The Houston Chronicle joins the long string of newspapers that assert their commitment to “strong watchdog journalism” while covering news of their own troubles with e.e. cummings-like simplicity. The newspaper devotes just 208 words to news that it is laying off 12% of its staff, or nearly 200 people. That’s about one word per victim. In fact, the Chronicle doesn’t even mention a body count. You have to read The Wall Street Journal account to find that number. Even the AP devotes more space to the story than the Chronicle.

We have to wonder if this is some kind of Enron hangover. Are Houston media so tired of covering bad news that they just pass along the press release without comment or question? To be fair, the Chronicle does invite reader comments on a blog and posts a single response to the many questions people submit about who exactly was let go. Still, one response from one ombudsman to news of the loss of 90 newsroom employees hardly satisfies the public’s right to know. Nor will that information be passed along to the paper’s 448,271 print readers. How do we know there are 448,271 print readers? We read the AP story. That information wasn’t in the Chronicle.

We don’t know what went on inside the walls of the newspaper yesterday, but an entry on Houston Press Blogs makes it sound positively eerie. Without citing sources, Steve Olafson reports that no upper managers were laid off but the only two women on the editorial board were. So going forward, the editorial charter of the leading newspaper serving the great and diverse city of Houston will be directed by five white guys. The paper now has practically no suburban news coverage and it laid off the reporter who’s covered NASA since the 1986 Challenger disaster.

Olafson’s most damning anecdote: “Chronicle Vice-President and Editor Jeff Cohen never came out of his office to address the staff during the day-long process of buttonholing employees to deliver the bad news. Instead, he issued a memo.”

Boston Globe Battles Rival Herald for Irrelevance

How long will the Boston Globe be around? Bloomberg says layoffs will be needed to meet the goal of a 12% newsroom staff reduction. But it’s more than that. The Globe has become an anchor around the neck of New York Times Co., which paid $1.1 billion for it and its Worcester, Mass. sister paper in 1993. Circulation and revenue losses at the Globe have far outstripped those of the Times and the only bright spot in the business is the Boston.com website. Barclay’s recently valued the Globe at just $20 million, or more than 98% less than what the Times paid for it. And it’s clear that resistance to change is a powerful force in the newsroom. We attended a meeting of the Social Media Club in Cambridge, Mass. this week at which a young Globe reporter talked about the news staff’s focus on scooping the rival Boston Herald, a newspaper that has fallen so far that a lot of people outside of downtown Boston don’t even know it’s still around. The Globe‘s issues aren’t beating the Herald, but rather staying relevant to readers who could care less about either of them.

Publisher Fights Back at Newspaper Critics

Remember Time magazine’s list of the 10 Most Endangered Newspapers in America from earlier this month?  It’s a load of hooey, says Randy Siegel, president of Parade Publications in a biting commentary in Editor & Publisher. Siegel assumes that most people didn’t notice the byline on the list, which was not a Time reporter but rather Douglas McIntyre. He’s an editor at 24/7 Wall St., a website whose parent also runs a site called Volume Spike Investor, which recommends stocks that are undergoing extreme short-term volume fluctuations. “It’s a sad day when Time magazine…runs an unsubstantiated article on its website, without a single disclaimer, from Wall Street speculators who make their living peddling tips to…day-traders,” writes Siegel, who is co-founder of the Newspaper Project, a booster site for mainstream media.

Siegel doesn’t stop there when naming names.  His next target is Jeff Jarvis, the ubiquitous blogger who has long been a vocal critic of the conventional media.  Siegel credits Jarvis for being smart, but wishes the NYU professor and consultant would disclose more openly his advisory activities on behalf of companies that benefit from the destruction of the institutions he criticizes. Siegel also has some harsh words for CNN.com, which he says has covered the newspaper industry’s troubles with surprising zeal. CNN “probably would like nothing better than to see newspapers and newspaper websites fail, so their biggest competitors for audience and ad revenue would go by the wayside,” he speculates.

Miscellany

The Christian Science Monitor wraps up its 100-year run as a daily newspaper this weekend. Going forward, the thoughtful but lightly circulated journal will focus its efforts online, choosing to rely on journalism rather than video and infographics, according to editor John Yemma. He tells Media News International that the Monitor “intends to increase its page view five-fold by 2013, end its reliance on a Christian Science Church subsidy that now provides 40 percent to 50 percent of its revenues, and achieve financial sustainability by 2015.”The monitor was the first major newspaper to largely abandon the print market in favor of the Web and we wish it well.

