Miami Herald For Sale
McClatchy puts the south Florida institution on the auction block, perhaps as a way to raise money to pay off its Knight-Ridder debt. But who’s going to buy the paper? Other titles that have been taken off the market for lack of interest include the Norfolk Virginian-Pilot, San Diego Union-Tribune and Austin American-Statesman.

New York Times To Leverage HQ For Ready Cash
Quoting:

The New York Times Co. is borrowing $225 million against a portion of its new headquarters in Manhattan. The company has to raise money to make a $400 million payment on one of its revolving lines of credit this coming May; the other $400 million line of credit, as yet untapped, may very well be canceled by financiers spooked by the credit crunch and economic downturn.”

Viacom, NBC, Others Cull 30,000 in Fight for Their Future – Advertising Age
Quoting:

The media industries have shed more than 30,000 jobs in 2008, according to an Ad Age analysis of Department of Labor employment statistics and news reports. That’s about 3.5% of the total media work force of 858,000. Since the bubble-inflated high-water mark in 2000, media has lost more than 200,000 jobs.

WPP’s media-buying unit Group M is predicting a 3.9% fall in U.S. ad spending in 2009, according to estimates to be released this week. That’s after no ad spending growth from 2007 to 2008.

Fitch Ratings is predicting the weakest year for advertising since 2001. BMO Capital Markets is predicting a 2% drop in U.S. advertising in 2009 but a deeper 5.4% slide in spending on measured media, with radio down 7.6%, broadcast TV down 8.7%, newspapers down 12.1% and magazines down 8.2%.

The good news for media companies is that consumers are spending more time in front of screens than ever before, said Group M Chief Investment Officer Rino Scanzoni. “We are looking at a generation of people that have grown up with multiple media that are now becoming major consumers. Viewing has increased; it’s just fragmented over more pieces.

Would You Pay Money to See Your Favorite Site Ad-Free?
Frank N. Magid Associates asked consumers if they would pay for Web content. The results were resouding. Quoting:

When we asked consumers if they would pay $39.99 a year, which comes out to less than $4 a month, for an ad-free version of one of their favorite sites, only 2.4% said definitely yes, they would be likely to do so…At the lower price of $29.99 a year, or less than $3 a month, only another 1.9% of consumers said they would be very likely to pay for an ad-free version.

Christie Hefner Exits Playboy
It seems the end of a 20-year rein as CEO should merit more than a one-paragraph news brief. Also, who’s going to replace her?

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.

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?

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.”

Magazine Ad Pages Drop, Holiday Season Looks Grim

These numbers are just gruesome. Quoting:

On Oct. 28, the Conference Board announced that its consumer confidence index had plummeted to an all-time low of about 38 out of 100, a drop of over one-third from its level of 61.4 in September. The expectations index–which evaluates consumer sentiment about the future–went even lower, dropping from 61.5 to 35.5. Lynn Franco, director of the Conference Board’s research center, said the decline in the confidence index was “the lowest reading on record” since the index began tracking consumer attitudes in 1985.

Macy’s said it will eliminate all magazine advertising in the first half of 2009, although its holiday marketing budget is still largely intact. Subsequently, The New York Times reported that Neiman’s specialty retail segment–including Neiman Marcus Stores and Bergdorf Goodman–saw sales tumble 27.6% in October, while Nordstrom is down 15.7%, and Target fell 4.8%.

Traditional Media Hit Harder Than In Past Recessions

It used to be that three mainstream media channels – newspapers, radio and magazines – reliably predicted the economy’s decline into a recession and its recovery. That all changed about three years ago. Newspapers and magazines fell while the economy was rising and show no sign of anticipating a recovery. The results, writes Erik Sass:

“While softening ad revenue anticipated the two previous economic downturns by about a year, in the most recent case, the slowdown for magazines, newspapers and radio began about three years before. In addition, the declines have already proven to be steeper in this pre-recession period than at the height of the previous ones. This suggests that all three traditional media, suffering from both secular and macroeconomic trends, are poised to suffer unprecedented losses in the economic downturn that is now unfolding.

