Editor & Publisher looks at the list of solutions being proposed to the newspaper industry’s troubles and adds a new one into the mix: the Low-Profit Limited Liability Company, or L3C. An L3C “is a corporation that qualifies as a charity under IRS rules but runs as a for-profit business,” Mark Fitzgerald explains, and it’s gathering momentum as a rescue strategy among various chapters of the Newspaper Guild.

That’s right: The Newspaper Guild may get into the business of running newspapers, if only to save its membership from annihilation. An L3C is allowed to take investments from charities and nonprofits because it has a “social benefit.” This new kind of nonprofit is now permitted in several states and the Guild “is lobbying for federal legislation – expected to be introduced later this spring – that would explicitly include newspapers among businesses that have a ‘social benefit.'”  

Apparently, the thinking is that a lot of newspapers are going to come on the market selling at pennies on the dollar this year and this new tax structure would allow owners to spread out ownership among a great many entities, including businesses like printing press makers and auto dealers who have a vested interest in maintaining the business. Foundations would also be able to treat their donations as investments that could earn a return.

Another school of thought is to tear down antitrust rules that prevent newspapers from cooperating on fixing prices, E&P says. This could be a solution to the “content wants to be free” problem: If newspaper owners can legally collude to set prices and licensing fees for their content, then they can conceivably reverse the tide and charge for their product.

One thread is clear throughout the feature, though: No one is seriously arguing that newspapers should be publicly supported like National Public Radio. The consensus among owners and even Guild officials is that these businesses must stand on their own.

BTW, this story was just put online on April 1 after first appearing in E&P‘s print edition in March.

Sun-Times Parent is Bankrupt

Sun-Times Media Group, Inc. (STMG), which operates 59 newspapers and websites, including the Chicago Sun-Times, filed for bankruptcy on Tuesday. The company has been under severe financial and competitive pressure and was weakened by a fraud scandal that landed two previous executives in jail. Chairman and interim CEO Jeremy Halbreich said the company is looking at possible asset sales and new investments, and that it has sufficient resources to work through the bankruptcy process.

The Toronto Globe and Mail looks deeper into STMG’s financial situation and the ripple effect of the 2007 fraud convictions. Last year, the company lost $344-million on revenue of $324-million, as advertising revenue fell 18 per cent in the fourth quarter and is expected to drop 30 per cent in 2009. What’s more, STMG is contractually obligated to pay the former executives’ legal costs, which total $118 million so far. To top it all off, it may face a $510 million tax obligation as a consequence of illegal deductions those executives took.

Dour Pew Report Nevertheless Offers Hope

“This is the sixth edition of our annual report on the State of the News Media in the United States. It is also the bleakest,” reads the introduction to The Project for Excellence in Journalism’s annual State of the News Media report. It certainly delivers on that promise. We haven’t read all 180,000 words, nor are we likely to, but you can start with the executive summary if you want to dive in yourself.

The media overall had a terrible year in 2008 with the newspaper and magazine segments being hit the hardest and the cable TV industry providing the single bright spot. Cable networks actually increased their newsroom investments by an average of 7% during the year, with CNN adding bureaus in 10 cities. This modest growth wasn’t nearly enough to make up for the huge cost cuts in other media, though. By the end of 2008, all three TV networks had pulled their embedded reporters from Iraq. Newspaper circulations continued to decline; Sunday readership is off 17% since 2001.

The biggest disaster was in news magazines, with only one in four Americans reporting they’ve read one the day before. Time, which invented the genre, may be the only one left pretty soon, the report says.

Public trust in media dropped, but historical data shows that this trend is erratic. Interestingly, a vast majority of Americans (70%) believe the media favored Barack Obama in the most recent election. Even a majority of Democrats believe that.