We haven’t read any criticism of the hare-brained Newspaper Revitalization Act that’s briefer and more biting than that by Tim Windsor on the Nieman blogs. “I am immediately suspicious of any effort that has as its starting point that newspapers are precious things to be preserved, forever, like some kind of ubiquitous, everlasting Williamsburg of media,” he writes. “The worst thing that could happen would be for newspaper companies to find the means to suddenly become comfortable again.” We couldn’t have said it better and have nothing to add.

Allvoices, the community journalism project that we covered here last July, has added a feature to its website to rate the credibility of contributors. The feature is intended to address the widespread criticism that community journalism has weak quality control. The credibility meter evaluates both the content of a report and the reputation of the author on an ongoing basis as stories move through the Allvoices systems. Criteria include community ratings of the author and content, duplication with other stories and level of supporting content in mainstream media.

The Bakersfield Californian cut 12% of its staff and shook up its management ranks. The 26 positions that were eliminated include 14 in the newsroom and come on top of a 10% workforce cut in December. Management cited a 30% drop in year-over-year revenues as the culprit. The Californian, which has won some attention for its efforts to inspire reader contributions, is also establishing a high-level editorial job called vice president/content. Olivia Garcia, publisher of subsidiary Mercado Nuevo, assumes that role with Californian editor Mike Jenner reporting to her.

Gannett is telling employees to take another unpaid week off in the second quarter on top of the one they had to take off in the first quarter. The company is also temporarily cutting salaries of some high-paid employees.

And Finally…

Nineteen-year-old Dutch college student Marco Kuiper has assembled a collection of weird and wild photos from around the web going back to the middle of last year. He calls it “imagedump,” and the selections range from hysterical to disturbing to borderline obscene. They all have one thing in common: They’re fascinating to look at. Is this citizen journalism?  Who cares?  It’s funny as hell.

This site has received quite a bit of attention for the “R.I.P.” column, which has been a fixture on our sidebar since day one. However, we think the headline for that column may have run its course and we’d like your opinion.
The big problem is that not every title in that column has ceased to exist. The Capital Times, for example, is still plugging away online and even delivers a print publication twice a week. The Ann Arbor News is about to go the same route and the Seattle Post-Intelligencer has abandoned print but is bullishly trying to reinvent itself on the Web.
If we have the Capital Times there, we really should add the Christian Science Monitor, which is about to go weekly in print but stay 24/7 online. Several papers have recently cut back to four or five days a week and more are likely to follow. They aren’t R.I.P. but neither are they really daily newspapers any more. Should they be on the list?
So, your opinions please. Should we:
1. Leave R.I.P. as it is on the assumption that nothing is perfect in this world?
2. Leave the title as R.I.P. but limit the list to papers that are truly defunct? Gone? Pffft?
3. Leave the title R.I.P., list papers that can no longer be considered dailies but may exist in other forms and add a silly disclaimer like this one?
4. Change R.I.P. to “Out of Print” and list papers that can no longer be considered dailies but that may live in other forms?
5. Something else we haven’t thought of?
Sorry for the lengthy explanation, but this kind of thing really does cause us to lose sleep.

With this latest and deepest round of layoffs, the Atlanta Journal-Constitution will have cut the population of its newsroom by more than half since 2006.

The newspaper announced today that 30% of its editorial staff will be dismissed through a combination of voluntary buyouts and layoffs. Another 107 full- and part-time jobs will be eliminated because of a reduction in circulation. The move will trim the size of the news group to about 230, from a high of 500 people just three years ago. Distribution to seven outlying counties will be severed, reducing the AJC‘s reach to 20 metro Atlanta counties.

This is the third round of layoffs at the AJC, which can’t be accused of dribbling away staff.  In December, it eliminated 56 full-time and 100 part-time jobs in its circulation unit. Last July, it cut 189 jobs – including 85 in the newsroom – while also spending $30 million on new printing presses. In that move, the paper also discontinued all its regional editions, including the Gwinnett County regional, where its main printing press was located.

The new cutbacks will target people making the most money.  Most of the reductions “will be in production and management, allowing us to keep as many news reporters as possible,” AJC Editor Julia Wallace said.

