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Deal With the Devil

14 Dec

{Cleveland Plain Dealer union members ratify new agreement, by Julie Moos on Poynter.org, Dec. 11, 2012}

IN THE WAKE of owners of the Cleveland Plain Dealer announcing plans to cut 58 journalists — one-third of the newsroom — in 2013, Guild members approved a new six-year contract Dec. 11.

That contract provides for 8 percent wage increases for workers remaining after the layoffs, partially offsetting the 12 percent pay cut they agreed to in 2009.

The contract allows the company to lay off five people in 2014, but protects workers from layoffs for the rest of the contract’s term.

The Guild also agreed to let non-Guild workers be hired for the Plain Dealer’s website, cleveland.com.

In the long-run, this gives Advance greater latitude to hire less experienced journalists for less pay with different skills for its website, and then use that material in its print product. The staff cuts save money, not reduced print days, according to an analysis done by Rick Edmonds.

Harlan Spector, chairman of the Plain Dealer’s unit of the Northeast Ohio Newspaper Guild, said,

“A big part of that is we’ve given them some language that could, over the years, really diminish our numbers. It gives them the ability to put cheap content in the paper.”

Spector calls the new agreement “a bitter pill but it beats the alternative.” That alternative was the company’s announcement that without the new agreement, it would cut half the staff next year.

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Cleveland Plain Dealer to Slash Newsroom Staff by One-Third

5 Dec

Plain Dealer

OWNERS OF THE Cleveland Plain Dealer have announced plans to gut the newsroom staff by one-third — 58 positions from a newsroom of 168. The number of days the paper is published might be cut, too.

If that playbook sounds familiar, it should — the owner is Advance Publications, the same outfit that laid off some 600 people at the New Orleans Times Picayune and its three papers in Alabama, and ended daily publication.

[After Advance announced that plan, Digital First CEO John Paton wrote “In Defense of the Times-Picayune.”]

Staff at the Plain Dealer knew cuts were coming and started a “Save the Plain Dealer” campaign | Facebook page. There also is an online petition at change.org.

In a post on the Facebook page, organizers of the campaign say:

Friends and supporters, we wanted to let you know that The Plain Dealer has told the Guild it plans to reduce the number of Guild members in the newsroom to 110 next year. Guild members are the heart of the paper. They report, photograph, copyedit, design, draw, create graphics, archive information, edit and so much more. The reductions, which represent about 1/3 of our membership, would be devastating to the news-gathering operation.

One a Day Keeps Ignorance at Bay

Christine Haughney wrote a good piece about the Plain Dealer’s situation in the New York Times’ Media Decoder blog, including this hoppy tidbit:

Among the more lively efforts to stave off a reduction in the print schedule is a “Save The Plain Dealer” party planned for Thursday night at the Market Garden Brewery and Distillery. The brewery is releasing a new beer, 7-Day Lager, which it says is “best when enjoyed daily, because one a day keeps ignorance at bay.”

Los Links: More on Journal Register’s Bankruptcy

7 Sep

For your reading pleasure, more stories in the wake of Journal Register Company’s bankruptcy announcement.

In Denver Post & MediaNews Group: Fallout from partner Journal Register Company bankruptcy? Westword’s Michael Roberts reports that, according to “an insider,” there was some dissension in the ranks once the bloom was off the Digital First rose:

By summertime, however, our source reported grumbling over what was perceived as top-heaviness at Digital First Media, with new senior executive hires during a time of layoffs at MediaNews Group papers around the country. The fear: MediaNews Group was being used as a cash cow to build up DFM. Our source also noted tension between MediaNews Group types and folks imported by Paton, many of them with Journal Register Company roots.

GigaOM’s Mathew Ingram writes in Newspaper restructuring — think steel, cars and airlines, the newspaper industry’s transformation will need to be measured in decades:

If there is a poster child for the “digital first” newspaper movement, it is probably Journal Register Co., which manages a chain of dailies and weeklies in the eastern U.S. John Paton took the helm as CEO after it emerged from bankruptcy in 2009, and implemented a wide range of digital-first moves — and yet parent company Digital First Media just announced that Journal Register Co. is filing for bankruptcy for a second time. The not-so-hidden message in all this is that despite all the pain of the last few years, the restructuring of newspapers isn’t even close to being over: as we’ve seen with the large structural changes in the steel industry, car makers and the airline market, transforming an industry with massive legacy costs is a long and bloody process. What emerges at the end remains to be seen.