Newspapers are in “free fall,” the report concludes, although “We still do not subscribe to the theory that the death of the industry is imminent. The industry over all in 2008 remained profitable,” turned in revenues of $38 billion and employed 45,000 professionals gathering and editing the news. There is reason to believe that traditional walls between online and print are falling and that newspapers are figuring out how to monetize targeted audience segments. They also appear to be much more open to working with aggregators and partners.

Still, the long-term outlook continues to be dim because of the economy, debt pressure and the unwillingness of investors to spend money in mature markets. The value that papers provide, though, is only increasing in importance. “In what traditionalists tend to dismiss as a cacophony of talking heads, celebrity infotainment, opinion-driven blogosphere exchanges and information overload, the integrity and sense-making of professionally done news should be more valuable than ever.”

The report also has an interesting section analyzing the practices and credibility of citizen media. It features an update of an earlier report that audited 64 citizen news sites. The new research should provide some comfort to established news organizations because it finds that, in general, they do a better job of incorporating citizen voices into their coverage than pure grassroots citizen operations. In particular, legacy news organizations are better at giving citizens a voice in published content and making it easy for readers to download and share information. In fact, the only area in which mainstream media’s citizen journalism ventures failed to outshine the grassroots sites was in linking to competitors’ content.

Finally, the report includes profiles of several new media ventures, ranging from NewHavenIndependent.org to MinnPost.com to GlobalPost.com.

Miscellany

The San Francisco Chronicle‘s buyout offer has 120 takers, which is more than was expected. As a result, the involuntary layoff total won’t be as high as many had feared. The newspaper management has been working with the union to restructure its contract. Even with the buyout, remaining employees will still see pay cuts and longer hours.

The Livingston County (Mich.) Daily Press & Argus has announced a “significant but unspecified number of layoffs” in its 95-employee workforce. Management would only say that the number was more than 10 and included Managing Editor Maria Stuart.

The Staunton (Va.) Daily News Leader will cut eight full-time employees and 15 part-timers from a workforce of unspecified size. Just one day earlier, the paper said it would outsource its printing operations to the Harrisonburg Daily News-Record. Laid-off employees include “press operators, mailroom workers and other employees charged with the production side of printing the paper every day.”

If you’re in Eugene, Oregon this afternoon, you can stop by the university at 4 p.m. and hear Boston Globe editor Martin Baron talk about the challenges facing newspapers, presumably including his own. The Globe laid off another 50 people last week.

Amid all the hand-wringing about the lack of new-media alternatives to newspapers, the online-only Huffington Post is setting up a small investigative unit to examine the nation’s economy. The news site is collaborating with The Atlantic Philanthropies and others to launch the Huffington Post Investigative Fund with an initial budget of $1.75 million and plans to hire 10 investigative journalists who will primarily coordinate work done by freelancers. “All of us increasingly have to look at different ways to save investigative journalism,” said founder Ariana Huffington (left). She added that the fund will probably hire laid-off newspaper journalists.

Everything the venture produces will be available free for any publication or website to publish. While the group’s initial focus will be on the economy, the founders intend to cover a wide range of topics over time. Content won’t reflect HuffPo’s left-leaning politics because the philanthropic funding requires a neutral perspective. Jay Rosen, who will advise the project, has more detail on his blog.

Critics find a hint of irony in Huffington’s journalism bailout plan. Joseph Tartakoff notes that “Some traditional media outlets have previously accused the HuffPo of stealing their content. The Chicago Reader, for instance, charged Huffington Post with ‘grand theft‘ after it reprinted one of the publication’s articles wholesale on its site.” HuffPo practices a new style of journalism with a small staff of reporters and links to other sources aggressively from its home page.

Jeff Jarvis likes the HuffPo idea and suggests that $1.75 million can go a lot farther than one might think. He evokes the “1% rule” of online communities, which is that 1% of the people create the content that the other 99% consume and discuss. “You need only a limited number of contributors to support great things in a gift economy. See: Wikipedia and NPR,” Jarvis writes.

