About the only positive note in McClatchy Co.’s announcement that it will cut another 1,150 jobs is that the year-over-year decline in August revenues was a little better than in July. Other than that, what can you say? The stock, which closed at 60 as recently as early 2006, spiked briefly below $3 a share yesterday before recovering to close at $3.40. This is the third round of cost reductions this year by McClatchy, which operates 30 daily papers in the US. In June, it announced plans to cut its workforce by 1,400 people and on Sept. 1, it froze wages for a year. When the new cuts are completed, McClatchy will have reduced its workforce by about 16% this year. The company also cut its dividend for the first time in 20 years, saying that money would be better used to pay down its $2 billion debt.

There was a bit of good news. August revenue fell 15.7 percent from a year earlier to $142.8 million, and ad  sales were down 17.8 percent. This was a bit of an improvement over July, when revenue fell 16.4 percent. Online ad revenue was also up 7.4%, bucking an alarming recent trend toward declines in that critical area for many newspaper companies.

Troubles at a newspaper parent are felt most strongly at the local level. The Sacramento Bee expects to avoid being hit by this latest round of layoffs, but it is eliminating nine regional sections and scaling back newsstand sales. The Bee has already cut 219 employees, or nearly 10% of its workforce, this year.

Another company that’s struggling to survive, Cox Newspapers, said it will sell 29 newspapers, including the Austin American-Statesman. The Austin paper is one of the jewels in the Cox crown, showing consistent profitability and strong online growth. The paper has pared headcount judiciously and has expanded into contract printing and direct mail. Hearst Corp. and private equity firm Austin Ventures.

The piece in the American-Statesman has some interesting tidbits. According to media analyst John Morton, publicly traded newspapers made a pre-tax average of 22 cents for every dollar of sales in 2003. In comparison, Dell Computer  made about 5 cents on the dollar in its most recent quarter. Morton also said a rule of thumb for valuing a newspaper is $2,000 multiplied by the average daily circulation over a week. However, that ratio is probably much lower in the current economic climate. He added that five years ago, a newspaper typically sold at 12 or 13 times its pre-tax earnings, but that ratio is in the 5- to 7-times-earnings range today. 

The news was not as good at Gannett Co., which reported that ad revenues in  its publishing division were down  16.8% in August compared to last year. Repeating a familiar refrain, Gannett blamed the declines on a sharp drop in classified advertising revenue, which was down 28%. Real-estate advertising was off a mind-bending 40%, a figure that isn’t likely to improve amid the ongoing meltdown in the mortgage industry.

WSJ Evolves its Design

With online subscribership up 26% over the past two years and a growing base of visitors from social networks, The Wall Street Journal overhauled its website design this week. The most notable change is a departure from the print-like look of previous versions. The new site is horizontal, rather than vertical, and adopts the three-column structure used by USA Today and The Washington Post. One notable change is that all stories are now open to reader comments, a feature that was previously available only on blog entries. Each story now includes tabs for comments and multimedia elements, such as slide shows and video. There’s also a social network called Journal Community that mimics similar efforts by BusinessWeek and Fast Company.

Wired  likes the new look, but notes that the Journal still hasn’t bitten the bullet on giving away content for free. It quotes an exec saying that the newspaper is gradually ratcheting open its paid content wall to new readers. It adds that subscriber-only articles have always been readable through a back door for free by searching on Google News. Firewalled articles are also accessible through a new BlackBerry application and links from social networks.

The New York Times notes that the redesigned site has more advertising units and sponsored sections. It’s more colorfull, features photography more prominently and has a moving newsreel with headlines and photos linking to related content.

We like it. In ditching its old design, the Journal has fallen into step with the look and feel of other news sites, which makes for easier navigation. The comments feature is a lso a nice touch. With all national newspapers now acceptin g user feedback, it’s wonder all newspapers don’t adopt this openness.

Layoff Log

• The Wichita Eagle laid off six employees and accepted voluntary buyouts from 16 others. That amounts to 6% of its employees. The paper offered voluntary buyouts to all full-time staff in August.
• Phoenix Newspapers, which publishes The Arizona Republic,  announced 37 involuntary layoffs spread across several departments. That’s on top of  56 people who recently left in a buyout deal.

The chart (from Alan Mutter) says it all. The U.S. newspaper industry experienced its ninth consecutive quarter of falling print revenue, according to the Newspaper Association of America. Worse is that the rate of decline is accelerating and online revenue is now dropping, too. Although the second quarter decline was only 2.4%, it’s a stark contrast to the 20%+ growth rates the rest of the industry is experiencing.

Classified advertising is a disaster. Look at these numbers: Real estate ad revenue down 36% to $619 million; recruitment advertising down 40% to $600 million; automotive classifieds down 23% to $580 million. The lifeblood of newspaper profitability has historically been classified advertising and the blood is gushing away.

This has a ripple effect on online ads, which had previously been the industry’s sole bright spot. MediaPost puts its finger on the problem: “Unfortunately, most of the growth in [newspaper] online revenues was due to ‘up-sells’ from print classified listings. As the volume of print listings declines at an ever-faster pace, that means there are fewer opportunities for online ‘up-sells.'”

TechCrunch chips in: “Advertisers trained to buy bundled ads are more likely to drop the entire bundle when making budget cuts.”

These trends continue to have all the makings of a classic death spiral: accelerating revenue declines create alarm among traditional customers who start fleeing in droves out of fear of being associated with a dying business. Print revenue declines have accelerated each quarter for the last two years, with the most profitable parts of the business taking the biggest hits. For example, automotive advertising, which totaled $5.2 billion in 2003, is now on track to do less than $2.5 billion in business this year. That’s more than a 50% fall without accounting for inflation.

If you do account for inflation, it gets worse. As the above chart by Tim Windsor shows, inflation-adjusted newspaper revenues are now below 1982 levels (click here for a readable version). The right side of that chart looks like a cliff, which is what the newspaper industry is hurtling toward.

There are simply no bright spots left. Between a recession, Internet competition and dramatically increased newsprint costs, this is a perfect storm. Quoting TechCrunch: “At this rate, there won’t be an industry left by the end of next year.”

Or, as one comment on Mutter’s blog put it, “The best news recently at our paper: the cleaning staff determined that the mold growing under the Coke machine is not hazardous.”