Cleveland Plain Dealer increases job cuts to 50

CanWest cuts 560 jobs, five per cent of workforce

Cost pressures and plunging share prices prompted Canadian publisher and broadcaster CanWest Global Communications Corp. (TSX:CGS) to cut 560 jobs – about five per cent of its workforce – Wednesday as the company faces a rougher economy and more competition.

The company, which employs about 10,500 people in Canada, said the cuts would save $61 million a year.

The company, once worth billions, now has a stock market value of about $85 million.

The Winnipeg company said about 210 jobs will be cut at through a restructuring of news operations at CanWest Broadcasting’s E! stations.
CanWest Publishing, which operates the former Southam chain and other papers, will see about 350 positions disappear through a restructuring of the community newspaper group.

I Read the News Today, Oh Boy

The New York Post‘s Phil Mushnick beats up on a favorite print-media whipping post: TV news:

The freshest genuine news that local TV newscasts now provide are weather forecasts, unless you count updates and previews of “American Idol,” “Survivor” and “Dancing With The Stars.”

Quoting a friend from TV land: “Today? There are reporters I work with who just want to be on TV. They’d be game-show hosts. It doesn’t matter to them. The only original stories we report these days is what [bleep] to watch on the network, that night. It’s depressing.”

It’s frightening stuff. The decline of newspapers is far more than a story about newspapers. It’s a huge TV story, an encouraging trend for the corrupt and a development that should scare the daylights out of everyone else.

Schiller Leaves ‘Times‘ To Lead NPR

NPR is already crowing about the appointment of Vivian Schiller, formerly general manager of NYTimes.com, as its new CEO. Schiller guided the Times through some difficult periods, including its migration from a part-paid to an all-free business model. She also oversaw two redesigns that were considered groundbreaking. At NPR, she’s expected to accelerate a multimedia makeover that will expand the organization’s footprint broadly into video.

Last week, I spent a day speaking to two college classes about the changing media industry. Both groups consisted of juniors and seniors, nearly all of them majoring in public relations. These people should be heavy consumers of information, and they are. When I asked the roughly 45 students how many of them read a newspaper online every day, nearly ever hand went up. But when I asked how many subscribe to a newspaper, only a single student raised a hand.

Oh, they read newspapers. They read Metro, the local entertainment weekly, the college daily and even the major metro dailies on occasion. The difference is that they don’t subscribe. They consume information when it’s convenient to them, and so much information is being pushed at them all the time that they have plenty of choices about what to read. The concept of paying to subscribe to something is foreign to these people in their early 20s. Why pay for what you can get for free?

Some publishers may be adapting to this new reality and paring back their paid subscriptions accordingly. Back in April, the Audit Bureau of Control changed its rules to enable publishers to declare as paid circulation copies that they sold for as little as a penny. At the time, some people predicted the beginning of a new circulation war. But the opposite has apparently happened. The Wall Street Journal reports that the current trend at big papers is to manage circulation intelligently, focusing on hitting the highest-quality readers at the best time of day. The story cites the Atlanta Journal-Constitution and the Arizona Republic as two papers that have cut circulation to the applause of advertisers, who didn’t see much value in distributing to readers who live so far away that they would never be candidates to come in to their stores. And publishers do see growth potential in circulation of Sunday issues, which arrive when people are most receptive to reading them.

Involuntary declines, continue, though. The two New York tabloids continue to post ongoing readership losses, in part because of price increases announced earlier this year to offset the rising cost of newsprint. Fortunately, newsprint prices are stabilizing now, in large part due to decreases in demand brought about by the slowing global economy.

Pressure to Go Private

Many years ago, for reasons that are unknown to us, major newspaper publishers began reporting monthly, rather than quarterly earnings results. Today, that practice has become a millstone around the industry’s neck, casting a public spotlight on the industry’s woes with painful frequency.

While reporting on the latest round of earnings declines, James Erik Abels of Forbes begins to ponder the once-imponderable: maybe it’s time to think about the end of the newspaper industry. The business model isn’t viable any more, Abels says, and the recession will hit hard at its base of local advertisers. The piece suggests that the pressure of earnings comparisons is only making matters worse by publicizing the industry’s problems. That’s one reason some equity managers are encouraging owners like the Sulzbergers to take their companies private: it enables them to restructure outside of the glare of publicity.