John Yemma would probably agree. As his publication, the Christian Science Monitor, goes Web-mostly, the editor (right) has launched a blog that he hopes will be “a place to talk about the changes in media.” In his second entry, he compares the crowd-sourced Wikipedia model to the closed Encarta and Britannica products. “General knowledge…can’t withstand an effort that was developed specifically for the Internet and that harnesses gifted amateurs,” he writes. And he issues a warning to newspapers about putting content behind a pay wall, as Britannica and Encarta did. “The Web is its own universe with its own rules,” he writes. Such new-media thinking from a veteran print journalist indicates that the Monitor experiment will be an interesting one to watch.

Debating the Value of Newspapers to Democracy

Slate’s Jack Shafer takes a dim view of the idea that newspapers are essential to democracy. Before the current crisis, he writes, people mostly complained about the lousy job newspapers did of getting the facts straight and delivering balanced coverage. Now that the medium is failing, newspapers have been “reduced to a compulsory cheat sheet for democracy. All this lovey-dovey about how essential newspapers are to civic life and the political process makes me nostalgic for the days, not all that long ago, when everybody hated them.”

17th Century Newspaper

Shafer points out that when Thomas Jefferson said he preferred newspapers without government to government without newspapers, he wasn’t talking about the broadsheets we know today. Newspapers in Jefferson’s time were baldly partisan and often skewed the facts to suit their views. How did people figure out the truth when each journal had its own version of the truth? They triangulated, they checked other sources and they figured it out. This worked okay up until about 50 years ago, when newspapers decided to become the arbiters of truth. That’s convenient, but it doesn’t mean we can’t go back to a form that the founding fathers believed was essential to democracy.

The idea that many small contributions can out-produce a few big ones is nicely articulated by Timothy Lee on TechDirt. In order to understand how journalism can be reinvented, you need to discard the notion that only monolithic, vertically integrated organizations can cover the news. “The Internet makes possible a much more decentralized model, in which lots of different people, most of them volunteers, participate in the process of gathering and filtering the news,” he writes. “If millions of people each contribute small amounts of time to this kind of decentralized information-gathering, they can collectively do much of the work that used to be done by professional reporters and editors.”

If you’re geeky enough, you’ll recognize the open-source software model in this thinking. The most powerful force ever to come along in software development depends upon teams of loosely-organized developers each contributing a little bit of their time to building software that anyone can use for free. No, journalism isn’t software development, and there are certain practices of journalism that can’t be duplicated by a person sitting at a desk in India. However, Lee suggests that if the gadflies who already hang around city council meetings start reporting upon them on their blogs, then the community effect can take over to turn that amateur reportage into real journalism. You don’t need professional reporters for everything.

Jon Talton begs to differ. In an angry and resentful blog entry, he derides the idea that grass-roots efforts can ever replace the depth and credibility of what professional journalism organizations produce. Special interests, “will all have stronger voices for their agendas. Manias, rumors and groupthink will be more prevelant. In many localities, people will be particularly ill-informed about their government and major economic powers, pluralism will decrease and corruption will rise,” he writes. After that, we suppose, come the locusts.

Miscellany

Media General is cutting back again in Florida, saying there are no signs yet that the economy is picking up. Its Florida Communications Group cut 53 jobs, eliminated 12 vacant positions, closed two niche publications and added three more days of unpaid furlough to the 10 that employees were already required to take.

Back in the early days of the Web, some newspapers were criticized for withholding information from their websites until the stories had already appeared in print. Now that times have changed, the Minneapolis Star Tribune is being labeled a visionary for doing the same thing. The Strib has enjoyed good success online despite its small-market roots, so the paper is gambling that it can entice readers to become print subscribers by withholding some deep investigative reporting from the website. “The best of our deep, exclusive content will be available online later in the week, unless we have a compelling reason to post it sooner,” wrote editor Nancy Barnes in a letter to readers.

The Boston Herald laid off 12 people, or 6% of its workforce.