Chicago Tribune Editor Gerry Kern sent a memo to staffers last week that challenges some shibboleths of journalism and appears to advocate for giving readers more entertainment at the expense of traditional community affairs.

The message reads like a mission statement. “We clearly are moving toward a 24/7 online business that also publishes in print once a day,” Kern says. While acknowledging the value of traditional fare like public service and investigative reporting, he also stresses the need to delight and entertain.

The nut graph is about halfway down, where Kerns relates that “One of the most revealing insights from recent research is how little excitement some people feel about their daily encounter with us. Many of our regular readers regard us like the electric company or water utility. Yes, everyone wants electricity and water and it’s a pain to do without them. But your soul just isn’t stirred by the sight of working faucet or wall socket.

“Without an engaged audience that finds value in what we offer, we cannot succeed. Journalism is not an abstraction that exists apart from the audience. It must deliver what the audience needs and wants.”

This sounds like a not-too-subtle message that Tribune staff need to take themselves a little less seriously and listen to their readers a little more closely.  If that means giving them record reviews and Sudoku puzzles, so be it.  The Tribune is about to debut a new design along the lines of its Tribune Co. brethren.  If their lead is any indication, you’ll see a lot more color and a little less gravity.

The St. Louis Post-Dispatch has apparently got the same religion.  The paper is upgrading its features sections with more emphasis on local entertainment and leisure destinations while merging its news sections and cutting back on commentary.

Also, the Tribune has a new managing editor with a track record of success addressing young audiences. Jane Hirt was the founding co-editor of Redeye a free tabloid aimed at Chicago commuters that is considered one of the Tribune’s more successful recent ventures.

All this may be too little too late. Fitch Ratings on Friday cut the debt rating of Tribune Co. to “CCC” and said default is a “real possibility.”  The assessment comes just a week after Tribune CEO Sam Zell said the company had paid down $807 million of borrowing to meet its obligations for the rest of the year.  Fitch isn’t very positive, though.  The firm believes lenders can expect to get between 31 and 50 cents per dollar of investment.

Too Much Time Spent on “Time Spent”

Editor & Publisher has its regular exclusive report on the amount of time people spend reading newspaper sites. At first blush, the numbers look bad. “Nearly half of the top 30 newspaper sites, ranked by total number of unique users, fell year-over-year,” E&P says. “Fourteen dropped slightly or significantly.”

E&P has been reporting the Nielsen numbers dutifully since Nielsen said it would rely on “time spent” as the most important attribute of newspaper website stickiness a year ago, but a review of some historical numbers shows that this metric has its limitations. Look at the examples below, taken from previous E&P accounts.

	May ‘07	July ‘07	May ‘08	July ‘08
New York Times	29:36	27:21	28:52	32:03
Wall Street Journal	14:46	12:17	8:27	18:28
USA Today	12:39	11:48	13:00	16:17
Philly.com	10:11	6:59	8:03	5:07
Houston Chronicle	25:44	14:20	21:43	25:21
Star-Tribune	36:36	22:36	27:18	36:39
AVERAGE	21:35	15:54	17:54	22:19

While these numbers aren’t necessarily indicative of the overall health of the industry, they demonstrate how unreliable the “time spent” figure can be. Look at The Wall Street Journal, which presumably has enough readers to make its figures consistent.  What on earth happened this past May to cause such a drop-off in reader interest?  And what happened over the next three months to cause a revival?

Similarly, the Houston Chronicle tanked in July, 2007 but recovered spectacularly in the year since.  And are readers in Minnesota staying home this summer cruising the Internet instead of driving?  How else to explain such a dramatic recovery?  We’re sure the people Philly.com would like to know the answer.

Here’s some interesting perspective on the subject.

Miscellany

Media General’s publishing revenue fell nearly 19% in July compared to a year ago as the sour Florida economy continue to eat away at its business.  Classified advertising revenue plunged 32.5% with real estate falling an incredible 47%.  Online revenue was up a scant 5.7%,

---

The Milwaukee Journal Sentinel laid off 22 employees to reach its goal of 130 total job cuts after a voluntary buyout program failed to achieve the magic number.

---

Valleywag digs up some old screenshots in a trip down memory lane as it tells of “5 ways the newspapers botched the Web.”  Reading the account, you get the sense that there were some smart people who saw the opportunities in online publishing as early as 1983 but cluelessness about how people would use the Web combined with a compulsion to protect their print franchises scuttled the early innovations.  It’s a depressing account of opportunities lost.

---

Your obedient editor will be on vacation for a few days and posting less frequently, to the relief of newspaper executives everywhere.

Editor & Publisher has a 3,000-word special report on the newspaper industry’s prospects that doesn’t turn up much new ground but documents the panic that has set in across the business. Everything is on the table, industry execs now say. In the coming year, expect a lot of papers to eliminate money-losing Monday, Tuesday and Saturday editions, dump their classified advertising sections and combine forces with rivals or outsource overseas. Recent redesigns like those at the South Florida Sun-Sentinel are intended to be produced by smaller staffs. Some papers consider giving up on courting the youth audience and decide to just focus on giving their older readers something they’ll want to consume for the next 25 years.

The problem is that newspaper are tinkerers, not re-inventers, the piece concludes. Their core skills are mis-matched to the enormity of the task that faces them, and the unrelenting declines in business have left them with no option to think through bigger changes. Noting the waning interest in the the “Newspaper Next” program, the American Press Institute’s Drew Davis quotes one board member as saying, “We are like drowning people, who are treading water as fast as we can. And you people are throwing life preservers and we can’t even get our hands out of the water to reach them.”

In its first year, Newspaper Next reached some 6,000 people, but since API rolled out its 2.0 version last February, the response has not been anywhere near that, says Davis. The biggest newspaper companies, he adds, are most conspicuous in their absence.
Not everyone is as dour as the people quoted by E&P. Kevin Slimp reports on a recent meeting by a group of consultants, speakers and trainers who call themselves the Media Specialists Group. They discussed the future of newspapers and, while they agree that big dailies are mostly toast, they’re generally optimistic about circulation trends among regional and focused titles. Expect to see a lot more free distribution and segmentation, they say. Newspaper publishers will also do more contract printing and use their delivery channels to distribute advertising.

