Less than six months ago, Sam Zell said Tribune Co. had enough cash to carry it through the third quarter of 2009. Now The Wall Street Journal and other outlets are reporting that a bankruptcy filing may occur as soon as this week.

Tribune has hired Lazard Ltd. to advise on its options, including a possible Chapter 11, according to several reports. No one in an official capacity is saying much of anything, and sources familiar with the talks are quoted as saying that bankruptcy is only one of several options.

Tribune still has nearly $1 billion in interest payments due this year and another $512 million payment in June. it was thought that asset sales could keep it afloat while those obligations were met, but the recent market free-fall, combined with Tribune’s 83% fall in operating profit in the third quarter, has changed everything. The Chicago Cubs were supposed to be sold this past spring, but the $1 billion price tag has reportedly become too rich with all the turmoil in the stock market. The company has debt terms that limit its borrowings at the end of the year to nine times its adjusted profits. The ratio stood at 8.3 at the end of the second quarter, the Journal says, and that was before the recent collapse in profits.

The Los Angeles Times says Tribune officials are arguing that it’s pointless for creditors to insist on adherence to debt ratio guidelines and that they should focus instead on just getting paid. In fact, the LAT report quotes one ex-Trib exec saying, “”This might all be posturing and positioning. They could be looking for a new [debt] structure . . . without actually having to take the bankruptcy action.”

BusinessWeek’s Jon Fine combines the Tribune Co. news with E W Scripps’ announcement last week that it was looking to unload The Rocky Mountain News and a report that McClatchy is seeking buyers for the Miami Herald. Fine concludes, “That major companies would consider selling in such a terrible environment speaks volumes as to how impaired an asset a big-city newspaper is.”

If you want to read all about it (literally), the news reports are stacking up like cord wood on Google News.

Hot on the heels of the newspaper industry’s record-breaking 18.1% quarterly revenue decline, analysts are weighing in with dire forecasts and advice.

“A newspaper that cannot sell enough advertising or cut enough expenses to sustain profitable operations is not likely to make it to the other side of 2009,” writes Alan Mutter in a depressing outlook on the industry’s immediate future. While the rest of Mutter’s post isn’t as provocative as that closing statement, it provides a detailed analysis of which markets are mostly likely to see mergers or closures (Minneapolis, San Francisco, Southern California, Southern Florida) as well as markets like Chicago and Boston, where two competitors are locked in battles of mutual destruction. The most likely scenario for 2009 is that publishers will have to choose from a palette of equally distasteful cost-cutting options, and that the measures they have to take will be more drastic than the 10%-20% workforce cuts of the past year. Mutter lists voluntary pay cuts, massive outsourcing, frequency reduction and asset sales as being on the table.

Fitch Ratings might agree. Its report says several major daily papers could shut down by 2010. Speaking in that odd third-person-singular that investment companies like to use, the agency sa

ys “Fitch expects newspaper industry revenue growth will be negative for the foreseeable future,” and that credit ratings are likely to decline further. Unlike the 2001 advertising crash, this one is affecting both national and regional advertisers, the credit rating agency says. “And unlike the easy credit and lower interest rates during the 2001 ad recession, this time advertisers and consumers face a credit freeze.” The outlook for 2009? Don’t ask. Fitch expects real US GDP to drop 1.2% while inflation hovers at 2.7%.

Steve Outing has some advice for newspaper executives struggling with the reinvention question. While his E&P column isn’t as edgy as usual, his prescriptions are practical. The most counter-intuitive in our opinion: stop chasing young people. Millennials aren’t going to read newspapers, so your redesigns intended to make your print edition more appealing are going to fail. Reach out to them through their mobile devices and services that aggregate their social networks with news (he isn’t more specific about this; Facebook is a pretty big obstacle to this goal). Focus your print editions on the readers who want to read print. Yeah, they’re older, but they’re still viable. You’re going to be

managing print down for the next 15-20 years, so get used to it. And while you’re at it, start pushing those older print readers online. Make your newspaper a gateway to enhanced services on the Web. And for God’s sake, stop wasting your time on fluffy lifestyle pieces. Print loyalists want serious journalism.

Outing has some investment advice, too: hire someone to maximize online visibility through social media channels, bring in a mobility specialist and give your staff time to come up with novel ideas for reinvention. The problem, of course, is who’s got the time or money for all this? Outing doesn’t address the budget issue but then again, he’s a pundit, not an accountant.

Profiling the Provocateur

The New York Observer has a long profile of local media guru Jeff Jarvis, who perhaps vexes the mainstream media industry more than any other contrarian. That’s because Jarvis, who now teaches journalism at NYU and agitates with his popular Buzz Machine blog, is one of them. He worked at the San Francisco Examiner, New York Daily News, People and TV Guide, among other outlets, and was founding editor of Entertainment Weekly. Jarvis may understand traditional media’s pain, but he doesn’t cut the industry much slack.

He is passionate about citizen journalism and the need for media institutions to remake themselves as hubs of news, commentary and conversation among a community of people with similar interests. He has little tolerance for the go-slow mentality that pervades American newsrooms. As Jarvis sees it, the quicker we blow up the old, the quicker we can get on with the new. And he makes his points in blunt, sometimes profane language.

