Demonstrating the power of diversification, News Corp. bucked industry trends and posted a profit of $5.8 billion for the fiscal year just ended, buoyed by a string of box office hits, robust online growth and a strong Australian economy. However, CEO Rupert Murdoch warned of tough times ahead in the US market and said News Corp. will step up investments overseas to compensate.

Robust retail and real estate advertising at the company’s Australian, Daily Telegraph and Herald Sun newspapers in Australia helped burnish profits, which were up by 21%. While US and UK performance was weak, The Wall Street Journal grew online subscriptions by 88%, results that stand in stark contrast to the prevailing wisdom in the US that newspaper publishers should give away all their content for free. MySpace.com also had a pretty good year, Murdoch said, without elaborating.

News Corp. is looking to India and China to fuel growth as western economies stumble. India’s GNP is expected to grow 7% in the next year, Murdoch said, and the company is responding by investing $109 million) in six new television channels there.

News Corp. has invested wisely in its online and broadcast diversification strategy over the last decade and the investments appear to be paying off. With the US newspaper industry flat on its back, News Corp. has managed to find growth in areas that US publishers largely shunned in better days. As a result, the company expects operating profits to grow another 4% to 6% in the coming year.

Despite the rosy results, Wall Street continues to debate the wisdom of the Murdoch strategy. A detailed piece in Variety questions whether the mogul overpaid for the Journal last year and whether weakness in US newspaper stocks could tempt Murdoch to go on an ill-advised buying spree. The piece lists a number of investments Murdoch has made in the Journal and in the Dow Jones wire services that he acquired and notes that News Corp. is the only publisher that has appeared to be impervious to the layoffs and downsizing that are afflicting the competition.

Good news, right? Not exactly. News Corp. shares are off 40% this year and some analysts cluck that Murdoch has failed to outline a compelling vision for integrating the Dow Jones properties with his other holdings. Murdoch remains optimistic, but cautious. “This is destined to be an extra-inning game, and to use an overly used metaphor, we’re only in the first inning,” he said recently.

Tuesday brought a welcome respite from the pummeling newspaper stocks have taken recently. Buoyed by a 332-point rally in the Dow, most domestic newspaper companies enjoyed share price increases of between 3% and 10%, with Media General leading the way.

Ombudsmen Becoming History

When I was a ninth-grade student in 1972, my English teacher presented us with “ombudsman” on a Word Power quiz. I scanned every dictionary I could get my hands on, but couldn’t come up with a definition of the term.

Ombudsmen, however, were destined to become fixtures at newspapers over the next few years. These reader representatives were all the rage in the 1970s and 80s. The idea was to take an aging reporter and make him or her a sort of armchair quarterback for the editors, fielding complaints from readers and rendering judgments that carried no particular weight but hopefully made the quality of journalism better.

Now it appears that ombudsmen role may be destined for the scrap heap. Karen Hunter, the Hartford Courant‘s reader representative, pens her farewell column as her job is eliminated in the current round of layoffs.

“Of the nearly 1,500 newspapers in the United States, only a few dozen have ombudsmen and the number is decreasing,” Hunter writes. “Over the past year, reader representatives/public editors/reader advocates/ombudsmen have been reassigned, retired or bought out at the Baltimore Sun, the Minneapolis Star Tribune, the Orlando Sentinel, the Fort Worth Star-Telegram and the Palm Beach Post. She points readers to the Organization of News Ombudsmen, which carries on the fight.

Pam Platt, reader representative at the Louisville Courier-Journal, also writes an obit for the position this week. The Courier-Journal was the first US paper to employ an ombudsman 40 years ago, she says, but the job doesn’t make sense any more in the current economic climate. Platt will write editorials and columns instead.

Layoff Log

• The San Francisco Chronicle, which has been losing money for years, continues to be the poster child of industry problems. Now it’s offering a buyout package to 125 employees. The paper has shed half its editorial staff since 2000 and is reportedly losing about $1 million a week. BusinessWeek‘s Jon Fine last year predicted that it could be the first major metro daily to fold its print edition.
• The Sarasota Herald-Tribune laid off 33 staff on Tuesday, with cuts coming about equally from the editorial and business sides. Parent company New York Times Co. didn’t elaborate.
• The soap opera at Blethen Maine Newspapers continues, with an exasperated publisher of the Portland Press Herald/Maine Sunday Telegram denying reports that the paper could be shut down without a sale. Charles C. Cochrane said that option was a worst-case scenario outlined in recent court documents and is highly unlikely. Blethen is trying to sell its Maine portfolio to a group of local investors.
• The Jackson (Miss.) Clarion-Ledger will reduce its headcount by 20 people, or about 5% of total staff. Romenesko has a memo from the publisher outlining all the usual reasons.
• The Cincinnati Enquirer is asking 50 non-union staffers to take a buyout and says layoffs may be necessary if there aren’t enough takers. Parent Gannett Co. just reported a 36% drop in profits on a 10% revenue decline.
• The good news is that the LA Times ended up shedding fewer jobs than expected: 135 instead of the planned 150. Editor Russ Stanton writes an inspirational memo to his colleagues, exhorting them to continue to innovate despite their depleted numbers.

