Newspapers in an Economic Storm

By Deborah Howell
Sunday, March 19, 2006

Recent events in the newspaper business make it clear that newsrooms cannot escape market forces.

Stockholders forced the sale of Knight Ridder Inc., the nation's second-largest newspaper chain, with 32 papers. McClatchy Co. announced Monday it would buy Knight Ridder, but said it would sell 12 of the 32 newspapers -- the ones not making enough money and not in growth markets.

And Post editors announced March 10 that the newsroom will cut 80 of 870 newsroom positions. The New York Times, located in the world's financial center, announced on Tuesday that it will stop publishing daily stock listings.

Advertising revenue has fallen at most newspapers because of mergers of major retailers, lagging auto sales, the bankruptcies of major advertisers and a shift of classified ads to free Web sites such as Craigslist. Declining circulation and the defection of young readers to the Internet mean that newspapers can't raise their advertising rates year after year.

Newspapers are part of the civic glue that holds communities together. The turnover in newspaper ownership has been staggering to cities that wake up to find their newspaper sold and to employees who thought their jobs were safe. The Post, like most big-city dailies, has lost circulation -- a nearly 7 percent drop since 2003 -- and advertising revenue has been flat while expenses have risen, so The Post is trimming its budget sails. Newspaper journalism is labor-intensive and expensive; the two big costs are people and paper.

The Post is more protected from the forces battering some other publicly traded newspaper companies -- although the price of its publicly traded Class B stock has fallen about 16 percent in the past year -- and stockholders cannot force its sale. The Post, like the New York Times Co., Comcast Corp., Dow Jones & Co., McClatchy, and several other media companies -- and Google -- has a two-tier stock structure. The Post's Class A shares, which include the power to elect a majority of the board, are owned by members of the Graham family.

There are bright spots. McClatchy has increased circulation 20 of the past 21 years, achieved a 20 percent-plus profit margin and produces good journalism. The company did it by being focused and disciplined; it did not bulk up in good times but also did not cut staff or news space in bad times.

And daily newspapers always have more reporting boots on the ground than other media rivals. Reporting is the essence of journalism, and The Post abounds with talented reporters. It is also, like most newspapers, heavily into the Internet, keeping readers informed more quickly and intensely than ever before. Other new ventures include a commuter tabloid, the Express, and the planned WTWP radio station.

All the newspaper gurus I've talked to think newspapers and newsrooms have to change, and journalists at The Post talk about it every day.

John Lavine, dean of the Medill School of Journalism at Northwestern University, has done extensive newspaper readership research. "Newspapers have to change dramatically," he said. "Unless the public reads it, you're just chopping down trees. The ability to create relevant journalism must be paired with being connected and valued by readers, understanding what motivates them. The days of journalists telling readers what matters are over."

Tom Rosenstiel, a former reporter and now director of the Project for Excellence in Journalism, believes two problems have damaged usefulness and profitability. "Too many newspapers are edited for journalists, sources and prizes," he said. He also believes newspapers have made a mistake by ignoring immigrants, blue-collar communities and poorer neighborhoods, preferring a more elite readership. "They cut off their future." (The Post made a smart move in buying El Tiempo Latino, a local Spanish-language newspaper.)

Dean Singleton, chief executive of MediaNews Group Inc., is looking at buying some of the 12 papers McClatchy is shedding. He is bullish on newspapers and is buying new presses in Denver and Salt Lake City.

"It's not that we're a declining business, we're in a changing business. It's finally becoming real in newsrooms. We have a generation of newspaper people who want to write and impress our peers and sources rather than impress our readers and get them to read us, whether in print or online. The economy of the newspaper today will not allow us to do that any longer. To operate more efficiently, we will need fewer editors and fewer process people and hopefully more people on the street gathering news," he said.

Executive Editor Len Downie does not believe that losing 80 jobs through a combination of buyouts and attrition will affect the quality of The Post's journalism. He said the news staff grew "enormously" in the past and now must become a "rational" size.

In the future, newspapers probably will be smaller, more expensive and more tailored to readers' needs. Lavine says newspapers will be fine "if they discover more interesting stories and then tell them in profoundly more interesting ways and then drive all of this by understanding and connecting with their audience -- and then use the Net and wireless to expand their ability to provide all of that where, when and how the readers want it."

There's one big intangible in all this: a paper's connection with its readers. Readers who feel respected and who love their newspaper don't depart easily. If Post journalists write every story, take every photo, compose every headline and design every page with readers in mind, and the newspaper is printed well and delivered on time, The Post will be fine.

Deborah Howell can be reached at 202-334-7582 or

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