This has made Jarvis a hot potato for a tribe of senior editorialists who are trying to balance their respect for the man with their distaste for his revolutionary ideas. The piece quotes several of these top editors, including New York Times Executive Editor Bill Keller, who clearly finds some of Jarvis’ ideas persuasive but is uncomfortable with his extremism. Gawker’s Nick Denton sums it up: “Of all the Internet supremacists, he is the one who has betrayed his origins in print. Of all the people who grew up in newspapers and magazines, he is the one who has most clearly abandoned them.”

Jeff Jarvis is required reading at the Death Watch and we commend him to you.

Poignant Tales From the Front Lines

Pam Podger and her husband moved from Virginia to Montana because they loved the natural beauty and the lifestyle. They took at job at the Missoulian. Nine months later, they were both laid off on the same day. More than 50 years of journalism experience was thus thrust out on the street, with two kids to care for. Podger writes in American Journalism Review of her anxiety, her fears about the future of journalism and her determination to stick it out in her new home.

Cost-cutting is robbing the public of an American institution – the editorial cartoonist. “In the past three years, around three dozen artists have been laid off, forced to take buyouts or to retire, according to the Association of American Editorial Cartoonists,” says an Associated Press piece. The story spotlights Eric Devericks, whose work is pictured above. Devericks has known nothing but success since his work was recognized with a national award while he was still in college. But rewards don’t amount to a hill of beans in an industry that’s cutting bone, so the Seattle Times laid him off effective next Friday. Next month, Devericks, his wife and three kids are “heading to southern California, where two buddies have offered Devericks a job as a business development specialist for their new industrial design company,” says the AP account. The curtain is quickly coming down on a generation of journalists who proved that the brush, as well the pen, can be mightier than the sword.

Back in late October, Gannett Co. announced plans to cut 10% of its workforce.  This week, the hacking began in earnest. A sampling:

• The Louisville Courier-Journal cut 69 positions, or 6.5% of the staff.
• The Reno Gazette-Journal will cut 61 positions, close two weekly publications and idle a commercial printing facility. The weeklies are the Douglas Times and Fallon Star Press.
• A total of 206 jobs will be eliminated at Gannett’s New Jersey papers, including the Asbury Park Press, Cherry Hill Courier-Post, East Brunswick Home News Tribune, Bridgewater Courier News, Parsippany Daily Record and Vineland Daily Journal.
• The Arizona Republic was also caught up in the Gannett downsizing.  The Phoenix Business Journal reports that 68 employees were laid off on Wednesday, including 25 from the newsroom.  The nearby East Valley Tribune recently announced plans to reduce its number of publishing days.
• Also maimed in the Gannett buzz saw is the Nashville Tennessean, which will lose 90 jobs out of 1,140 total employees.  One-quarter of the cuts are in the newsroom.
• The Town Talk of Alexandria, Louisiana will cut 14 jobs.
• Ninety-two jobs were lost in Gannett’s Wisconsin properties.  Two weekly newspapers –  the Wrightstown Post Gazette and the Denmark Press – will also close.
• The Battle Creek Enquirer will lose nearly half its staff, a total of 50 employees out of 105 positions.  The paper also shut down its printing press and move all printing operations to Lansing.
• Florida Today will lay off 30 employees and buy out six others.
• The Des Moines Register will eliminate 41 jobs and leave another 15 open positions unfilled. Among the casualties is the newsroom’s editorial cartoonist, who has been with the paper for 25 years. The cutbacks amount to 6.9% of the workforce.
• The Green Bay Press-Gazette cut 22 jobs at its daily and weekly publications.  However, no reporting or advertising sales jobs were eliminated.
• The Hattiesburg American will move its production operations to a nearby newspaper and eliminate 38 jobs.  The publisher assured readers that they will see no difference in the newspaper as a result.
• The Honolulu Advertiser accepted 41 buyouts and laid off another 10 employees.
• The Mississippi Clarion-Ledger cut 33 jobs through layoffs, buyouts and elimination of open positions.  The publisher also promised that quality will be unaffected.
• The Indiana Journal & Courier is cutting 13 jobs, about 6.5% of its workforce.
• The Poughkeepsie Journal eliminated 14 staff positions, including three open jobs and seven buyouts.

All this and more is being documented in gruesome detail on the Gannett Blog, Jim Hopkins’ remarkable watchdog website.  Gannett may not be revealing the extent of its job cuts, but Hopkins has assembled field reports from employees at 71 newspapers, as of today.  In addition, more than 100 comments have been posted. Peter Kafka of All Things Digital pays homage to the blog here, as does Editor & Publisher, which quotes extensively from it.

Unrelated to the Gannett moves:

• The Minneapolis Star Tribune has asked its unions for $20 million in cost cuts, saying “the survival of the company is at stake.” The Strib is riddled with debt. It cut $10 million earlier this year, but its $400 million in debt demands more drastic action. The paper has already cut $50 million since 2007 through attrition, layoffs, buyouts and other means.
• The Bakersfield Californian will lay off 25 staffers.  The move was prompted by “the steepest and sharpest drop off” in advertising revenue in the newspaper’s history.
• The Chicago Tribune will idle an unspecified number of newsroom employees by the end of the week. Update: A total of 11 newsroom employees will lose their jobs, including both of the Tribune‘s New York correspondents.

And to all a good night…

Bad news has spread across traditional media at a breathtaking rate. Fortune’s Richard Siklos ticks off some of the sorry numbers. It’s not just the newspaper industry that’s suffering.