Newspaper brands have considerable value, which is one reason some private investors are lining up to buy them, Abels says. Relaunched with smaller staffs and more nimble businesses, newspapers would have a leg up on online startups because of their reader loyalty. It’s just that the process of getting to that smaller staffing model is to difficult to manage in public view.

Superblogger Robert Scoble has a proscription for the newspaper industry: experiment a lot and do it quickly. Scoble thinks every reporter should have a camera phone that’s capable of taking high-quality video images and should be able to broadcast events in real-time just like television does. He also says people who think quality journalism is dead should look at TalkingPointsMemo, Pro Publica and Topix, which are building profitable businesses based upon good reporting. He also says keep an eye on Spot.us, a startup that will fund journalism based upon the stuff people want to read.

Layoff Log

• Having recently extracted major union concessions by threatening to go out of business, The Newark Star-Ledger rewarded its staff by eliminating 40% of their jobs. Most of the reductions will be achieved through buy-outs, though, and management had told the unions back in August that it needed substantial cuts to keep the paper viable. Huffington Post says the actual newsroom losses will be closer to 45% of the 334 editorial employees. The magnitude of the cutback is impressive eye-popping at a time when most newspapers are still trimming around the edges. However, the publisher said it believes the Star-Ledger can return to profitability when the changes are complete.
• Speaking of trimming around the edges, A.H. Belo is doing everything it can short of layoffs to tighten the belt. The suffering publisher announced it will freeze salaries, reduce employee retirement contributions, suspend its dividend, trim capital spending and lower the fees it pays to its board of directors. The company also renegotiated its deal with creditors. “It’s probably not going to get better until 2010, if then,” says industry analyst John Morton., a newspaper industry analyst in Maryland.
• As LA Observed predicted last week, the Los Angeles Times laid off 75 journalists, or about 10% of newsroom staff. That comes on top of 150 job cuts in the newsroom this past summer. The site has the dour memo from Editor Russ Stanton.
• Randy Turner is the latest blogger to point out the contradiction of newspapers reporting everyone else’s layoffs but burying their own. He cites the Joplin Globe, a Missouri paper that he says laid off 15 staffers last week but has said nothing about it since. And he provides a laundry list of layoffs at other local businesses that the Globe has covered in recent months.

More papers are dropping the Associated Press. The Columbus Dispatch becomes the latest media entity to just say no to the wire service, following by just days Tribune Co.’s blockbuster announcement that it would exit the consortium. The AP’s costs are a sore spot with budget-challenged publishers, as are its tendency to compete with them online.  Editors are frustrated by new rules that require them to insert tags on stories they contribute to the wire service, which the AP then publishes through its numerous Internet channels.  The editors complain that revenue-generating traffic is thus diverted to the AP from their own web sites.

The AP claims new pricing will cut newspapers costs by about 10% beginning next year and that it will share ad revenues with members.  Publishers, though, say the lower prices aren’t enough. The AP’s fees can exceed $1 million annually at some newsrooms, which is about the same cost as 12 to 15 salaries.  In light of the need to cut costs, newspapers are coming up with creative alternatives, including regional consortia and citizen contributions. The New York Times account says defectors will also turn to less expensive newswires to cover the void left by the AP.

Pundits Disagree on Media’s Future

The director of digital at the UK’s Guardian Media Group forecast two years of “carnage” in the traditional media industry.  Emily Bell said she could see five national newspapers in Britain going under during the next two years as well as “the regional press heading for complete market failure.”  Even successful media companies will have to prepare for a long period of losses, she said.  The culprit is undifferentiated content driven by the traditional role of media as representatives of their customers, rather than participants in a conversation.  The only way to avoid irrelevance is to change this mindset, Bell believes.

However, the global leader for entertainment and media practice at PriceWaterhouseCoopers in Hong Kong begs to differ. “Traditional media isn’t dead yet and won’t be for the next five years, ” Marcel Fenez told the World Association of Newspapers readership conference, Despite its rapid growth, digital advertising will represent just 10 per cent of total advertising for newspapers by 2012, he said. He forecast that global newspaper advertising (including digital) will grow 2.9 percent to $136.8 billion during that time.  Part of traditional media’s advantage is its willingness to collaborate, he noted.  By not trying to “gouge the other guy’s eyes out,” media companies can come up with the kind of creative partnerships that stymie other industries.