Decline is Worse Than Numbers Indicate

Vin Crosbie submits the most lucid, dispassionate and coherent explanation for the decline of the US newspaper business that we’ve seen since Eric Alterman’s groundbreaking piece in The New Yorker this spring. The industry’s problem isn’t the Internet, he argues, it’s the steady loss of respect for and contact with its readers, a trend that began more than 30 years ago. While absolute circulation has declined only 14.5% since 1970, the real decline is more like 45% when adjusted for population growth. Only a third of Americans say they read a newspaper yesterday and only 46% read one regularly, down from 71% in 1992.

Crosbie skillfully skewers the online readership data that newspaper execs use to obscure their problems, pointing out that readers who visit four or five times a month can’t be compared to subscribers. He also dismisses the so-called “passalong rate,” which dying publications like to use to inflate circulation numbers

In the end, he predicts that half of all American dailies will be gone – both online and in print – by the end of the next decade. He promises more analysis of what went wrong in essays today and next week.

---

In his analysis, Crosbie also ticks off the precipitous decline in newspaper share values over the least few years, ranging from 65% at Gannett to 99% at Journal Register, yet Morningstar believes the companies are still overvalued. In a report subtitled “The newspaper business is in terminal decline,” Matthew Coffina analyzes the outlook for Gannett, The New York Times Co., Lee Enterprises, McClatchy and GateHouse Media and sees, at best, relatively fast ongoing deterioration of their businesses. “[We] consider the newspaper industry unattractive as a whole,” he writes.

Is Yahoo Friend or Foe?

First, Yahoo created an ad consortium and invited newspapers in so they could sip from the cup of online spending. Now it’s competing with its partners. In an Agence France Presse story (carried, ironically, on Yahoo News), Glenn Chapman reports that Yahoo is here to stay as a primary news source. It’s got feet on the street in Beijing for the Olympics (following the herd there) and has scored coups with recent interviews with South Korean president Lee Myung-bak and George W. Bush, who gave his first Internet-only interview to Yahoo. One of its tactics is apparently to ask readers to submit questions during interviews with dignitaries, which is kind of cool, when you think about it. (via Josh Catone).

For some reason, the industry’s troubles are hitting particularly hard in New Jersey. Newsday gathers up the bad news: Gannett just 120 jobs in six Jersey papers. The owner of the Newark Star-Ledger says the paper is on track to lose $30 million to $40 million this year. And the Hackensack Record just sold its building and will turn most of its staff reporters into “mobile journalists,” which is a new euphemism for “stringer.”

Novel Concept

Jason Mandell writes about a writer’s novel approach to sustaining investigative journalism using a community support model. David Cohn, a former tech and science reporter for Wired, has created Spot.Us, a place where journalists can float ideas for investigative reporting pieces and get funded by visitors, who vote with their wallets for the stories they like. The results are then syndicated to partner outlets. “If you get 100 people to give just $15, that’s enough to pay a journalist to do a story on something that will benefit the community,” Cohn told Mandell. Spot.US is partially funded, ironically, by Knight Foundation. Knight-Ridder was forced to sell out to McClatchy two years ago and has suffered along with its acquirer. Maybe Spot.Us is a way to begin to build at least a shell of a new vision for investigative journalism.

Layoff Log

How bad is morale at USA Today? The Gannett Blog floats the possibility that the national daily, which has so far escaped outright layoffs, may finally be on the chopping block. What’s most interesting, though, is the 50+ comments, most of them from people purporting to be USA Today employees, describing the dour mood in the halls and speculating about a big meeting next week with the publisher. There’s also an interesting account of a recent internal meeting at which tensions flared between print and online staff. Apparently, online is now the favored child at McPaper and some of the print veterans resent it.

Also,

• The Fort Worth Star-Telegram is now offering a buyout to “the majority of regular full-time employees.” This is its third job reduction this year.
• The Rockford (Ill.) Register Star laid off 13 employees and closed its Springfield bureau. A round of voluntary buyouts this spring wasn’t enough. from April to June that resulted in the departure of 17 employees. The publisher wouldn’t rule out further cuts.
• Warren Buffett’s Buffalo News may be somewhat insulated by Berkshire Hathaway’s might, but it’s still offering a small buyout. The package is good, though, starting at $60,000 and going up. Staffers were surprised to learn of the offer first on the newspaper’s website, though.
• The Burlington (Vt.) Free Press is laying off six people, which is only about 3% of its staff. A 50-year-old columnist says he “didn’t see it coming.”
• The St. Petersburg Times avoided layoffs as 200 people accepted a buyout. The early-retirement package took out 40 percent of the paper’s staff of 50-and-older employees.

And Finally…

Slate’s Jack Shafer Ron Rosenbaum hates pencil puzzles, and his rant against a practice that he sees growing in popularity is worth reading just for gems like his characterization of Sudoku as the “mind-numbing hillbilly heroin of the white-collar class.” Shafer Rosenbaum picks up copies of Will Shortz’s Funniest Crossword Puzzles and let’s the first “down” clues speak for themselves:

4. Highly ornamented style

5. Tell ___ glance

Whoa, dude, you’re killin’ me!

Puzzle addicts could cure cancer if they’d apply their brains more appropriately, like by reading a book, he says. “For you puzzle people: Reading is a seven-letter word for what you’re depriving yourself of every sad minute you’re spending on your empty boxes.” In the end, “there are two kinds of brains. Those hardwired to obtain deep pleasure from arranging letters in boxes and those hardwired to get the creeps from the process.”

It’s very funny. Now, back to our puzzle…

Tribune Co. posted a $4.5 billion loss on a massive writeoff of goodwill to reflect the lower value of its newspaper assets. There was no good news in the results. Print revenue was down 15%, classified revenue off 26%, circulation sales down 2%, even online revenue was down 4%. The company’s next move will be to sell the Chicago Cubs, Wrigley Field and possibly its famous headquarters building in Chicago to meet a debt payment. After that, it’s a matter of crossing fingers and hoping that the economy improves enough to make more asset sales possible.