Quoting Michael Nathanson, media analyst at Sanford Bernstein, Siklos notes that this is the first time in memory that a coincident election and Olympic year has been accompanied by a decline in ad spending. “Excluding Internet spending, ad spending across all traditional media in this year’s third quarter was down 8.5 per cent, the sixth consecutive quarter of declining spending,” he writes.

Siklos quotes Craig Huber of Barclays Capital forecasting that “classified advertising as a percentage of newspapers’ revenue will decline to 26 per cent in 2009 from 36 per cent in 2006. Meanwhile, newspapers’ share of total U.S. ad expenditures…will have declined to 10 per cent next year from 20 per cent in 1999.”

But it’s not just newspapers. Yahoo just reported a 64% drop in quarterly earnings. Google stock is off more than 45% and analysts are cutting their forecasts of online spending growth. The only winners at this point appear to be subscription services that derive a significant portion of their revenue from non-advertising sources. While the story stops short of pointing to a generalized decline in advertising, the numbers leave you wondering. Could it be that businesses are beginning to question the value of advertising and that those doubts are creeping into the numbers? Could be. On the other hand, it could also just be a crummy economy.

“Get Me Bangalore!”

Maureen Dowd writes about a newspaper that’s offshoring editorial content and learning to make it work. James McPherson is the editor and publisher of Pasadena Now, a small weekly. A year ago, he fired his entire editorial staff and farmed out coverage to a staff of Indian writers he recruited on Craigslist. He pays them about $7.50 per 1,000 words, compared to the $30,000 to $40,000 he was paying each reporter annually. The Indian writers “report” via telephones, web harvesting and webcams, with support and guidance from McPherson and his wife.

Reaction to the idea was brutal at first, but the concept of editorial offshoring is gaining traction. Dowd counts MediaNews Group chairman Dean Singleton among the ranks of executives who have recently talked about massive offshoring to save costs. Singleton says most preproduction work for MediaNews’s California papers is already outsourced to India, which has cut costs by 65 percent.

If the idea sounds preposterous, think about it. How many people in a standard newsroom never leave the building? Any job that primarily involves computer and phone work is a candidate for offshoring. Between cell phones, webcams, virtual meetings and instant messaging, the need for face-to-face contact is diminishing to the point of irrelevance in many cases. On-site reporters will always have value, but in the future they could become a small corps of feet on the street feeding copy to a virtualized production force that is largely invisible. The compelling cost efficiencies give publishers a lot of incentive to be creative.

Ex-LA Times Editor Takes on Zell

Former Los Angeles Times editor James O’Shea comments at some length on recent statements by Tribune Co. CEO Sam Zell about the failure of newspapers to listen to their customers. O’Shea has a problem with that philosophy. “If all we had to do was ask readers what they wanted in a newspaper and then give it to them, wouldn’t someone have done that years ago?” he asks? In fact, they did. “I’ve seen dozens of papers march down that road to no success.”

O’Shea agrees that journalists have done a poor job of demonstrating their value as stewards of the public trust, but he thinks that failure is actually due to their efforts to listen too closely to their customers. The conventional marketing wisdom is that readers want soft, lifestyle stories and the more we give them that pabulum, the more we undermine our value as serious journalists. “To the extent we blur the differences between these once-distinct voices with pandering coverage that resembles advertorial and not editorial we play right into this trap,” he writes.

After nearly 2,500 words of analysis, O’Shea fails to deliver a prescription for change. “Newspapers have to figure out how to deliver journalism that makes the public believe we once again are a public trust, something of value and something they won’t hesitate to pay for,” he writes. Hear, hear! How are we going to do it? O’Shea doesn’t offer any ideas. That makes this piece ultimately rather disappointing.

Miscellany

If the newspaper industry is dying, apparently no one told Saharra White. The California State University, Northridge journalism major pooled her savings and donations from friends last year to launch Say It Loud!, a newspaper for African-Americans of the San Fernando Valley. “I wanted to start the newspaper because there are black people in the Valley doing some positive things,” she says. Say It Loud! is one of about 200 black community newspapers across the US, according to the Black Newspaper Publishers Association. White says she felt the stunning election of an African-American as President demanded new media to cover the impact of the Obama administration on America’s future. She distributed the paper in print for a year, but now has gone online-only as a matter of economic necessity.

The Cleveland Plain Dealer is laying off 27 staffers by phone this morning because not enough people took the paper up on its buyout offer. In a memo yesterday, Editor Susan Goldberg told Guild local 1 employees that those selected for layoff will be notified by 9:30 a.m. Anyone who doesn’t get a call should come in to work.

The publisher of the San Jose Mercrury News has told employees to brace for more layoffs early in the new year. The company has already cut newsroom employment by 50%.

The Charleston (W. Va.) Daily Mail will switch from afternoon to morning publication, giving the city two morning papers. The Daily Mail and the Charleston Gazette will continue to compete with each other, despite the fact that they share production staffs and distribution networks. They also share about 6,000 readers who subscribe to both publications. Afternoon newspapers have all but disappeared in the US.

And Finally…

While executives and journalists fret about the implications of life without newspapers, Donna Freedman writes on MSN Money Blog about more practical matters: what’s she going to use to clean her windows?  The alarming shrinkage of daily newspapers is going to leave people with a shortage of packing material, impromptu gift-wrap and puppy-training supplies, she worries. “Without newspapers, what will I put at the front door to soak up moisture from wet shoes? To say nothing of the fact that I would no longer be able to say, ‘These are the Times that dry men’s soles,'” she groans. Several visitors pick up on the fun, offering eulogies for Sudoku puzzles lost and fish ‘n chips that lost their appeal on polystyrene platters.

