Silicon Cuts Both Ways

The newspaper that renamed itself to chronicle the electronic society is itself being hobbled by it. Friday, the Mercury News – the self-proclaimed “newspaper of Silicon Valley” – announced its own set of severe job cuts. It joined what may be becoming a parade of news staff shrinkings. Last week, both the New York Times and the Merc’s sister Knight Ridder papers, the Philadelphia Inquirer and the Philadelphia Daily News, announced significant newsroom cutbacks. The numbers are stark. At its high point, somewhere near the most buoyant time of the bubble, newsroom staff totaled 404. That number included a major expansion of the Merc’s business staff, which set out to tell the story of the technology-fueled economy. “Good Morning Silicon Valley”  ( http://blogs.siliconvalley.com/gmsv/ )was a blog before blogs were named, pointing its readers to stories from around the world that captured the wild events of the day. Now after the current reduction of 15%, the newsroom will be down to 280 -- a 32% decrease over a little more than half a decade. Knight Ridder, reeling from poor earnings reports and debt downgradings , is making cuts effective in November, to clear its books of severance costs in time for 2006. The challenges of 2006 though will remain the same for Knight Ridder and the other major newspaper companies: 1) loss of classified ad share and pricing power; 2) more advertising choices (especially online contextual and rich media) among core retailers; and 3) declining circulation numbers, as its core readership ages and its younger potential readerships consumes news – free – online. In the Merc’s case, that’s all true, and, in addition, the uneven Bay Area economy added its toll.