More Media Layoffs

Well, layoffs may not be exactly the right word, but the recent news that two dozen Star Tribune newsroom staff had accepted buyouts continues the trend toward newsroom downsizing.

The buyouts amount to two weeks of pay for every year of service. I was surprised at some of the names I saw, like Dane Smith, with whom I worked back at the state capitol in the late ’80s to mid ’90s. With 20 years under his belt, the MPR story says he sees this as an opportunity to move to other pursuits. Still, I’ve been reading his byline for a long time, so it will be quite a change.

This is the same buyout formula the St. Paul Pioneer Press offered its employees late last year. Buyouts are better than layoffs (at least they’re voluntary), but they’re happening all over: this post has links to some other notable and recent ones.

It’s another signpost on the road to smaller mainstream media news organizations, even as the amount of news and information available explodes. Reporters are needing to be more versatile, producing multimedia content in addition to their old-fashioned writing. And many reporters are starting blogs (often hosted by their newspapers), so the writing part of the job isn’t diminishing either.

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The Aase Switch

Thanks to Jeff Jarvis for pointing out Michael Rosenblum’s blog, and particularly some great posts he’s done about why magazines and newspapers do web video better than TV stations do.

The irony, at least from my own perspective, is the comparison between news organizations that have traditionally worked in print and those that have traditionally worked in video – that is, local TV news stations. The magazines and newspapers have far less problem adapting to video; at least in the VJ model – that is where the reporter carries their own small camera and laptop, and produces their own stories. The magazines and newspapers ‘get it’ right away because this is they way they have always worked. Newspaper journalists have never worked with a crew. They have never had to wait in a reporting situation for ‘the pencil to arrive’.

In most local newsrooms in this country, we field an average of 8 camera crews in any given day. That means 8 cameras to cover a city like Tampa or Houston or Nashville. Can you imagine what would happen if a newspaper were suddenly reduced to covering Tampa with 8 pencils?

Read the whole article here; it’s well worth it. The fundamental point is right on; in a smaller-audience world of web video, you can’t afford multi-person crews taking a long time to produce content. Rosenblum advocates miniDV production with laptops for editing.

Newspapers and magazines and others that aren’t accustomed to high-end broadcast production can be more nimble; they can send a reporter with a mini DV camera instead of just a pencil and notebook, enhancing their print reporting and at the same time opening a new world of web video opportunity. It requires a more radical rethinking for TV stations to “gear down” their production.

Ironically, I’ve seen TV stations moving in the opposite direction. I’ve seen them bring digital cameras on some of their highly popular stories, so they can create still-frame slide shows for their web sites.

So TV stations (which use hugely expensive video cameras in their main business) use inexpensive digital still cameras to create more page views that can enable them to serve more ads and generate more revenue, and newspapers (which use expensive gigapixel still cameras with foot-long lenses in their main business), use inexpensive video cameras to enhance their sites.

This is something of a take-off on the Anderson Switch, which holds that everything paid will become free and vice-versa. In the Aase Switch, TV goes print and print goes video.

Of course, I’m not optimistic this label will catch on, for two reasons. First, my last name isn’t easy to pronounce, like Chris Anderson’s. (For the record, it’s AY-see.) But more importantly, it’s so obvious that it can’t possibly be original.

Here are some other good Rosenblum posts on similar themes:

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Newspaper Half-Price Sale

Star Tribune logo

I’m maybe a little late to notice this (I’ll hide behind the excuse of my daughter’s wedding), but it’s interesting to see that in just eight years, the Minneapolis Star Tribune has lost half its value, as the paper reported December 27:

The McClatchy Co. capped a year of dramatic changes in the newspaper industry Tuesday by announcing the surprise sale of the Star Tribune, its largest newspaper, to a private investment group.

The $530 million sale will place the future of Minnesota’s dominant newspaper in the hands of Avista Capital Partners, a New York-based partnership of former investment bankers. It also continues a trend that accelerated this year in which large newspaper companies, such as McClatchy, Knight Ridder and Tribune, either winnowed their holdings or put themselves up for sale. Private owners have emerged to bid for many of the big-city papers that have come into play as a result.

McClatchy paid $1.2 billion for the newspaper in 1998. Although its circulation and advertising results in the past several years had run into the same headwinds that other large dailies have encountered, the Star Tribune remains solidly profitable.

McClatchy, in explaining its decision, said the Star Tribune had been underperforming in recent years.