In Journal Register, future-of-news star, is bankrupt again, Ryan Chittum writes for the Columbia Journalism Review that the numbers John Paton mentioned in his announcement are meaningless without some context:

The reason we don’t know more about the numbers is that JRC, as a closely held company, releases financial information only selectively—in sharp contrast to its “open journalism” philosophy.

>snip<

Paton, for instance, has repeatedly said digital revenues at JRC were up some large percentage since he took over. He does so again in his bankruptcy note. Yes, but from what to what? Those are big numbers all right, but 235 percent of not much is still not that much, and its worth noting that JRC’s digital revenues were far below industry average when Paton took over. It’s much easier to grow fast off a low base, and Paton has used the company’s privately held status to cherry pick positive numbers without having to paint a full picture—one that definitely didn’t include an imminent bankruptcy.

A former Journal Register employee wrote a letter about the bankruptcy announcement that is posted on Romenesko:

From RACHEL JACKSON, former Journal Register employee: The [Journal Register] Chapter 11/sale announcement does not surprise me in the least – and the employee you quoted as calling this “horseshit” is exactly right.

Lastly, in the wake of the bankruptcy announcement there has been some grumbling (perhaps it’s contagious) about the fact that Project Thunderdome is located in Manhattan rather than, say, Willoughby, Ohio, where real estate costs are presumably less. Jim Brady explains the reasoning in a piece by Adrienne LaFrance for Nieman Journalism Lab, Why does Project Thunderdome have to be in New York City?

“You want to be in a position to get the best possible people you can,” Brady said. “I’d love to get in an argument with anybody who says there isn’t a lot of journalistic talent in New York City.”

Carry on.

Is Alden Global Capital Souring on Newspapers?

6 Sep

From a piece by Martin Langeveld at Nieman Journalism Lab: Journal Register’s bankruptcy is strategic, all right — but for whom?

In an in-depth analysis of the possible implications of Journal Register Company’s bankruptcy filing, Langeveld writes that while Alden Global Capital’s initial strategy seemed to be one of consolidation, the hedge fund might have changed its mind — it has shed around half of its newspaper holdings in the past year.

Last year in July, I estimated Alden’s total media investments to be about $750 million. Today, after the various sales and counting JRC’s value as zero, those holdings are probably down to about $300 million, and it seems clear that Alden would just as soon get out completely — at least from newspapers.

>MORE

Journal Register Co. Files for Bankruptcy

5 Sep

UPDATES AT BOTTOM OF POST:

  • John Paton’s letter to employees and FAQ
  • Steve Buttry’s take
  • Running commentary on Romenesko
  • Journal Register Co.’s reboot on Nieman Journalism Lab
  • Story by The Denver Post’s Andy Vuong
  • Analysis of the news on Poynter.org

FROM JOHN PATON’S blog: “Another Tough Step”

Today Digital First Media announced Journal Register Company has filed for Chapter 11 bankruptcy and will seek to implement a prompt sale.

We expect the auction and sale process to take about 90 days, and I am pleased to tell you the Company has a signed stalking horse bid for Journal Register Company from 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC.

So why file Chapter 11?

The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that are now unsustainable and threaten the Company’s efforts for a successful digital transformation.

From 2009 through 2011, digital revenue grew 235% and digital audience more than doubled at Journal Register Company. So far this year, digital revenue is up 32.5%. Expenses by year’s end will be down more than 9.7% compared to 2009.

At the same time, as total expenses were down overall, the Company has invested heavily in digital with digital expenses up 151% since 2009. Journal Register Company has and will continue to invest in the future.

But also from 2009 to 2011 Journal Register Company’s print advertising revenue declined 19% and print advertising represents more than half of the  of the Company’s revenues. Print advertising for the newspaper industry declined approximately 17% over the same time period, according to the Newspaper Association of America. As well, both print circulation and circulation revenue have also declined over the same time period.

Since 2009, printing facilities have been reduced from 14 to 6; 9 of the 50 owned facilities have been sold and 8 distribution centers have been outsourced.

During the same time period, debt was reduced by 28% with the Company currently servicing in excess of $160 million of debt.

All of the digital initiatives and expense efforts are consistent with the Company’s Digital First strategy and while the Journal Register Company cannot afford to halt its investments in its digital future it can now no longer afford the legacy obligations incurred in the past.

Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable.

Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.

After a lot of thought, the Board of Directors concluded a Chapter 11 filing was the best course of action.

Journal Register Company’s filing will have no impact on the day-to-day operation of Journal Register Company, Digital First Media or MediaNews Group during the sale process. They will continue to operate their business and roll out new initiatives.