Miscellany

Los Angeles Times veteran William Lobdell left the paper after 18 years last week. He posts a bitter 42-point analysis of the mistakes the paper made, particularly on the business side. Lobdell says Sam Zell isn’t the villain, but the Tribune CEO did accelerate the company’s s fall. He doesn’t mince words in his criticism of Tribune Chief Innovation Officer Lee Abrams, whom Lobdell clearly considers to be a dunce. He also refers to “good sources” who say another 150-200 layoffs are coming. Lobdell doesn’t see much hope for the Times barring a Herculean effort by the editorial and business operations to reinvent the paper. He’s happy he’s not sticking around for that. Lots of comments on this entry.

---

The Newspaper Association of America Newspaper says newspaper websites attracted more than 40% of all unique visits on the Internet in the second quarter of 2008, a 12.2 percent increase over the same period a year ago. The custom analysis prepared by Nielsen Online also says total page views averaged three billion per month in the period. Considering that Google alone reportedly processes more than 25 billion queries a month, the 40% figure seems questionable.

---

The Audit Bureau of Control (ABC) made a bunch of changes to its procedures in an effort to “simplify ABC rules, reduce audit costs and provide greater pricing and marketing flexibility to publishers,” the organization said in a press release. Publishers have been clamoring for ways to boost their numbers in a period of declining circulation and the ABC adjustments appear to give them a bit more latitude to do so.

And Finally…

There’s no question that the 81 squares that make up a Sudoku grid have been one of newspapers’ greatest friends over the last decade. Many people buy their daily newspaper just to get their fix. True achievers will have a chance to compete for fame and fortune at the 2008 Philadelphia Inquirer Sudoku National Championship on October 25 in the City of Brotherly Love. The Inquirer has even launched a line of apparel honoring the pencil game, but is doing what it can to prevent sales. The Sudoku apparel web page invites visitors to click on the image of a shirt to make a purchase, but none of the images are clickable, meaning that there is effectively no way to make a purchase. Click the image at left to see how it’s done.

Now it’s A.H. Belo’s turn. The Dallas-based publisher plans to cut $50 million in expenses over the next eight months by cutting staff at the Providence Journal, the Dallas Morning News and the Riverside, Calif., Press Enterprise. Belo said its hopes to reduce its workforce by about 500 people, or 14%, through voluntary severance packages, although layoffs are a possibility. Unlike some publishers, it’s targeting the cuts by property. The ProJo, for example, will offer buyouts to about a third of 700-person workforce but won’t accept more than 54 takers. Belo is also looking at selling some real estate it owns in downtown Providence and Dallas to boost the bottom line. Like many publishers, its dividend costs have skyrocketed and the company acknowledged that it may have to cut current $1/year dividend, which amounts to nearly 17% of the stock price.

The Morning News will lose about 10% of its 390 full-time newsroom staffers. It will also reduce frequency of Quick, a free newspaper for young adults, from five times a week to weekly. It’s continuing with plans to launch Briefing, a new free title for nonsubscribers who want a “quick-read” newspaper.

Belo has suffered more than most newspaper publishers in the last year. While its peers are mostly still profitable, Belo suffered a $3.2 million loss in the most recent quarter. As we’ve noted recently, losses can lead to a dangerous death spiral in which cuts lead to subscriber and advertiser flight, which leads to more layoffs.

The layoffs at the Providence Journal are particularly disheartening. The paper is under constant pressure from its neighbor Boston Globe to the north, but is generally acknowledged to have done an oustanding job of localizing its coverage and retaining reader loyaty. While the ProJo is getting off easy compared to the hits that many other papers around the country have seen, it’s clearly not impervious to industry trends.

BusinessWeek Gives ‘Em Zell

BusinessWeek visits Sam Zell in his plush Chicago office and comes to the conclusion that Zell’s $8.5 billion purchase of Tribune Co. is “one of the most disastrous the media world has ever seen.” Zell doesn’t mince words in the interview: “If current trends in advertising are permanent, we have a really serious problem.”

This profile is the best we’ve seen in the months since Tribune’s fortunes began to deteriorate. It notes Zell’s open disdain for the newspaper business as well as his distaste for baseball, which is a paradox since Zell owns one of the most storied franchises in the game. The piece also outlines clearly the financial sleight-of-hand that enabled Zell to acquire Tribune with just $315 million of his personal fortune. “When we first undertook this project, we viewed Tribune as 60 ways to get lucky,” he says. Zell doesn’t have to grow the business in order to reap a huge profit, the piece says. He just has to keep it afloat.

Which is a challenge in itself. The story quotes analysts as predicting that Tribune could default on its debt obligations as soon as December. Zell has put a number of innovative new practices into place, including consolidating some newspaper and broadcast operations in Florida and Chicago. However, the free-fall in newspaper advertising may just be too great. Meanwhile, Zell’s trash-talking about newspapers isn’t helping employee morale. “If you have a lemonade stand, you don’t try to sell the lemonade by saying it’s terrible,” says ex-LA Times reporter Myron Levin.

Things Get Stranger in Paradise

The State of Hawaii has stepped into the dispute between the Honolulu Advertiser and the 54 employees, many of them union members, the paper laid off earlier this month. The Newspaper Guild has problems with how the layoffs were handled, maintaining that seniority guidelines weren’t followed. Meanwhile, the union has printed up 100,000 cards that readers can send in to cancel their subscriptions in event of a strike. The thinking is that it’s better to take down the Advertiser and cause a whole lot more people to lose their jobs than to have 54 employees treated unfairly.

