More Bad News for Newspapers, Part II

I wrote today's first post over the weekend, before seeing today reading today's New York Times article by Richard Perez-Pena, "Uncertainty as Tribune Prepares to Retrench."

Here are some additional points that Perez-Pena made:

• Watering down the product can hurt staff morale.
• "'To the extent you diminish your product, I think you diminish your success in print or online. In the long run, it's going to be harmful to newspapers' brand names, which is the strongest thing they've got,'" John Morton, an independent newspaper analyst. "Offering readers less, trying to cut costs and preserve unrealistic profit margins. 'It’s a strategy, basically, of gradually closing down,'" Morton added.
  
• Although not addressed in last week's analyst call, Sam Zell has said that he thinks too many resources have been allocated to international and national news -- information available from other resources on the Internet -- and that local news is what's most important to readers of local newspapers.
• The implications include smaller national and international sections -- and heavier reliance on wire service copy.
• "But a newspaper dominated by wire articles would offer little that was original — and little temptation to a reader who could just as easily go to Google or Yahoo for news."

What's the biggest problem facing newspapers? Cost structure and circulation are issues, but not the real problem. According to Mike Simonton, senior director at Fitch Ratings in Chicago, quoted in the article, "The biggest problem still is the loss of ad sales...I think there’s very little evidence that any of these strategies and changes will change that.”

Again, the point I've made before in this blog, as much I respect journalism, its survival mostly rests on being an effective mechanism to distribute advertising -- not on circulation or journalism awards. (The same is true for broadcast TV, which has been more successful in experimenting with new means to distribute advertising via product placements, even as viewership has declined.)

More Bad News for LA Times, Chicago Tribune -- and Other Major Newspapers

During a recent conference call with financial analysts, billionaire owner Sam Zell said that the Los Angeles Times and Chicago Tribune will cut staff and the size of each paper to get to a 50-50 ratio of editorial copy and advertising.

The Los Angeles Times could lose 82 pages a week, leaving regular daily issues with just 56 news pages. (Sundays issues would have bigger page counts.)

Of course this means cutting reporters. How will Tribune Co. determine which reporters to layoff?

By measuring journalists’ output. According to a New York Times article, "Tribune Co. Plans Sharp Cutbacks at Papers," Randy Michaels, the Tribune Co.'s COO, said, “'When you get into the individuals, you find out that you can eliminate a fair number of people while eliminating not very much content.' He added that he understood that some reporting jobs naturally produce less output than others."

This is a new approach to the industry, but one, that according to the article, "would save on newsroom and newsprint costs, which together typically account for 25 percent to 30 percent of a newspaper’s operating costs."

Additional changes include: redesigning newspapers' formats, like the Orlando Sentinel, to feature “maps, graphics, lists, ranking and stats...(because reader surveys showed that's what readers want, and) we’re in the business of satisfying customers, and we will respond to what they say they want,” Zell wrote in a note to employees.

In other words, the readers' experience with the paper will be totally transformed.

Even though the company says decisions will be based on productivity, the result means that Tribune Co. newspapers will be unable to adequately cover their markets. We've already heard that response from reporters themselves at the Boston Globe, Associated Press, Reuters and other news outlets. That does a disservice to readers and the community.

But at least they'll get the perception of more ads in their shrunken papers -- and we all know how people's main complaint about newspapers has been they just haven't gotten enough ads.

The future of newspapers' business sections in the Internet age

The tightening ad market is claiming more victims. The latest: "The Denver Post—which folded its business section into other sections on every day but Sunday—last month became at least the eighth daily since early 2007 to cut its stand-alone daily business section," according to BtoBOnline.

As it is, many newspapers have been pushing their readers to their websites to check out the stock pages, in part as a cost-savings initiative because the cost of newsprint continues to rise (if only I could invest in the futures market for newsprint). And in part because most active traders, these newspapers feel, already check their stocks online.

But getting rid of standalone business sections means:

• Business news becomes a less important section within the newspaper hierarchy.
• Business sections will get fewer resources and reporters. The level of business coverage will decrease because staffs won't have enough time to cover news they would like to.
  
• Business sections will be smaller sections and more difficult to find.
• There will be less room for local coverage.
  

All this will lead to a more challenging ad environment, and a downward cycle.

This is good news for local business weeklies...which should be able to beef up their pages with content and ads.

Meanwhile, the BtoBOnline article cited "a study by Arizona State University's National Center for Business Journalism found that about 75% of daily newspapers today run, on average, one page or less of business news a day, and only one in eight daily papers runs a stand-alone section."

The implications for B2B PR programs is that we need to shift our focus to the business weeklies and AP, Bloomberg and Reuters, and away from local market daily business sections.