The New York Times this week carried a well-argued op-ed making a case for turning newspapers into endowed institutions. The authors, which include a financial analyst and the chief investment officer at Yale University, suggest that newspapers endowed under Section 501(c)(3) of the I.R.S. code would enjoy the best of both worlds. They could continue to generate revenue from advertising but would enjoy the benefits of tax-free status as well as insulation from the vagaries of the market. The only thing they’d give up is the ability to support political causes.

The authors make a persuasive argument, but the devil is in the details. They suggest that the Times could cover its newsroom costs with an endowment of $5 billion, but getting enough people to sign checks to reach that total would take years. The National Association of College and University Business Officers lists just 18 academic institutions with endowments of more than $5 billion, and that tally has no doubt shrunk since the markets collapsed last fall. These institutions have large rosters of wealthy alumni whose affinity for their alma maters is stronger than is most people’s fondness for a newspaper. They’ve also been amassing their endowments for 100 years or more. While the Times might have a shot at generating that kind of loyalty, it’s a stretch to believe many smaller papers could successfully generate enough endowment to cover their expenses, and few have the time or resources to mount the necessary fund-raising campaigns.

Poynter’s Bill Mitchell points to a fascinating history at Online Journalism Review of earlier efforts to establish non-profit or reader-funded newspapers. This idea isn’t new; it’s been tested for nearly a century without notable success. In fact, Poynter Institute, the Church of Christ, Scientist and the Church of Jesus Christ of Latter-day Saints are the only three nonprofit institutions in the US that own daily newspapers, and all are struggling to keep their properties viable. Dorian Benkoil also takes up the question at Corante, but he argues that profitable journalism models are already emerging online and that we should focus on those. Judging by the lack of precedents, it seems likely that the endowment model will remain an interesting but unattainable goal.

“The future of newspapers is rooted firmly in 1878. Some guy was doing … 130 years ago, exactly in a place like this … what I’m doing right now. Except he had a better heating system.”

The speaker is Ed Shamy, a 50-year-old former newspaper editor from Vermont who’s part of a growing number of laid-off publishing professionals who are starting their own local publications. Ed Shamy publishes the 130-year-old County Courier in Vermont. All by himself.

Is this a trend? It could be. Yesterday, we told you about Melissa Marinan, a veteran ad sales rep who lost her job when her newspaper closed. So she’s starting her own local newspaper. Just last week, we pointed to a story about Joshua Karp, an entrepreneur who wants to start hundreds of hyper-local newspapers written by bloggers.

Amid all the hand-wringing about the perilous economics of major metro dailies, one fact has been buried: the cost of publishing a local newspaper is lower than it ever has been. Digital cameras have cut the time and cost of taking and publishing photos. Desktop software can be used to lay out pages quickly and cheaply. Editors can tap in to local blogs and websites for information that used to require phone calls and faxes. Many printers can now go direct from computer file to plate. Distribution can be done in an afternoon out of the back of one’s car.

It’s not a great way to make a living, but potentially it is a living. For the ranks of laid-off baby boomers who are no longer supporting kids and big mortgages, it may be a viable way to apply their skills. We believe local newspapers actually have a bright future.

Superior Economics

Why can local publishing flourish while major metros collapse? No unions, for one thing. No presses, no delivery trucks, no circulation departments, no call centers. In fact, local newspapers have almost no infrastructure costs at all. A skilled writer who works full-time and leverages contributions from the community can turn out enough copy and photos to fill a 16-page weekly issue. A second person can cover every prospective advertiser in the area.

The advertisers are there. In fact, local businesses are the great untapped revenue source. Major metros traditionally haven’t bothered with them because the dollars are too small. There are no online services that serve local communities effectively. Most small businesses advertise through a patchwork of channels that can include place mats and business card holders in the local hair salon. It’s a frustrating, time-consuming process that small business owners would rather not bother with. A newspaper that reaches a local audience has a chance to deliver a better return at a lower sales cost.

Print is not dead, only certain manifestations of print. A lot of skilled publishers are out of work right now, and at least some of them will follow the path of Ed Shamy and Melissa Marinan. We wish them well.

Layoff Log

• Baltimore’s Capital Gazette Communications will cut 111 jobs as it moves all printing operations from Annapolis to Comprint, a Laurel, Md. Printer that already produces several daily and weekly papers. The body count at Capital includes 31 full-time and 51 part-time press and mailroom positions, along with 29 other people in other departments. No reporter jobs were cut. The Capital Gazette also prints the Bowie Blade-News, Crofton News-Crier and the West County Gazette. No word on whether the contractor will hire any of the laid-off employees.
• The Missoulian (Mont.) has cut six jobs and will combine its call center with four other newspapers in big sky country. The Montana Standard is doing the same thing.
• The Hutchinson (Kan.) News will lay off four employees and require everyone to take one unpaid week of before April 30. The newspaper also plans to reduce its daily page count.

Gatehouse Media and The New York Times Co. have settled an inane lawsuit over Boston.com’s use of RSS feeds and story fragments from Gatehouse publications. You can read the muddled settlement term here (courtesy of Jeff Jarvis) and a very good analysis by Mark Potts here. It’s a good thing this suit didn’t go to court because it would have distracted both litigants – not to mention a few dozen journalism bloggers – from more important issues.

The conventional wisdom is that Gatehouse shot itself in the foot in this case by suing to end a practice that was driving traffic to its own websites from a much more visible competitor. In our opinion, Gatehouse had a legitimate gripe, but its mistake was paying lawyers to deal with a problem that could have been easily – and more beneficially – solved with technology. Basically, Gatehouse missed the opportunity to turn lemons into lemonade.

Instead of issuing a cease-and-desist, Gatehouse could have simply intercepted any traffic referred from a Boston.com URL and redirected it to a landing page. That page could have been used for anything Gatehouse wanted, such as a subscription promotion or even a redirect to the home page of the publication being linked to. Any 12-year-old can program a Web server to do this. So it’s perplexing why Gatehouse would want to bring in expensive and clueless attorneys to craft a solution that is so convoluted that no one will even pay attention to it two years from now.