The newspaper industry needs to make radical changes, but neither the management nor the culture in a typical newsroom is conducive to much change at all, according to an organizational behavior specialist.

Mark Glaser interviews Vickey Williams, director of the Digital Workforce Initiative in the Media Management Center at Northwestern University and author of All Eyes Forward, a report about the challenges in changing newsroom culture.

Bottom line: Williams believes most newsrooms are still forcing young journalists into the mold that existed 20 years ago: a top-down structure in which decisions are made at the top and underlings are expected to execute them without question. Characterizing many newsrooms as “aggressive-defensive workplaces,” she finds structural impediments to the adoption of digital tools, suspicion of online media and organizational resistance to any ideas that don’t come from the top.

What’s most troubling about this behavior is that it’s sending young journalists for the doors, Williams says. They don’t believe their ideas are getting a fair hearing and they don’t want to work for organizations that are so insular.

Glaser has a transcipt of his interview with Williams. A few quotes:

• “Resistance [to change] is going down. I am not at all convinced that we know how to replace that with something constructive. So in short, we don’t fight it as hard and as loudly” the fact that we have to change” but we don’t know what to do instead.”
• “Journalists need to get more business savvy” and they will get more business savvy one way or the other. If they become a victim of the cutbacks, then they will be looking at making their own living and be worried about income and attracting advertisers to their website. So getting more business savvy is only a plus.”
• “We asked people what they thought about the data [showing that young people wanted to leave], and the veterans even wanted to argue down that the data was correct. And if it was correct and young people were leaving, it was because they were wimps, and good riddance.”
• On creating a change-oriented culture: “For years, we have been an industry with our panels and task forces and we’ve generated lots of reports that have gathered dust on the corners of bosses’ desks, and people don’t have the energy for that anymore.”
• “I agree with Jeff Jarvis that it would be a very good gamble to allow Millennials to start up companies or products. But I can’t think of a single media company where that would be allowed to happen on a broad scale.”

Williams’ conclusions are sobering. There’s a lot of talk about change and what newspapers need to do to save themselves these days .There are many great ideas for reinvention, although there is no avoiding a lot of pain in the process. Ideas are just one part of the picture, though. There needs to be a culture in place that’s willing to accept change. Newspapers don’t have a lot going for them in this area.

Newspapers have done business more or less the same way for about 150 years.Few industries on earth can say that. The newspaper business has been historically stable, profitable and predictable. It’s boring, but it makes a lot of money. In the 1970s and 80s, some titles enjoyed renewal rates of 90%. In addition, consolidation during the last 50 years has left most cities with only one or two newspapers. Monopolies and duopolies usually suck at innovation. When was the last time your electric company did something clever?

Williams is right that newsroom culture rewards obedience. After all, you need structure and process to produce a fresh product every 24 hours. The hierarchical organization of most newsrooms is appropriate for what they’ve been asked to do for many years. Now you’ve got a situation in which authority needs to be openly questioned. Do you suppose a 30-year veteran city editor is going to cozy up to that idea? Cultures don’t change until people change, and organizations that are run by old guys who have worked their way up through the ranks are the least change-oriented of all.

This is why it’s so hard to be optimistic about the future of newspapers. Ideas can’t flourish without a nurturing culture. Newspapers exist in a culture that is so change-averse that adding color to the front page is considered a breakthrough. When your value is defined by process rather than agility, it’s tough to suddenly be agile.

Maybe I’m being too cynical. Please share your views. Is there a way for this industry to reinvent itself without blowing itself up first?

Miscellany

• Perhaps the savior will be cell phones. The New York Times reports that Verve wireless has signed up 4,000 papers and 140 publishers to deliver news via its wireless service. Research says 40 million people use their phones to go online, and Verve’s service can push news alerts, local stories and geotargeted advertising at those customers, most of whom are probably driving at the time. The CEO of Verve is a former Pulitzer Prize-winning reporter, by the way.
• The Santa Fe New Mexican is cutting 16.5 jobs, or about 7% of its workforce. Ten of those lost jobs are in the newsroom. The biggest culprit is real estate advertising, which has all but disappeared.
• E.W. Scripps may write down the value of its newspaper and local broadcast holdings in the third quarter, the CEO said on the company’s earnings call. Scripps carved out the troubled businesses into their own company earlier this year so they wouldn’t drag on the more lucrative TV and online businesses.
• Speaking of Scripps, columnist Jay Ambrose scolds readers for not appreciating all the great things newspapers deliver. “Perhaps the Internet and innovative editors will come up with ways to preserve the distinguishing value of newspapers,” he writes. “It would help if more citizens understood this value themselves.” Good going, Jay. Blame those customers.

