Newspapers Know No End To Turmoil

By Frank Ahrens
Washington Post Staff Writer
Thursday, November 9, 2006

It's no exaggeration to say that bad news comes every day for the embattled newspaper industry.

Yesterday, the editor of the Philadelphia Inquirer became the second top editor of a major newspaper in two days to leave.

Also yesterday, investors increased pressure on the New York Times Co. to scrap its venerated family-ownership structure, saying it has harmed the company's value and is no longer accountable to public shareholders.

Amanda Bennett, the Inquirer's editor for the past three years, was replaced by National Public Radio ombudsman Bill Marimow, who left as editor of the Baltimore Sun in 2004 after staff cuts there. At the Inquirer, Marimow may have to cut more than one-third of his staff within weeks.

And in Los Angeles, staff members at the Times have had exactly one day to deal with losing editor Dean Baquet -- who was fired Tuesday after refusing to make staff cuts required by the paper's corporate owners -- before new reports emerged that L.A. supermarket magnate Ronald W. Burkle wants to buy their paper and its parent, the Tribune Co.

"I'd say we're slowly recovering here," said Vernon Loeb, the L.A. Times' California investigations editor. "But I wouldn't want to minimize how deeply all of us feel the loss of Dean. He wasn't just admired here. He was beloved."

Facing declining circulation since 1987 and diminished revenue for the past few years, major newspapers and their owners are trying to remake themselves for the digital age. Most papers have moved aggressively into Internet -- and some, mobile -- delivery of their news and ad sales, as they attempt to follow their readers from paper to the Web and beyond.

But the changeover has been costly, and even though online ad revenue has been rising, it is not enough to offset the loss of classified and display advertising in newspapers.

Newspaper companies also are feeling pressure from Wall Street investors, who see an industry that shows little or no growth potential.

In Philadelphia, the Inquirer is one of the old lions of the industry, a multiple Pulitzer Prize winner, once home to renowned national and foreign correspondents. But the paper has lost tens of thousands of readers in recent years, more than most of its industry peers. Daily circulation, 500,000 at its peak in the 1980s, is 332,000 today.

Earlier this year, the paper's former owner, Knight Ridder, was bought by the McClatchy Co. chain, which kept Knight Ridder's growing papers and sold poorer performers, such as the Inquirer.

The paper's newsroom had already lost 75 employees to buyouts, taking the staff down to about 410. Now, the new owners are negotiating with the employees' union to cut as many as 150 newsroom jobs.

"They are taking a major metropolitan newspaper and taking 'major' and 'metropolitan' out of it," said Tom Ferrick Jr., an Inquirer Metro columnist and the newsroom union's chief steward. Ferrick said Marimow, who worked at the Inquirer from 1972 to 1993, was warmly received when presented to the newsroom yesterday.

Nevertheless, Ferrick said, "I don't know why he'd come here to preside over the dissolution of this newsroom."

In Philadelphia, Marimow faces a situation similar to the one that preceded his departure from Baltimore. He took the NPR ombudsman job last month after he was forced out as NPR's vice president for news and information after only eight months on the job, and had time to write two ombudsman columns before exiting for Philadelphia.

Marimow said he took the Philadelphia job because of a fondness for his home town and his hometown paper, because he thinks that owner Brian P. Tierney is a "guy of character" and that the Inquirer can be a great local newspaper, despite the looming cuts.

"There's no doubt there's going to be a period of pain," Marimow said yesterday. "But that does not mean that with the appropriate mission, [the paper] won't be excellent."

Bennett said it was time for a change in newsroom leadership.

"It's been a very rewarding three years but a very tough three years," Bennett said yesterday. "We had to do a lot of hard stuff. There's a very tough road ahead, and both of us agreed that it was better to have someone new to come in and start that."

In New York, Morgan Stanley Investment Management, which owns 7.6 percent of New York Times Co. shares, is pressing the company to scrap its century-old ownership structure.

The Times Co.'s market value has fallen more than half in the past four years. Since hitting a high of more than $50 a share in 2002, Times Co. stock has dropped steadily, hitting a low of less of than $22 a share in August of this year. Shares rose 37 cents yesterday to close at $24.53.

The Stanley investors blame the company's ownership structure, which is known as "dual-class."

In their cross hairs is Times Co. Chairman and Times Publisher Arthur O. Sulzberger Jr., great-grandson of Adolph S. Ochs, who bought controlling interest of the Times in 1896. Even before the company went public in 1969, it set up two classes of stock -- A and B. Class A is publicly traded, but Class B is not, and it comes with more voting rights. The Ochs-Sulzberger family owns about 90 percent of Class B stock and has the power to elect nine of the company's 13 board members.

"We believe that the [Times Co.'s] current corporate governance practices deviate from what is widely considered to be best practice by corporate governance experts," wrote Hassan Elmasry, a Morgan Stanley managing director.

Morgan Stanley is asking the Times Co. to let investors vote on abolishing the two classes of stock ownership and taking away one of Sulzberger's jobs at the annual shareholders meeting in the spring, which the company is not required to do. The Morgan Stanley pressure is of interest to other media companies with dual-class ownership, such as The Washington Post Co., in which the Graham family holds controlling interest.

Staff researcher Meg Smith contributed to this report.