Gatehouse actually had legitimate concerns about Boston.com’s use of its headlines and story summaries. The Boston Globe, which is Boston.com’s parent, was arguably compensating for its own cutbacks in suburban coverage by harvesting the work of a competitor. The problem is that challenging that practice legally is like trying to boil the ocean. Linking and summarizing are so intrinsic to the Web that legal action would be unenforceable and horribly expensive.

Had the suit actually gone to trial, everyone from the ACLU to the Electronic Frontier Foundation would have weighed in with an opinion and Gatehouse would have spent millions of dollars it doesn’t have to fight a battle that is probably costing its newspapers at most a few thousand dollars a year in lost revenue. It’s good that the Times Co. decided to just cave and settle. The agreement does no real harm to Boston.com and gives a few Gatehouse executives satisfaction. The only people who win are – ugh – the lawyers.

There’ll Always Be a France

People who think the U.S. government should subsidize newspapers might want to keep an eye on what’s happening in France, where the government has stepped up its financial support of the beleaguered newspaper industry. The French government already subsidizes newspapers to the tune of $360 million a year and now it will throw another $260 million in the annual kitty in the form of increased government ad spending and an unusual promotion that will give every 18-year-old a free newspaper subscription, presumably until he or she is no longer 18.

Keep in mind that France is about as much like the US as Mars is like the Earth. The French economy is highly regulated and the 35-hour work week is almost a state religion. The difference in perspective is well represented by this quote from President Nicolas Sarkozy: “It is the state’s primary responsibility to respond to an emergency, and there is an emergency caused by the impact of the collapse of advertising revenue.” Nevertheless, it’ll be interesting to see if government subsidies have any uplifting effect whatsoever on the French newspaper business, which appears to be in even worse shape than ours. We’re not betting on it.

Miscellany

Martin Langeveld has a terrific post at the Nieman Journalism Lab about why newspapers should get into social networking. Unfortunately, only about 10% of newspaper websites are doing anything in this area, according to one study. That’s puzzling, since newspapers can connect with their audiences geographically, which is something very few Web properties can do.  We’ve wondered why sites like Going.com exist when newspapers are naturals to provide these location-based linkup services. Langeveld suggests that publishers are still having trouble shifting from the role of oracle to that of facilitator. The idea of enabling conversations instead of dominating them is still foreign. He’s probably right. See his post for an impressive list of links to resources that help explain how social media can help build community.

When Journal Register Co. bagged out of Connecticut earlier this month, one layoff victim decided to do something. Melissa Marinan, who sold advertising for JRC’s Imprint chain for 18 years, raised money from her dad and started her own local weekly called The Valley Press. She even recruited the former editor of the Imprint newspapers and hired a full-time reporter. Marinan will take care of selling advertising. The first issue of the free paper hits residents’ mailboxes on Feb. 5.

Reed Business Information is cutting about 7% of its workforce. The company publishes Variety and Publishers Weekly magazines, among others.

Thank you, Tim Windsor. The respect is mutual.

And Finally…

Nigeria’s Vanguard newspaper reported matter-of-factly that police in Lagos implicated a goat (left, although not the actual goat in custody)  in an attempted auto theft, saying that one of the thieves transformed himself into the animal in an attempt to avoid arrest. The thief was apprehended nonetheless, and now will either have to change back to a person or a spend the rest of his life in the, um, pen. If you don’t believe us, this story has been carried on hundreds of news sites. Oops, Gatehouse, there are those headlines and summaries again.

You can skip roughly the first 1,500 words of Jon Austin’s lengthy essay on The Rowdy Crowd and jump right to the nut graph about micropayments. This otherwise rambling opinion piece makes a persuasive case that the news business can create a viable economic model by charging small amounts for each item of content a reader consumes. We’re not talking 25 cents here; we’re talking ¼ of a cent. The technology actually exists to charge very small amounts for very focused transactions, Austin writes, and the newspaper industry could be the first with sufficient motivation to make the system work.

Micropayments were an idea that came out of the early Internet. The idea was that electronic networks removed so much cost from a transaction that it was theoretically possible to conduct profitable exchanges at prices of as little as a few cents. The cell phone companies have been doing this for years by debiting transactions against a buyer’s phone bill. Now Apple is selling iPhone software applications for as little as 99 cents. It’s not a big step from there to ask readers to pay a few pennies to get an article they can’t find anywhere else. People are already comfortable with carrying around their Starbucks and McDonald’s cards and charging small transactions against them. Why can’t the same thing work for information?

The Economist suggests a similar idea in a short column that suggests that consumers may be more willing to pay than one would think I they didn’t have a choice. “Few people would have guessed how much British viewers would be prepared to pay to watch televised football matches—which used to be on free-to-view channels—before Mr Murdoch’s satellite television bought up the rights and began charging,” says the unnamed editorialist. The piece also quotes Los Angeles Times editor Russ Stanton, saying that the paper’s online revenues now pay for the entire print and online editorial staff, a claim we hadn’t seen before. This makes print officially a loss leader at the LA Times.

It seems to us that micropayments are worth another look. If a consortium of publishers could agree to share the costs and to firewall some of their content this way, the technology just might have a chance to generate a meaningful revenue stream for publishers whose local content is truly exclusive.

Le Lockout

“Photographers and journalists at the paper make an average salary of $88,000 for a 30-hour week. Editors make an annual average salary of $125,000. Employees are entitled to four to six weeks of annual vacation paid at time-and-a-half.” Sound like paradise? Actually, the union is pretty unhappy with the state of affairs at Le Journal de Montreal and a contract dispute with management led to a lockout over the weekend. Management charges that the union refuses to negotiate a contract in good faith,  and this has frustrated modernization efforts. Union leaders charge that parent company Quebecor Media’s plans to merge Le Journal’s online presence with the media conglomerate’s other holdings will debase the quality of journalism. We can’t remember a newspaper union ever making that a bargaining issue before, particularly at a time of crisis.