Sam Zell is getting credit from his critics for telling it like it is in this interview with  Condé Nast Portfolio at Quadrangle Group’s Foursquare media conference. The famously combative Tribune Co. CEO reinforces remarks he’s been making all year about treating newspapers like businesses. That means questioning everything from sales incentives to the importance of journalism prizes if they don’t contribute to the bottom line. Some nuggets:

I could tell you unequivocally that [the current newspaper] model is a failure, or that model has passed its time of relevance.

In the Tribune he took over, “every single newspaper had a cadre of salaried salesman. Now, you know, I’m just a businessman, but I’ve never seen any kind of a sales force that was effective if, in fact, they had no incentives.”

On home delivery economics: “If you go across the street and you buy a newspaper from a vendor, you will pay 50 cents. But if you get it home-delivered, which costs the company 10 times as much, you pay 30 cents…You try and make those numbers work, and it don’t make any sense.

Journalists are more than willing to tell you what they think you need to know. And to some extent, that’s a valid position, but I certainly don’t think it is the answer. And to the extent that you have journalists who are unwilling to listen and only want to talk, they really should give up journalism and become college professors.

If the goal is a Pulitzer, it’s in the wrong place. In other words, we’re not in the business of…underwriting writers for the future. We’re a business that…has a bottom line…I think Pulitzers are terrific, but Pulitzers should be the cream on the top of the coffee. They shouldn’t be the grounds…newsrooms have basically never recovered from Watergate, and everybody wants to be Woodward and Bernstein, and that’s the definition of success.

86 percent of the cost of the newspaper business is print, paper, distribution, and promotion. That’s untenable long-term and…short-term.

Mark Potts has been no Zell zealot, but he sees a lot of sensibility in the mogul’s remarks. “More so than a lot of people in the newspaper business, he’s dealing in a reality-based environment, not living in the past,” the recovering journalist writes. Newsosaur Alan Mutter, who’s also no Zell fan, largely agrees. And Mark Lacter of LA Observed, which has been a vehement Zell critic for his cost-cutting at the Los Angeles Times, applauds the CEO’s rationale. “Much of what Zell says is painful to read, but it would be a mistake to dismiss many of his views about the news business,” Lacter writes.

We were struck by Zell’s comments about the sales infrastructure he inherited. According to the CEO, Tribune Co.’s sales reps were effectively order-takers, competing with no one and holding a lifetime lock on their territories. In a harsh advertising environment, you wonder how any sales force can be competitive without incentives, particularly when their task is increasingly to sell low-margin online ads in high volume. Internet companies know that online ads require a fundamentally different compensation structure, a hungrier sales staff and a incentives that encourage reps to develop new business. It’s hard to believe that even a year ago, major newspapers were operating without those simple principles in place.

Speaking of Zell, we can’t help notice that it’s been more than two full months since the wonderfully snarky Tell Zell blog has posted an update. We’ve heard that management at the LA Times has recently been coming down on internal critics like a ton of bricks and we hope that the blog’s anonymous author, InkStainedRetch, is simply in hiding, waiting for another chance to ply his or her viciously eloquent talents at a future date.

Happy Thanksgiving to all our readers in the US!

Newspapers have to stop selling ads and start selling audience. Even more importantly, they have to sell what their business customers seek: awareness. That’s best accomplished by engaging many small audiences within the community and monetizing that through ad programs that span multiple channels.

That’s the gist of comments by Stephen Gray, managing director of the American Press Institute’s Newspaper Next project , in an interview with Mark Glaser last week. The piece has caused a stir in the blogosphere because of Gray’s suggestion that newspapers should learn to think of themselves as advertising agencies. In other words, their role could be to direct their customers’ marketing dollars to the channels that work best for the customer, whether the newspaper company owns them or not.

“It’s not just ‘buy banner ads on my news website,'” Gray says. “It’s ‘we can make your business effective on the Internet.’ And that might include doing your website or buying the keywords you should have on Google AdWords for our market.”

Newspaper Next’s three-year project to figure out a strategy for the newspaper business has employed the services of Clayton Christensen, author of The Innovator’s Dilemma, a book that should be required reading for every newspaper executive. The book examines the paradox of successful companies responding ineffectively to changes in their market that ultimately kill their businesses, even though they understand fully the implications of that failure.

Successful newspapers are reinventing themselves as comprehensive sources of local information through whatever channels people use. Gray tells of the experience of the Pocono Record, which sent out a team of reporters to interview local residents and find out what information was difficult for them to find. The paper rejiggered its products to deliver that information and saw print circulation group and Web traffic and sales surge 50%.

As far as what this means for journalists, Gray offers this provocative quote:

“[This is a] watershed moment, when people stop getting information from a [once a day] dropper. We now live on the ocean and can dip in at any time and get whatever we want. So we will spend a lot less time with things that are designed for everyone like news and spend a lot more time proportionately finding solutions for me and what will help me in my life today…I am preaching in the field that newspapers need to visualize themselves becoming the local information utility.”

Gray’s comments are right on the mark, but it’s doubtful that many newspaper executives have the insight or innovation to make the changes he recommends. In Innovator’s Dilemma, Christensen points to numerous examples of executives in highly competitive, fast-changing industries who failed to respond to technology disruption. If the people who ran Digital Equipment Corp. or Novell were unable to accommodate change, why should we believe managers who have overseen comfortable local monopolies for the past several decades will fare any better?