The New York Times Co. shows signs of managing through the crisis, although its regional properties continue to drag down overall performance. The company’s earnings fell by almost 50% in the quarter just reported, but when you factor out the cost of layoffs and buyouts, profits were off only about 12%, from 29 to 26 cents per share. That beat analyst expectations. Circulation revenues were up as the company implemented a price increase at its flagship. The company’s regional holdings continue to drag on performance. Combined revenues at The New York Times and the International Herald Tribune were off 9.5%, which is better than recent industry averages. But the New England Media Group, which includes the Boston Globe, fell 15.1%. The Times continues to look like it can survive and even thrive in the post-metro-daily world because of the power of its brand. The Globe is a different matter, though.

And credit the Times for originality on this one. The paper has linked its web site with popular business networking destination LinkedIn.com. Beginning this week, LinkedIn members who read an article in the business or technology section of NYTimes.com will see a box pointing them to five stories selected for them on the basis of their LinkedIn profiles. There will also be ads, of course. This kind of profiling is a squishy area for Internet companies, which constantly walk the line between delivering value and treading on privacy. The advantage for the Times is that it’s trusted brand is less likely to incur outrage than some dot-com start

Zell on a Skewer

Brooklyn College professor Eric Alterman, who penned a best article so far this year about the newspaper industry’s travails, brings his sardonic wit to a short piece in the ultra-liberal political journal The Nation, which we somehow managed to overlook until today. Summing up the desperate cuts, price increases and rationalizations that we and others have been documenting for months, Alterman ultimately turns his canons on everybody’s favorite whipping post: Tribune Co. CEO Sam Zell.

Admittedly, making fun of Tribune’s “chief innovation officer,” Lee Abrams, is a little bit like beating up your grandmother. But Alterman can’t resist. Noting, among other things, that Abrams was surprised to learn that reports datelined “Baghdad” are actually written by reporters in Baghdad, he concludes, “The more one listens to the men and women at the top of the industry, the more it becomes obvious that the survival of the newspaper is going to have to come from somewhere else.” Unfortunately, Altman concludes that he has no great ideas for saving daily newspapers. He’s just quite certain that the people charged with doing it currently aren’t up to the task.

Miscellany

Tribune Co. executives are trying to reassure shell-shocked staffers that the worst may be over. In an interview on the company’s intranet on Tuesday, Zell and COO Randy Michaels said the company’s recent job cuts were intended to be swift and deep in order to avoid the “death by 1,000 cuts” scenario that is afflicting many of their competitors. Zell wouldn’t predict an end to the earnings free-fall, nor would he be held accountable for earlier promises that he wouldn’t cut his way to profitability. Michaels outlined some aggressive initiatives at member papers aimed at attracting new business.

---

Erica Smith, whose Paper Cuts Google Maps mashup vividly documents the industry’s slashing and burning, says Tribune Co.’s Florida properties have been keeping mum on recent job cuts. The Orlando Sentinel eliminated 16 jobs a week ago but didn’t fess up till Friday, she says. She also cites, as we did earlier this week, the Ft. Lauderdale Sun-Sentinel‘s self-demeaning decision to hide news of its own layoffs because of the editor’s concern that the news will get “butchered in the media.”

---

A group of Chicago Tribune staffers has published a list of their 50 favorite consumer magazines. While predictable candidates like Rolling Stone and The New Yorker are there, the list has some unexpected delights, including Modern Drunkard and Firehouse, which is, believe it or not, for people who love to chase fire engines. If only these print-biased editors had thought to hyperlink some of the titles they recommend. Incredible.

The Minneapolis Star Tribune may be the first victim of default. Finance and Commerce says Avista Capital Partners, which acquired the paper last year, now wants out of the deal. The trouble is that no one wants to put up any money. Investors are paying only 53 cents on the dollar for a share of the current note, which is well below the Wall Street average of 90 cents. The ultimate buyer could be a distressed-debt hedge fund, which will move quickly to slash costs. It’s hard to believe that McClatchy paid $1.2 billion for the Star Trib in 1998. We’d estimate that investment is worth about $200 million now.

---

More coverage of the Pew Research study released this week: Marshall Kirkpatrick wonders if location-aware mobile devices like the iPhone 3G could be the nail in the coffin.  If the salvation of newspapers is local, then how do you compete against a device that delivers local news right where you’re standing? Kirpatrick says he’s an unabashed newspaper fan, but the dailies have got to figure out a way to stop killing trees in order to dump paper on his doorstep that then goes right into the recycling bin.

---

The Los Angeles Times is folding its book review section. The decision has drawn howls of protest from the book review editors themselves, who are encouraging their readers to howl with them. Book reviews are the most erudite features of major metro dailies and an important symbol of the intellectual value newspapers deliver. We guess that’s not a high priority to Tribune Co. management at the moment.

---

Evening Post Publishing Co., owner of the Charleston Post and Courier, is offering buyouts to all of the paper’s 513 employees, looking to shed staff without resorting to layoffs. Employees can get the standard two weeks for every year of service. The Post and Courier is the oldest paper in South Carolina and once employed more than 700 people. (via The Digitel).

---

 David Sullivan’s That’s the Press, Baby is always an engaging read, even when we don’t agree with him. He lets loose on some doomsayers this week with rapier wit. Sullivan’s blog is about newspapers, copy editing and department stores, three topics that frequently come up in the same sentence.

---

The Sacramento Bee‘s ombudsman asks us to keep it all in perspective. Despite the nuclear winter that hovers over the US newspaper industry, global trends are up. Did you know that Turks spend 74 minutes a day with their broadsheets? Or that circulation is up 481% in Ukraine over the last five years? These and other nuggets are available in this entertaining column.