Miscellany

Writing on the Knight Digital Media Center, David Westphal suggests that newspapers could tap into foundation grants to shore up their investigative journalism practices. Noting that the Knight Foundation recently gave $5 million to 21 civic foundations for projects that sounded strikingly like local news operations, Westphal suggests that public/private partnerships could enable newspapers to tap in to grants made to local civic organizations and fund projects that would be otherwise unsustainable. It turns out that philanthropies aren’t as resistant to the idea as you might think. Westphal quotes sources at the J-Lab at American University saying the lab has already funded 120 pilot projects with mainstream news organizations. He also quotes the president of the American Society of Newspaper Editors saying the idea deserves discussion.

A couple of big asset deals may be about to go down. PaidContent.org reports that The New York Times Co. is close to selling 19 of the 25 floors of its new headquarters building in Manhattan to an investment management firm. We weren’t even aware that there were any investment management firms left. The deal would reportedly have W.P. Carey & Co. buying the space and leasing them back to the Times. In a sign of how screwy the real estate business is, the Times Co. would retain ownership of the six floors it doesn’t occupy. PaidContent also says Tribune Co. is mulling a $900 million offer for the Chicago Cubs from the Ricketts family. The offer is the best of the three Tribune has received. Even if it’s successful, approvals and financing could take months.

Tim Windsor, who’s newly blogging at Nieman Journalism Lab, points us to a veteran journalist with the delightfully ethnic name of Gina Chen who’s got a terrific how-to blog called Save the Media. Gina exhorts journalists to dive in and start using tools like Facebook and Twitter. She also offers advice to make those tools a little less intimidating. Her plain-talk style is easy to read and she understands the journalist’s perspective. She joins our blog roll and we recommend you bookmark her site.

The Port of Belfast, Northern Ireland, is bullish on newspapers. Or at least bullish on newsprint. It will spend £4.5 million (about $6.1) expanding its paper and newsprint handling facilities. “From nothing just ten years ago, paper imports are now an important part of the port’s diversified trade base,” said the port’s chief executive.

Terence Walsh of the Frederick (Md.) News-Post gets caught up in Obamania, asserting that the new president “has inspired more people, especially young people, to pay attention to the world around them and serve their communities than any politician in recent memory.” He believes this is a rare opportunity for newspapers to reassert their value to young people who are newly energized to learn about the world around them. We hope he’s right, thought ungluing young people’s eyes from their Facebook news feed might be a bigger task than editors imagine.

Class act: The weekly Town Meeting of Elk Rapids (Mich.) shut down after more than 30 years last week. It announced its closure in a two-sentence ad on page 2 of its final edition: “Today marks the final issue of the Town Meeting. We appreciate your loyalty over the 30-plus years the Town Meeting has served your community.”

And Finally…

Chris Freiberg started a Facebook group asking people to buy a newspaper on Groundhog Day (Feb. 2) as a way of showing support for the industry. He invited 600 friends and word-of-mouth has since swelled acceptance to more than 14,000 people. It’s a nice endorsement for a beleaguered industry, but you do have to read some of the raw and funny wall posts.

Downturn Hits Ethnic Press

New York’s ethnic press, which has been mostly insulated from the downturn affecting the newspaper industry, is beginning to suffer. A Spanish-language daily and a Chinese weekly have already closed this year and now the Ming Pao Daily News, which is considered the most intellectual of New York’s four Chinese newspapers, is reportedly slated for closure by its Hong Kong parent. The New York Times notes that ethnic newspapers enjoy an intimacy with their readers and advertisers that big-city dailies traditionally don’t and that this has bought them some security in the past. But the lousy economy is threatening the already thin margins of these small-circulation properties, and many don’t have websites to fall back on. Ming Pao will continue to publish a free daily, which has been the sole bright spot in the market. New York had 10 Chinese daily newspapers just 20 years ago.

Extra! Extra! Blog All About It!

Blogging has come full circle in San Francisco, where a software entrepreneur-turned-publisher has launched a weekly newspaper composed entirely of blog entries. Joshua Karp has big plans for the chain he calls The Printed Blog. If his idea reaches its full potential, he’ll have hyper-local twice-daily editions in thousands of communities around the US. Chicago alone could support 50 localized Printed Blogs. Karp’s editorial model is very Web 2.0-like: bloggers give him their stuff in exchange for a slice of the profits. More than 300 have already signed on. Profits aren’t an issue right now, but Karp believes that local businesses will appreciate the tight control they’ll have over their ad messages as well as the low cost of $15 to $25 to reach 1,000 readers. The New York Times account quotes one advertiser exulting in his new ability to tailor his ads to specific neighborhoods. Printing is outsourced to local distribution points. Naturally, there’s a website.

Layoff Log

• Voice of San Diego is reporting that another 50 employees will be laid off at the Union-Tribune. The paper has been a prominent victim of the area’s cratering economy, having already laid off 15% of its employees a year ago and staging another buyout since then. The U-T has also been for sale for the past six months. While several local investors have expressed interest, no one has written a check yet.
• The Mason City (Ia.) Globe Gazette has laid off nine full-time employees and will leave six open positions vacant. No word on how large the total staff is.
• Lee Enterprises-owned River Valley Newspaper Group, which includes two dailies and eight weeklies in Wisconsin, has cut 10 positions across the company.
• The Traverse City (Mich.) Record-Eagle has cut the equivalent of eight positions from a staff of unspecified size.
• The Peoria Journal Star is laying off an unspecified number of employees part of a plan to reposition the paper. Asked for a quote, publisher Ken Mauser delivers one of the most vapid comments of this new year: “Like many companies operating in today’s business environment, change will be inevitable and necessary to position our business for the future.” A blogger at Illinoize says 11 people lost their jobs.

Miscellany

The sour economy has spurred the San Jose Newspaper Guild and two newspapers to come to terms after 23 months of negotiations. The 25 Guild members get a year of job security and pay raises through 2012, but give up the right to block management from outsourcing some of their jobs.

The right-wing Tulsa Beacon takes the publisher of the Tulsa World to task for joining the most exclusive country club in the city while simultaneously laying off 28 people at the newspaper. Hypocrisy, the Beacon reports, is exclusively the domain of the liberal media.