Helium.com is a web site devoted to citizen journalism. We had a chance to speak with its VP of development, Peter Newton, on Monday. Newton is a long-time Boston Globe executive who came to Helium about two years ago to help invent a new approach to journalism. 

The site has about 5,000 regular contributors, who upload all manner of stories relating to their interests and activities.  Helium isn’t a news site; rather, it takes the type of material that people would have posted on blogs for nothing and offers it to the public and to publishing partners on a revenue-share basis. Newton said some citizens are earning thousands of dollars per year for their contributions.

Helium has useful advice on everything from Socrates to roasting turkey.  Contributed stories are evaluated by members and voted up or down the popularity stack.  Contributors share in advertising revenue as well as the modest license fees the company generates from distributing its content to publishing partners.  Most of those partners are small right now, but Newton says some big deals are imminent. In the Marketplace section, a few publications solicit articles by topic, paying between $48 and $120 per submission. There is also a list of citizen journalism awards available to aspiring writers.

One of Helium’s goals is to become a source of freelance content for publishers who want a low-cost alternative to standard freelance rates.  The site is founded on the assumption that expertise doesn’t have to cost $1/word and that knowledgeable people can now find an outlet for their expression. Helium isn’t profitable yet but hopes to get there within about a year.  With $17 million in venture capital, it’s off to a good start. 

Small is Beautiful…Or At Least Cheap

The New York Times reports upon the rise of small, focused investigative journalism operations that are succeeding where traditional newspapers are cratering.  Operating at the will of charitable organizations, in many cases, they pay their journalists anywhere from $30,000-$50,000 per year and provide highly targeted coverage of specific topics and regions.  Most of these organizations are small and have low traffic counts, but the big ones, like MinnPost in the Twin Cities and the St. Louis Beacon, can top 200,000 visitors per month.  While they provide only a fraction of the coverage of the mainstream media they displace, they are increasingly popular alternatives for journalists whose jobs have been swallowed up by the implosion of local dailies.

Do They Still Not Get It?

Baltimore Sun copy desk director John E. McIntyre relates the experiences of two colleagues who are making a living trying to give new-media advice to their ink-stained brethren.  Their frustration is summed up in this anecdote from one of them: Too many journalists think the reader’s pleasure is irrelevant, that the reader picks up the newspaper either to be instructed or to sit in awe of the literary talent being presented in it. In short, too many journalists are too full of themselves to succeed in the 21st century, when a newspaper needs to focus on what its readers want, since the readers’ choices of what to do with their time seem limitless. That is the challenge for young journalists of the 21st century, who I hope will save us all.” McIntyre concludes that young people are not hostile to newspapers as much as they are disdainful of being bored.  The idea that readers will suffer through paragraphs of tedious introduction in order to get to the meat of the story is at the heart of the disconnect between newspapers and their audiences. “We have to master the new technologies, both to acquire useful information and to convey it in the form in which readers prefer to receive it,” he says.

Miscellany

The Virginian-Pilot will cut 125 jobs, or about 10% of its workforce.  Tactics include shutting down a free daily newspaper geared to Generation Y readers, reducing the size of the newspaper by about 40 pages a week and eliminating the business section.  The Pilot provides an unusually frank account on its website, quoting editor Dennis Finley as saying that those laid off include some of his most senior managers.  “One of the goals was to keep as many reporters on the street as possible,” Finley says.  Particularly disappointing is the closure of Link, a free daily newspaper targeting the 18-to 34-year-old demographic group.  The Pilot‘s average circulation has been falling, but less than the national average for newspapers.  A price increase is also in the cards.  

Here’s a welcome breather for the newspaper industry: newsprint prices have stabilized. The companies that sell newsprint are quietly saying that they have no plans to raise rates next year.  However, that doesn’t compensate for the likely increases in the price of gasoline. While gas has gotten cheaper lately, many experts believe that $4/gallon gasoline is a likelihood for next summer, which will still significantly affect newspapers that distribute by truck.

The Chulchavox blog relates two items we missed:   

• The Denver alternative weekly Westword says that staff members of the Longmont, Colo. Times-Call newspaper have been invited to the publisher’s holiday party – as parking valets. Staffers will reportedly earn what they get for their day jobs, only they’ll be parking the cars of rich people in attendance.
•  The Newark Star-Ledger has reassigned a reporter and a deputy photo edit to the mailroom in order to keep their jobs.

The blogger also quotes from Martin Legeveld, of News After Newspapers, commenting upon the follow-up land from the American Press Institute’s CEO conference held last week. Participants agreed to reconvene in six months to explore additional collaboration ideas.  “What are they thinking?” Langeveld says.  “What will be left six months from now?”

The McClatchy Company reported that consolidated revenues in October decreased 17.8% and advertising revenues declined 20.4% over the previous year.  The bright spot was a 12.4% gain in online advertising revenues.

Six Apart is offering laid-off journalists free blog accounts worth $150 per year.  More than 300 applications rolled in during the first eight days. Of course, you can also get free blog accounts at Blogger.com and WordPress.com, not to mention several other places.

The Maine-based Lakes Region Weekly has cut six positions through a combination of layoffs and the elimination of unfilled positions.

