Mindlessly groping for fat, daily rags eat the seed corn

By RON BROCHU

Most people won’t buy a crappy car, and few automakers would survive if their vehicles offered less and less each year. Same goes for every other product on the market. Who would buy a new smaller model that offered fewer features than the last one? Customers want more and better, and they sure won’t pay more to receive less. Imagine the reaction if Wal-Mart adopted a new slogan: “Pay More, Get Less.”

Ironically, that’s the direction daily newspapers are heading. Fewer local stories. Subscriptions that cost more. Higher advertising rates. It’s a fatal business plan that publishers refresh each time profits droop.

As if that’s not bad enough, editors pen columns about the fantastic bargain newspapers offer customers, who they obviously regard as money-burning idiots. It raises an obvious question: How can readers trust anything the publication says when its top dog utters such nonsense?

Pure and simple, fear and desperation are gripping the industry as it’s being weaned from a fat hog. For decades, daily newspaper publishers have sought profits in the range of 20-40 percent, raising advertising rates to support their tremendous appetites. With bellies bulging past their brows, they’ve not noticed the inability of advertisers to pay their growing rates – from local retailers to the average Joe selling his Chivvy.

Which brings us to last Monday, when one of America’s largest newspaper firms became the first to declare bankruptcy. Tribune Co., publisher of the Chicago Tribune, Los Angeles Times and numerous smaller newspapers, sought court protection from its creditors. Tribune won’t be the last. Since midyear, the Minneapolis Star Tribune has been unable to repay its debt and is high on the list of Chapter 11 candidates.

Losing readers to the Internet is a growing problem in the forlorn world of daily rags. But for many newspapers, debt is the bigger issue. Acquisition frenzy erupted following the senseless breakup of Knight Ridder Inc., former owner of the Duluth News Tribune, St. Paul Pioneer Press and about 30 other dailies. By and by, a series of America’s biggest newspapers were acquired by companies that borrowed heavily just before the economy fell into freefall. Declines in auto and real estate advertising have left publishers unable to repay their ridiculous debt loads, and the credit crisis has prevented restructuring.

Duluthians have witnessed it before (with devastating results) when Harcourt Brace Jovanovich Inc. followed a poisoned pill strategy to avoid hostile takeover by Robert Maxwell. In the aftermath, William Jovanovich put his publications division for sale to secure a quick cash influx. A local acquisition group led by Robert Edgell bought the property in a highly leveraged deal that closed shortly before the economy tanked. As failure became unavoidable, Edgell leaped to his death during a Thanksgiving dinner.

Desperation has a troubling rhythm that triggers wrongheaded decisions. For instance, newspaper owners today believe they can cut their way to profitability, even though they’ve already sliced through muscle into the bone. Nervous editors are sacking anyone who earns too much money – in other words, their most experienced reporters and middle managers. They’re also dumping their most interesting content – the features that competitors lack the time and/or staff to duplicate – along with high-demand add-ons such as TV listings.

To be kind, let’s call it “shortsighted” rather than something more appropriate, like “suicidal.” How long can shortsightedness survive during a lengthy downturn? Hard to tell, but its shelf life certainly is shorter for companies having significant debt. That includes Forum Communications, which borrowed from a consortium of lenders to buy the DNT, its affiliated area publications, and the Grand Forks Herald. Because the company is privately held, its financial strength is a closely held secret. Its aggressive local cuts, however, suggest finances are a concern. Perhaps losses are not an issue. Maybe the concern is just to ensure the Trib remains a cash cow, an admirable goal in the self-infatuated publishers’ club.
There are historical certainties.

• The Trib and other dailies won’t grow back to their former physical size, even if newsprint prices decline. While editors often blame their woes on paper prices, they’re silent when prices drop, which is a certainty. Excess manufacturing capacity prevents paper firms from sustaining higher prices.
  
  
• Former features won’t return. Once they disappear, they’re gone for good. Even if those features were popular, editors hate to admit they acted in error. It’s an ego thing. Most believe they were ordained, not hired, into the profession.
  
  
• Efforts to mimic gossip tabloids will fail at the local level. People love a screaming headline trashing Britney Spears; they cancel subscriptions when the venom is directed toward Aunt Millie.

Former Superior Daily Telegram Editor Ron Brochu saw the light after being booted from the ranks. He archives his articles at www.ronbrochublog.com and invites your silly comments.

Published in the Dec. 12 Northland Reader.