And this isn’t the end. “Today’s announcements are the first in a series of initiatives we’ll announce over the next 90 days to reduce costs,” said Publisher Doug Franklin, who added that the goal is to regain profitability by 2010.

Remaining editorial staff will be reshuffled to plow more resources into the profitable Sunday edition.  The strategy hints at possible cuts in frequency, which has been a popular cost-saving move for an increasing number of papers in the last few months.

We really like Sen. Ben Cardin’s idea that newspapers should be allowed to operate as nonprofits. We like it so much, in fact, that we’re going to be the first news organization to take the Senator up on the idea. So effective today, we are a nonprofit. Our $87.13 in monthly advertising revenue is tax-exempt and we welcome donations. We agree not to make any political endorsements, which is fine because we don’t like any of the candidates anyway. We do fear, however, that some newspaper companies may find it a tad more difficult to accept the Senator’s plan. They have this tiny problem of a couple or three billion dollars worth of debt to take care of. Maybe Sen. Cardin should attach a rider making the nonprofit option part of the bankruptcy code. That’s an idea we could really support. But for now, heck, keep those donations coming. PayPal preferred.

A Queensland University professor surveyed 200 first-year journalism students and four that few of them read newspapers. “More than 60 per cent read a printed newspaper once a week or less often. Yet 95 per cent said they enjoyed keeping up with news,” said Alan Knight. Their preferred sources are broadcast TV and the Internet. The survey was conducted online, which means it’s statistically invalid by default, and the brief press release doesn’t say how Prof. Knight limited response to first-year students. Still, it’s interesting and the prof plans parallel studies in other countries.

The New York Times’ Nicholas Kristof last week touched off a debate over the value of personalized news. Kristof asserts that the trend toward filtered and personalized news creates “the reassuring womb of an echo chamber” in which people only listen to the opinions of others who agree with them. 

Eduardo Hauser, CEO and founder of DailyMe.com, begs to differ. His service, which has been around since 2005, co-mingles news filtered by professional editors with headlines self-selected by the reader. In this brief audio interview, he describes why personalized news creates a more informed consumer and creates a base for delivering a well-rounded mix of “need to know” with “want to know.”

Who’s going to provide this information? “It’ still going to be journalists,” says Hauser, who admits to being a “fanatic” about newspapers. But the medium of print is losing its appeal. “The news will still be created by journalists. They will have the ability to create their own audiences. I have faith in the profession of journalism; I have less faith in the traditional media of journalism.”

[audio:http://www.newspaperdeathwatch.com/wp-content/uploads/2009/03/daily_me.mp3] Length: 14:53

If you want an excellent summary of how bad it is in medialand, read Bob Garfield’s excellent overview on Advertising Age before it goes behind the subscription wall (If you’re too late, click here). The sky is falling, folks, and it’s not just for newspapers.

Garfield is the author of the forthcoming book, Chaos Scenario (right), and he’s obviously been doing his homework. Some stats from the story:

• In 2008, magazine newsstand sales fell 12%. They’ve dropped another 22% this year off of that awful base.
• TV Guide, the erstwhile 17 million-circulation goldmine, was sold in October to OpenGate Capital for $1, or $2 less than a copy at the supermarket checkout.
• “Bernstein Research predicts a 20% to 30% drop in 2009 TV station ad revenue.”
• “For the last reporting period, Nielsen Media Research said, CBS’s prime-time audience was down 2.9%, ABC’s down 9.7%, Fox down 17.5% and NBC down 14.3%.”
• “According to Media Dynamics, the average price of reaching 1,000 households with a 30-second spot in prime time, has jumped from $8.28 in 1986 to $22.65 in 2008 — but effectively more like $32, because between 150 and 200 of those 1000 households use DVRs to skip past the ads.”
• NBC Universal CEO Jeff Zucker recently admitted that he’s considering making NBC a cable channel. A CBS executive said much the same thing.

And why is this all happening? Quoting again:

“Today the average 14-year-old can create a global television network with applications that are built into her laptop…you have the ability to create virtually unlimited supply against what has been historically relatively stable demand.”

Economic Shift

And that’s the problem. Also the opportunity. The ad-supported revenue model presumed that advertising space was limited, but today it’s abundant and growing faster than the supply of people to consume it.