Alan Mutter thinks the Tribune writeoff may be the largest ever by a new owner. He pulls out the calculator and estimates that the value of the company has declined $20 million a day under Sam Zell’s leadership. Of course, Tribune is owned by its employees, so everyone shares Sam’s pain. Only Sam’s not feeling much pain because his highly leveraged position is funded almost entirely by other people’s money. Mutter’s Default-o-Matic ranking now rates Tribune as the company most likely to default on its debt. “At its new Caa2 [junk bond] rating, Tribune’s issues are considered to have a 48.3% chance of not being repaid,” he writes.

Needless to say, the not-so-loyal opposition at Tell Zell finds more to hate in the numbers. Pointing out that Tribune’s investment in its television assets actually increased in the quarter along with revenues, the anonymous blogger comments, “They realize that investing in the product can produce increases in revenue.” True ’nuff, but when a 7% increase in investment yields a 2% increase in sales, that’s the equivalent of selling dollar bills for 95 cents. You’ll sell lots of product and still lose your shirt.

For Zell and crew, this is simply race against time. Ken Doctor sums up the company’s dilemma: It’s bailing water in a rising storm tide and desperately hoping that the storm will stop. The more assets it sells (and there are rumors that the LA Times may be the next big property to go), the fewer resources it has to generate revenue to meet its debt payments. At some point, this model simply collapses.

The only scenarios that can rescue Tribune Co. from ultimate default are either a reinvigoration of the newspaper industry (unlikely) or a turnaround in the real estate market (more likely, but not soon). But with many economists now predicting that the hoped-for 2009 economic turnaround probably won’t happen, it’s hard to imagine a scenario in which this company survives intact much beyond the end of next year. What does that mean for all the employee retirement funds being held in the form of Tribune stock?

---

The heavy debt load borne by many newspaper owners continues to take its toll. Cox Enterprises is looking to sell the Austin (Tx.) Statesman and 28 other regional newspapers in hopes of raising enough money to meet its debt obligations. Cox also owns the better-known Atlanta Journal Constitution but is selling the Statesman because the paper is profitable and may fetch a better price. Don’t count on it, says analyst John Morton. “The sales value of newspapers has probably dropped in half in the last five years,” he’s quoted as saying. “There are a lot of newspapers that are up for sale and there are no takers.” (via Romenesko)

Media Organizations Pull Back on Convention Coverage

Now this is progress. Newspapers are reducing their reporting staffs at the political conventions by up to 20% this summer, apparently in response to the fact that these vacuous, over-scripted media circuses are becoming less and less relevant to an American public that finally has alternatives. The fact that American Idol is the most popular alternative is beside the point.

As we’ve pointed out many times, the practice of sending 15-20 reporters to transcribe the same speeches that the TV cameras are already capturing makes no sense. With both parties’ nominations sewn up months ago, there is nothing happening at these conventions that’s going to make a difference to the democratic process. The most interesting insight to come out of the conventions is the speeches by the up-and-coming party insiders, and those are broadcast anyway.

Interesting tidbit in this story: some 320 bloggers are credentialed for the two conventions this summer, compared to just 42 in 2004. These people are mostly traveling on their own dime and they will work tirelessly because each and every one is competing with all the others. Instead of sending staff reporters to cover the convention, couldn’t newspapers contract with some of these bloggers for exclusive interviews and color pieces? Wouldn’t that be a lot cheaper than paying full-time staff and travel expenses? Is anyone actually doing this? Share your comments.

Miscellany

Wirting in Editor & Publisher, former editor and ad sales rep Maegan Carberry says the unspeakable: journalists have to learn how to help their employers make money. “I was aghast when I asked the (UCLA) Bruin staffers how many of them knew what a CPM (cost per thousand) was and my question was met with resounding silence,” she writes. “Same for an Alexa ranking or Google Analytics. Viewing the news through a myopic editorial lens is prohibitive to success.” Journalism schools still appear to be teaching their students to think of themselves as siloed and separated from the business side, a luxury no one can afford any more. Quoting a colleague, Carberry relates, “The person who figures out the revenue model for 21st century journalism will be a hero in the industry along the lines of Gutenberg with his printing press.”

---

CNN is actually hiring. It plans to expand its number of bureaus to 20 from 10. Some of these new staff will be what the news network calls “all-platform journalists.” They each get laptops, cameras and online editing tools as well as the capacity to upload video reports from their remote locations. Some may get canteens and K-rations, too. CNN’s SVP of newsgathering insightfully observes, “Everyone’s a reporter now. Even our viewers.”

---

Tell Zell analyzes a curious list of laid-off staff that was distributed to departing LA Times employees and calculates that older workers were more likely to lose their jobs. Twenty-one percent of workers over 50 were terminated, compared to 10% of workers under 40. Naturally, the entire internal memo is on the site for all to e-mail to their friends.

---

Blethen Maine Newspapers continues to exemplify the concept of bleeding staff.It’s cutting 20 full- and part-time positions at the Kennebec Journal and Morning Sentinel. That’s about 10 percent of the payroll. A lot of the laid-off employees are from the pressroom. Blethen unsuccessfully tried to shore up its business by doing commercial printing work, but that market collapsed as the economy worsened.

---

The Newspaper Guild is going to become more active in trying to reinvent the industry, says its incoming president. Bernie Lunzer says the union will actively investigate new ownership models, since the old ownership models have failed so badly. “There are non-profits, co-op ownership along the lines of what was used in agriculture for many years,” he tells E&P. And he won’t rule out the possibility that the Guild could take an ownership stake in some concerns. Lunzer says the Guild is also going to take a strong stand in defending newspaper ad salespeople, who are increasingly threatened with a move to 100% incentive-based competition. Fear is not a good motivator for sales people, he says.

---

In other union news, Philadelphia’s two biggest unions have agreed to forego a $25/week raise they had negotiated for Sept. 1. Members apparently want to help company ownership avoid total financial collapse. They might give a call to their colleagues in Honolulu and share this perspective.

---

Sun-Times Media Group (STMG) is outsourcing its inbound classified advertising sales to Buffalo-based Classified Plus. It didn’t say how much the move would save. Classified Plus handles calls for more than 200 newspapers in the U.S. The way things are going, it may soon be able to do that with a single employee.