The Associated Press has a great list of “daily newspapers that have reduced publication days since last year.” In reality, many of the papers on the list were not technically dailies to begin with, but all publish at least five days a week.  It looks like Mondays, Tuesdays and Saturdays are the most popular days to cut.

Asserting that the collapse of mainstream media demands the same urgency as “the threat of terrorism, pandemic, financial collapse or climate change,” two authors of a forthcoming book called Saving Journalism propose massive government intervention in the journalism crisis. Writing in the liberal journal The Nation, John Nichols and Robert McChesney say the recent debates over micro-payments and nonprofit funding is all well-intentioned, but these rescue scenarios don’t address the serious structural problems the US media faces. In essence, the public watchdog function is vanishing with nothing to replace it.

Media Post chart

This trend isn’t new; cost-cutting in the newsroom began in the 1970s when media tycoons began to form quasi-monopolies under the umbrella of government protection. Today, the media is a pathetic shadow of its former self, doing “almost no investigation into where the trillions of public dollars being spent by the Federal Reserve and Treasury are going but spar[ing] not a moment to update us on the ‘Octomom,'” the authors write.

Government already subsidizes media to the tune of tens of billions of dollars annually through mailing discounts, government advertising, monopoly broadcast, cable and satellite licenses and copyright protection. However, private interests have taken advantage of those subsidies to create wealth, and in the process are destroying the services they provide the public, Nichols and McChesney assert.

And they get specific about what needs to be done:

• Eliminate postage for periodicals that get less than 20% of their revenues from advertising;
• Give all Americans an annual tax credit for the first $200 they spend on daily newspapers or online sources that meet certain quality criteria;
• Allocate funds to enable every middle school, high school and college to have a well-funded student newspaper, a low-power FM radio station and accompanying substantial websites.

Face it: The old system is collapsing and won’t be resurrected, they say. We are entering a world in which government abuse and corporate greed will run rampant because no one is watching over the abusers. The business media completely misled the public about what was happening in Iraq and completely missed signs of financial disaster. And that was before 20,000 more journalists lost their jobs.

Although you need to take the left-wing source into account, this article is a pretty compelling argument for government intervention.  It is particularly chilling in its description of the impact that media cutbacks have already had on the public’s ability to understand the financial crisis and its own legislators’ actions.  The authors maintain that the estimated $20 billion cost of their proposal is a drop in the bucket compared to the amount being spent on the financial bailout.  The stretch may be in equating the urgency of the two problems.

Uphill Climb

Stewart: Millennials' Cronkite?

The Nation will have a battle convincing a skeptical American public that government support is the answer. Recent data from Rasmussen Reports paints a picture of a public that is largely disengaged from traditional media institutions while increasingly deriving its news from entertainment. A telephone survey of 1,000 Americans early this month found that 30% overall read a daily newspaper, but among respondents under 40, that percentage was only half as large. The survey also showed that newspaper websites have less “stickiness” than a product that arrives at the front door each day. Only 8% of US adults say they read their local paper’s website every day.

Meanwhile, one-third of Americans under 40 say Comedy Central’s Daily Show and Colbert Report are replacing traditional news outlets, which is slightly more than the 24% of Americans overall who think this is true. And there’s a popular opinion that this is a  good thing. “Thirty-nine percent of adults say programs of this nature are making Americans more informed about news events, while 21% believe they make people less informed,” the report says. Interestingly, Democrats are much more inclined to share this positive view than Republicans, by a margin of 48% to 28%.

Miscellany

The New York Times Co. imposed temporary 5% pay cuts for most employees in hopes of avoiding cuts to the newsroom staff.  Nevertheless, the Times also laid off 100 people in its business operations and said it would reduce freelancer spending and possibly consolidate some sections.  The pay cuts are subject to union agreement. Times management threatened to lay off 60 to 70 people out of its 1,300-person news staff if the union doesn’t concur.  The Times Co. cited an overall drop in advertising revenue of 13.1% in 2008 and 17.6% in the fourth quarter.  The pay reductions were described as temporary.  Salaries will revert to their previous level next year unless economic conditions improve fail to improve.  The company has already laid off more than 500 people this year.