If your business is to sell expensive advertising on the theory that you control a narrow channel to the consumer, and then your business is being vaporized by information abundance.  This is the problem for mainstream media in general and it is the one that demands the most creative solutions.

Garfield quotes Philadelphia Newspapers LLC’s Brian Tierney ruing the failure of the free Internet model: “If you build it, they will come — I don’t think is working for media like ours. … I think we’re going to have to start to find a way to charge for it and not just rely on advertising.”

Advertising was a great business for many years when media was scarce and power was concentrated.  The mass democratization of media is sinking all businesses that rely upon that inefficiency.  The solution is not to continue doing more of what we’ve been doing but to deconstruct the centralized media model into something that looks more like the shape of this much flatter market.  The goal should not be to preserve newspapers or television networks or magazines or whatever.  It should be to preserve and enhance the quality of what they have long provided while finding a sustainable business model.

The Ann Arbor News, a newspaper that has served the Michigan city since 1835, will cease daily operations in July. The newspaper’s “business model is not sustainable,” said publisher Laurel Champion in a statement this morning. The paper will scale back to twice-weekly print frequency and move the bulk of its newsgathering operations online.

The news was apparently a surprise to the staffers who gathered in a first-floor conference room this morning. The staff “appeared dazed as they huddled in groups to discuss the news,” said a report on the newspaper’s website. “Ed Petykiewicz, editor of The News, looked visibly shaken as he paced the newsroom. Several times he could be seen removing his glasses to rub his eyes.” Petykiewicz had announced his retirement after 20 years with the paper last Friday.

Employees will be given the opportunity to apply for jobs at the online operation, but there will be an unspecified number of layoffs. Matt Kraner, formerly chief marketing officer of the Cleveland Plain Dealer, will be president and CEO of AnnArbor.com. Tony Dearing, former editor of the Flint Journal, will be chief content leader.

The Ann Arbor News claims a daily circulation of 46,657 and Sunday circulation of 58,413, according to the company’s media kit. The paper is owned by Advance Publications, Inc., which also own Condé Nast Publications, Parade Publications, Fairchild Publications, American City Business Journals, the Golf Digest Companies, and newspapers in more than 20 US cities.

You can read the publisher’s letter here.

Analysts are digging into the new owners of the San Diego Union-Tribune and trying to discern the investment firm’s intentions.

Tom Gores (San Diego U-T photo)

Sign-on San Diego fills in some of the information void surrounding Platinum Equity, the purchase of the site’s parent. Despite its low public profile, the company is actually the 19^th largest private employer in the US, according to a Forbes estimate. Its founder, Tom Gores (right), has been listed by Forbes as the 163rd-richest American, with a net worth of $2.5 billion. It raised $2.75 billion last year – which was quite a feat in this economy – for its investment activities. The U-T is the first newspaper the company has owned but it may not be the last. There have been media reports that the principals are also looking at the Austin American-Statesman. Most importantly for U-T employees, the story quotes Platinum principal Mark Barnhill saying Platinum isn’t in the game for a quick flip. “We don’t worry about exits,” Barnhill says. “We worry about getting in on the entry side and running businesses effectively.”

Ken Doctor isn’t so sure. In his view, the deal may be all about the real estate. Citing sources who say Platinum paid no more than $50 million for the U-T, whose value once exceeded a half billion dollars, Doctor says the value of the land alone could be north of $100 million. “We may have entered a new rocky period for newspaper companies,” he writes. “The real estate on which they sit determines their market value.” Doctor notes that the biggest buyout in the history of the industry – the acquisition of Tribune Co. in 2007 – was carried out by a real estate tycoon. And property is part of the value that investors are scrutinizing carefully in Miami and Maine.

Writing on Paid Content, Doctor observes that Platinum Equity specializes in high-tech companies, so what’s it doing with a newspaper? The strategic adviser the partners are bringing in – David Black – has done nothing of note with the Akron Beacon-Journal that he took over in 2006. “The Black ownership has been unremarkable,” Doctor writes. So what did Platinum buy? Property “That real estate under its building…may be a real motivator for the purchase,” he concludes.

Incidentally, Ken Doctor has an interview with Michelle Nicolosi, who’s the editor in charge of turning SeattlePI.com into a true Web publisher. She’s trying to boost the idea of aggregation and local focus, but Doctor points out that links to direct competitors are pretty thin in the first week. The collection of 150 reader blogs is impressive, though.

