Wall Street Killed the Newspaper Star

December 4, 2008


I think it would be fun to run a newspaperCharles Foster Kane

I think it would be fun to run a newspaper into the groundAnonymous Gannett Co. executive

Remember the old joke about how to get an ethnic set up with a small business? The answer: Give him a big business, and wait.

I’ve got the new version of that joke. How do you give the Gannett company a small newspaper? Sell it a big newspaper, then wait.

Gannett laid off a lot of people this week, with the ax falling particularly hard on the Courier News and The Home News Tribune, two of my local prints. The people in the towns covered by those papers still want to know what’s going on. They still want news. But Gannett treats its newspapers the way medieval doctors treated their patients: by bleeding them, slowly in good times and drastically in bad.

These numbers on the huge profit margins of various Gannett papers are a year old, and they don’t tell the whole story. Paper costs have shot up, advertising revenues have plummeted, lots of bad stuff happened in the past year and will continue happening through the new one. But bear in mind — most of these papers had already been hit with rounds of layoffs before these numbers were compiled, and most likely people were being laid off even as these tidy profits were being entered into the Gannett ledgers. Keeping the stock price pumped is what it’s all about at Gannett. As Eric Alterman said yesterday, this is death by gouging.

I’ve heard the hardnosed businessguy rejoinder so many times I can move my lips in time with every word. A newspaper is a business like any other, a newspaper has to turn a profit, blah blah blah. Funny how that hardnosed realist thinking so often results in unrealistic expectations and, after a while, empty buildings and locked doors. You can make money in the newspaper business. Not by working as a reporter, god knows, but by owning newspapers. But you have to treat them differently than you would other properties, and you can’t keep wringing them out the way other companies do with their products in order to meet levels that Wall Street analysts consider appropriate. And if you do it the approved Wall Street way, you’re going to end up without newspapers.  

See, that’s the trouble with a newspaper — you can’t run it like a grocery store, a hamburger stand or a clothing mill. You can fire and hire cashiers without causing yourself too many problems. Anybody can stock a shelf, defrost a patty or run pieces of cloth through a sewing machine. I’m not trying to demean those jobs, but I am pointing out that the skills required for them are pretty much within everyone’s reach.

Not so with a newspaper. A newspaper thrives on such intangibles as experience, writing talent, the ability to inspire energy and loyalty among reporters, and the desire to maintain esprit de corps.

We all know the story of the man who had a goose that laid one golden egg a day, and how he killed and cooked it to give himself a meal. You probably laughed at that story when you were a kid hearing it for the first time. How naive you were! Your modern American newspaper owner wouldn’t simply eat the goose, he’d sell the meat to a restaurant, peddle the bones to a soup company, sell the feathers to a bedding firm and get his stock price pumped for that quarter, then look to buy another bird to do the same thing with for the next quarter.

Except we have fewer and fewer geese to do this with, and meanwhile the concepts of public service and stewardship have been allowed to decay. I don’t know what the solution is for newspapers and the news business in general. But I know this much: the innovations and creative thinking needed to rescue the news business won’t come from Gannett executives. They’re too busy sharpening their axes for  the next round of chopping.


4 Responses to “Wall Street Killed the Newspaper Star”

  1. mark Says:

    I used to deliver the Home News, when it cost 57 cents for 7 days of home delivery. At that time it was a coherent company, not just a commodity.

  2. Bill Says:

    The smoke has cleared, and I’m still here.

    I’ve come around to believe that media companies should not be publicly held, for the express reasons you gave in your post. We don’t make widgets. This is not an assembly line. There’s still enough of that Livingston College idealist in me to say that media have a different (I was tempted to use the word “higher”) calling than the average business. When they can do their jobs properly, the media are the watchdogs of our democracy. Media management decisions are too important to be left to the whims of Wall Street.

    I almost hate to say it, because a lot more people are going to be unemployed, but I think when we look back at this period, we’ll see that it heralded the end of mega-corporate journalism. I think some more of the big names are going to be history, and I think that from the ashes smaller news-gathering organizations will emerge. I think we’ll see, if not the rebirth of the weekly newspaper, at least its Web cohort.

    Local will once again mean local, and, in the end, people will be able to find out what’s going on in their hometowns, without having to read about towns in which they have no interest.

    And now, we sit and wait for the spring …

  3. rix Says:

    A web cohort in Pasadena CA outsourced local reporting to India.

  4. Steven Hart Says:

    The saddest part, Rix, is that by the dumbed-down standards most newspapers have brought themselves to, you could do your reporting from Mumbai and not affect the quality of the paper one jot.

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