The NYT Reality Check -- Announcing Just Three Days Before The Q3 Earnings Announcement That 100 Newsroom Jobs Are To Go Means Management Wants To Be Seen As Proactive Before Those Lousy Results Hit

Philip M. Stone October 21, 2009 Follow on Twitter

Everyone is so enthralled that newspaper companies seem to have their cost side under control, reporting higher earnings despite rotten revenues, that the New York Times reality check came as a bit of a shock -- announcing just three days before Q3 earnings are released that 100 newsroom jobs are to go, the timing obviously intended to show that management is managing, but this time around shareholders may not be impressed.

It’s not that the cutbacks are going to destroy the NYT editorial operation – it currently has about 1,250 newsroom employees which is some 500 more than any other US newspaper; no, the reason the shareholders won’t be happy is because other newspaper chains (Gannett, McClatchy) have savagely cut their employee costs over the past couple of years which is why their financials are now much better looking than last year, but the Times Company, while making cuts here and there and imposing a 5% salary decrease, hasn’t really been savage, and the Q3 earnings are likely to show that. 

So now, even for the NYT, it truly is “bite the bullet” time, and there has to be considerable sympathy for the newsroom folks. After all, although there were no firm promises, staff had been told early in the year that no 2009 cuts were foreseen after the 2008 cutbacks of about 100 staff, and to cement that staff accepted a 5% salary decrease. So it came as a major newsroom shock when editor Bill Keller announced via email (he was, he said, too ill to do it in person), “I won’t pretend that these staff cuts will not add to the burdens of journalists whose responsibilities have grown faster than their compensation….I doubt that anyone is shocked by the fact of this, but it is happening sooner than anyone anticipated.”  (A clear sign the year’s business plan is in tatters?) “When we took our 5% pay cuts it was in the hope that this would fend off the need for more cuts this year.” Apparently not! He ended, “Like you, I yearn for the day when we can do our jobs without looking over our shoulders for economic thunderstorms.”

So the reality is that “economic thunderstorms” are still very much a part of daily newspaper business life. No wonder McClatchy newspapers, for instance, are still busy making cutbacks. The day before their Q3 earnings were announced its News & Observer serving Raleigh/Durham, North Carolina said it was looking for buyouts, with Publisher Orage Quarles III telling staff, “Unfortunately, despite our progress, there is continued softness in our classified ‘Big 3’ categories. While it does not appear that revenue is getting worse, we still are falling short of our projections.”

And a week later its Charlotte Observer in the same state announced it, too, was looking for buyouts with Publisher Ann Caulkins saying, “It’s about a sluggish economy. We just aren’t seeing improvement.”

Yet more solid proof that earnings successes are coming from cutting costs, not by getting in additional revenue.

So, with newspapers really feeling the revenue downturn with very little sign that things will get better soon – some ad agencies say they will have more spend in the coming months, but on the other hand they are looking for lower ad rates which doesn’t help traditional media recovery any --  a new report is attracting attention for saying that perhaps now is the time that American society as a whole starts to take  responsibility for supporting news reporting for the good of society as a whole.

The report is being taken seriously because one of its authors is Len Downie, former respected Washington Post editor. The point that he and Columbia University journalism professor Michael Schudson make is, “It may not be essential to save or promote any particular news medium, including print newspapers. What is paramount is preserving independent, original, credible reporting whether or not it is profitable, and regardless of the medium in which it appears.”

Now even with the New York Times losing another 100 newsroom staff it’s still going to put out a top quality paper covering stories that most others wouldn’t get near, but when you start looking at those metropolitan and community newspapers that have decimated their newsrooms, that have cut so many local beats that they may no longer really be serving their communities as they should, then does society need to step in and take a role in saving news reporting?

Among the recommendations Downie and Schudson make are:

-- Tax regulations should explicitly allow new or existing local news organizations to operate as nonprofit or low-profit entities, allowing them to receive tax-deductible donations, along with advertising revenue and other income.

-- Philanthropists and foundations should substantially increase support for local news reporting -- at both commercial and nonprofit organizations -- to levels they provide for arts, cultural and educational institutions.

- Public radio and television should provide significant local news reporting in every community served by public stations, far more than most do now.

-- Universities and colleges should become institutional sources of local, state and accountability news reporting, following the lead of pioneering journalism schools whose faculty and student journalists staff community news and investigative reporting Web sites.

-- A national Fund for Local News should be created with fees collected, for instance, from telecom users, broadcast licensees or Internet service providers. Grants should be made competitively by independent state Local News Fund Councils to local news organizations for innovations in local news reporting and ways to support it.

The authors say, “We do not believe newspapers are going to disappear in print or online anytime soon. But they will have much smaller reporting staffs and play diminished roles. At the same time, the Internet has enabled new ways to gather and distribute news that make possible a reconstruction of American journalism.”

Read between the lines of all this and the authors are really pretty clear – newspapers in the future may not be able to do the reporting job they should be doing for their local communities, so it’s time to ready Plan B.

The reality checks of the past couple of weeks show that Plan B may not be such a bad idea -- we’re still going to have newspapers, but will the current advertising/subscription model alone continue to adequately support local reporting requirements, or do we need to take steps to enhance local reporting because newspapers will no longer have adequate newsrooms to do the job that society deserves?