Power in the Mid-Market

The Deal Journal blog at WSJ.com has an intriguing interview with Jonathan Knee, an investment banker who specializes in the media industry and who advised on the U-T buy. He has some intriguing insights that go well beyond the “industry is dying” conventional wisdom. Working from the premise that “within the pantheon of media sectors, the newspaper business is actually still one of the better ones,” Knee argues that the bloated cost structures that newspapers developed during times of plenty actually make them good candidates to endure the cost cuts they’re having to make right now, simply because there’s so much excess to cut. Furthermore, he argues, mid-market dailies are actually in a great position to harvest their monopoly positions and remain profitable for some time to come.

The secret: outsource whatever isn’t necessary to serve your local community. Then serve that local community very well. Don’t try to be bigger than what you are. Those boring local markets will “continue to generate…better profits than the supersexy businesses in the media industry asking for government or nonprofit help like movies and music.” Considering that small-market dailies have been considered the most at-risk properties in the business, Knee’s counter-intuitive views are worth reading.

Happy Birthday to Us

Today is Newspaper Death Watch’s second birthday (you can read our modest first entry here) and it’s been quite a ride. We started out by documenting the downsizing that was just beginning to occur in the business two years ago but quickly found ourselves engaged in more interesting issues like the future of news. Since 3/23/07 we’ve logged 382 entries and 528 comments, many from journalists who are being caught up in the cost-cutting. Last week we averaged over 2,000 daily page views and Technorati has us in the top 12,000 blogs worldwide. We’ve been profiled in Spain’s largest newspaper, interviewed on NPR,  traded views with Guardian Angels founder Curtis Sliwa on talk radio, and sourced on local TV in Sacramento.  We were also just interviewed by CNN.com for an upcoming feature on the transformation in the newspaper industry.

Two years ago, we published a book called The New Influencers that argued that the ability of individuals to publish to a global audience would disrupt the economics of media and transform our institutions. Since then, we’ve been living that idea.

Layoff Log

• Collateral damage: the Denver Newspaper Agency, which handled business operations for both the Post and the Rocky Mountain News, will idle 200 people as a result of the Rocky‘s closure. The news account says that’s 17% of the agency’s 850-person staff, but our calculator says it’s really 23%. The jobs aren’t needed any more without a paper to support.
• I turns out he Buffalo News won’t be laying off “dozens of employees” as ws feared a week ago. A deal with the Newspaper Guild succeeds in achieving targeted cuts of $2.9 million through a combination of wage reductions and givebacks. Still, nine people will lose their jobs.
• The Orange County Register had six rounds of layoffs last year and is promising more soon. No details on how many jobs will be lost.
• The Dayton Daily News cut 10 sales staff.
• The Skagit (Wash.) Valley Herald has laid off four people, including the editor-in-chief.
• The News-Gazette of central Illinois has been publishing both morning and afternoon editions on weekdays, but beginning June 1, it will publish ditch the afternoon edition. Elimination of an entire issue will save 1% in operating costs. Huh?

And Finally…

What would you do if your newspaper closed? Consider a career in local government. The New York Times profiles Michael Hanke, a veteran newspaperman from Canton, Ohio, who lovingly covered his hometown for more than 35 years before being laid off in a cost-cutting move two years ago. It could have been a sad story, but there’s a happy twist: Hanke is now a county administrator, where he works side-by-side with some of the people he used to criticize in his newspaper columns. And they’re tickled pink to work with him. It turns out that reporters are naturally inquisitive, resourceful and knowledgeable. “We got a real bargain when we hired Mike Hanke,” says Jane Vignos, the board president who selected him from among 70 candidates.

The week started depressingly with the demise of the Seattle Post-Intelligencer and then brightened with the emergence of a rescue plan for the San Diego Union-Tribune. We’d like to close it out with an inspiring view of the future by Steven Berlin Johnson, founder of the hyperlocal community site, outside.in.

Speaking at the South by Southwest conference last week, Johnson delivered one of the most cogent and optimistic perspectives on the future of journalism that we’ve ever read. His essay builds upon Clay Shirky’s excellent discussion last week of why revolutions are messy but necessary. Johnson does it by pointing to two of the most mature information ecosystems of the online world – technology and politics – and contrasting the state of media today to that of 20 years ago.