---

David Esrati’s “How Newspapers can become relevant in a Web 2.0 world” reads like an extended blog comment, but has some sound advice for how newspapers can learn a few things from Google and other  Web properties.

And Finally

This 2 1/2 minute video has scored over 11 million views on YouTube, and if you watch it, you’ll understand why. It’s an incredible love story that could only be told in this medium. What a heartwarming story of love across the boundaries of time and species.

Google CEO Eric Schmidt, whose company has played a critical role in the destruction of the US newspaper industry, bemoaned the decline of investigative journalism, a discipline he called “fundamental to how our democracy works,” in remarks at the the recent Ad Age Madison & Vine conference in New York. The executive said a fundamental challenge to the industry is that readers are spending less time on content and thus less time being monetized. The idea that new advertising models will emerge to support quality journalism after the newspaper industry collapses is misguided. “The evidence does not support that view,” he said.Schmidt observed that newspapers are being challenged by the triple whammy of advertising competition, high newsprint prices and a decline of non-targeted advertising. “These guys are in a world of hurt and we as a community need to find economic models that will fund really great content,” he said. He noted ruefully that sketchy coverage of the war in Iraq is a particularly compelling example of the loss of investigative resources.

Redesigns Called “Reinventions”

That’s the South Florida Sun-Sentinel before (left) and after its forthcoming redesign. Or should be say the SunSentinel? That’s right. As Charles Apple wryly notes, amid the cutbacks at Tribune Co., the new SunSentinel has laid off a hyphen.

Apple quotes SunSentinel design director Paul Wallen saying, “Although our median reader is in the mid to late 50s, our target audience is almost a generation younger. We’re after occasional readers, people who don’t feel they have the time or enough interest to read our paper on a regular basis…We want the paper to feel vibrant and alive, much like the community it serves.” The new design formally launches on Sunday. To get a larger (and different) example, click on the image at left.

Another Tribune Co. property, the Baltimore Sun, will debut a new design on Aug. 24. No prototypes are being floated yet, but Editor & Publisher quotes Sun publisher Tim Ryan saying the overhaul is a “reinvention.” There’ll be three sections: news, sports and features. The features section will be called “You” in a nod to the complete USATodayification of the American newspaper industry. Tribune Chief Innovation Officer Lee Abrams called the Sun redesign “a tour de force package that’s going to help re-write the Tribune Co. — and newspapers.” We’ve already shared our opinion on the business value of redesigns.

Milwaukee Feels the Pain

The Milwaukee Business Journal writes of forthcoming layoffs at the Journal Sentinel as the paper struggles to meet its goal of a 10% staff cut. The piece illustrates the scope of the industry’s pain. Milwaukee should be a good newspaper town. It’s got a solid blue-collar middle class, people who don’t change their habits very quickly. The Journal Sentinel has a near-monopoly position, with 70 percent readership among Milwaukee adults on Sundays and about 50 percent on weekdays. Yet ad revenue is down 13 percent so far this year on top of an 8 percent decline in 2007 and 4 percent in 2006. Sunday circulation is down 16% from a decade ago.

The story has the obligatory Newspaper Association of America quote about combined print/online audiences being larger than ever, but the nut graph is a quote from a Morningstar analyst: “For every dollar daily newspapers have lost in print revenue, they’ve been able to replace it with only 15 cents in revenue from their Web sites.” The only way newspapers can survive the online shift is to get smaller, the analyst says. It’s just that no one knows how small they have to get.

---

A Journal Sentinel columnist is taking a buyout package and looking ahead. In this wistful, but ultimately uplifting farewell column he reminisces on the joys and frustrations of journalism and looks forward to taking a chance and spending some time with his family.

Miscellany

Former New York Times editor John Darnton recently retired from the paper. But instead of writing a tell-all memoir, he’s aired some dirty laundry in the form of a murder mystery called Black and White and Dead All Over (order it on Amazon). Reviewer Seth Faison knows many of the people who appear in Darnton’s fiction, including Publisher Arthur Sulzberger and Executive Editor Bill Keller. Faison praises the book for offering candid insight on the politics, chaos and juvenile behavior that characterizes a city newsroom. Darnton may lose friends as a result of this bitingly satirical work, but he’s made for darned good summer reading.

---

Tucson Citizen assistant city editor Mark B. Evans has some kind words for political bloggers who are, in some cases, outclassing the area’s newspapers in political coverage. We ignore these new voices at our peril, he says. Newspapers are falling further behind, so why not welcome these emerging opinion leaders into our fold and benefit from the readership and revenue they can bring?

---

The Lexington (Ky.) Herald-Leader is trying to further reduce staff through buyouts. Kentucky’s largest newspaper already cut its workforce from 417 to 382 in June, but that wasn’t enough. Executives didn’t set a target figure for this round of cuts.

---

The Christian Science Monitor‘s Jan Worth-Nelson has quietly, subtly replaced her morning newspaper with a MacBook and an RSS feed, but she still remembers the days when reading the Sunday paper was a treasured ritual. Sadly, cutbacks at the LA Times have made the paper less relevant to her Sunday mornings and she misses the thrill that came with snapping open that first issue of the day to drink in the fresh news that it promised.

---

Howard Rheingold has an interesting essay on how to get more out of Twitter. Best advice: keep the list of people you’re following short and engage in meaningful interactions with them. He also doesn’t tweet what he had for breakfast. (via Mark Hamilton)

---

End of an era: In a nod to the realities of advertiser pressure and a weakening print market,  Rolling Stone will ditch is unique, awkward trim size and switch to a standard format effective with the Oct. 30 issue. The magazine’s size will be reduced from 10″ x 11 3/4″ to 8″ x 10 7/8″.

And Finally…

People always celebrate success, but they don’t give enough credit to really creative failure. Thank goodness, then, for The Fail Blog, a photographic tribute to failures big and small. Don’t look at this site in the office. Your colleagues will wonder why you’re laughing so hard. And don’t, under any circumstances, view it while you’re drinking milk, if you know what we mean.

I was a guest on a webcast about social software yesterday (you can watch it here; it’s free)  and the question came up about what publications can do to build community. I responded that they can’t do much and they shouldn’t even try because, with few exceptions, readers aren’t a community.

Then I checked my RSS reader this morning and noticed this item from Content Ninja that makes the very same point: “You cannot build a community around content.”

