word on whether the parties will return to the bargaining table, where they have been deadlocked for nine months.

Dan Gillmor has a short, pointed piece on MediaShift pleading for an end to caterwauling over the future of journalism and praising the “messy” process that is going on.  “I’ve grown more and more certain that we will not lack for a supply of quality news and information,” provided that risk-takers are permitted to experiment and that the supply of people who want to practice quality journalism doesn’t dry up, he writes. Like Clay Shirky, Gillmor believes experimentation will ultimately lead to many smaller news operations replacing a few big ones, and that that’s not a bad thing.

It appears that some leading news titles are finally throwing in the towel on the circulation wars.  The New York Times just announced that it will hike its single copy price to $2 on June 1, a 33% increase. Outside of the New York area, the Sunday Times will now cost a whopping seven dollars for home delivery. Several other papers have also increased prices recently, including the Washington Post, Tampa Tribune and Dallas Morning News.  These papers have effectively doubled their newsstand prices in the last two years.  Newsweek just rolled out a new design and cut its circulation by half while increasing cover prices.

What’s going on?  We suspect the publishers are finally beginning a sunsetting strategy for their print editions.  By driving up circulation prices, they are effectively winnowing out their low-value customers.  Price increases will probably come fast and furious in the future. Each will cause circulation to fall until a new floor is reached. Expect circulation declines to quicken as more newspapers adopt the strategy.  Declines have been running in the 6% to 8% range per year for the last two years, but will probably increase if more papers follow the lead of the Times and Journal.

In effect, these newspapers are giving up on print. They are harvesting their most loyal readers and shifting their investments to new platforms.  With the average age of a daily newspaper reader now standing at over 55 years, publishers can expect to derive print circulation revenue for about another decade. Of course, it may not be economically viable to stick with a daily schedule that long, but that readership can be milked for some time to come.

The harvesting strategy makes sense economically, strategically and environmentally. It’s pointless to throw good money after bad chasing new readers with deeply discounted subscriptions that are canceled after three months.  Loyal readers are more attractive to advertisers than bulk circulation and can command higher CPMs. And this means fewer papers going in landfills.  Treating print as a cash cow enables publishers to plow whatever profits are left into new platforms.  Their companies will grow smaller over time, but at least they’re more likely to have a future.

Miscellany

Dan Froomkin begins a four-part series at Nieman Journalism Lab on a prescription for the news industry.  He argues that the bland, expressionless voice that journalism organizations have adopted for the past 40 years has undermined their appeal. “We stifle some of our best stories with a wet blanket of pseudo-neutrality. We edit out tone. We banish anything smacking of activism. We don’t telegraph our own enthusiasm for what it is we’re doing.” In part two, he argues for putting passion back in news reporting.

The Wall Street Journal is running an interactive map that shows “adverse events at the top 100 newspapers” since 2006.  You can mouse over the regions and see information on layoffs, circulation trends and business conditions.  It ‘s accompanied by a dense, ugly chart with detailed information and lots of unexplained columns.  It also doesn’t include recent information like the closure of the Tucson Citizen.

San Diego Valley Reader has an extensive profile of Tewfiq (Tom) Gores, the billionaire who runs Platinum Equity, the partnership that bought the San Diego Union-Tribune. The piece details the controversial background of Gores’ uncle, Tom Joubran, an Arab immigrant who prospered as a grocer in Flint, Michigan but whose background may involve some criminal activity.  It suggests that the Union-Tribune may adopt a strong pro-Palestinian editorial position, which would be quite a contrast from its traditional Republican leanings.

USA Today has a cover story in its money section today that was reported entirely on Twitter. Reporter Del Jones asked CEOs to comment on whether the country is drifting toward a European style of capitalism.  Their responses are reproduced in the staccato shorthand that Twitter’s 140 character limitation imposes.  Absent from the discussion are the founders of Twitter – Evan Williams, Jack Dorsey and Biz Stone – who failed to respond to numerous tweeted requests.  Of course, with more than 2 million followers between them, they’re probably busy.

The tsunami that swamped the newspaper industry in 2008 appears to be spreading to the magazine business. “Virtually every major magazine is experiencing an often-substantial decline in ad pages,” says MediaPost, citing year-to-date numbers.

“Substantial” is being kind. Look at these ad page declines in 2009: Among women’s titles, Allure, Lucky, and Vogue are all down over 30%, and W is down 44%. Among magazines targeting men, Power & Motoryacht is down 63%, Boating down 49%, Automobile down 43%, and Motor Trend and Road & Track both off more than 31%.

In the lifestyle category, Details is down 38%, Maxim off 33.5% and GQ down 32%. Spin down 28%, Vibe off 39%, Gourmet off 46% and Bon Appetit down 34.5%.

Of 118 titles tracked by Media Industry Newsletter (MIN) Online, only eight saw year-to-year growth from 2008 to 2009.  The rest continued a pattern of decline that began in 2007, and the rate of drop-off is accelerating.  Subscribers are also beginning to flee the venerable titles in droves. Among the titles seeing year-over-year circulation losses of more than 10% are Reader’s Digest, Ladies’ Home Journal, Entertainment Weekly, and Redbook. And that’s not factoring in the deeply discounted subscription rates that publishers are using to lure subscribers these days.

Last Gasp for Newsweek?

“Newsweek executives are gambling that advertisers will support the equivalent of shifting from beer to wine,” writes the Washington Post‘s Howard Kurtz, summing up a major redesign of the weekly newsmagazine that appeared this week.  Newsweek is cutting its circulation in half to 1.5 million, increasing both its subscription and cover prices and adopting an editorial profile looks like the Economist: lengthy, opinionated pieces analyzing national and international affairs.  Gone are the summaries of weekly news that have long defined the category.

“The staff doesn’t understand it,” says editor Jon Meacham, but Newsweek really has little choice.  The age of mass media is giving way to the era of targeting, and even 1.5 million subscribers may be too many to serve effectively. Newsweek is on a run rate to lose $20 million a quarter, so this is probably a last gasp for the 76-year-old newsmagazine. Time, with a circulation of 3.25 million, now stands alone in the category of broad, general purpose weeklies that once dominated the newsstands.  It’s still on track to deliver a “substantial profit,” this year, although even Time has also reduced its circulation base, although less dramatically than its competitor, from a peak of over 4 million.

It’s interesting that clicking on the link to the story in the Post, whose parent company owns Newsweek, delivers a pop-up ad for the Economist, which is the one weekly newsmagazine that seems to have gotten it right.

Wired Stuck in the Middle

And what about Wired, the hip digital lifestyle magazine that chronicled the dot-com revolution? Surely it has figured out how to bridge the print-digital divide. Nope. Its business is in the tank, and even Chris Anderson, the new-economy guru editor whose books have foreseen foretold the emergence of hyper targeted media and free content, doesn’t seem to know what to do.

Ad pages are off 50% this year, making Wired the third worst performer among the 150 magazines tracked by MIN. The problem may be systemic.  Wired serves the digerati, whose natural preference is online media.  The publication’s website is operated almost entirely independent of the magazine, and despite multiple design awards, the print version of Wired has been unable to find the popular appeal that could make it a million-circ powerhouse. At 704,000 subscribers, it’s one of the smallest magazines in the Condé Nast portfolio. It lacks the scale to support giant branding campaigns by luxury products, but is too large to deliver efficiency for smaller advertisers.  It’s an uncomfortable place to be: in the middle.  And Condé Nast, which has already shuttered two major titles this year, is probably not in the position to invest in it.