As editors and bloggers have combed through the “Changing Newsroom” study from the Pew Research Center’s Project for Excellence in Journalism over the last couple of days, they’ve increasingly focused on the study’s findings that editors are, on the whole, positive about the future.

“Newspaper editors optimistic despite downs” was UPI’s headline. Writing on Conde Nast, Jeff Bercovici focuses on all the good news in the study and observes that newspapers are “very sensibly shifting their resources away from areas where their efforts can easily be duplicated and into the sorts of coverage where they can best distinguish themselves from competitors in all media.”

How can crusty old news editors remain positive amid the drumbeat of dreadful news that’s afflicting the industry? We can only speculate, but that’s what blogs do.

For one thing, perhaps there aren’t as many crusty old news editors any more. Layoffs have washed out a lot of the old guard. Some of them now content themselves blogging about the good old days, although a few still run editorial departments. Mostly, though, the editors who are left are the fighters, and fighters tend to think positively.

There’s also a silver lining to any crisis: the opportunity to focus and rethink the business. In that spirit, the most remarkable section of the Pew study is the chapter about the future. Read it to see quotes from veteran editors who believe the downsizing has required them to become more resourceful, creative and open-minded. In the words of Miami Herald Managing Editor David Wilson, – Through all that- ™s happened over the last few years, the quality of our work is among the best I- ™ve seen- ”and I- ™ve been here 31 years.- 

The study also reports that editors are more involved than ever in trying to identify new revenue streams, even offering an investigative reporting project for sale on Amazon in one case. What’s more, editors don’t think this breach of the traditional ad/edit wall is such a terrible thing. Some are actually invigorated by the idea of becoming more involved in the success of the business.

“They are working hard, innovating, making changes,” says the report. “They may have fewer reporters and less space to work with, [but] they are certain that what they are producing today is better than what they produced a few years ago.”

We’ve noted before the importance of discarding assumptions. It’s hard to do, but it’s the essential first step toward envisioning the future. The inspiring message from the Pew research is that the editors who are working through the ritual destruction of their industry are discarding assumptions en masse and finding that there really are better ways to do their jobs.

Curmudgeons persist but, as Jeff Jarvis notes, they are being marginalized. Times of crisis are also times to rethink everything. That appears to be the bright spot in the industry right now.

Layoff Log

The Tribune Co.-owned Allentown Morning Call will cut 35 to 40 newsroom positions, according to a memo from the publisher posted on Tell Zell. The Morning Call did a small buyout in March, but this appears to be much more sweeping, amounting to more than a quarter of the news staff, according the blog.

---

Also in stealth mode is the Ft. Lauderdale Sun-Sentinel, a Tribune Co. property which is cutting its 290-person news staff by 20% but choosing not to report it. Commenting on the paper’s decision not to tell its customers about significant changes to the product they pay for, Editor Earl Maucker comments, ironically, “It serves nobody’s interest to put it out ahead of time. As I’ve found, it gets butchered in the media.”

---

There are bad times all over the Sunshine State. The Fort Myers News-Press is laying off 36 people, eliminating some unfilled positions and killing a weekly supplement targeted at Hispanic readers. We hope Publisher Carol Hudler is wrong in calling the region’s economic climate “the worst local economy since perhaps the crash of 1929.” In fact, the economy did pretty well in 1929. The worst years of the Great Depression were from 1933-1937.

---

The beleaguered staffs at Maine’s Portland Press-Herald and Sunday Maine Telegram are bracing for the fourth set of layoffs in 12 months. The problem is that owner Seattle Times Co. can’t find a buyer for its Maine Newspaper Death Watch – º Edit – ” WordPressholdings, so it keeps cutting and cutting in an effort to prop up the finances. This layoff will take out 10% of the remaining 85 news staffers. Crosscut Seattle has exhaustive background. There’s also a depressing blog devoted to this situation.

---

Laid-off newspaper employees and their colleagues are increasingly taking to the street to publicize their plight. Baltimore Sun employees staged a rally last week, complete with 100 empty chairs to symbolize lost jobs. Alan Mutter asks if this is really an appropriate response, or if the protests might actually backfire and cause subscriber flight. What do you think? Is all the publicity about the death of newspapers actually worsening the industry’s decline? Maybe they’re on to something at the Sun-Sentinel.

---

Tell Zell reprints some of the farewell memos that went out last Friday as laid-of LA Times staffers packed their bags. Journalists write some of their best stuff at times like these.

And Finally

Our WordPress template chokes when we try to embed video, so we’ll have to settle for a link. If you want to understand the macroeconomic and demographic shifts that are disrupting this and so many other industries, spend eight minutes watching this video. You will be riveted.

It’s the dog days of summer, so even unsurprising research is good enough to draw lots of attention. This time the subject is a new Pew Research study that finds – “ surprise! – that newspapers are getting smaller, more local and more focused.

The New York Times chooses to focus on the obvious in its coverage. – “Almost two-thirds of American newspapers publish less foreign news than they did just three years ago, nearly as many print less national news, and despite new demands on newsrooms like blogs and video, most of them have smaller news staffs,” reads its lead.

