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."
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:
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