Call It Frightsizing

The news is out: Newspaper companies can no longer afford reporters and editors. Today's L.A. Times announcement is the latest to catch a news cycle of public attention. As well it should. A 17% cut -- 150 newsroom jobs -- is an unnatural disaster. It's the kind of news that shocks, if briefly. Because it is the L.A. Times, it's more shocking nationally than last week's cut at the Hartford Courant (25% or 58 newsroom jobs) and at the Baltimore Sun (about 20% or 55-60 jobs). All are Tribune-owned papers.

These cuts, and more at other Tribune papers, are a part of strategy, the new Tribune management tells us. It's "rightsizing" its papers to meet the economic realities of the day.

"Rightsizing" is one of those words management slings about when it wants to make it seem like it's making intelligent decisions in tough times. Sounds better than "panicking."

To describe the current round of staff cuts, though, there's a better word: Frightsizing.

Frightsizing means reckless cutting, hacking into one or both of the key elements of what news publishers will need to make it in the digital age. #1 is the newsroom -- or shall we say, content production -- staff. Content is what will make publishers money online, and as experienced, authoritative staff is lost, so will be lost some of the potential of what the new news company can be. #2 is the local sales staff, people who can grasp the out-sized sales/distribution opportunity of measurable, digital commerce and multiply publisher revenues. Frightsizing not only cuts deeply into near-term potential, it instills in the survivors fear and loathing, hardly qualities that win in hyper-competitive markets.

LAT Publisher David Hiller can talk about getting staff down to a "sustainable" size, but the truth is no one's got any idea what sustainability looks like. With increasing forecasts that the US economy will stay in the doldrums into '09, publishers are really just bailing water as fast as they can. The leaks (in print circulation, in print ad revenues, in newsprint costs and in slowing online revenues) are all widening. So all publishers are now cutting rapidly, with newsprint finding its predicted fate as an adjunct to the Internet, rather than to the opposite fiction too long held onto by news execs.

Really, given their company structures, they have little choice. You can see the must-pay checklists in front of publishers:

• Operating costs, with staff as the biggest and newsprint and ink coming in second;
• Capital costs, as they struggle to modernize production systems to meet new multiple-platform realities -- and still buy trucks to deliver the legacy product that still produces 90% of their revenues;
• Payments on debt;
• Dividend payouts to shareholders, payouts that most companies have increased (in the vain hope of satisfying investors) as their fortunes have declines;
• Funds to buy back a few shares here and there, again in vain hope of bolstering share price.

It's a daunting list, and one that nobody can meet with today's revenues. It wasn't always this way. Recall that three years ago, the profit margin in the industry still stood at about 21%, a number lusted at by many other companies in many other industries. Most companies had some semblance of an opportunity to make a bold moves, halving that margin and creating a real strategic plan to make a transition into the digital age with their companies largely intact.

They could have made better decisions to play the transition. Instead the transition is now playing them.

Certainly, the New York Times, the Washington Post, McClatchy, Scripps, Gannett and Belo come to mind as companies that are trying hard not to panic, not to frightsize. The cuts at all those companies are real, but you have the sense that there's an appreciation of retaining key assets.

Tribune, with its unconscionable $12 billion-plus debt, is the poster boy of frightsizing. Calling the new Tribune an employee-owned company is high parody, when those "owners" are being shown the door in massive numbers. You can place bets on whether the frightsized Tribune paper employees will outlast the real estate being shopped out beneath their feet. But for now, it's a horror show without a Hollywood ending in sight.

Related Content Bridges:

"LAT Madness is Brand Suicide"

"What's Wrong with Tribune's Math"

More Tribune, here

Comments

[journalism 101]

"Rightsizing" goes along with the BS spin that some publishers, editors and news organization managers are spouting regarding the benefit of cutting out sections and shrinking the news hole.

They believe, apparently, that readers are best served by steadily removing the elements that many readers want.

Yes, dear reader, we're making our paper a better paper by eliminating the business section! getting rid of sports writers based in our readers' favorite university towns! firing the movie critic! cutting out classical music coverage! getting rid of the book editor, and running wire reviews in the travel section!

For the "young people," we're giving you more of the celebrity coverage you like. Oh, wait, you split to the Internet long ago.

For the 40+ generation, we're giving you more of the celebrity coverage you like. Oh, wait, that just pisses you off and makes you go away.

Sadly, too many of the publishers, editors and other folks in charge of newsrooms everywhere are clueless when it comes to understanding what they ought to do to "save" newspapers.

So they shoot in the dark, bandying words like "hyperlocal" (before regional/local sections were cut out, local news was way more hyperlocal) and "rightsizing", and reorganizing the newsroom so that print, online and television folks work together.

Long ago, newspapers demonstrated their poor management skills and lack of foresight by pushing "convergence," and by duplicating their print content online, both of which served to devalue the print paper.

Sadly, the cluelessness marches on.

Believe it or not, but some of the people who are overseeing the destruction of their newsrooms and newspapers are continuing to be financially rewarded for their bad decisions (with bonuses, etc.) and are sure to leave with phat retirement packages.

How does that make sense?

[Wendy Contos]

A professor I had in graduate school used to call it "Stupidsizing."

[Big Tuna]

I'd like to put to rest the whole "owners were greedy because they got 20% margins when X amount of the S&P doesn't have a margin like that...." argument.

Business 101 explains that margins are not the most important thing regarding stock price....Growth is! If you have a lot of growth, i.e., Google, investors will settle for much lower margins.

If you have 0 to negative growth, i.e., newspaper, investors will demand higher margins to offset that lack of growth.

[ed]

Add unanticipated gasoline cost increases to your list. Delivering the legacy product costs more than three times than it did 3 years ago, thanks to hikes at the gas pumps. But it could be worse, as many papers already drew in their circulation routes to concentrate delivery within their core zone, on which they set their ad rates.