The recession has clearly taken hold in the advertising business and the result is likely to be “the closing of more big regional daily newspapers and bankruptcy declarations from even more big publishers,” according to Media Post. Fourth-quarter 2008 results were a disaster, and that’s coming on top of two years of declines that seemed to get worse with each quarter. Newspaper classified advertising fell 39.2% overall in the quarter, with job-recruitment advertising plunging nearly 52%. Perhaps more ominous is that online revenue at newspaper sites was off  8% in the quarter, although online advertising is weak across the board right now.

The Rockingham News of southern New Hampshire has just published its final edition, and the weekly that has served the region for more than 40 years offers quite a lesson in its own history. Aubrey Bracco must have interviewed a couple of dozen local residents to get their recollections of what the paper meant to them, and he pens a loving and informative farewell.

Mike Hughes, president and creative director at the Martin Agency, pens an impassioned plea to his colleagues to support newspapers with their advertising dollars. “Our industry needs newspapers — but just as important, so does humankind,” he writes.  So stop following the latest trend and putting your advertising in the trendiest places.  “How many agencies aren’t selling newspaper advertising to their clients as hard as they should? It’s time for a wake-up call.” It’s an invigorating argument until you read the bio and see that Hughes’ employer is the “agency of record for the Newspaper Association of America.”

Writing on Mashable, Woody Lewis lists five ways newspapers can embrace social media more effectively. He notes that The New York Times now has an application programming interface that third parties can use to access its content from their programs. This is a cool idea. He also says partnerships with strong technology partners are a good idea.

Jay Rosen lists a dozen articles about journalism that he really thinks you should read, although we can’t fathom his top pick: Paul Starr’s laborious New Republic epic. Many of the others are excellent, though, and a few we hadn’t seen before.

And Finally…

We were thrilled to be included among the “Death of Newspapers” bloggers cited by Paul Dailing in Huffington Post. We agree with him that our self-absorbed, righteously indignant, told-you-so attitude is crap and that we have no answers to the problems facing the industry. We encourage you to boycott our book (available in fine bookstores everywhere) in support of his position. We should be ashamed of ourselves.

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.

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.

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.

It ain’t over yet for the Tucson Citizen.  The struggling Arizona paper was set to close on Saturday — and had even prepared a farewell edition — but now two prospective buyers have emerged and Gannett Co. has announced that the Citizen will continue to publish on a “day-to-day basis” until negotiations are completed.

Talks are in progress with two “very interested buyers,” according to Robert Dickey, president of U.S. Community Publishing for Gannett Co. in a memo to staffers. Reporter Renee Horton dug up the name of one likely party: Santa Monica Media Corp., a “blank check company” that exists solely to perform mergers and acquisitions.

Staffers were stunned by the news, since many have already landed new jobs or had made plans for how to spend the severance they were promised.  About 25 of the paper’s 65 employees would have been eligible for at least 20 weeks of pay under the severance deal, according to the story in the Citizen.  Several staffers were none too pleased about the news.

Randy Harris, a staff artist who presumably is not looking forward to continuing his employment at the paper, said the news was “just one more instance where they are screwing us over one last time.”

More coverage by the Associated Press.

Representatives from a Who’s Who of major newspapers will gather on Saturday for a daylong event in Washington focused on finding new revenue solutions to the newspaper crisis.

Calling itself Revenue Two Point Zero, the group says it’s fed up with all the talk and  is going to focus on solutions.  “We reject the belief that media companies should pursue models based on pay-for-content plans or philanthropy,” the group’s manifesto says.  “Instead, we believe the best hope for media companies to make money is the old-fashioned way — by earning it from advertising.”