There is no comparison. As an Apple Mac fan from the early days, Johnson used to wait at the local newsstand for each issue of Macworld magazine to arrive. In the late 1980s, “It might have taken months for details from a John Sculley keynote to make to the College Hill Bookstore; now the lag is seconds, with dozens of people liveblogging every passing phrase from a Jobs speech. There are 8,000-word dissections of each new release of OS X at Ars Technica, written with attention to detail and technical sophistication that far exceeds anything a traditional newspaper would ever attempt.” Even Macworld, which used to dispense news only once a month, “published twenty-six different articles on Apple-related topics yesterday.”

24X7 Politics

The political sphere is also booming with information. Barack Obama’s controversial race speech in Philadelphia was seen in its entirety by 8 million people online. In 1992, “It would have been reduced to a minute-long soundbite on the evening news. CNN probably would have aired it live, which might have meant that 500,000 people caught it.” Not only was the entire presidential campaign live-blogged, but it was covered by a swarm of interested Web publishers who dissected every event and issue. And by the way, Web users all had access to a bounty of information directly from both candidates. Two decades ago, such details were hard to get and they were mostly summarized and passed through the filter of the local newspaper.

Johnson asserts that the transformation that has already taken place in technology and political news will spread into other domains as well. While praising The New York Times, he notes that a big paper can’t be all things to all people. “Every week in my [Brooklyn] neighborhood there are easily twenty stories that I would be interested in reading: a mugging three blocks from my house; a new deli opening; a house sale; the baseball team at my kid’s school winning a big game. The New York Times can’t cover those things in a print paper not because of some journalistic failing on their part, but rather because the economics are all wrong.”

Johnson says he gets that local news from blogs like Brownstoner, which is one of nearly 2,000 blogs focused on Brooklyn.

Future in Aggregation

Is there a future for professional news organizations in all this? Absolutely, Johnson asserts. “If they embrace this role as an authoritative guide to the entire ecosystem of news, if they stop paying for content that the web is already generating on its own, I suspect in the long run they will be as sustainable and as vital as they have ever been. The implied motto of every paper in the country should be: all the news that’s fit to link.” And this will open the door for new organizations to step in with the international coverage that is unquestionably threatened as traditional newspapers decline.

Johnson’s use of the mature new-media markets of technology and politics is an innovative approach to envisioning a future for professional news gathering, one in which aggregation and interpretation trump original reporting. With millions of enthusiasts now providing front-lines coverage, the new role of professional journalists will be to organize and make sense of it all. This doesn’t make them any less important than they are today. They’ll just deliver a different kind of value.

Layoff Log

In the meantime, though, the transformation takes its toll:

• The Minneapolis Star Tribune, already languishing in bankruptcy, is laboriously negotiation cost cuts with its unions in an effort to save $20 million in annual expenses. Its 116-employee pressmen’s union just approved contract revisions that will result in wage reductions, 24 layoffs and reduced staffing on the presses. Next up are negotiations with delivery and newsroom unions.
• The Memphis Commercial Appeal is cutting 19 newsroom jobs. No word on whether additional reductions are hitting other departments.
• McClatchy papers continue to cut jobs, working toward a corporate goal of 1,600 reductions, but McClatchy Watch says it isn’t going to happen. “Unless it plans to shut down a couple of its papers, McClatchy will not come anywhere near laying off 1,600 employees,” the site says, and it has title-by-title numbers to prove it. However, commenters don’t entirely agree. A lively debate over the blog’s estimates ensues, along with a side argument over stylistic issues, which seems to crop up frequently when journalists disagree. Meanwhile, the site reports on recent layoffs: 47 in Anchorage, 20 in Columbus, 14 in Lexington and 10 in Modesto. The Idaho Statesman is also laying off 25 people and imposing salary cuts.
• Three staffers are gone at the Las Cruces Sun-News. One of them is “the typist who transcribes calls to Sound Off!” We hope that’s not a full-time job.
• Morris Communications has managed to avoid layoffs so far, but it’s is cutting staff salaries 5% to 10% at all its properties, including the Amarillo Globe-News.