Good obituary writers have their research done well before the subject is laid to rest. In that spirit, Newsosaur Alan Mutter begins the process of writing an obit for the Chicago Sun-Times, a newspaper that he clearly believes is destined for our R.I.P. column in the not-too-distant future. Mutter, who used to work at the Sun-Times, begins his tale in 1984 and tells the story of the first 10 years of ownership changes that “turned our thoughtful, respected and reasonably prosperous tabloid into a scandal sheet.” It’s a personal, poignant and sometimes funny account that will be told in installments.

Congratulations to Martin Langeveld, whose thoughtful News After Newspapers blog has been scooped up by the Nieman Foundation as part of its journalism lab.  He’s joined there by Tim Windsor and Matthew Ingram. In an introductory entry tellingly tagged “audience, doom, newspapers, and print,” Langeveld describes the reasons why the industry has entered into an inescapable vortex and how the thinking at daily papers must change if there is to be any hope of survival. He will continue to serve up the provocative ideas he started at NAN and the industry will be better for it.

The Register-Pajaronian of the Santa Cruz valley area will cut back its publication schedule to three days a week from six. The 141-year-old paper blamed its financial troubles on the collapse of major advertisers Mervyns and Circuit City. Unspecified layoffs accompanied the move.

If you’re still wondering “Who the hell is Carlos Slim?” Fortune has some background for you. A brilliant investor who specializes in buying distressed firms, Slim is now bailing out The New York Times Co. and may end up controlling the company as a result. For journalists, the nut graph is near the end: ‘Slim seems to neither covet the attention nor access that comes with being a media baron, nor to share the controlling Sulzbergers’ view that their ownership is a trust that puts the company’s journalistic mission ahead of commercial imperative.” If it’s a bio you want, get thee to Wikipedia.

And Finally…

The Boston Globe held out longer against front-page advertising than The New York Times – about two weeks longer. The Globe‘s first page-one ad ran on Wednesday, timed to coincide with the production of an additional 100,000 inauguration issues. The ad was for the movie “Defiance” (see below).

Google CEO Eric Schmidt has been one of the most vocal supporters of newspaper among the ranks of the digerati, so it must hurt him to pull the plug on Google Print Ads. When it launched the program two years ago, Google hoped Print Ads would not only be a revenue stream but also a sincere effort to bridge the print/online gap and inject new life into newspapers’ traditional business. Unfortunately, “It is clear that the current Print Ads product is not the right solution,” wrote Spencer Spinnell, Director of Google Print Ads, in a blog entry, “so we are freeing up those resources to try to come up with new and innovative online solutions that will have a meaningful impact for users, advertisers and publishers.”

Print Ads was a variation of Google’s ad brokering system that enabled advertisers to bid on space in member newspapers. Google eventually amassed over 800 newspaper partners. The program differed from a bigger initiative by Yahoo because Google targeted print advertising directly. Yahoo’s newspaper partnerships are strictly online. Spinnell’s announcement was tinged with regret. “We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy,” he wrote. “We remain dedicated to working with publishers to develop new ways for them to earn money.”

Will Slim Bid for Times Co.?

Now that Mexican billionaire Carlos Slim has loaned The New York Times Co. $250 million to meet its debt obligations, speculation is focusing on his motivations.  With a personal fortune estimated at more than $60 billion, Slim is one of the world’s richest men. Buying the Times Co. would add a new chapter in his storied career investing in telecommunications, retailing, construction, banking, insurance, railroads and mining. Unlike Sam Zell, Slim could finance the Times Co. with pocket change, meaning he could own one of the world’s greatest media brands without the overhead of having to meet onerous financial terms. Alan Mutter suggests that Slim could parlay his investment into an outright takeover, something no other investor has been able to attempt because of the Ochs Sulzberger family’s tight control of the company. He notes that the comparatively shallow-pocketed Rupert Murdoch bought Dow Jones for a much higher price. “If Murdoch could swing $5 billion for Dow Jones with only $8 billion in personal net worth, then imagine how much Slim could afford to pay for a trophy like NYT,” Mutter writes.

Journalism’s Distant Mirror

Writing in The New Yorker, Jill Lepore reminds us that newspapers have been declared dead before. Her historical account begins in 1765 and takes us through the crucial role that newspapers played in colonial America by fanning public outrage against British – and later American – rule. The Stamp Act, passed by Parliament that year, was widely thought to be the death of newspapers, since it affixed a tax to every page printers produced. But resourceful publishers persevered, even moving their presses by boat under the cloak of night to evade government enforcers.

Lepore notes that the concept of an impartial press is a relatively recent invention. “Because early newspapers tended to take aim at people in power, they were sometimes called ‘paper bullets,'” she writes. “Standards of journalistic objectivity date to the nineteenth century. Before then, the whole point was to have a point of view.” In fact, Benjamin Franklin, who could be considered the father of the American newspaper, didn’t see his role as being “to find out facts. It was to publish a sufficient range of opinion.” In that form, “Early American newspapers tend to look like one long and uninterrupted invective.”

This oppositional role didn’t just roil the British authorities. John Adams signed into law the Sedition Act in 1798, making it a crime to defame his administration. “Adams had come to consider printers a scourge,” Lepore writes. Adams’ successor, Thomas Jefferson, was an ardent supporter of a free press, but by the beginning of his second term, even Jefferson admitted to having thought about prosecuting some publishers.

While not framing the point explicitly, Lepore makes the case that partisan journalism of the kind practiced by bloggers isn’t necessarily a bad thing. Truth may be the casualty of unbridled opinion, but that was also the case in the 18^th century, when even Sam Adams occasionally made up stories to dramatize British cruelty. The fact that some newspapers published untruths didn’t make them any less vital to the establishment of a fledgling democracy. “Without partisan and even scurrilous printers pushing the limits of a free press in the seventeen-nineties, [author] Marcus Daniel argues, the legitimacy of a loyal opposition never would have been established and the new nation, with its vigorous and democratizing political culture, might never have found its feet.”