“Community” is a poorly understood term (just look at the variety of definitions in online reference sources) and, like many buzzwords, it is being overused right now. Publishers trying to escape their sinking  businesses are clinging to the community life raft, hoping that it offers hope for a future. For some it does, but that’s not a good prospect for most newspapers.

Newspapers have historically defined their communities geographically because that’s the business model that worked. While people who share a common space on the planet are technically  a community, they’re the least cohesive kind of community. Outside of a shared interest in certain issues like public safety or schools, residents of a city or town have little in common. They may occasionally form strong communities around common interests like a school bond or tax increase, but those groups invariably dissolve as the issue goes away.

There are readership communities that work. Readers of a special interest magazine about needlepoint or scuba diving are a type of community. Those people have intense shared interests and they are much more likely to bond together in an online forum that serves those interests. Publishers of special-interest magazines have the best chance of turning their readership into self-sustaining online communities.

Newspapers, however, don’t. Their strength is creating content and their best chance of building community involves giving people a chance to discuss, comment upon and contribute to their content. USA Today does about the best of any major newspaper at encouraging this kind of reader participation. But USA Today isn’t trying to become a community. Its management knows better than that.

Miscellany

• Jeff Jarvis suggests that it’s crazy for newspapers to operate their own websites and they should just hand over the back-end work to Google.  Newspapers should focus on what they do best: journalism and local ad sales. All the staff time and money spent building technology infrastructures is basically reinventing the wheel. He’s got a point.
• The Daily Telegram of Superior, Wisconsin will cut back from six to two print issues a week beginning this fall. The 6,000-circulation afternoon daily has been publishing for 118 years. A BusinessWeek account notes that theDaily Telegram competes vigorously with the Duluth News Tribune, which is only about five miles away and which is owned by the same publisher. We’re wondering if combining, rather than competing, might be a more practical approach.
• Washington State’s The Columbian laid off 20 people – eight of them in the editorial group – in the second round of cutbacks this year. The paper cut 30 positions back in February. Editor Lou Brancaccio told the Portland Business Journal that early retirements could trim the current staff of 306 even further.
• The delightfully vicious Tell Zell site gives Tribune Co. CEO Sam Zell a performance review using the company’s own performance management form.  The world is a better place because of anonymous blogs.
• Rev. Jesse Jackson’s stated desire to remove Barack Obama’s testicles apparently caused a minor uproar on copy desks around the country. In a bold bid to produce the most trivial news story of the week, the Columbia Journalism Review sends in a reporter to analyze how major titles dealt with the “nuts” crisis. Could anyone be less interested?

In the new world of journalism, anyone is potentially a journalist, even if only for a few minutes. This idea doesn’t sit well with a lot of media veterans, so it’s no surprise there is debate over the tactics of the Huffington Post and its employee, Mayhill Fowler, that led to two big campaign scoops.

The most recent one, which every political junkie heard by now, concerns a three-minute rant by Bill Clinton over a Vanity Fair report questioning the propriety of his post-presidential decorum. Clinton’s remarks were captured on video by Fowler, who didn’t identify herself as a reporter but who claims to have had the video camera in plain view while Clinton was talking. The LA Times account describes the recorder as “candy bar-sized” and Clinton claims to have not known he was being recorded.

Fowler also recently caught Barack Obama criticizing small-minded Americans in comments that were not meant for reporters.

Fowler claims no professional journalism experience, which means she isn’t a “true” journalist, to use a phrase favored by veteran editors. Yet no one can dispute the veracity of her reports. After all, they’re on tape.

The hot potato for professional journalists is that ordinary people with a $100 video camera can now capture major news events that the media miss. The problem for public figures is that these folks don’t necessarily identify themselves as journalists or operate by the rules. And since public figures have practically no coverage under libel laws, their every utterance is potentially fair game for the media. Which is actually a problem for the media.

Layoff Log

• Continuing the trend toward newspapers burying their own bad news, The Day of New London, CT cut about 12% of its jobs and relegated the news of the cuts to an inside business page on a Saturday. The comments are as interesting as the story on The Day‘s website. Readers question whether senior executives are taking pay cuts and cite a director’s profile from dating site Match.com, of all places, as a source of information about the director’s compensation for his services.
• Layoffs are spreading into the magazine industry, which until now has been far less affected by the ad sales slowdown than the newspaper business. Folio magazine reports that three publishers are announcing layoffs. Meredith Corp. will cut 60 positions and leave 60 other open jobs unfilled. B-to-b publisher Reed Business Information is eliminating 41 jobs in advance of its divestiture by parent Reed Elsevier. And another b-to-b stalwart, Penton Media, will cut 42 jobs. There’s no word on what percentage of the workforce these layoffs constitute.
• The Cleveland Plain Dealer is one of a ring of innovative Ohio newspapers that came up with the idea of putting aside rivalries to share resources. That isn’t going to save it from the storms that are battering the industry, though. Cleveland Leader reports that management plans to cut 35 pages of news a week along with 20% of the workforce. That’s on top of a 17% cut in positions after a recent buyout.

Miscellany

Craig Stoltz reviews the redesigned websites of the ultra-conservative Unification Church-backed Washington Times and the Bay Area-bred San Francisco Chronicle and concludes that, surprisingly, the Times is the one doing the innovating. Whereas the Chron‘s new design is more of the same, he says, Times has apparently started with a blank slate and rethought its approach to news presentation without bias toward print or anything else. The most innovative new feature is the Dig Deeper button, a hyperlink that literally flips a story on its head to show more background and detail. Try it; it’s neat. (via Jeff Jarvis).

---

Editors Weblog rounds up some data and opinion from around the industry and shows why the economics of online advertising don’t comfortably replace the print model. There’s a study that shows that readers of nytimes.com spend an average of 68 seconds per day with the paper, compared to 16 minutes for the print edition. And the bounty of alternatives means that ad rates are under constant competitive pressure. Quoting Scott Karp of Publishing 2.0, “Print circulation is about 10% of total audience reach, while online advertising revenue is 10% of total ad revenue — the economics are nearly the perfect inverse of what they should be.” This is not an optimistic piece.