And Finally…

Out-Of-Town News, the Harvard Square kiosk that has served newspapers and magazines from around the world to an eager audience of students and erudite residents of Cambridge, Mass., will go out of business at the end of this month.  The city Council of Cambridge, Mass. has voted to extend the lease in an effort to keep the business in Harvard Square, but the prospects look grim.  The newsstand has been in operation since 1945, but business has been challenging for several years.

Vol. 1, No. 1

It isn’t a newspaper, but to millions of computer enthusiasts, PC Magazine is an institution. It led the uprising of PC-empowered office workers against corporate IT departments in the 1980s and peaked at 1.2 million circulation in the 1990s. Issue sizes once ran to 500+ pages and the magazine supported a staff of more than 300 people. Its product reviews were considered the gold standard in the industry.

So the announcement this week that PC Magazine will exit the print market and go online-only was a turning point of sorts. With circulation down by half and an advertising base that has switched its budgets almost entirely online, the move makes sense. Expect to see more tech titles follow.

Longtime tech writer David Strom and I devote 14 minutes to a eulogy and look to the future in this podcast. Strom also has his own memorial here. Former PC Mag editor-in-chief Michael Miller also has a few thoughts.

Technology media has been a leading indicator of change in other media sectors. InfoWorld was the first major tech title to abandon print and many publishers have scaled back on size and frequency to keep their ink-on-paper operations viable. Most will tell you that they run print at break-even and make all their profits online. That was apparently the situation at PC Mag. Readers of tech publications are naturally more Internet-savvy than the general population, so the shift to the Internet was evident in the tech market several years ago. Look to that market as a leading indicator of where the media in general is going.

Tough times for the Newspaper Guild are shifting the union’s strategy from organizing laborers to simply surviving. Membership is down about 17% since 1986 and 2,000 Guild members have left this year alone. In a telling move, the union recently cut back the frequency of its internal newspaper from monthly to bimonthly and moved more content online. “Right now the biggest thing you’re fighting is the overall sense of impending doom,” is the uplifting quote from new Guild President Bernard Lunzer.

It’s so bad that the Guild is now focused on helping its longtime adversaries survive. The union recently pitched in to help finance an acquisition and it has worked actively with some newspaper owners to arrange concessions that would keep the titles afloat. It’s also beginning to organize people outside of the newspaper industry, such as interpreters in California courts.

The industry’s shift to online distribution hasn’t helped the Guild. Fobes notes that “Much of its power came from its ability to seize up a paper by asking sister unions running presses to strike.” With fewer copies to print and presses to staff, that club isn’t as big as it once was.

The Associated Press will reduce it staff by 10% over the next year. The cutback of roughly 400 positions will be accomplished by attrition to the greatest degree possible, according to CEO Tom Curley, but layoffs may be necessary. The AP instituted a hiring freeze several weeks ago. The pain being felt by member newspapers has hit the AP hard and the situation has worsened as several large members have announced plans to drop the subscription service in order to save money.

Sobering news out of the American Press Institute’s executive confab in Reston, Va. last week. The newspaper industry is in a full-blown crisis and radical surgery is needed to save it, according to an executive summary. CEOs learned about the classic stages of a crisis and ran the numbers on their own businesses. All but one of the public companies in the room was “below the safe stage,” the summary said, meaning that they’re at real risk of bankruptcy.

There were strong words from the podium. Turnaround specialist James Shein of the Kellogg School of Management at Northwestern University said one of the biggest hurdles to progress is “the industry’s senior leadership, including some people in this room…I am not sure you can take a look at your industry with fresh eyes.” Remedies that were discussed ranged from waiting out the economy to hiring experts like scientists or bank regulators to replace some reporters (wait’ll you see the bill on that one). Everyone who’s still around will come back in six months to revisit the situation.

There was undoubtedly some debate about asking the government for a bailout, as the auto industry as done. Ain’t gonna happen, says Alan Mutter. For one thing, government bailouts are intended for industries that have the potential to turn things around and grow again, which is highly iffy proposition for the newspaper business. Paradoxically, a government handout would also compromise one of the most common arguments for supporting the press, which is that it provides a vital watchdog function. “It is difficult to imagine how the vigor and independence of the press would be maintained if the industry depended on the largesse of the very government officials it is supposed to be watching,” Mutter writes. Finally, the industry is just too small to make a difference in the health of the overall economy.

In Praise of Experience

Few news scribes are as eloquent and engaging as The New York Times’ David Carr and you’d do well to read this column about the foolhardiness of firing experienced employees. Pointing to veteran reporters and columnists who have been sacrificed on the altar of cost-efficiency, Carr says newspapers are effectively cutting off their nose to spite their face. Once the short-term profit boost is complete, these organizations, “won’t stay relevant to readers with generic content ginned up by newbies with no background in the communities they serve,” he writes. Read the column for more gems like that.

St. Petersburg Times columnist Eric Deggans was referenced in the Carr column, and he posts a thank-you for the recognition and an elaboration on the practice of laying off experienced people. Deggans notes that his newspaper has few senior journalists writing any more; most of the old-times have made the jump to management or left the paper. He wonders if the loss of veteran old-timers will leave a gap for the next generation: “I wonder if we’ll reach a point where only the best writers can keep doing the job as they age, creating a bit of a generation gap between writers and editors,” he asks. That would be a loss because youngsters need the wisdom of older scribes who aren’t their bosses, Deggans says.