We were actually more intrigued by Editor & Publisher‘s take, which zooms in on the paradox of staff cuts: – Editors by big numbers think their papers are actually improving their coverage, even as they lament that their staffs have lost their most veteran journalists in waves of buyouts and layoffs,-  reads the nut graph. E&P also pulls out other nuggets like the fact that copy editor positions are being cut more than any other and that editors feel conflicted about the move to the Web. Quoting from the research: “A plurality of editors (48%), for instance, say they are conflicted by the tradeoffs between the speed, depth and interactivity of the web and what those benefits are costing in terms of accuracy and journalistic standards.”

The study does highlight the angst that’s being caused by an epic platform shift and the departure of many veteran journalists. The good news is that more than half the editors say the quality of their product has improved over the last three years. The unsettling news: – Only 5% of those responding to the survey said they were very confident of their ability to predict what their newsrooms would look like five years from now.- 

---

Perhaps the gloom that pervades the industry is misplaced. Media Mark Research & Intelligence (MRI) reports that total readship is up in the top 100 markets. A survey commisioned by the Newspaper National Network (NNN) found a 2.1% increase in audience size to 80.6 million between spring 2007 and spring 2008. However, media outlets were somewhat ambiguous in their interpretation of the results. Editor & Publisher interprets the data as indicating that print readership is up
while MediaPost refers to unduplicated audience, which includes online readers. Both outlets cite newspapers’ recent clampdowns on free bonus circ as improving audience quality.If the research (which isn’t mentioned on either sponsor’s site, as far as we could tell) is about online audience, then the results aren’t that encouraging. Most newspapers have been reporting increases of 10% or more in online audience, which about mirrors the growth of the Internet overall. If the numbers refer to print readership, then they are indeed surprising, given that the Audit Bureau of Control has reported a steady downward trend in that area. Perhaps more details will emerge when the NNN actually says something about the research.

Layoff Log

The Atlanta Journal-Constitution is spending $30 million on new printing presses and cutting its staff by 8%. The loss of 189 jobs includes 85 newsroom employees and 104 people in the advertising group. The paper is also discontinuing all its regional editions, including the Gwinnett County regional, where its main printing press is located. In an open letter, the publisher explains that the AJC drives 80,000 miles a day to deliver its product and that spiraling fuel costs have hit hard. The paper has also had to absorb a 35% increase in the cost of newsprint.

In light of all those factors, the decision to invest so heavily in new presses seems a bit bizarre. We’re sure there are good business reasons, but if all the growth is online, why invest in a print product that already has a near-monopoly position in its market? We suspect there are nearly 200 soon-to-be-ex-employees of the AJC who are asking the same thing right now.

---

More than 3,500 newspaper jobs have vanished this summer, according to Media Post. You’ve read about most of them here, but the media publisher’s roll-up demonstrates how widespread and entrenched the industry’s problems are.

---

An already tense labor-management standoff at the Honolulu Advertiser wasn’t helped by last week’s announcement that the paper must cut 54 positions, or about 10% of its workforce, for the same reasons everybody else is laying off. It took all of one day for the union to authorize a strike. Workers said they had no idea the layoffs were coming and that the Advertiser claims to be profitable.

Being profitable, of course, is not a guarantee against layoffs, especially when parent Gannett Corp. just announced a 36% drop in earnings. Advertiser management is actually pressing the issue by proposing that the union be abolished so that it can have the flexibility assign reporters to take photos, for example. The union says no. In an age when competitive websites leverage content contributed by local citizens for little or no money, it makes sense to send both a reporter and a photographer to cover a story at union scale. This is a business model that the Advertiser can ride comfortably into oblivion.

---

The Gleaner of Henderson, KY, will eliminate nine pressroom positions and four other unspecified jobs as it moves printing to the Evansville Courier & Press. The item didn’t say how many people work at the paper.

Miscellany

The owner of Pacific Coast Business Times, a weekly business journal in Southern California, says business is great. The closure of business sections in some big dailies has helped, says Henry Dubroff. Business weeklies have lower costs and just as much credibility as the dailies they’re challenging he says. If you read between the lines of this piece, though, you’ll also see that business weeklies are more attuned to playing nicely with the businesses they cover: – The culture of a business journal is more like a small business than a traditional newspaper,” Dubroff says. “Other departments are close at hand, not on another floor. A mix of high standards and cooperation are keys to success.-  Translation: business journals are more likely to write nicely about the companies they cover.

---

The editor and publisher of American Thinker, Thomas Lifson, writes somewhat mockingly about the decline of The New York Times under publisher Pinch Sulzberger. Repeatedly referring to the publisher by his preppy nickname, Lifson ticks off a list of questionable business judgments at the Old Gray Lady, including the decision to increase the dividend while the stock was tanking and the Ochs/Sulzberger family’s refusal to consider selling the operation. Noting Rupert Murdoch’s designs on the Times, Lifson references recent reports that Murdoch and Daily News publisher Mortimer Zuckerman are discussing ways to combine some operations in order to reduce costs. – With the financial muscle to cut prices and steal advertisers away from the Times national and metropolitan editions, Murdoch can force the Times to cut its own prices for the advertisers and readers who remain with it, further pressuring circulation revenue and readership,-  he says. In other words, a death spiral.