If you have questions just ask – you know how to reach me.

John

John Paton
Chief Executive Officer
Digital First Media

John Paton’s e-mail address is jpaton@digitalfirstmedia.com and he can be found on Twitter at @jxpaton.

FROM AROUND THE WEB

Los Links: Break The Chains, But Don’t Wait Too Long

8 Jul

Want to save local newspapers? Then break the chains that hold them back
In this piece for OJR: The Online Journalism Review, Robert Niles writes that economies of scale don’t work in the newspaper business anymore and it’s time to break up the chains.

Locally-focused news publications must become truly local, with local information, produced by local reporters with local ties, sold to local advertisers by a local sales staff who work for a local owner.

News Corp Split, Buffett’s Bet Top Year of Big Media Ownership Changes
The Pew Research Center’s Project for Excellence in Journalism has a nice wrap-up of media transactions over the last couple of years.

According to the investment banking firm of Dirks, Van Essen & Murray, which monitors newspaper transactions, a total of 71 daily newspapers were sold as part of 11 different transactions during 2011, the busiest year for sales since 2007.

There’s a mention of Alden Global Capital’s acquisition of the Journal Register Company, and “Alden Global has also invested in several other newspaper organizations,” including MediaNews Group (two of the seven MediaNews Group directors are from Alden Global Capital).

And be sure to check out the list of Who Owns the News Media that covers newspapers, TV and radio.

The Fissures Are Growing for Papers
The New York Times’ David Carr writes about “cracks in publishing operations,” one of the bigger ones being underfunded pensions that threaten companies’ financial health. “There are smart people trying to innovate, and tons of great journalism is published daily, but the financial distress is more visible by the week.”

Those of us who work inside the racket like to think of our business as unique, but with underfunded pension plans, unserviceable debt and legacy manufacturing processes and union agreements, the newspaper industry looks a lot like, well, steel, autos and textiles.

Report: How to Build Trust In the Digital Age
Mediabistro’s 10,000 Words column has a piece by Mona Zhang about a report that examines the quality of journalism in the digital age, which “investigates the notions of objectivity and impartiality in the digital world, and whether or not we can trust the new forms of journalism that are emerging as a result of new technologies.”

He (Richard Sambrook) writes that as the traditional business models erode, there has been an increase in “journalism of assertion” and “journalism of affirmation”—models that rely on immediacy and volume, and affirming the beliefs of its audience.

Newspapers Chronicle Lives of Returning Veterans
Nu Yang wrote a piece for Editor & Publisher about the American Homecomings project by The Denver Post and Digital First Media.

The site is really a public service project,” (Lee Ann) Colacioppo said. “We’re doing it for the veterans who are returning and to serve that community … the feedback we’ve received so far is from readers thanking us for sharing these stories and veterans who appreciate the attention to the subject.

And a link to the American Homecomings project since there doesn’t seem to be one in the story.

Lastly, here’s a fun little infographic about the consolidation of media in America.

Los Links: At Least You’re Not A Lumberjack

15 Jun

I’m starting a new feature on the site: Los Links, a (probably) weekly collection of stories about goings-on in the brave new media world. If you run across something that you think should be included, post it in the comments or shoot me an email.

Why Your News Organization’s Social Media Policy May Be Illegal
In the context of the recent brouhaha about Colorado Springs Gazette journalist Barrett Tryon being ordered by management, citing the company’s social media policy, to remove a post from his personal Facebook page, Poynter’s Jeff Sonderman writes such actions have drawn the attention of the National Labor Relations Board. He writes the NLRB has found provisions of employer social media policies to be unlawful in six recent cases, labeling such restrictions “an ‘overly broad’ gag order on workers’ rights.”

The NLRB seems particularly concerned with any restriction that might impair employees’ rights to discuss employment terms and conditions publicly or with each other. The guiding law here is Section 7 of the National Labor Relations Act, which gives workers the rights to organize, unionize and bargain collectively.

Note: The Denver Post’s social media policy can be found in the Ethics Policy document on the intranet.

The Importance of Trustworthiness
In the American Journalism Review, Carl Sessions Stepp writes that while newspaper executives make a convincing case that readers see content as a “real-time work-in-progress that can be instantly corrected and updated,” those executives should be mindful that cutting copy editors could also damage a newspaper’s reputation as more mistakes get through.

The more alarming risk is that the cumulative cutbacks undercut the all-important trustworthiness, a nearly unique selling point. Instead of the recognized, essential site for reliable material, a news operation becomes just one among many semi-satisfactory options.