In Condemnation of Euphemisms

It isn’t a layoff, it’s an evolution. At least, that’s how a column by Ventura County Star Editor Joe Howry describes it. “At The Star, our plans were to continue intensifying our focus on local news… Life, in the form of the economic downturn, has forced us to speed up those plans,” he wrote last Sunday.

What really happened is that the Star recently laid off 44 people and consolidated its weekday paper to conserve space. In Howry’s view, though, the cutbacks are simply part of an “evolution” centered around “preserving the quality and quantity of local news.” Not once does his editorial mention layoffs or cost reductions. LA Observed’s TJ Sullivan finds absurdity in the message. Sullivan doesn’t doubt it was painful for Howry to let so many people go, but he thinks they deserved a more honorable send-off that to be referred to as victims of efficiency. Journalists are supposed to tell the truth, he says. Don’t candy-coat downsizing. Admit it sucks and move on.

Newspaper Outsourcing a Growth Industry

Research and Markets has released a report entitled “Offshoring By US Newspaper Publishers” that sees big growth in the newspaper outsourcing industry, particularly in India. About 2,300 people were employed offshore to serve US and UK newspaper companies in July, 2008, the report says. Most of the work is in ad production. Overall revenues of the business are estimated at $35 million this year (quick calculation: about $15,000 per head), growing to $120 million by 2012. “The total offshore opportunity from newspaper publishers is estimated to be approximately $3.5 billion,” the summary says, although it doesn’t specify whether that’s an annual figure or a total of several years. However, vendors still “need to build client confidence in terms of delivering consistently good quality of output and quick turnaround.” You can download your own copy for 437 euros (about $555).

Miscellany

The New York Times has closed its quarterly sports magazine Play because of slow ad sales. Assistant Managing Editor Gerald Marzorati called the closure the “hardest professional call I’ve ever made in my life,” but with the magazine losing six-figure sums every year, there was no viable alternative. The quarterly was said to be a favorite of New York Times Co. Chairman Arthur Sulzberger. According to The Wall Street Journal, “The Times explored several options to keep the magazine afloat, including cutting editorial staff, publishing it only online and signing a single advertiser for each issue. New York Observer says no staff positions will be cut because the content was mainly freelanced and the only staff employee will be reassigned within the organization.

The Erie (Pa.) Times-News will use a “generous” buyout to reduce staff by 25 employees, or 9 percent of its 273-person workforce. The buyout, which is available to 51 employees, provides up to five years of company-paid health insurance, or an equivalent flat payment, plus a $10,000 signing bonus for each eligible employee who accepts. The paper has actually been growing weekday circulation in the past year, but “broad economic market conditions” mandate the cuts. The publisher said no layoffs will be necessary in 2009 if enough people accept the offer.

The Sun-Times Media Group (STMG) is cleaning house in a concession to two big shareholders. Several board members will resign in the first stage of a complete restructuring of the governing body. The company will also lose a special monitor who was assigned to keep an eye on things following an earlier scandal in which two executive were jailed for stealing. STMG is also deregistering its Class A common stock and will now trade on the pink sheets, which require less regulatory overhead.

The industry’s malaise is spreading overseas. The UK’s Independent is laying off 20% of its staff, or about 90 people. The company’s managing director said the business is “racking up losses that would threaten the very survival of these papers.” Trinity Mirror, which is the country’s largest local newspaper publisher, recently said it had quietly closed 28 titles this year.

The southern California-based North County Times has cut 25 newsroom jobs, or about 25% of its workforce. Ironically, the paper also has a column this week by John Van Doorn, who was laid off after 58 years as a reporter and editor. The veteran New York newspaperman could be excused for being cynical about the whole thing, but his farewell piece (pre-published in Editor & Publisher) is actually quite uplifting.
Van Doorn thanks an industry that gave him the opportunity to “reside in 11 countries and work in 35, rub shoulders with presidents, prime ministers and a king or two, and with ordinary people far more substantive, such as the North County population.” And he’ll be back. “I cannot not write,” he concludes, inducing paroxysms in Microsoft Word’s grammar checker.

And Finally…

This year may go down as the worst ever for the newspaper industry, but 2008 also ironically included one of the best single-day sales milestones in history: the day after the presidential election. Issues flew off the newsstands in record numbers following Barack Obama’s victory, as readers sought to capture a moment in history.

Now the Chicago Sun-Times is going one step further by offering 44 copies of its Nov. 5 front page as a “museum wrap fine art giclée print on canvas.” If, like us, you’ve managed to live your entire life without knowing what giclée is, Ed Chasen Fine Art describes it as “a French term used to describe a specialized process in which pigmented inks are applied to canvas or paper to reproduce a fine art reproduction.” Regardless, the first 15 copies have so far failed to elicit a single bid starting at $350 each on the auction site, although there are still several days left.

The newspaper industry is in chaos, but you wouldn’t know it at the Financial Times, the U.K.-based business daily that now sells more copies in the US than in the UK. In fact, the economic crisis has been good for business, says Caspar de Bono, managing director of Financial Times Business in a story in BtoB magazine.

The reason is that panicked investors want to know how the meltdown in the US is playing out in other countries, de Bono says. The FT, with its great international reach, is becoming a coveted source of information. US circulation is up 5% this year to over 140,000. Sales for the FT Group were up 11% in the first nine months and publishing sales were up 14%. With The Wall Street Journal setting its competitive sites on The New York Times, the time might be right for the FT to become a major salmon-colored alternative to America’s business daily.