We feel compelled to note again that Newspaper Death Watch is cited in the article’s opening paragraph, although we differ with the author’s characterization of our tone as gleeful. We prefer to think of it as bemused.

Miscellany

The LA Times is girding for more layoffs. Russ Newton, the Times‘ senior vice president of production, sent a letter to the Teamsters union, which shared it with its members. “The Los Angeles Times has decided to take steps to further reduce its cost including, but not limited to, layoffs,” Newton writes. “[T]he Company intends to implement the cutbacks no later than March 15^th, 2009.”

Romenesko reports that Gannett newspaper boss Bob Dickey’s decision to fly from Virginia to Arizona to announce plans to sell the Tucson Citizen wasn’t entirely altruistic. In fact, Arizona appears to have been just a waypoint on a trip further west. Dickey is in Palm Beach, Calif. this week for the Bob Hope Chrysler Classic golf tournament.

Editor & Publisher‘s Mark Fitzgerald reviews the redesigned Chicago Tribune and pronounces it a “home run.” With its clean look, lack of jumps and liberal use of info graphics, the “to-go” edition of the Trib, which will only be sold on newsstands, “eloquently makes the argument that it’s time America’s big-city dailies seriously consider converting to a compact format,” Fitzgerald writes. The question is when the Tribune will simplify things and make the tabloid edition available to home subscribers, too.

Lee Enterprises reported a 69.3% decline in first-quarter profits as revenues dropped 13%. The company said it is further cutting costs and will ask shareholders to authorize a reverse stock split to comply with the minimum bid price requirement of the New York Stock Exchange listing standards, if necessary. In an unrelated move, the publisher of the Lee-owned Wisconsin State Journal and Madison Capital Times said it will cut 12 positions, mostly in editorial.

The World Association of Newspapers will postpone its annual congress because of the global economic crisis. The meeting was set to take place in Hyderabad, India in March, but only 250 delegates have signed up so far. That’s well below the 1,500 who usually attend.

Last summer we told you about Neighborsgo.com, a spinoff of the Dallas Morning News that uses a social network to anchor a community journalism initiative. Apparently it’s working. Editor & Publisher reports that Neighborsgo is being expanded to cover 47 neighborhoods, with each section featuring headlines, local restaurants, gas prices, education resources and crime news.

Media malaise continues to spread beyond the newspaper industry. Warner Bros. Entertainment is cutting its global workforce by 10% by laying off 600 people and leaving 200 vacant positions unfilled. Clear Channel Communications, which is another diversified media company, announced plans to idle 1,850 workers last week.

Hearst Corp. has officially notified employees of the Seattle Post-Intelligencer that they will all lose their jobs if no one buys the newspaper. This may have seemed obvious following last week’s announcement that the paper will be shuttered if a buyer isn’t found, but Hearst had to send a letter as a formality. A few people might be offered jobs at SeattlePI.com if the publisher elects to keep the website alive.

And Finally…

Here’s one to satisfy your inner voyeur. Nicholas White was trapped in an elevator in New York City’s McGraw-Hill building for 41 hours. It was a lonely ordeal, but White unknowingly had a security camera to keep him company. His plight is documented in a time-lapse video that condenses 41 hours to just a few minutes set to mournful music.

Add one more name to the list of the newspaper industry’s walking dead: those titles that have been put up for sale with the threat of closure if a buyer isn’t found. Colorado’s Rocky Mountain News and Seattle’s Post-Intelligencer are both in limbo awaiting rescue and now Gannett Corp. has added the Tucson Citizen to the auction, stating that if a buyer isn’t found by March 21, the afternoon daily will close.

The Citizen has been published by Gannett in a joint operating agreement partnership with Lee Enterprises, owner of the Arizona Daily Star. Gannett has actually made out in the deal because the Daily Star makes more money than the Citizen and has to pay a share of profits to its competitor. But even that apparently isn’t enough to make the Citizen a worthwhile investment for Gannet. D-Day is March 21.

Some Pols Miss the Heat

In an ironic twist, public officials are beginning to complain about the loss of the watchdog journalists who used to keep them awake at night.

Broward/Palm Beach’s New Times carries an opinion piece featuring quotes from numerous government officials complaining about the lack of journalistic oversight. Financial problems at the Miami Herald and the Fort Lauderdale Sun-Sentinel, compounded by Florida’s sour economy, have led to massive staff cuts. That means some cities that used to have two reporters are now covered by one third of one reporter.

“[The Sentinel] doesn’t seem to have the interest in going after big-time issues that require work,” says Broward Public Defender Howard Finkelstein, in one of several quotes that illustrate how the industry’s turmoil is hitting home on Main St.. “They want to write quick things for the blog. It just looks like it’s falling apart to me.”

Writer Bob Norman says the city of Hollywood, which is home to more than 140,000 souls, doesn’t have a full-time beat reporter for the first time in memory. Sunrise (pop. 85,000) is also almost uncovered. “The state of journalism in Broward has been decimated,” Norman writes. This has put government officials in the odd position of mourning the loss of the same watchdogs who used to make them miserable.

“The newspapers used to be the watchdogs of the government, and people relied on them to tell the truth,” says Sunrise Commissioner Sheila Alu. “Now they’re just filled with advertisements.” But perhaps reflecting the love/hate relationship elected officials have with the fourth estate, she adds, “Believe me, we’re fine with it.”

But Jim McDermott isn’t. The Democratic Congressman from the state of Washington is mad as hell about the possible closure of the Seattle Post-Intelligencer and he intends to do something about it. McDermott, who is also a senior member of House Ways and Means Committee, says in a guest column in the P-I that perhaps we should steal a page from the UK and let more of our newspapers operate as nonprofits. “The tax code might have a direct bearing on developing a new business model for the newspaper business nationwide,” he says. In other words, if all those newspaper conglomerates would be willing to convert to nonprofit status, the government could help them out. Tell that to the folks at National Public Radio, which cut 7% of its workforce and cancelled several programs last month.