And Finally…

In times of trouble, people now have a new way to commiserate and cooperate: Facebook. A new group called Newspaper Escape Plan has been hatched to enable laid-off journalists to pull together and share job-hunting tips and gossip about the business. You can go there to learn about services like Publish2, which is a social bookmarking service for journalists.  Follow it on Twitter.

The AP posted this sobering photo of discarded newspaper racks languishing in a San Francisco junkyard.

The pending purchase of the San Diego Union-Tribune by a private equity firm opens an interesting new chapter in the newspaper industry’s history. Not much is known about Platinum Equity other than the company has completed more than 100 acquisitions in the last 15 years and one of its partners is a successful newspaper owner. For a company that has spent $27.5 billion on acquisitions, it’s website is almost defiantly sparse, as if to reinforce that it doesn’t have to tell anybody anything it doesn’t want to.

Based on our experience with similar takeovers in the past, here’s a short FAQ of what we think you can expect. Also be sure to check out Alan Mutter’s analysis for the views of a professional investor.

What’s a private equity firm?

It’s basically a group of rich people who pool their money and invest in companies that they think are undervalued. They bring their expertise to bear to quickly grow the value of the assets they acquire and then sell them, hopefully at a substantial profit. There are a lot of private equity companies out there, but you don’t hear much about them because they prefer to work in the background and they’re largely unregulated.

Why did this one buy the Union-Tribune?

For starters, it probably got a great price. Private equity firms look to unlock asset value and Platinum Equity must believe that it can quickly make changes that will substantially increase the value of the paper. What those changes are is still unknown.  Because private equity firms don’t have to tap into the lending market to any great degree, they are among the few institutions that are capitalized to make big purchases right now. That’s another reason we can presume they got a great price.

Platinum Equity would not have bought the Union-Tribune unless the partners believed that the business was undervalued.  That’s another indication that perhaps the market has hit bottom.  The big question is what changes the partners believe they have to make to increase the value of the asset.  That’s going to be the really interesting question

So what’s going to happen now?

In the short term, not much.  The new owners will spend the next couple of months on paperwork to get the deal done. However, things are likely to happen pretty quickly after that.

The partners in these private equity firms are usually decisive, no-nonsense people who don’t fear making tough decisions.  It’s likely there will be downsizing and probably a lot of it since the new owners don’t have the sentimental attachments of the current owners.  One thing is for sure: the new owners will treat the Union-Tribune as a business and probably a short-term business at that.  Professional investment firms rarely work on timelines of more than three to five years.  If they haven’t sold the business and doubled their money by that time, the deal is considered a failure

Is this good for the Union-Tribune? 

It probably is. Platinum Equity spokesman Louis Samson said the right things in endorsing the value of the Union-Tribune brand: “We will bring a strong operational focus that helps ensure the Union-Tribune not only survives in this market, but thrives.”  This is good news, because professional investors are as likely carve up and destroy a company as readily as they can build one.  It appears that the new owners are focused on stabilizing and supporting the brand, but that doesn’t mean they will avoid hard decisions.   It should be noted, by the way, that the company’s press release about the acquisition makes no reference to continuing the Union-Tribune s as a newspaper

Is this good for the newspaper industry?

Yes, because it is one sign that the market has become attractive again. With the exception of a few small papers in Connecticut, nobody has bought a major newspaper in over a year.  The fact that someone finally did buy one may open the door for other investors to come forward. 

Platinum Equity’s moves  certainly will be closely watched.   It will also be interesting to see how a professional investment firm treats its new asset.  While Platinum Equity has some experience in the market in the person of partner David Black, it is not a professional publisher.  The partners will be looking at the Union-Tribune as an asset and trying to maximize the value of the asset.  In other words, their minds won’t be clouded by assumptions of what a newspaper should be.  It will be just a business to them.  Since the problems in the newspaper industry are fundamentally business problems, it will be interesting to watch what a professional management firm does to solve them.

What would you do if you were an employee of the Union-Tribune right now?

I’d think hard about how to justify my value to the organization, not in terms of my length of service or number of awards but rather relative to the company’s bottom line.  When business managers with no newspaper background took over at Tribune Co., they started measuring journalist productivity by column inches of copy.  The new owners at the Union-Tribune probably aren’t that dense, but they will almost certainly take a financial analyst’s approach to managing the operation.  Employees who can’t demonstrate why they are critical to the business will be most at risk, as will those who carry  the highest salaries.