---

Gannett Co. will write down the value of its assets by up to $3 billion, blaming troubles at its UK operation. Gannett is widely to considered to be one of the most financially sound US newspaper publishers.

---

Google CEO Eric Schmidt says his company has a “moral imperative” to help the newspaper industry and that the company’s recently acquired DoubleClick ad service could help. He didn’t offer any more details. Newspaper publishers must be breathing a huge sigh of relief.

---

Dan Schultz of MediaShift Idea Lab proposes a five-step process for vetting news that originates from citizen journalists. It involves link analysis, commenting, geotagging and moderation, among other things. Content Ninja has an analysis.

---

It’s depressing to see newspapers shutting down ventures in new markets. The Milwaukee Journal Sentinel will close a free weekly aimed at young readers. A memo posted by Romenesko cites two years of ad declines and increasing newsprint costs as the double whammy.

---

The new venture by former Wall Street Journal managing editor Paul Steiger has debuted. Pro Publica will produce investigative reports in partnership with other media outlets and publish those stories first on the partner’s print and Web properties. The initial site is nothing more than a roundup of news from other sources, but the site is almost fully staffed and original material will begin appearing shortly, according to the “about” page. Pro Publica is a nonprofit funded by some big charitable organizations. It will initially employ 27 journalists.

---

Paul Bradshaw wants to know if blogging has changed the way journalists work. You can take his short, anonymous survey here.

And Finally…

The Online Journalism Blog is piercing the gloom with a new website where journalists can tell why it’s a great time to be in the business. It looks like Jolly Journalist just debuted, so hurry on over to be one of the first to comment.

Moody’s Investors Service has joined the Greek chorus of financial watchdogs predicting more bad news for the newspaper industry. Analysts expect newspaper advertising revenue to drop 7% to 9% in 2008 and maybe slightly less in 2009, but only if the economy recovers next year. If it doesn’t, look out.

Most troubling is the decline in cash flow, defined as earnings before interest, taxes, depreciation and amortization (EBITDA). Over the past 10 years, EBITDA has fallen from 28% to 19% as a percentage of revenue, Moody’s said. Cost cuts aren’t keeping up with revenue declines, which is eroding EBITDA by more than 10% a year. That erosion comes at a terrible time because so many publishers are heavily leveraged with debt. Less cash means less money to pay creditors. Moody’s thinks deeper cuts will be needed in editorial operations, but “It will prove challenging to continually reduce editorial costs without impairing the core news product or employee morale.”

As if to accent the Moody’s forecast, E.W. Scripps Co. said newspaper revenues will fall 8% to 10% in the second half of 2008. The company is in the process of splitting itself in two.

Optimists See Growth, But Much of it is Free

The head of the World Association of Newspapers says reports of the industry’s demise are greatly exaggerated. Speaking to the World Editors Forum meeting in Göteborg, Sweden, CEO Timothy Balding cites statistics showing growth in Asia and South America that is outstripping declines in the US and Europe. Overall newspaper circulation is up over 3% internationally. A lot of that growth is coming from the expanding free-daily industry, however. Free papers now make up 23% of circulation in the EU and 8% in the US.

Wired magazine editor Chris Anderson comments on this trend, noting that it is another indication that information is becoming free. While any growth is good, the loss of paid subscribers presents big challenges to the economics of the newspaper industry, which are predicated on circulation lists.

Free isn’t necessarily good business in the US, though. The CEO of Metro International SA tells Bloomberg that it’s examining its options in the North American and European markets while looking to expand into 30 new markets. The world’s leading publisher of free dailies has struggled to reach profitability, although its market penetration has grown rapidly. Per Mikael Jensen says emerging economies look to have more promise at the moment.

---

A study conducted by advocacy group Newspaper Works shows that Australian readers hold newspapers in high esteem. The survey of 1,010 people found that 90% of readers do nothing else when reading a newspaper as compared to the half who busy themselves with other things while the TV is on. Most perceive newspapers as “absorbing, dynamic and reputable,” and the online extensions only add to that credibility. (Via Editors Weblog).

---

Finally, the editor-in-chief of the Los Angeles Times tells Media Bistro that print isn’t going away in his lifetime. That said, Russ Stanton is honest about the challenges, noting that the substantial infrastructure cost of print is a liability. “Someone, somewhere is going to grow the revenue from online enough that it can support a newsroom of our size and talent. And when that happens, that’s when you can start, if you so choose, to pull the plug on the paper,” he says. He adds that citizen journalism is pretty intriguing.

Turnover Continues At the Top

Rupert Murdoch continues to put his own team into place at The Wall Street Journal. Deputy Managing Editor Bill Grueskin is the latest to go, leaving the paper for a post in the ivy-covered halls of academia. Grueskin’s departure comes just two months after Managing Editor Marcus Brauchli was unceremoniously shown the door.

Los Angeles Times Editorial Pages Editor James Newton will leave the paper to finish writing a book about Dwight Eisenhower. He had been in the job only 14 months. Newton’s memo to staffers made it clear that he wasn’t motivated by some pressing inner urge to tell the Eisenhower story. “[T]he paper still has challenges ahead. The publisher and I have discussed those difficulties, and he is entitled to an editorial page editor who shares his vision on how best to confront them,” he wrote. LA Observed has Newton’s farewell memo, as well as the obligatory bouquets of gratitude from Publisher David Hiller.

Thoughts on the New Journalism

Jeff Jarvis eloquently expresses an important point about the future of journalism in this essay on the ethics and culture of linking. The link is the currency of the blogosphere, of course, and the emerging culture of journalism is embedding links into news reporting process. In the old days, Jarvis notes, reporters would rather repeat all the legwork done by a competitor than acknowledge being beaten on a story. This led to tremendous duplication of effort. In the new model, though, journalists are learning to link to useful information and build upon it, creating a new and richer style of journalism.

Jarvis cites the experiment being conducted by a group of Ohio papers that are sharing stories between each other rather than processing them through the Associated Press. This means less rewriting, faster delivery and more genuine content. Says Jarvis: “[T]hey’re doing what they do best and linking to the rest and they are linking to original journalism: the new architecture at work.”