News Without Newspapers

21^st News has a guest column by Gary Hook, former director of editorial operations at USA Today, about why he’s worried about journalism. Hook’s concerns were prompted by attending the Knight International Journalism Awards, which recognized two journalists who risked all to deliver the truth. Hook says their stories are inspiring, but at the same time he’s worried about who will carry on this kind of crusading work once many newspapers are out of the picture.

His answer may be in the award winners themselves: Aliaksei Karol, the editor-in-chief of the weekly Novy Chas in Belarus and Frank Nyakairu, a correspondent and freelancer who has documented human rights abuses in Africa. Neither of these men works for a major metropolitan newspaper. Novy Chas is published in print, but clearly serves more as a means of political expression than a profit-making concern.. Nyakairu is a freelancer and wire service correspondent who could just as easily write for paying Web publishers as for Reuters.

Both men were recognized for what they do, not the medium in which they do it. They are great journalists in spite of not working for a daily newspaper. Which makes Hook’s argument a little hollow. Early in the column, he quotes Walter Lippmann, who said, “The purpose of journalism is to give information on which the citizen can act.” There’s nothing in there about newspapers that we can see.

Miscellany

Alan Mutter takes a financial analyst’s eye to the profitability picture in the industry and concludes that further cuts are likely before year’s end. The problem is that profits are falling at a much faster rate than revenues, about 18 times the velocity of decline for 12 publishers he studied. Mutter uses EBITDA (earnings before interest, taxes, depreciation and amortization), an accounting standard that strips out all the non-cash events that influence an income statement. Nearly every publisher in his analysis suffered year-over-year profit declines to 40% or more, with Sun-Times Media Group logging the most extreme decline at -1523%. “Not one publisher in the group of 12 was able to prevent its profits from falling faster than its revenues,” Mutter writes. And imbalance like that is unsustainable, meaning that more cuts are almost certain.

Ken Doctor has the scoop and the schedule on CNN’s upcoming two-day offsite at which the cable TV network will pitch its services as an alternative to the Associated Press. Doctor thinks CNN’s coveting of major editors has gotten too little attention, and when you look at the numbers, it’s hard to disagree. CNN has more journalists than either the AP or Reuters, and it’s got more delivery channels, too. Amid a nationwide revolt against the AP’s licensing and fee policies, CNN’s argument on Dec. 1 and 2 could be persuasive. However, Doctor proposes nine questions that he thinks the execs in attendance should pose to their host first. He’s hoping they get an answer because the network has been unwilling to offer anyone for an interview.

Once-fierce rivalries in the Metro newspaper business are giving way to calls for collaboration. The Dallas Morning News and the Fort Worth Star-Telegram used to compete toe-to-toe for readers, but with circulation and revenues going south, there’s talk of a news alliance. The two companies recently began delivering each other’s papers to local markets and discussed but later discarded a joint printing agreement. More collaboration is probably on the way, however. Star-Telegram columnist Mitchell Schnurman outlines in detail the financial realities as well as the culture shock engendered by the idea of an alliance.

Speaking of Dallas, documentary filmmaker mark Birnbaum and Dallas Morning News film critic Manny Mendoza have teamed up on “Stop the Presses,” a dark documentary about the future of newspapers. The Rocky Mountain News interviews them, but gives the piece only scant space and no room for the filmmakers to say anything. Kind of like a story in print.

Bay Area News Group has rescinded layoffs of eight workers after the union filed a complaint with the National Labor Relations Board. The union says it wants to explore alternatives to layoff, such as “asking employees who were thinking of leaving, if they want to save someone else’s job.” If you can unravel the meaning of that statement, please comment.

“Bring it on!” cries the Boston Globe’s Joan Venocchi in a cheeky send-up of auto makers, labor unions and other failed institutions that hope to find succor at the government teat. Venocchi sees a parallel to her own profession. Sure, the newspaper industry is in trouble, she says, but “No one in government is going to back a newspaper bailout and no one should…If newspapers aren’t producing news in a format that people want to purchase, it’s the industry’s problem. If Detroit isn’t producing cars people want to buy, that’s Detroit’s problem – not the taxpayers’. Her logic is sound. There was no excuse for the AMC Gremlin.

BusinessWeek‘s Jon Fine tackles the same topic as Venocchi, though his angle is a bailout plan for the newspaper industry. With tongue planted in cheek, Fine proposes that the government adopt the industry crisis as its own and shell out billions to cover the industry’s debts while providing each household with an Amazon Kindle in a rescue plan thinly disguised as a green initiative.

Michael Sifton is out as chief executive of Canada’s Sun Media Corp. after just a year on the job. He’ll be replaced by Pierre Karl Peladeau, the CEO of parent company Quebecor Inc. “Disappointing” results in the company’s publishing and Internet businesses was cited.

60 Minutes’ Andy Rooney ditches his usual satiric tone in a homage to the newspaper industry that gave him his start. “I wouldn’t trade [my newspaper column] for all the stations that broadcast this television commentary. The money I’d trade,” he says. Rooney got his start with Stars & Stripes before World War II, and the industry taught him all about journalism. How sad to see it in such trouble. “There’s been a steady decline in the ciruclation of newspapers, but it’s strange that there’s no decline in the faith people put in them,” he says. TV has benefited from some great journalists, he says, but it’s not the same. “There are more pictures on television. That’s about it.”