---

The Asheville, NC Citizen-Times has started making reporters punch a time clock. Actually, it’s a thumbprint reader, and you have to punch in and out even if you’re going down the block to the bank. With that kind of management penny-pinching, it’s unlikely that C-T reporters are going to be burning the midnight oil on a big story any time soon.

And Finally…

Conspiracy theory? Tell Zell reveals internal communications from Tribune Co.’s IT organization telling how computer systems are being centralized at the company, making it possible for a reporter at the Baltimore Sun, for example, to file a story directly to the LA Times. Previously, the systems couldn’t talk to each other. Does this mean it will soon be possible for the Tribune papers to pool resources and send, say, four reporters to witness the same Presidential press conference instead of eight? If so, then we take back the mean things we’ve been saying about Sam Zell. Maybe the guy really does have a vision.

The Hindustan Times writes about a fledgling business in the booming Indian outsourcing economy: editorial services. The paper looks at Mindworks Global Media and Express KCS, two small companies that gained an early toehold in outsourced advertising production and that are now moving to the editorial side. Mindworks has tripled its staff to 100 in the last year, while Express KCS has grown an incredible 20-fold to 400 people in that time.

The COO of Express KCS is quoted saying the company is in talks with “seven or eight” interested papers. The editors are usually Indian journalists who are trained in the nuances of American editing. Most are young and they work dirt cheap compared to their US counterparts. The firm runs shifts around the clock. Poynter Institute’s Rick Edmonds is quoted estimating that “a copy editor at a medium-sized American newspaper makes between $30,000 to $60,000 per year, compared to between $4,800 and $14,480 at Express KCS.”

Is this the future of journalism? It’s unlikely that anyone will figure out how to cover a city council meeting from Bangalone any time soon. For office functions like copy editing, though, the economics of offshore outsourcing look pretty compelling. Although there’s evidence that quality can be a problem, the trend looks unstoppable. Forrester Research estimates that 3.3 million U.S. jobs and $136 billion in wages could migrate offshore by 2015. Indian firms have a lot of incentive to improve the quality of their services. The lousy quality of English taught in US public schools doesn’t help keep jobs on shore.

There’s lots more information online

Must Be a Slow News Week

• The weeks surrounding Independence Day in the US are notoriously bereft of news, which leads to very long stories about topics that don’t seem to deserve very long stories. This is true even in the shrinking age of the newspaper.
• Crain’s Detroit Business speculates about the future of the Detroit News, which is the weaker of the Motor City’s two dailies. The News and the Free Press coexist under a joint operating agreement that makes ownership of the News by MediaNews Group a no-lose proposition. It could become a loser for JOA partner Gannet, though, particularly as business deteriorates. In the end, nothing is likely to happen soon, Crain’s says, leading one to wonder why it needed a 1,200-word story to come to that conclusion.
• The Maryland Daily Record devotes nearly 800 words to the news that the Baltimore Sun will cut its business section. This has become standard operating procedure for newspapers that are cutting back, since the business section generates little advertising and its the most vulnerable part of the paper to online competition. Papers have devoted less space to announcing layoffs of 10% of their staff.
• The managing editor of the Bristol Herald Courier kicks in 700 words about the decision to make the paper one inch narrower and cut back a little on wire copy. Otherwise, no biggie.
• Meanwhile, all’s well and good with the UK tabloids, thank goodness.

And Finally…

• If you want a really different and refreshing perspective on the role of newspapers in people’s lives, read what fans of the syndicated column The Amish Cook have to say.  It will humble you.
• We love Dave Barry, so we thought we’d remind you of one of his best columns: “25 Things I Have Learned in 50 Years.”

An intern at the Tampa Tribune has posted excerpts from a remarkable speech by Editor in Chief Janet Coats to her newsroom the other day. The newspaper had just announced plans to cut its newsroom staff by about 10% or 21 people. Coats said some politically unpopular things. ““People need to stop looking at TBO.com as an add-on to the Tampa Tribune,” intern Jessica DaSilva quotes Coats as saying. “The truth is that The Tampa Tribune is an add-on to TBO.”

Coats went on to compare the newspaper industry to the music industry, which is in a death spiral of its own right now. Demand for music has never been higher, but the record industry is hemorrhaging because its business model is tied to a distribution system that is now irrelevant. Newspapers will enter a death spiral of their own if they don’t change their thinking, Coats said.

Janet Coats is one smart editor, and let’s hope her staff responds to her rallying cry: “It’s worth fighting for.” While they’re at it, find a full-time job for Jessica DaSilva, who turns in a nice piece of reporting here.

Latest Cutbacks May Not Go Far Enough

Alan Mutter has a fascinating analysis of newspaper industry layoffs. He counts up all the cuts announced this year, compares them to previous downturns and concludes that publishers are cutting back far too little. In previous slowdowns, Mutter demonstrates, publishers cut headcount roughly in line with ad declines. This time around, though, they’ve trimmed less aggressively. It could be that publishers’ decisions to cut expenses in 2005, when business was good, made them think they were ahead of the game, but they’re actually falling further and further behind as the ad business spirals downward.