Meanwhile, the CEO of acquisitive MediaNews Group urges newspaper executives to “discard our arrogance.” Speaking to the World Newspaper Congress in Sweden William Dean Singleton says, “We’re going to have to quit writing and editing for each other and write and edit for that consumer out there.” He says half the chain’s profits will come from online sources by 2012. Singleton continues recent criticism by industry CEOs of the way newspaper journalism is done. News Corp. CEO Rupert Murdoch recently said The Wall Street Journal has too much management overhead and Tribune Co. CEO Sam Zell has also insulted his editors.

Layoff Log

• The Portland Press-Herald and MaineToday.com will cut up to 35 positions on top of the 27 jobs that were eliminated in March.
• Newsday has reportedly laid off 32 employees — half in operations management and half from Star Community Publishing. This follows a 120-person reduction in March. Publisher Timothy Knight said the move would “reduce management layers in operations, clarify roles and responsibilities, and speed decision-making.” The paper is awaiting transfer of ownership from Tribune Co. to Cablevision Systems Corp.

And Finally…

Simon Owns interviews journalist and Editor & Publisher columnist Steve Outing about a new venture he’s working on called Reinventing Classifieds. It’s a blog in which prominent publishing professionals contribute their insights on classified advertising and how the newspaper industry can recapture that business. At first glance, the content looks a little like Newspaper Death Watch ““ lots of bad news. But there hasn’t been much good news to report in the classified industry of late. There’s lots of up-to-date news and even a piece by design guru Roger Black. The site is tied to a project led by Future of News developer Christopher Ryan that’s attempting to build a distribute ad placement platform that newspapers could use to get a leg up on Craigslist.

Last night I had the pleasure of moderating a panel on “The Future of Journalism,” featuring a group of reporters and former reports from the broadcast, print and online media. This panel was perhaps not representative of the media world these days, since all of the members are involved in digital initiatives of some sort at their organizations. But all come from conventional media backgrounds, and I found their optimism to be refreshing.

Panelists included Ted McEnroe, Director of Digital Media at New England Cable Network; Robin Lubbock, Director of New Media at WBUR radio; Howard Sholkin, Director of Communications & Marketing Programs at IDG Communications; and David Wallace, Managing Partner of Gamechange LLC and a professor at Emerson College.

All the panelists noted that newsrooms in their organizations were having some difficulty bridgingt the divide between the specialty journalist, who does one thing well, and the new journalist, who’s expected to work in multiple media with almost equal facility. Some veteran reporters simply haven’t been able to make the change, they noted, and their organizations are tolerating that fact. When journalists can’t make the transition to a new style of reporting, management is ultimately to blame, they said. Retraining is critical right now.

It was clear that the old walls that separated different kinds of media from each other are fallng. Robin Lubbock cited some recent stories by his radio station that demanded a visual component. In the past, the reporters would have had to do the best they could within the limitation of audio, but today they can post images on the website and send interested listeners there. This has added a wonderful new dimension to the craft of audio journalism and has energized the reporters, he said.

IDG’s Sholkin commented that the company has successfully transitioned from a print to a mostly online model in the US and that the new breed of journalist that’s entering the company is more flexible and adaptable than the print-only generation that preceded them. Today’s twentysomething reporters are only too willing to grab a camera or a video recorder if it’ll enhance the story.

The panel was also upbeat on the prospect for citizen contributions to the news reporting process. While acknowledging that mistakes were more likely in the still-undefined community journalism world, they applauded the trend toward involving readers in the newsgathering process. They were unanimous in the opinion that readers’ voices can only improve the quality of the final product.

Backpack Journalism

Several panelist also remarked on the emergence of the “backpack” journalist, who takes an assortment of devices into the field with which to capture a story. Notepads and tape recorders are no longer enough. Reporters must today be facile with any media. They also must be comfortable with communicating in short bursts. An example is the Wichita Eagle‘s current coverage of a grisly murder trial via Twitter.

Editor & Publisher has a detailed special report on these mobile journalists or “mojos.” Using lots of examples, the magazine tells how some editors are dismantling the traditional newsroom and seding reporters out into the field to file from wherever they happen to be. A fully stocked backpack of gadgetry (which can run nearly $15,000) is essential, but when journalists have the tools, they become one-person news machines. “I have had days with five or six stories,” says Brian Howard of the Journal News in White Plains, N.Y.

These journos aren’t all kids, either. Most people quoted in the story are in their 30s and the man identified as the grandfather of mobile journalism is 63. Reading this story, you get the sense that change is happening.Good change.

Murdoch as Antidote

Rupert Murdoch is putting the finishing touches on his takeover of The Wall Street Journal with his the designation of Robert Thomson as managing editor. There wasn’t a word of opposition from the newspaper’s editorial independence committee, whose reason for existence becomes more questionable with every non-decision.

Simon Constable writes on TheStreet.com that Murdoch is injecting a healthy shot of competition into the fat and lazy US newspaper business. He contrasts the frantic competitiveness of the newspaper market in the UK, with its more than a dozen dailies, to the languid complacency of a US market defined by one-paper towns and government-sanctioned monopolies. No matter what you think of Murdoch, Constable says, the man is shaking things up and that can’t possibly be bad for an industry in crisis.

Not everyone agrees. Writing in Canada’s Financial Post, Editor Terence Corcoran rips into the Journal’s creeping left-wing bias, focusing in particular on new columnist Thomas Frank. Far from being a counterbalance to the Journal‘s traditionally conservative editorial views, Frank is just a liberal ideologue spouting the tired old mantra of publications like The Nation, from whence he came, according to Corcoran. And Cameron blames Murdoch, whose left-wing leanings Cameron says are routinely injected into the editorial voice of the newspapers he acquires.

And Finally…

Seattle Times Executive Editor David Boardman gives his readers a forthright account of why his newspaper is laying off when circulation is actually growing. The problem isn’t that the paper is losing relevance, he explains. It’s that the business model doesn’t work any more. “Thanks in part to a Bay Area entrepreneur named Newmark and his free, online ‘craigslist,’ the bottom dropped out. In the past eight years, revenue from classifieds has fallen by two-thirds, and they now account for only 20 percent of total ad income.”

Boardman’s piece is refreshing. It’s direct and free of the “our combined print/online readership is bigger than ever” denial. He says newspapers need to find a new way to make money. So that’s what they’re going to do.