McClatchy Watch points to an analysis of recent investigative reporting at the Kansas City Star that cites glaring holes in the story. It’s probably not the reporter’s fault, the writer points out. Writer Eric Adler is a seasoned pro. But the lack of news and copy editors caused some basic questions to go unanswered.

Turnover Epidemic

The industry’s downturn is taking its toll on top management. The New York Times documents editor and publisher turnover at top US titles and says it’s out of control. In fact, 19, of the 20 largest newspapers in the country have changed their top editors this decade. The next to go will be Ken Paulson, who leaves USA Today in February.

Editors and publishers are under unprecedented pressure to do more with less, the Times reports, and angry CEOs are quick to boot them out when they fail. Editors, in particular, are preoccupied with revenues and income statements. “My involvement in business concerns went from something like 15 percent of my time to about 50 percent,” says Paul Steiger, who retired in 2007 as managing editor of The Wall Street Journal, and who now heads the nonprofit journalism foundry ProPublica. The turnover may be necessary. A lot of executives who were successful in good times have been like deer in the headlights when faced with the need to slash and burn through their business.

Maybe the problem is consolidation? From the Media Reform Information Center (via Derek Gilbert):

Miscellany

Carlos Slim, the world’s richest man, may increase his stake in The New York Times Co., according to Reuters. Slim already owns 6.4% of the company, a stake that has fallen by more than half in the past five months. But a source says he’s in it for the long term and is ready to give the embattled Ochs Sulzberger family a vote of confidence by helping them to pay off a $400 million debt that comes due in May. The good news, says Reuters: “Slim, 68, became one of the world’s richest men by placing heavy bets on hard-hit companies.”

Citing a 40% decline in revenue since 2006, the beleaguered San Diego Union-Tribune is getting creative with expense cuts. Hourly workers will have to take one or two days without pay in February and March, merit raises will be frozen, company contributions to 401(k) accounts will be eliminated for this year and employees will pay more for health insurance. The Union-Tribune has been for sale since July and while there have been some interested local buyers, no one has yet named a price.

Ogden Newspapers has eliminated several positions at its Intelligencer and Wheeling News-Register papers in West Virginia. True to the spirit of full disclosure, the publisher isn’t revealing any more information.

Clear Channel Communications isn’t a newspaper company, but its plans to lay off 1,500 employees command attention because Clear Channel is such a leading indicator for the advertising industry. In addition to dominating outdoor (billboard) advertising nationwide, the company owns a portfolio of radio stations, making its difficulties a microcosm of the US advertising market. The layoffs amount to about 7% of the workforce.

And Finally…

It isn’t every day you get cited in The New Yorker, but Jill Lepore leads off a piece on the newspaper industry’s troubles with a reference to the Death Watch this week. We weren’t be able to set aside the time to read and digest this 14-screen epic on Monday morning but will get to it soon. Guess we’re stuck with the R.I.P. column now…

Tribune Co. and the New York Daily News* are looking at closing their foreign bureaus and outsourcing international coverage, The Wall Street Journal says. The beneficiaries would be the Washington Post and a Boston-based startup called GlobalPost. Under the arrangement being discussed by Tribune Co. and the Washington Post, Tribune would contract with the Post for international stories to be delivered to its portfolio of newspapers and would close dozens of foreign offices, saving the bankrupt company millions each year. There’s no word on how much of that coverage would be unique to Tribune, but that’s presumably an issue in the talks. The two companies have long had an alliance via a joint news service.

The New York Daily News deal has Mortimer Zuckerman’s paper contracting with GlobalPost for its international coverage. The deal is the first big win for GlobalPost, a venture funded by deep-pocketed investors, including former Boston Globe publisher Benjamin Taylor. The co-founders are Charles Sennott, a veteran Globe foreign correspondent, and Philip Balboni, former president of New England Cable News. You can read all about the site’s mission and dive into two of the longest biographies we’ve ever seen on the site’s mission page.

Like The Politico and Politicker, GlobalPost is attempting to create a new publishing model leveraging online efficiencies, reader involvement and diversified revenue. Part of GlobalPost’s revenue is to come from syndication deals like the one with the Daily News. Stories will mostly be contributed by local stringers and embellished with reader input and reports from other online resources. GlobalPost thus hopes to deliver quality journalism at a fraction of the overhead cost of a foreign bureau. The Daily News deal will clearly put it on the map.

Blogger Lisa Williams has an interesting take on GlobalPost which Amy Gahran embellishes upon on the Poynter Blog. Williams suggests that news publishing may be moving toward an on-demand model similar to the one emerging in the computer industry. “Cloud computing” is all the rage in IT right now, with Amazon’s EC2 service blazing the trail. EC2 enables businesses to rent computer power only as it’s needed, outsourcing the expensive and specialized task of maintaining corporate data centers to specialists who serve multiple clients. Williams suggests that a similar model could provide news at a much lower cost than full-time staff. It’s kind of a super stringer model made more efficient by the Internet.

Gahran likes the idea, although she differs with Williams’ theory that this could spell the end of beats. General assignment reporters will still be needed, she says, but much of the specialty reporting could be provided by independent journalists and organizations of journalists, the latter scenario being The Politico and GlobalPost models. “You could have a situation where various kinds of organizations could purchase reporting capacity to make sure the stories or communities that matter to them get covered — whether that’s a town, a government agency, a business trend, legislation, a water quality issue or sports,” she writes.

*An earlier version of this article incorrectly referred to the New York Post instead of the Daily News.

Star Tribune Files for Bankruptcy

Add the Minneapolis Star Tribune to the list of newspaper publishers now dwelling in the purgatory of Chapter 11 bankruptcy. The filing “was necessary to reduce our operating costs, restructure our debt and create a financially viable business for the future,” Publisher Chris Harte wrote in a note to readers. Last month, the Strib said it needed $20 million in union concessions to sustain operations. But talks with the union broke down last week. The union appeared surprised that management did exactly what it said it was going to do. “The unions at the Star Tribune are conscious of the newspaper’s financial plight and the state of the industry nationwide,” said a union official said in an account in the Kansas City Star. However, consciousness apparently wasn’t enough.
The value of the Star Tribune has collapsed since McClatchy paid $1.2 billion for it in 1998. Its balance sheet currently lists assets of about $493 million and liabilities of $661 million. Chapter 11 gives is the chance to shed some debt and restructure is assets under court protection. In practice, companies rarely emerge from Chapter 11 looking anything like they did when they went into bankruptcy.

