Lauren Rich Fine: Cutting Headcount Is Only Part Of The Solution For Newspapers

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Lauren Rich Fine: Cutting Headcount Is Only Part Of The Solution For Newspapers

The rate of dire announcements coming from the newspaper industry is only being exceeded by broad stock market declines, and, in fact, might be related. As our founder Rafat Ali noted in today’s post, McClatchy (NYSE: MNI) Newspapers is trimming another 15 percent from its overall headcount in a new effort to cut costs. Hearst is close to determining the fate of the San Francisco Chronicle and the Seattle Post-Intelligencer. Scripps’ Rocky Mountain News has been shuttered. Journal Register, Philadelphia Newspapers, and the Minneapolis Star Tribune have filed for bankruptcy.

More after the jump...

As ad revenues continue to plummet mostly because of weakness in the economy, more cost containment efforts are likely to follow, although new revenue streams would be preferred. The industry is finally acting quickly but from such an extreme position of defense that we have to presume more obituaries will be forthcoming. While it’s tempting to be supportive and suggest no one could have seen this coming, it really isn’t the case. More than three years ago, I asked newspaper companies to imagine a future without classified ad revenues; even though it was an extreme suggestion, directionally I knew it was the right way to think. How the industry is getting there—market-share declines exacerbated by a devastating economic downturn—is different than I might have imagined. But just the same, no one has a plan. Self-denial has flourished throughout the industry.

I worry that the industry will cut off its nose to spite its face. Rampant headcount reductions generally sever the wrong heads. True, there probably isn’t a lot of fat left, but I would venture to guess that an objective outsider could walk into most newspapers and question editorial processes, numbers of reporters and range of content—and come up with some good suggestions. Something dramatic has to be done. After enough hinting, I am again receiving the iPD, a PDF-like version of the Cleveland Plain Dealer (owned by Newhouse’s Advance Publications); it certainly isn’t perfect, but it is a step in the right direction as papers try to figure out how to do away with the burden of production and costly newsprint. I prefer a print version of the paper, but if I can’t have one, this version will do. It preserves the editorial integrity of the paper, the serendipity, the ability to predictably find content, and, by the way, the ads.

I wish the industry had felt this same pressure before it became real financial pressure. I am frequently asked whether most newspapers are profitable. Forgetting the vagaries of seasonality, the answer is yes. The problem with that answer is that it is a snapshot; newspapers used to be a lot more profitable and many will become money losers at the rate revenues are declining. The bottom line is clear; more announcements are coming.

Photo Credit: a_kartha

Lauren Rich Fine Mar 9, 2009 2:15 PM ET

Posted In: Media & Publishing, Newspapers, lauren rich fine

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lauren rich fine

Nick,
I agree, both about changing behavior/tasks and the WSJ. As an avid WSJ reader, the quality of the paper is still terrific, but it is getting increasingly off target, the most recent example being the addition of sports coverage. I am still amazed at the cultural issues that still exist in newsrooms, but i will leave it at that

Nick Davis

Lauren

there's no doubt that newsroom behaviours are a key issue. But it's not just a cost issue. Any manager will tell you that to change outcomes you must actually and fundamentally change what people do. I'd suggest that the primary test is: what's unique about news? More importantly, what's unique about the audience need for any given title?
You can cut a lot of costs in work flow. But you won't get anywhere if you don't get the product right for the contemporary media reality. Take WSJ. Murdoch is probably rationalising a very inefficient newsroom. But he's also encouraging Thomson to make the paper more general in its purpose, with sport and so on. Is that really where the WSJ reader lives? I don't think so.

Jeff B

Hey Lauren-
you are right. If cost-cutting was part of a broader long-term change for newspapers, then maybe it would make sense. But it doesn't seem to me any of the public management teams have stepped up to attempt to alter their business models, so they are all just running their existing model into the ground. Cost-cutting for the sake of cost-cutting, when the secular changes are so big, will accomplish only short-term objectives.

lauren rich fine

Larry, thank you for your kind words but more importantly a reminder that some papers are still doing alright. Adam, thanks for bringing your company to my attention. No question that the newspapers need to do a better job on ad sales of all types; it really shouldn't be that difficult. You might want to check out brand muscle; full disclosure, i am on their board, but it also fits in the mix.

Adam Gelles

Newspapers have got to realign their ad inventory to drive better and smarter revenue from their customers. They need to optimize how the sell print with digital to ensure long term revenue viability. This means their ad product planning needs to align more with how clients understand advertising value rather than operating in silos based upon medium. See what we have been doing with Gannett as a starting point.http:// www.theammgroup.com.

Larry Grimes

Lauren, you are right on. However, we continue to only read about the top 20 markets, per se and their daily newspaper woes. Community weeklies and most smaller daily newspapers remain quite healthy albeit challenged in this weakened advertising sales environment. They will bounce back as the economy improves. They remain, by far, the #1 ad buy in their markets. And are under little pressure on-line. And luckily most do not rely on classified advertising for their survival.

Newsroom cuts—you are right on again. It is silly 8 people have to touch a story to get it published. When Sam Zell suggested the newsroom needed to go back to the old model, "ambulance chasers" per say, covering several stories a day, he was correct. It's the weekly model for sure.

Lauren Fine

I respectfully disagree. I think the folks in the profession could handle more than one of those functions and fully streamline the process. I agree there is a real craft to professional journalism but the industry has taken itself too seriously, become too cautious, and too bloated to survive.

michael rogers

Its way too easy to blame the Unions. Operating a newspaper organization is labor intensive—there is a reason why each issue is a known as a "daily miracle". Sure, eight people touch a story. Try the reporter, the fact checker, the grammarian and proof reader, the editor, legal and the page layout person all on tight deadlines. America expects that its papers contain stories of merit and gravitas. We expect them to be factually presented in a professional way. Otherwise, none of the content would be worth the paper they are printed on.

Mike Rogers

nathan r

How much of the headcount reductions will be dictated by the ability of companies to find efficiencies when dealing with unions? I believe that it was Rupert Murdoch who noted that it takes 8 people to touch a story before it was printed at the WSJ—he thought it could be more efficient however the newsroom is one of the unionized areas that has leverage against management decisions.