Why Newspapers Were Doomed All Along
Justin Fox, editor of the Harvard Business Review Group, writes that we’re witnessing the death spiral of many metro dailies that react to lost revenue by cutting back on news-gathering resources and raising prices, making them less attractive to readers. He writes the post-World War II business model was: establish monopoly, milk monopoly.

But the sustainable online business model for serious local reporting has yet to be discovered. … If former monopoly newspapers are to succeed in remaining part of that (sustainable media) mix, they’ll probably need owners who don’t really care about making money. That is, they’ll effectively become non-profits.

The 10 Worst Jobs of 2012
And by the way, according to CareerCast, newspaper reporter is now one of the 10 worst jobs around, coming in at No. 196 out of 200. What’s number 200? Lumberjack.

The Search For A New Business Model

5 Mar

THE PEW RESEARCH Center’s Project for Excellence in Journalism released the findings from a fairly extensive study about newspapers’ efforts to find their footing as the business model changes. Following is a very small sampling from the long report.

From the project’s site, journalism.org, March 5, 2012:

A new study, which combines detailed proprietary data from individual newspapers with in-depth interviews at more than a dozen major media companies, finds that the search for a new revenue model to revive the newspaper industry is making only halting progress but that some individual newspapers are faring much better than the industry overall and may provide signs of a path forward.

>snip<

The industry is inhibited by several obstacles that executives themselves candidly acknowledge. One involves the difficulty of changing the behavior of people trained in the ways of a mature and monopolistic industry. Still another is the unavoidable fact that the part of the newspaper industry that is growing, digital, continues to provide only a small part of the revenue, while the part that is shrinking, print, provides most of the money — a paradox that is difficult to navigate and hard to resist. One pervasive feeling is that 15 years into the digital transition, executives still feel they are in the early stages of figuring out a how to proceed.

“We have all these [new] products we are working on that we believe are going to deliver results that are part of our sustainability,” said one executive. “But we need to eat today.”

Another senior executive, capturing a sentiment articulated by many of his peers, talked about a culture of “inertia” that made change more difficult.

Another executive told us bluntly, “There’s no doubt we’re going out of business right now.”

The problem, he explained, is the dilemma that faces many trying to innovate inside older industries. If you changed your company and did not succeed, that could hasten the end of the enterprise. “There might be a 90% chance you’ll accelerate the decline if you gamble and a 10% chance you might find the new model,” he said. “No one is willing to take that chance.”

>snip<

The good news for the newspaper industry in this data is that the percentage of digital ad revenue is growing at a double-digit pace. Overall, for the last full year for which papers had data, digital revenue at the papers studied grew 19% on average.

The bad news is that print ad sales, which still account for 92% of the overall ad revenue of the papers that provided data, fell by an average of 9%.[1] Thus the actual dollar gains were outnumbered by losses by a factor of 7-to-1 for those papers. These tallies of overall print and digital ad revenues included the last year from which the papers had complete data (2010).

We found that the highest rate of annual digital ad revenue growth occurred at those papers with circulations of 50,000 and above. At those papers, digital revenue grew 20% on average.

>snip<

In our interviews, we asked executives to identify the biggest internal and institutional obstacle at their companies to forging a successful business model.

The response was nearly unanimous. Officials at 10 of the 13 companies said their biggest challenge was the continuing tension between people in their organizations who are advocating a more aggressive digital approach and those more aligned with the legacy tradition. In essence, they described a conflict between going faster and going slower. (One other executive didn’t cite this as a problem at his particular company, but said it was the crucial issue for the industry at large.)

In other words, there remains a continuing disagreement over how to proceed.

“Probably the most difficult thing is to change a corporate culture because you don’t really have the power to do it,” noted one executive. “You can change CEOs, executive VPs, digital VPs. You can wave this magic wand all you want. But at the end of the day, the troops in the field hunker down. From our company, and I would venture for other organizations as well, the most difficult thing to do is change it. “

>snip<

The core cultural issue, executives told us, is the tension between the old ways and the new ways — and some of that stems from newspaper leadership that came of age in the days of monopoly newspapers and 20% profit margins.

>snip<

Culture change is a huge issue for the industry, warned another official who added that it’s happening at a slower pace than people think.

At one company, an official colorfully described the challenge of implementing culture change across the organization as “a contact sport, one collision at a time.”

One major reason why these collisions may still be occurring is that, despite all the travails, the print newspaper still provides the overwhelming majority of the revenue at every paper examined. Thus some of the resistance to change, executives acknowledged, was based on practicality. “We spend 90% of our time talking about 10% of our revenue,” one said. At his company, he explained, they focused much of their energy on a digital model that still wasn’t paying the bills.