Another speaker at the same conference danced on the hyper-local theme. Randy Bennett, vice president for business development at the Newspaper Association of America, said newspapers need to fight back against stagnant readership growth by becoming the destination of choice for local activity. “We must be a trusted source for all relevant content created by us, or others – professionals or amateurs,” Bennett said. “We must give users a tool for extracting the content they need and create a platform for interactive conversation.” Is there a business model in all this?  Bennett admitted he was unaware of one but expected that large sites would come up with something

When Bad News is Good News

Publishers know that bad news sells, and new data from Nielsen Online proves that point. The service’s tally of unique visitors at the nation’s top newspaper Web sites in September showed that all but one (the Village Voice) were up by double- or even triple- digit percentages. The big winner was the Anchorage Daily News, which enjoyed a 928% spike in unique visitors, presumably due to interest in native daughter and Vice Presidential candidate Sarah Palin.

The irony of the financial crisis is that it has also been good for some segments of the publishing business. Reuters says business media are enjoying a short-term lift in readership and ad dollars, thanks to all the attention being drawn by Wall Street’s financial crisis. The question is what happens after reader interest cools? The long-term slowdown in advertising in conventional media is likely to continue and perhaps worsen beginning in the first quarter of 2009, experts predict.

Miscellany

News Corp. Chairman Rupert Murdoch says the unprecedented global financial crisis presents a buying opportunity for his company. Speaking at the company’s annual meeting on Friday, Murdoch said News Corp. just turned in its sixth straight year of record earnings and is sitting on $5 billion in cash, making it well prepared for further downturns in credit markets. The company has also renegotiated its credit lines to allow for longer payback periods.

No one, including News Corp. has been left untouched by the mess on Wall St., Murdoch said.  ”It has weakened advertising markets and beaten down our share price,” the 77-year-old CEO said. “We have prepared ourself well for this day.” With next year presenting “unprecedented challenges,”  News Corp. will look for acquisitions in growth businesses. India, eastern Europe and Asia have the most promise, Murdoch said. He also expressed “great confidence in our future,” apparently referring to News Corp.’s future, not necessarily everybody else’s.

A team of enterprising publishers in the UK has produced a four-page newspaper created entirely by hand. “Every word and every image and every mark of any kind in The Manual was drawn by a team of volunteers – mostly illustrators,” a blog entry says. “Each copy of the paper has been numbered in a limited edition of around 100.” The experiment foresees a day when “handmade qualities can transform newspapers from ‘junk’ to collectable.” Sounds like a neat idea.

Just two months after Puerto Rico lost its only daily English-language newspaper, a new suitor has stepped in. The Puerto Rico Daily Sun will be available starting this Wednesday by subscription and at newsstands. The paper will be staffed largely by members of the now-defunct San Juan Star. Few details were released. The publisher said an upcoming press conference would reveal more.

The Seattle Times Co. may be close to selling its newspapers in Maine, but that probably won’t save it from having to make deep cuts early in the new year.  Al Diamon, Maine’s most widely-read media critic, reports that “two informed sources in the newspaper industry” says a company called Maine Media Investments could buy the Blethen Maine Newspapers by the end of the month. The chain has been an albatross for the Seattle Times, which has enough of its own problems on the opposite coast. Diamon quotes sources as saying more deep cuts are expected in January.

The new executive editor of the Merced Sun-Star in California’s heartland mixes metaphors and crows about his performance at the free throw line in one of the more delightfully clueless homespun essays we’ve seen by a scribe in a while. Our favorite line is this drug reference (emphasis added): “The newsroom…is down to seeds and stems in terms of numbers of reporters, photographers, copy editors and sports writers.” Someone should put Mike Tharp in touch with the Merced County Sheriff’s department, which destroyed about six tons of marijuana plants the previous day.