The group has several examples of how it hopes to do this, including mobile advertising, better classifieds and a stronger appeal to small businesses.  About 20 representatives of major publications will be there, and the Society for News Design has joined the parade. A post on the society’s blog asks people to volunteer criticism, comments and inspiration in the spirit that “everyone in the industry agrees that radical changes needed.”  You can follow the action via tweets from Logan Molen, VP of Interactive Media at the Bakersfield Californian. He’s at rev2oh.

New Ideas

Speaking of Bakersfield, the Californian is the lead in a BusinessWeek story about how newspapers are trying to develop new revenue streams.  In an industry where nearly everyone is sinking, the Californian is actually growing.  One of the secrets is Baktopia.com, an online social network aimed at young people that publishes the best of the Web in print.  “Advertisers pay full rate,” says the company’s digital products manager.

The story further talks about the Californian‘s launch of Printcasting.com, a Web venture that lets anybody create a digital magazine.  The best stuff is turned into a print publication supported by advertising. Money in print? It’s true.

The rest of the BusinessWeek article mainly covers companies and technologies we’ve written about here before, including blog aggregator Outside.in, micro-payments start up Kachingle and community content provider Helium.  Almost no one quoted in the article is actually making much money with these ventures, but at least they’re thinking differently. That counts for a lot these days.

Seattle Times Still In Deep Weeds

You’d think the closure of its largest rival would be a boost to the Seattle Times, but Seattle’s other paper is still struggling to make ends meet. That news comes from Doug Henderson, an economist with the Joint Council of Teamsters No. 28, who was allowed to have a look at the paper’s financial data available as part of the owner’s request to slash 12% of its workforce. Henderson said that despite having already laid off 25% of its employees, the Times‘ “financial status is still serious” and it “needs to consider either selling off some operations or shutter some. However, with the economic climate being in utter chaos, the opportunity to sell any type of operation is very slim.”

The news should come as no surprise to surveyors of the Seattle scene. The Times‘ financial position is so perilous that many people were surprised when it was the Post-Intelligencer that  pulled the plug. The Blethen family, which owns the Times, has been unable to sell a money-losing chain of newspapers in Maine. Less than three months ago, Senior Vice President Alayne Fardella admitted that the company’s situation is “dire,” and added that “It has been and continues to be a long and difficult fight for our survival.”

Miscellany

News & Observer Publishing Co. said it will lay off 27 people in the Raleigh News & Observer newsroom, reduce wages and implement unpaid furloughs as part of an overall reduction of  11 percent of its work force, or 78 people. Management added that the N&O will also “increase cooperation with the Charlotte [Observer] newspaper and will speed its transition to a narrower format to save on production costs.” Both the Raleigh and Charlotte papers are owned by McClatchy. The local ABC affiliate has a news story about the N&O’s problems bluntly titled “N&O struggles to survive.”  Says reporter Larry Stogner: “No one wants to talk about when the ax will fall again – and on whose neck.” Managing Editor John Drescher says a subscription model to the paper’s website is under consideration.

Former Flint Journal reporter Jim Smith said last week that publishers at the Flint Journal, Bay City Times and Saginaw News were are expected to call together their staffs this week to announce:

• They’ll reduce the publishing schedule to three days a week: Tuesday, Thursday and Sunday;
• They won’t honor a “lifetime” employment pledge of parent companies Newhouse Newspapers and Booth Newspapers;
• An unspecified number of layoffs;
• Reduced pay and benefits for remaining employees;
• Consolidation of printing and copy desk functions and content-sharing among the three titles.

No word yet on whether Smith is right.

And Finally…

We don’t know who’s behind Criggo.com – the owner’s name is disguised and the site is registered to a fax number in Los Angeles – but we hope he or she never stops tending the site. Even as classified advertising has shriveled, newspaper ads continue to deliver a seemingly unending stream of entertaining and bizarre humor. Very often, what’s funny isn’t the double entendres or typos; it’s in the fascinating stories that must underly these truncated missives to the world. Aren’t you just dying to know what’s going on behind closed doors at the house that placed this ad?