John R. Kimberly, a professor of management at the University of Pennsylvania’s Wharton business school who was interviewed as part of the research, says these internal cultural tensions are “not at all atypical of industries that are undergoing disruptive change…The unhappy saga at Kodak, that’s a great example.”

“The problem is not hard to understand at one level,” Kimberly said. “You have developed a set of skills that have been valued and all of a sudden, this isn’t so valued anymore.” The pace of change at each news organization, he said, will largely depend on “who are going to be the leaders and who are going to be the followers.”

>snip<

The differences over pricing reinforce probably the strongest underlying finding of this study. The people who run the newspaper industry are unsure of where it is heading or what it will look like.

These executives stand on the front lines of a business that is also a civic institution, that has a larger purpose than making money, and that prospered for so long that its success was an impediment to innovation.

All that has been radically transformed in less in than a decade. The high water mark for newspaper employment and profitability came in 2000, a mere 12 years ago. The change since then is breathtaking by any measure, and it was hastened by the worst recession in 80 years, a recession that for newspapers has not eased.

The leadership that remains in these companies is trying to innovate while also protecting the old business that pays most of the bills, and each year newer technologies pose yet more challenges. It should be no surprise, then, that the dominant perception about the future is uncertainty.

>MORE

 

Selected tweets about the Pew study from Steve Buttry’s Twitter feed (March 5, links go to Pew story):

  • Most papers “are still largely print first operations” in sales. #DigitalFirst sales staffs “are a distinct minority.” bit.ly/yOXUiB
  • Hmmm, one paper had 63% digital ad revenue growth, another 50%. Wonder what company they might represent? bit.ly/yOXUiB
  • This Pew graphic headline is wrong: “Digital Gains Can’t Make Up for Print Losses.” They can. They just haven’t yet. bit.ly/yOXUiB
  • Not if they’re stacking digital dimes. MT @kevglobal: zite.to/xxUWvH < Pew: for every digital $, papers are losing 7 in print

 

Other takes on the Pew study:

RIP, Rocky Mountain News

27 Feb


ON FEB. 27, 2009
, the Rocky Mountain News ceased publication.

I’ve cobbled together some reading from around the web:

Newspapers Continue Decline As Presidential Campaign News Source

23 Feb

THE PEW RESEARCH Center for People & the Press released a study Feb. 7, Cable Leads the Pack as Campaign News Source, which offered up the not terribly surprising news that fewer people get campaign news from newspapers:

Pew Research Center

With a contested primary in only one party this year, fewer Americans are closely following news about the presidential campaign than four years ago. As a consequence, long-term declines in the number of people getting campaign news from such sources as local TV and network news have steepened, and even the number gathering campaign news online, which had nearly tripled between 2000 and 2008, has leveled off in 2012.

and …

In contrast to cable, the Pew Research Center for the People & the Press’ 2012 campaign news survey, conducted Jan. 4-8 among 1,507 adults nationwide, finds broad declines in the numbers getting campaign news from newspapers, and local and network TV news. Just 20% say they regularly learn something about the presidential campaign or candidates from their local daily newspapers. In 2008, 31% said they got campaign news from their daily newspaper and 40% did so in the 2000 election cycle.

Bear in mind they’re talking about the presidential campaign — if I can find some data on local campaigns and media sources I’ll post it.

Pew Research Center

One thing that was somewhat surprising is that a “relatively limited audience” gets campaign information from social networks:

Many of the newest internet tools for getting campaign information, including social networking, are being used by a relatively limited audience. One-in-five Americans (20%) say they regularly or sometimes get campaign information from Facebook and just one-in-twenty (5%) say the same about Twitter. Even among Facebook and Twitter users, most say they hardly ever or never learn about the campaign or candidates through those sources.

However, in a post titled Why newspaper advertising still matters, Campaigns & Elections says from 2002 to 2010, political advertising in newspapers increased substantially:

Need more proof that newspapers have made a comeback when it comes to political news and advertising? In the 2002 elections, the newspaper industry collected a paltry $35 million for political advertising. It’s likely that more money was spent on bumper stickers that year. But fast forward to 2010 and the newspaper industry increased their take nearly tenfold to over $300 million in political ad sales.

I couldn’t find the study they cite online so the numbers are a little lacking since there’s no context — I’d like to know the percentage of newspaper political ad sales in relation to overall political spending.

There are more interesting graphs on the Pew story, so click on through.