This is depressing news, and it further supports the likelihood that a death spiral is beginning. Death spirals happen when revenues decline faster than expenses. Companies avoid tough decisions about cost cuts, figuring that things will get better and they want to retain their best people. When things don’t get better, they find themselves scrambling to shed workers as quickly as possible. They take a hatchet to their workforce, which scares employees and spooks investors. The best people leave and the remaining employees cower in a corner, getting little done and mostly speculating about the next round of cost cuts. This happens every time a big corporation goes off a cliff, and the same scenario is ominously forming in newspapers today.

In light of Mutter’s analysis, the Tribune Co.’s recent aggressive cost-cutting measures may be smart business. Yesterday’s 250-person layoff at the Los Angeles Times, for example, was more than 8% of the total workforce. Nevertheless, with revenues falling at a 14% clip in the first quarter, it still may not be enough. Which sucks.

• The Milwaukee Journal Sentinel will cut 130 people, or about 10% of its workforce. Management is hoping to use buyouts and attrition, but will resort to layoffs to meet the number. The Journal Sentinel just won a Pulitzer.

Getting on the Hyper-local Train…Or Not

The Santa Cruz Sentinel is the latest paper to joint the reader-generated content trend. But instead of celebrating the addition of community-contributed articles to the new “Perspectives” section, an editorial presumably written by EIC Don Miller under the dour headline of “More changes at the Sentinel” makes it clear that this was not a popular decision. “I try to keep all these changes in … perspective. Because change is what is happening,” says the writer. “And for newspapers, in whatever form they will be published and delivered, to survive, change is what we have to do.” Wow, that oughta rally the community! (via Editors Weblog)

---

Steve Outing vamps on an earlier opinion he wrote with the controversial position that local news can be boring. Outing, who is an unabashed supporter of the “hyper-local” concept, uses his hometown newspaper as an example. The section devoted to reader-contributed items is full of uninteresting, poorly written and marginally relevant content. “I’m a believer in hyper-local! I just don’t think we’re doing it right yet,” he writes. Good point. Hyper-local doesn’t mean publishing every 4-H Club meeting announcement and blog entry citizens that citizens contribute. It’s about constructing a new kind of news service that targets specific interests. The prolific Outing offers some of his own ideas.

Miscellany

A columnist for the Rocky Mountain News proposes a novel idea: shut down his newspaper. Or maybe close the Denver Post. Either/or. The current business model isn’t working, says David Milstead. Denver has a been a joint operating agreement town for eight years, but the uneasy alliance between owners E.W. Scripps and Media General hasn’t led to sustained profitability for either of Denver’s two papers. Perhaps the best course of action is to shutter the weaker paper and the weaker website. Milstead suggests that this could result in the News continuing in print while the Post serves Denver online.

---

If you want to see heartening examples of the innovative things newspapers are doing, subscribe to Editor & Publisher’s Best of the Web feed.

---

McClatchy Vice President of News, Howard Weaver, has set up a wiki to seek ideas from staff members and really anyone who wants to weigh in. It’s lightly trafficked so far, but it’s still early. Advice to Weaver: the vast majority of wikis go nowhere. There seem to be two elements of success: 1) People have no other other way (like e-mail) to express their opinions; and 2) One or more people are actively tending the fires, responding to comments and posting new material. Just because you build it doesn’t mean they’ll come.

---

The Review-Atlas of Galesburg-Monmouth, IL will drop its Monday edition, following the lead of several small papers that have scaled back frequency in the same of cost savings. Monday is the smallest issue of the week for most newspapers and frequently loses money.

And Finally…

If the industry’s troubles have got you in a bad mood and you want to blog off some steam, change the routine a bit. Find an insult that’s  more offensive that the usual F-bomb and use language that won’t make a bad impression on the 4-year-old is in the back seat. Brush up on your scurrilous vernacular with the Shakespeare insult kit. Take it from the Bard himself and don’t be a qualling hedge-born moldwarp.

 

The Los Angeles Times will lay off 250 people, including 150 in the newsroom, in the latest round of Tribune Co. cutbacks. The layoffs have been rumored ever since Tribune Co. COO Randy Michaels singled out the paper as a trough of journalistic productivity in Tribune Co.’s portfolio. Tribune has since announced steep cuts in Hartford and Baltimore.

In contrast to layoffs at other newspapers around the country, Tribune Co. has focused the knife on editorial departments. The cuts in Hartford and Baltimore each amounted to 20% or more of the newsroom. Michaels and CEO Sam Zell have openly stated that journalist productivity, as measured in column inches,  will be one of the metrics they use to identify layoff targets. The LA Times is slashing its news staff by 150 people, or about 17%. The surviving staff of 725 is nearly 40% smaller than  it was during the boom days just before 9/11, when it employed 1,200.

In a memo to employees, Times editor Russ Stanton also outlined other planned changes, including a redesign of the newspaper and merging of the print and online news staffs. Stanton’s memo indicates that Times management is solidly lined up behind the transformation of the brand from a print to multiple media. Ed Padgett has the full text of Stanton’s memo.

Padgett also reprints an unusually upbeat and conciliatory memo from Sam Zell, whose public mood had raged from dazed to cynical recently. While this probably isn’t the last of the Tribune cuts, it may be the most painful. the LA Times has the largest newsroom and the broadest reach of any Tribune title and the industry has been waiting for the ax to fall.