Five “C”s -- Co-operate, Consolidate, Combine, Cull and Cut -- Take Over Newspapers As They Attack The Sixth “C” -- Costs

Philip M. Stone September 11, 2008

More and more competing newspapers these days are finding ways to co-operate with one another to reduce costs, other newspapers are consolidating expensive activities, combining sections continues and, of course, the people cull grows ever more while cutting the number of print days is becoming a trend. Everyone, it seems, is searching for innovative ways to save on costs.

And the reason for doing this is explained very bluntly by Gannett U.S. Community Publishing president Robert J. Dickey who says that for all the cost savings, including layoffs, that his company has gone through this year the decline in revenue has outweighed expense reductions almost threefold.

Now Gannett has a well-deserved reputation for being a very tightly run company. If it is experiencing such a 3:1 ratio of revenue decline to cost savings, then one can only imagine what the situation must be elsewhere, let alone the cost savings to come – Gannett  saying Tuesday that in addition to 1,000 layoffs previously announced a restructuring means 100 higher paid department heads are to go, too. 

Dickey told employees in an email, “Like many businesses, the weakening economy has had a significant effect on our financial performance. Hardest are the classified categories -- real estate, employment and automotive, where our year-over-year classified losses are in the 25% range. But it does not stop there: All segments are struggling with the current economic conditions and, unfortunately, forecasters predict that a rebound won't occur until well into 2009 or later.

“While our local market position remains strong, it is critical to our future as the preeminent local news and advertising source that we adjust and align our resources for continued success. Although we worked hard this year to manage costs, the decline in revenue has outweighed expense reductions almost threefold. Last month this led us to adjust our workforce by 1,000 positions, while attempting to minimize the impact on content creation and ad sales capacity.”

And that goes a long way in explaining the innovative steps by being taken by so many newspapers to control their cost structure. For instance, in the Dallas-Ft. Worth metroplex the Dallas Morning News (Belo) and the Ft. Worth Star-Telegram (McClatchy) have small overlapping  circulation in eight counties. So the two have agreed that in the counties closest to Dallas The Morning News will deliver the Star-Telegram to the Ft. Worth newspaper’s customers, and in the counties closest to Ft. Worth the Star-Telegram will deliver the Morning News to the Dallas newspaper’s customers.

It means the Morning News will be delivering around 12,000 of a competitor’s newspapers, and the Star-Telegram will be delivering around 21,000 of a competitor’s newspapers. Jim Maroney, publisher and chief executive of the News, explained, “There are certain geographies where we both have significant distribution, and we’re sending two cars down the same street, each delivering one product of each of the two companies. If we can get one car going down the street delivering both products, it lowers the cost of distribution for both companies.”

Each newspaper will continue to service its own customers. “This really has an upside in saving us a bunch of costs, and at the same time, we can still provide a high level of service,” said Gary Wortel, president and publisher of the Star-Telegram. Neither newspaper has said how much each hopes the scheme will save.  

On the editorial side, three newspapers in South Florida have agreed to share content of routine stories. The Miami Herald (McClatchy), The South Florida Sun-Sentinel (Tribune) and The Palm Beach Post (Cox) have started a three-month trial that “will allow the papers to pick up stories  from one another that meets a narrow definition of basic news”, according to a Herald memo. “We’ll also have the option of picking up feature reviews, and we’ll increase the amount of news pooling we do with one another.”

“We all know the importance of taking new approaches, including breaking with long-standing tradition if it will help strengthen the paper,” the Herald memo said.  “For the past month or so, editors from the Sentinel, The Post and The Herald have been working on how to trade content on routine stories in order for us all to place more focus on exclusive coverage, from breaking news to enterprise to investigative work…

“The content sharing will take a fairly simple approach: Each newsroom will have the option of picking up stories from the papers' websites for publication in the next day's paper. Eligible stories will be about events that happened in the past 24 hours or that are coming up within several days. Project work, investigations, feature stories, columns and other enterprise will not be included in the arrangement. A second part of the experiment will enable the papers to pick up reviews -- from theater to restaurant reviews -- for publication on both the web and in print. The newsrooms will also work together to increase pooling on stories and photos in one another's primary territories.”

Gee, picking up newspaper stories from other newspapers for your own use -- isn’t that what used to be a primary function of the AP state wire?

And in New York the mighty Times has announced plans to combine some sections circulated in the New York metropolitan area. The Metro report – previously a stand-alone section -- is now becoming a part of the newspaper’s A section that also contains international and national news. Sports is relegated, Tuesday – Friday, at the back of the Business section, but it will keep a separate section for the weekends and on Mondays.

And why is The Times doing this? “The aim, of course, is to save money,” editor Bill Keller told staff in a memo. According to the newspaper’s own story on the consolidation, the move is expected to save several millions of dollars, not by firing workers but rather by reducing overtime. Keller explained the savings will come “from eliminating an early shift in the printing plants on some days. We do not expect to cut the space devoted to these important and popular areas of coverage, or to reduce the staff of journalists who deliver that coverage.”

With the Times’ presses only able to print four sections at a time, any day the newspaper has more than that means an early run of those additional sections before the main run. By limiting the newspaper to just four sections for three days a week the early printing shift can be eliminated on those days. Editorial actually gains with later deadlines for the copy that used to go in that early run, but readers who abhor change won’t be happy.

And the newspaper has found yet another way of saving money – getting out of the wholesale delivery business -- but this does involve some 550 job losses. The company at the end of the year is closing a subsidiary that delivers some 200 newspapers and magazines throughout New York and the suburbs. Instead it is going to increase its use of lower paid independent contractors.  About 550 jobs will go although the company says it may take back some staff for some limited distribution that it will continue doing itself.

The company again did not give specifics on the savings it expects but no doubt high gasoline costs helped fuel its decision. It’s all part of a company campaign to save at least $230 million over the next two years.

Elsewhere, in a cutting mode, the News and Observer in Charlotte, North Carolina (McClatchy) has announced that to save on newsprint it is cutting 10 pages a week and in addition it has offered voluntary buyouts to 40% of its workforce. If too few go then there could be involuntary buyouts or layoffs.

Also in a cutting mode is the Daily Orange, the newspaper of Syracuse University in New York. It’s cutting out its Friday edition “because of a series of financial setbacks that makes printing and distributing a paper on the week’s slowest day impractical.”  

And so back to the statement by Gannett’s Dickey which shouldn’t escape notice, “forecasters predict that a rebound won't occur until well into 2009 or later.” That seems to warn the industry that if one thinks cost cutting has been savage thus far, it’s nothing compared to what is to come for at least another 18 months!