Bloodletting in the Newsrooms
The news keeps getting worse for newspaper journalists and the communities that depend on their daily papers for local coverage. Across the country, newspapers are trying to maintain their high profit margins by slashing newsroom jobs and news coverage.Last month, the Star-Ledger, the largest newspaper in New Jersey, became the latest paper to scale back its newsroom operation. The paper announced plans to lay off 40 percent of its staff. The Los Angeles Times laid off another 75 journalists. Since 2001, the Los Angeles Times has gutted its newsroom, cutting staff from 1,200 to 660. Gannett, a company that owns 85 daily newspapers, said it would lay off 10 percent – or 3,000 – of its newspaper employees. Meanwhile, Time Warner Inc., the world’s largest magazine publisher, plans to lay off 600, or 6 percent, of its magazine employees.
Dean Singleton, the CEO of Media News Group, one of the largest newspaper owners in the country, recently told a publishing group that he may consolidate copy-editing desks at his 54 newspapers to one location to cut expenses. He is even entertaining the possibility of moving all copy-editing operations overseas, something at least two other publications have already begun doing.
While my heart goes out to all the journalists who have lost their jobs and to the communities being affected by reduced news coverage, it is hard to feel sorry for the newspaper industry, where greed and profit have led to the situation we see today.
Over the past year, newsrooms have been bleeding journalism jobs. UNITY: Journalists of Color reported recently that an astonishing 2,415 newsroom jobs have been lost since September 15. The Project for Excellence in Journalism estimates that newspapers have cut about 10 percent of newsroom jobs — 5,500 positions — this decade.
The latest announcements come as newspaper circulation and ad revenue continue to slide. A recent Audit Bureau of Circulations report found that circulation for daily newspapers dropped close to 5 percent over a six-month period that ended in September 2008. Newspapers in larger cities have been the hardest hit. Circulation at the Los Angeles Times fell by 5 percent; the Chicago Tribune, 7.7 percent; the Boston Globe, 10.1 percent; The Philadelphia Inquirer, 11 percent; the Philadelphia Daily News, 13.2 percent; and the Atlanta Journal Constitution, 13.6 percent.
Meanwhile, the Newspaper Association of America (NAA) expects total ad revenue for the industry to drop by 11.5 percent this year.
Greed and Profit
The Internet has transformed the media industry and how the public consumes news. More people are reading their local newspapers online than ever before. Online ad revenue grew for 17 straight quarters until its recent decline. Nevertheless, the NAA expects online ad revenue to continue its growth next year.
Despite the changing industry, newspapers remain extremely profitable. The Project for Excellence in Journalism (PEJ) reported that the average pre-tax profit margin for newspapers was 18.5 percent in 2007. Some newspaper profits remained above 20 percent. “The industry remains profitable, but it has come time to take the ‘obscenely’ out of that commonplace observation,” PEJ said in its annual State of the News Media report.
But the majority of newspapers are publicly traded companies for which any decline in profits is unacceptable. As a result, newspapers are trying to please Wall Street by axing jobs and scaling back coverage.
With fewer reporters on the beat — and less quality local coverage — it’s no wonder people aren’t subscribing to the paper. While these cuts may please stock analysts, they harm the public. There are fewer journalists covering the business of government at city halls and state capitals across the country. Media companies are closing their Washington and foreign bureaus, while the number of lobbyists pushing the legislation agendas of their corporate clients at the local, state and national levels has increased under the diminishing watchdog eye of the Fourth Estate.
Failure to Adapt
What is rarely discussed is that media consolidation and a lack of leadership within the newspaper industry have resulted in the newspaper industry contributing to its revenue decline.
Too many executives were slow to embrace the Internet as part of their newspapers’ business models. It was just last year that PEJ reported that mainstream media had began to show a serious commitment to growing online ad revenue.
Media consolidation has also resulted in a handful of newspaper chains that are owned by publicly traded companies. Major chains like Times Mirror and Knight Ridder were swallowed up in recent years by other chains. Companies like Tribune and Media News are reducing their staff to pay off their debt for going on a merger spree.
To help ease their debt burden, the industry has turned to the FCC to bail them out by deregulating the industry to allow newspapers to purchase a TV or radio station in the same market, a station that has most likely maintained “obscenely” high profit margins. Last year, the FCC voted to lift the newspaper-broadcast cross- ownership regulation that helped to protect media diversity, competition and localism for more than 30 years. The proposed new rules include gaping loopholes that would allow for consolidation in potentially every media market in this country. The new rules are currently being challenged in court.
If upheld, journalists should expect more layoffs, and the public should see a declining commitment to news as newspapers take on greater debt to please their Wall Street investors.