Here’s More Examples Of What ‘New Business Plans’ Are Doing to Newspapers

Philip M. Stone June 26, 2008

The popular line from newspaper publishers these days is that employees must come to terms with 'new business plans' necessary for print’s survival. So, in what is fast becoming practically a weekly ftm feature we highlight below what publishers have been up to recently.

We do point out, however,  that unless there are exceptional circumstances we are not including such announcements as the one this week from the Detroit Media Partnership that oversees the joint business and advertising operations of The Detroit News and The Detroit Free Press. It is looking for 150 buyouts by July 18 – some 7% of total staff, but that falls under the category of old business plans, there seem to be similar announcements  coming out almost daily, but what we want to do here is to emphasize new approaches:

• The Boston Globe has proposed to unions that employees accept a 10% pay cut. Union leaders say they unanimously oppose that and see it as the first shot  in future collective bargaining.

• The Boston Herald is planning to outsource its printing rather than invest in upgrading the newspaper’s 50-year old presses. Some 130-150 jobs will go.

• The Orange County Register (California) is outsourcing some of its editing functionality to a company based near New Delhi, India, and the same company will handle page layout for another community newspaper in the group.  A one month trial with Global Media begins at the end of the month.

• The Hartford Courant  (Tribune) says that in September its weekly news hole will fall to 206 pages a week from the current 273, a 25% reduction. And the paper is making an equal percentage reduction in its newsroom – it will go from 232 staffers down to around 175.

• The web site of the International Herald Tribune is to merge within the New York Times site. When the New York Times Company  became the sole publisher of the IHT in January, 2003, it said its research showed the IHT brand name was well worth keeping and protecting, so no merger into the New York Times although there have been moves since aligning the two closer. But apparently the IHT branding power doesn’t convey to its web site which is read by about 7 million readers monthly  -- many coming from the likes of Google rather than a core audience -- compared to the NYT’s 56 million.

• Johnston Press, publisher of more than 300 UK regional and local newspapers,  successfully conducted a £170 million ($330 million, €214 million) rights issue in order to pay down debt. It also sold a 20% stake in the chain at a bargain price to Malaysian billionaire Ananda Krishnan Usaha (we now understand how billionaires become billionaires – they buy low and later sell high – not rocket science!)

• Sam Zell is looking at the Tribune Tower in Chicago, and Times Mirror Square in Los Angeles and has announced the company is looking for ways to maximize profits from those properties which he says are underutilized. Tribune Tower is 40 stories high, Times Mirror Square (the tabloid PM Mirror owned by the Chandler family was killed off in 1962) is a complex of five buildings with 750,000 square feet (70,000 square meters) of usable space taking up an entire city block. Additionally there is a parking garage and  a two acre (near one hectare) vacant parcel of land.

• The Associated Press, taking the heat from member newspapers that complain  they can’t afford the agency’s current rates, is rolling out details of a new pricing structure this week intended to reduce member costs by $21 million.

• The Palm Beach Newspapers (Florida) says it wants to cut 22% of its staff (300 workers out of 1,350) and the only reason we include this “old” business plan is because of publisher  Doug Franklin’s statement, “We are the last major  Florida newspaper to implement staff reductions,” which pretty much means the real estate crisis in that state has now  hit everyone hard.

• McClatchy has had success buying up some $300 million of debt at heavily discounted pricing and the reason for that success could come from Moody’s Ratings Services that now has classified the newspaper company’s debt as the lowest grade of junk debt possible—SGL -4. No doubt debt holders were thinking to get what they can while the going is still somewhat good! Rather ominous for the newspaper industry that the worst such debtor ranked by loan volume is major newsprint supplier Abitibi Consolidated. What happens to newsprint supplies if  there’s a default there?

And then there’s the story lovingly reported by the San Francisco Chronicle  (Hearst is said to be losing $1 million a week there)  that De Lauer’s newsstand in Oakland was to go out of business at 10 p.m. local Wednesday night after 101 years of selling newspapers and magazines from around the world. City officials and others are investigating if there are possibilities to keep the landmark open. “It’s a 101-year-old institution,” said David Glover, executive editor of a non-profit group devoted to strengthening local communities. “It has a special place in the landscape of the community.” The newsstand has been losing some $75,000 to $100,000 a year for the past five years, and  the accountants are now having the final word unless there is a last minute save.

One thing seems pretty obvious -- whether it is publishing a newspaper or operating the stand that sells that newspaper the results seems to be the same these days. Joe Churchwood, the newsstand’s accountant, explained, “This is a business that time is passing by because everyone has a computer. Your news is at the click of a button.”