Layoff Log

• The Boston Globe will furlough 50 employees through a buyout and layoffs, if necessary. This is the fifth staff reduction at the paper since 2001 and the first to be limited to the newsroom. The cuts will reduce the Globe’s editorial staff to 329 people, down 39% from its peak newsroom employment of 552 in 2000. The local Guild boss said future cuts should come from the management side, as the worker bees have already given more than their fair share.
• Gannett’s announcement earlier this week that it would require all employees to take a week off without pay in the first quarter sparked a frenzy of media coverage, but we found the furor surprising. Manufacturing companies have used this tactic for years to preserve jobs and the modest 2% across-the-board pay cut seems bearable compared to the alternative of idling so many people. We agree with Alan Mutter’s take: By sharing the pain, Gannett avoids having to cut 600 jobs. Isn’t that a more noble objective?
• The Christian Science Monitor will cut its editorial staff by 15 or 16 people, which the mangled math in a Boston Globe story calculates to be 7%. Since the CSM employs 90 editors, our calculator says that’s more like 16%, but whatever. The Monitor is preparing to go from weekday to weekly print frequency in April and adjusting it staff size accordingly.
• The Schenectady Daily Gazette will cut 16 positions in its fourth round of layoffs in a year.
• The publisher of Vermont’s Rutland Herald and the wonderfully named Barre-Montpelier Times Argus will lay off 14 people, or about 9% of its staff.

And Finally…

Nick Christensen of the Hillsboro Argus has tongue only partly in cheek as he makes a somewhat persuasive argument for a government bailout. Give me my billions, he says. It won’t influence me. Christensen does point out correctly that judges and district attorneys are among the government watchdogs who are also paid by the institutions they monitor.

If you need another indication that citizens can be important sources of news coverage, you only need to consider yesterday’s crash of a US Airways jet in the Hudson River. The first report of the crash appeared on Twitter at 3:28, just two minutes after the plane took off. Twitter was also the first outlet to carry news that a flock of geese was probably the source of engine troubles that forced the pilot to ditch the plane. The photo below is from CNN’s iReport citizen news service. A video featuring more images taken by witnesses can be seen here.

Last night I attended a dinner hosted by the Boston Globe for the stated purpose of gaining insight from a small group of new-media enthusiasts about its Boston.com website. The evening turned into a wide-ranging discussion about the future of the Globe itself, with no clear consensus emerging. I was struck by the vision that the Globe showed when it launch Boston.com 13 years ago and how that vision was later clouded by conventional newspaper wisdom.

Boston.com was originally intended to be a destination site for residents of the Boston area.  It was launched at a time when nearly every metro daily was going online, most under their own brands.  The Globe took a different approach: Boston.com would be branded and focused on a region rather than an existing print property. The Globe even enlisted some local media partners to contribute content and share in the profits. Those partners have mostly fallen away over the years, but the vision of the newspaper’s website as a geographic focal point was a precursor of the “hyper-local” concept that’s so popular in the industry today.

Blurred Vision

That vision didn’t carry through, though. With news editors running the show, Boston.com over the years increasingly looked like the front page of the Globe. National and international headlines shared the home page with local copy and the site lost its regional distinctiveness. Suburban bureaus were axed in the name of cost savings.  As a resident of a nearby town, I personally found that my information needs were better met by small sites that were tightly focused on topics or regions that matter to me.

Now the Globe is trying to get back some of the distinctiveness of Boston.com.  There’s no question that the site is more local today than it has been in years, but the online landscape has changed as well.  Some of the questions that came up during the meeting:

Does a website even matter anymore? So many people get their news through feeds and aggregators that the idea of a website as a destination may be outmoded.

Is brand important? Maybe The New York Times brand is, but does the Boston Globe‘s brand strike enough of a chord in people’s minds to distinguish its value?  Brand may be the only thing newspapers have left in the long run, so that’s a critical question.

How local does the site need to be? Many communities in the greater Boston area are served well by e-mail lists, community newspapers and even individual bloggers.  How granular does a major metro need to get in order to be truly hyper-local?

Who’s going to do the grunt work? Part of the service that major metro dailies perform is sitting through tedious budget committee meetings and city council sessions. It’s a little-appreciated loss leader for newspapers, but it’s essential to their watchdog role.  What blogger in his or her right mind is going to do that?

In my humble opinion, the Globe should do the following:

• Create Huffington Post-style bureaus in local communities, with news provided by stringers and citizens.  Many reporters for community weeklies make little or no money, so the exposure in the Globe would be an incentive for them.

• Borrow a page from Yelp.com, Going.com and Angie’s List and become the dominant source of buying advice for local products, services and activities.

• Ramp up its custom publishing arm to help local companies become legitimate publishers in their own right.  Many businesses want to take advantage of new media to do this, but their efforts are mostly terrible.

• Treat print as a cash cow and manage it downward gracefully while building new revenue streams.  Further cutbacks are inevitable, but it would be nice to balance that with some growth.

• Take a hatchet to the sales force, focusing on hiring and retaining people with classified advertising experience.  Future revenues are going to come from local businesses, so invest in the people who can sell to them.

The group from the Globe listened attentively and appeared to take the input seriously.  Unfortunately, the barn door has already closed on print and the declining revenue picture offers fewer options for investment with every passing day. But Boston.com is a nice website.

Envisioning a Future Without the Times

Writing in the Atlantic, Michael Hirschorn starts with an outrageous statement: what if The New York Times folds its print newspaper four months from now? Okay, it’s not likely to happen, Hirschorn writes, but the way The New York Times Co. is spiraling downward, the Big Apple’s intelligentsia should prepare for a day when they won’t have a newspaper to read in their SoHo coffee houses.