Cincy Navigator

Mark Glaser has an extended interview with Jennifer Carroll, Gannett’s vice president for digital content. She gives a progress report on Gannett’s Information Center initiative, a 2006 campaign to remake its 85 daily newspaper newsrooms into 24-hour digital publishing platforms. Carroll says that the programming and video skills the company has taught its journalist has led to some truly innovative coverage, like the Des Moines Register’s video/database/map mashup coverage of the Parkersburg tornadoes. Another innovation is CinciNavigator, a mass mashup created by the Cincinnati Enquirer that embeds information about local events ranging from arrests to nightclub listings on a map.

Carroll says database reporting can create a groundswell of interest that leads to improved print sales. The Rochester Democrat and Chronicle found that by publishing a database on police overtime the Thursday before a Sunday print date, it created anticipation that drove the highest Sunday single-copy sales of the year.

Carroll says Gannett is hiring and expanding its commitment to digital journalism, even against the backdrop of a terrible business climate.  A few people comment on the interview skeptically, suggesting that newspapers will never be a destination for multimedia content.

Future for Journalism Bright, Just Not So Much for Newspapers

John Kirch writes about a recent panel on the future of journalism at the University of Maryland-College Park. He offers the optimistic view that that future is bright.  The comments by panelists reflect our own opinion that the best time to get into journalism is when everyone else is getting out.  The future of big branded news institutions is dim, panelists said, but journalists will still be able to survive and thrive by promoting their own brands instead of the brains of their employers.

Paraphrasing the panelists, Birch writes, “Reporters will not only have to know how to interview sources and write stories for different media platforms,…they will have to know basic business principles so that they can create individual brand names for themselves that can be used to build followings and create job opportunities.”

Knowledge of business principles goes against the grain of conventional journalism teaching, of course.  However, that doesn’t mean journalist have to sell their souls, only that they need to be able to promote themselves because they are the product.  The risk is that journalists fall back to providing only content that delivers a large audience, such as celebrity gossip. We hope to see nonprofit and public interest organizations emerge that promote content that the public needs to know about.  The difference is that the content mix will be pulled by the readers more than pushed by editors.  What that will look like is anybody’s guess.

Miscellany

Jeff Jarvis is as provocative as ever in this withering attack on a recent AJR piece by Washington Post reporter  Paul Farhi. Farhi makes the case that journalists aren’t responsible for the plunging fortunes of newspapers; a variety of competitive and demographic trends are the real culprit. Balderdash, says Jarvis. “Victimhood is an irresponsible abdication of responsibility, a surrender.” We suspect that Jarvis was trying to stir up controversy and boost attendance to his forthcoming conference more than he was trying to savage a colleague. In that respect, he was successful. There are more than 150 comments on the piece, many of them thought-provoking, and Jarvis returns to engage with his audience frequently during the debate.

While free daily newspapers have struggled in US, they’re evidently hitting a chord with the commuter set in the UK.  Brand Republic reports that free dailies given away to commuters are gaining a foothold with the younger readers, who have largely forsaken paid daily newspapers. “City AM‘s daily reach has increased from 23% in 2007 to 32% this year, while the FT’s has dipped from 22% to 20%,” writes Mike Fletcher. Metro’s circulation now tops 3 milllion across the UK and has brand extensions that offer eight different platforms for advertisers. Perhaps more importantly, the freebies have solid demographics among the up-and-coming audience of young adults. London Lite, which is published by the same company that also produces the Daily Mail and Evening Standard, counts almost 80% of its readers in the 18- to 34-year-old demographic group.

The Providence Journal will lay off 25 part-time in six full-time employees, all from its news operation.  The move leaves a news staff of 200 people and a total staff of 705 at the ProJo, down from 763 in early September.

If online competition is hitting the broadcast industry as hard as the print business, why haven’t there been more layoffs in TV newsrooms?  Here’s one explanation.

The collapse of so Wall Street firms will hit the media business hard, with newspapers taking a disproportionate share of the body blows, according to a Bernstein Research report.  The report says finance and insurance/real estate advertising makes up 21% of newspapers’ ad revenue, about double that of broadcast media and slightly more than that of online media. “History suggests that another industry will eventually fill the growth void left by the insurance/real estate and finance sectors, but the operative word is clearly ‘eventually,” wrote the report’s author, analyst Michael Nathanson.