“The Star Tribune did very well for a few years, but recently it has lagged in performance,” McClatchy CEO Gary Pruitt said. “Large metro papers have underperformed smaller ones because they’ve been more dependent on classified ads, which have been most affected by the Internet. The Star Tribune suffered from that.”

While the sale price is far less than McClatchy paid in 1998, the company will also realize $160 million in tax benefits as a result, making the total benefit to McClatchy closer to $700 million.

If anyone doubts that the mainstream media are facing significant economic problems, this is further evidence that is consistent with my posts about circulation and audience declines and layoffs here and here.

Some have suggested that the interesting trend is private firms taking these large public media companies private…that the quarterly earnings focus of publicly traded companies doesn’t let them make the investments they need to transform themselves and flourish in the world of new media. See, for example, Clear Channel being taken private.

That’s an interesting idea, but this recent sale of the Star Tribune gives a rare barometer of the overall health of the old media. Going from a value of $1.2 billion to $530 million in just eight years is a 56 percent loss. Now, some would say that’s not taking into account the tax savings McClatchy gets for selling at a loss…which brings the value to McClatchy of the transaction to $700 million. That brings the loss to “only” 42 percent.

I believe McClatchy is a good capitalist company seeking to maximize value for shareholders, and would have sold to other firms if they had offered more than $530 million. Maybe with the end of the year approaching, McClatchy was a motivated seller, and in the urge to consummate the deal didn’t drive as hard a bargain with Avista as it would have otherwise.

Maybe McClatchy could have gotten a better price if it had advertised the paper for sale on Craig’s List.

As the story says, the Star Tribune does have the dominant position among newspapers in a top-15 market, and I have no reason to doubt that it remains profitable.

But apparently it’s about half as profitable as it was in 1998.

“I’m here today because my partners at Avista and I believe unequivocally that the Star Tribune is one of the great newspapers in the country and that the Twin Cities is one of the great markets,” said Chris Harte, a member of Avista’s executive advisory board and a former Knight Ridder publisher, who will act as chairman of the board of directors at the Star Tribune.

If a profitable, “great” newspaper in a “great” market is dropping this quickly in value, what’s the outlook for papers elsewhere?

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Melting Icebergs in the Northland

Pioneer Press

More evidence of continued economic difficulty for traditional media due to declining circulation and resulting loss of ad sales. This morning’s Minneapolis Star Tribune, reporting (registration required) on crosstown rival Pioneer Press, says the St. Paul paper has had a land rush for the buyouts offered to senior newsroom staffers.

Twenty-one senior members of the St. Paul Pioneer Press newsroom have been offered buyouts as part of the company’s decision to downsize in the wake of slumping ad sales, editor Thom Fladung said Thursday.
The number was higher than the 10 originally called for in the paper’s cost-cutting moves, because more staffers sought the buyouts, Fladung said.

“When you have a lot of veteran journalists come forward and they sincerely want [a buyout], then it’s incumbent on me to try really hard to give them that. I felt I owed them,” he said.

The 21 employees could rescind their buyout requests, but most are expected to be gone by today.

The Pioneer Press says the cutbacks amount to 30 in total, including the 21 newsroom staff. The newsroom will be reduced by 10 percent.

The people taking buyouts “have been peers, coaches and friends to us,” he said in an e-mail to the newsroom. Today is the last day at the paper for the people taking buyouts. The package amounts to two weeks worth of pay for every year of service at the paper, up to 52 weeks.

Early next week Fladung said he’ll pass on more information about how the buyouts will affect the workers who remain. The changes will put a higher premium on communication in the newsroom and identifying the best stories, he said.

“This was so fast,” said Don Effenberger, 57, an editor at the paper with 28 years of experience. Employees had about three weeks to decide whether to take the buyout. Effenberger says he’s not retiring, though, and will look for another job.

In his short book/fable, Our Iceberg is Melting, which I reviewed here, John Kotter says complacency is the number one barrier to businesses making necessary changes in a rapidly changing environment. That point, and Kotter’s other 8 steps to successful transformation, are examined in more detail in his Leading Change, written in 1996. I picked up a used copy on Amazon and am reading it now. It is helpful background to his more recent book about the nomadic penguins, and I recommend it as well.

It seems the Pioneer Press (and senior newsroom staffers) are well beyond complacency. And earlier this week, Ford announced that 38,000 hourly employees had accepted buyouts, and in October NBC announced 700 job cuts. It seems a sense of urgency to find new ways of providing value to consumers, combined with reasonable means of getting paid for it, would behoove us all. As I’ve said before, whatever you think of the climatological phenomenon of global warning, from an economic perspective it’s here already. Icebergs are melting everywhere.

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