Hirschorn goes on to present a well-written summary of the changes readers are likely to see as newspapers exit the scene. “Common estimates suggest that a Web-driven product could support only 20 percent of the current staff; such a drop in personnel would (in the short run) devastate The Times’ news-gathering capacity,” he notes, suggesting that international coverage will almost disappear in the process. “Internet purists may maintain that the Web will throw up a new pro-am class of citizen journalists to fill the void, but for now, at least, there’s no online substitute for institutions that can marshal years of well-developed sourcing and reporting experience.”

Ultimately, emerging sources like Huffington Post and Talking Points Memo may create a new model for participatory journalism, but the quality of services they provide will be more erratic and unpredictable that those readers have known in the past. New-media operations needs to maintain low overhead. Huffington “is the prototype for the future of journalism: a healthy dose of aggregation, a wide range of contributors, and a growing offering of original reporting.” Since few of those contributors are paid, what you see is what you get.

For Better or Worse, China Invests in Newspapers

“As international media is contracting, China is going in the other direction,” says Doreen Weisenhaus, a media law professor at the University of Hong Kong, in an opinion piece by Forbes‘ Robyn Meredith, about China’s ambitious plans to expand its international media presence. Meredith says China plans to spend $6.6 billion to build the staffs of China Central TV, People’s Daily and other news organizations both on the mainland and around the world.  US bureaus are planned, among others, and new Chinese-owned, English-language newspapers will be launched in the U.S. and China.

The problem, Meredith says, is that China doesn’t have a free press.  Although controls were loosened somewhat during the 2008 Summer Olympics, there’s no indication that these expanded news organizations will be allowed to say anything that displeases the government. The result could simply be an expansion of the Chinese propaganda machine.  And if someone gets the idea to spend some of that $6.6 billion buying up distressed US newspapers, well, it’s not a pretty thought.

Layoff Log

• Even as it expands its footprint into the US market, the Financial Times is still feeling the pinch. The newspaper will cut 80 positions across its global operations. The British have their own word for this: redundancy. We would still prefer to be laid off than found redundant.
• The Billings Gazette is laying off eight people.  There’s no word on what percentage that is of the total staff size.

Miscellany

We’ve noted several examples of newspapers burying the lead in reporting on their own layoffs.  So give credit to the Seattle Post-Intelligencer for doing the opposite.  Not only did SeattlePI.com cover the announcement of its likely sale or closure in detail, but now the paper’s managing editor, David McCumber, has launched a blog to document the 60 days until decision time. It’s an honest, personal and well-written account of the many thoughts are no doubt going through his mind as the clock ticks away.

Erica Smith, whose Paper Cuts maps mashup is de facto official record of newspaper industry layoffs, has put together a nice list of newspapers that use Twitter. Such a roster is automatically out of date the minute it’s posted, but it gives you a good idea of how various news organizations are segmenting their coverage and also where the list of followers is growing fastest. You can also see who gave up early. BTW, the Paper Cuts counter has been reset for 2009.

Veteran travel editor John Flinn recently took a buyout package from the San Francisco Chronicle. He’s not bitter or angry, but he’s a bit wistful about how the industry’s troubles are affecting his specialty area. Travel scribes are a different breed of feature writer, each with a unique voice and a different way of going about the job. Sadly, they are being replaced by “utility infielders” with their top-10 lists and “charticles.” But Flinn isn’t looking back. He’s hitting the road soon in his VW Westfalia pop-top camper van.

Give-Us-A-Break Department: “The vast majority of Americans believe the U.S. media industry’s coverage of the faltering economy is actually contributing to the economic crisis by ‘projecting fear into people’s minds.’ That’s the finding of a survey of 1,000 U.S. adults released Thursday by Opinion Research Corporation. The survey, which was conducted last month via telephone, found that 77% of respondents believe fear mongering by U.S. media outlets is negatively impacting consumer confidence in the economy.” – MediaPost, 1/2/09.

If you want to start the week off on a good note, don’t read this forecast of all the newspapers, magazines and, yes, websites that are likely to close this year.

The Toronto Globe and Mail may be about to join the layoff log. The newspaper is looking to reduce its workforce by about 10 percent, or between 80 and 90 jobs, according to a brief statement on its website. There haven’t been layoffs at the Globe and Mail since 1982, and even then all the people were rehired under the terms of a union contract. Publisher Philip Crawley cited an anticipated $40 million drop in advertising this revenue as unprecedented. “The pace and the severity of the decline is like nothing we’ve seen in recent years,” he said. The buyout offer is generous: three weeks of salary, up to a maximum of 18 months’ pay, for each year of continuous service. The Globe and Mail operates under a tighter set of union restrictions than most North American newspapers. The Financial Post says the union contract forbids the paper from cutting staff without opening its books for examination.

The Evening Sun of Hanover County, Pa. will cut nine reporter and editor positions from its 25-person newsroom. “Hopefully, readers won’t notice any decline in coverage,” as a result of the loss of 36% of the staff, the editor-in-chief said. However, copy editing is badly needed, as demonstrated by this quote from the Evening Sun‘s publisher: “There is no intention to ever not have a newspaper in this community.”

A reader reports that the Selma (Calif.) Enterprise and nearby Kingsburg Recorder have moved their printing operations 25 miles away to the Hanford Sentinel.  Between seven and 12 people have been laid off, the reader said. However, this report is unconfirmed.

Struggling to meet a goal to reduce expenses by $50 million in 2009, Chicago’s Sun-Times Media Group has asked all its unionized employees to agree to a 7% cut in compensation. The cuts can come from salary, benefits or a combination of the two. The union said it’ll think about it. The Chicago Sun-Times has also put forth a proposal to outsource copy editing to an unspecified contractor, possibly in India or Canada. The union definitely didn’t like that idea. And the paper has laid off an unspecified number of people in its advertising group.

The Newman (Ga.) Times-Herald has reduced its staff by 10 people, or 15%, but expects to be around for at least another 144 years, according to a gung-ho editorial bylined by both its president and publisher.