Et Tu, Hamodia?

March 12, 2009

As Cities Go From Two Papers to One, Talk of Zero

By RICHARD PÉREZ-PEÑA

The history of The Seattle Post-Intelligencer stretches back more than two decades before Washington became a state, but after 146 years of publishing, the paper is expected to print its last issue next week, perhaps surviving only in a much smaller online version.

And it is not alone. The Rocky Mountain News shut down two weeks ago, and The Tucson Citizen is expected to fold next week.

At least Denver, Seattle and Tucson still have daily papers. But now, some economists and newspaper executives say it is only a matter of time — and probably not much time at that — before some major American city is left with no prominent local newspaper at all.

“In 2009 and 2010, all the two-newspaper markets will become one-newspaper markets, and you will start to see one-newspaper markets become no-newspaper markets,” said Mike Simonton, a senior director at Fitch Ratings, who analyzes the industry.

Many critics and competitors of newspapers — including online start-ups that have been hailed as the future of journalism — say that no one should welcome their demise.

“It would be a terrible thing for any city for the dominant paper to go under, because that’s who does the bulk of the serious reporting,” said Joel Kramer, former editor and publisher of The Star Tribune and now the editor and chief executive of MinnPost .com, an online news organization in Minneapolis.

“Places like us would spring up,” he said, “but they wouldn’t be nearly as big. We can tweak the papers and compete with them, but we can’t replace them.”

No one knows which will be the first big city without a large paper, but there are candidates all across the country. The Hearst Corporation, which owns The Post-Intelligencer, has also threatened to close The San Francisco Chronicle, which lost more than $1 million a week last year, unless it can wring significant savings from the operation.

In a tentative deal reached Tuesday night, the California Media Workers Guild agreed to less vacation time, longer workweeks and more flexibility for The Chronicle to make layoffs without regard to seniority. Union officials say they have been told to expect the elimination of at least 150 guild jobs, almost one-third of the total, and management is still trying to negotiate concessions from the Teamsters union.

Advance Publications said last fall that it might shut down The Star-Ledger, the dominant paper in New Jersey, but a set of cutbacks and union concessions kept the paper alive in much-downsized form.

The top papers in many markets, like The Star Tribune in Minneapolis, The Philadelphia Inquirer and The New Haven Register, belong to companies that have gone into bankruptcy in the last three months.

The owners insist they have no intention of closing publications, but the management making those assurances may not be in charge when the companies emerge from reorganization.

Other publishers, like the Seattle Times Company and MediaNews Group, owner of The Denver Post, The San Jose Mercury News and The Detroit News, are seen as being at risk of bankruptcy. Many newspapers — from The Miami Herald to The Chicago Sun-Times — have been put up for sale, with no buyers on the horizon.

Ad revenue, the industry’s lifeblood, has dropped about 25 percent in the last two years (by comparison, automotive revenue for Detroit’s Big Three fell about 15 percent during the same period, although it has accelerated recently), and that slide, accelerated by the recession, shows no sign of leveling off in 2009.

Web sites like Craigslist have been to classified ads what the internal combustion engine was to horse-drawn buggies. The stock prices of most newspaper publishers have dropped more than 90 percent from their peaks.

And magnifying the problem, for many chains, is a heavy burden of debt that they took on, mostly in a spree of buying other newspapers from 2005 to 2007, just before the bottom dropped out of the business.

The Tribune Company, for instance, owner of The Chicago Tribune, The Los Angeles Times and other papers, filed for bankruptcy in December, largely because of its debt load. The reality is that even though the economic climate is hard for newspapers, without their debt payments the publishers in bankruptcy would still make money, as do most newspapers around the country.

But profits are shrinking fast; taken together, major chains had an operating profit margin of about 10 percent in 2008, down from more than 20 percent as recently as 2004, according to research by John Morton, an independent analyst.

The recent closures and threatened closures point to an ominous new trend. For The Chronicle, The Rocky, The Star-Ledger, The Citizen and others, debt was never the problem and they belonged to solvent companies, but still they have been losing money.

Analysts say that many other major papers have also slid into red ink recently, including The Washington Post and The Boston Globe (which is owned by The New York Times Company).

The steady trickle of downsizing that sapped American papers for almost a decade has become a flood in the last few years. The Los Angeles Times still has one of the largest news staffs in the country, about 600 people, but it was twice as big in the late 1990s. The Washington Post had a newsroom of more than 900 six years ago, and has fewer than 700 now. The Gannett Company, the largest newspaper publisher in the country, eliminated more than 8,300 jobs in 2007 and 2008, or 22 percent of the total.

On Wednesday, The Miami Herald, once the celebrated flagship of the Knight Ridder chain, said it would trim an additional 19 percent of its already diminished staff.

Nearly every large paper in the country prints fewer pages and fewer articles, and many have eliminated entire sections. Bureaus in foreign capitals and even Washington have closed, and papers have jettisoned film criticism, book reviews and coverage of local news outside their home markets.

Many papers are sharing coverage with former competitors in an effort to save money. (The New York Times has also suffered from declining revenue, but has been able to avoid serious newsroom cuts so far.)

For more than two centuries, newspapers have been the indispensable source of public information and a check on the abuses of government and other powerful interests. And they still reach a vast and growing audience. Daily print circulation has dropped from a peak of 62 million two decades ago to around 49 million, and online readership has risen faster, to almost 75 million Americans and 3.7 billion page views in January, according to Nielsen Online.

But no one yet has unlocked the puzzle of supporting a large newsroom purely on digital revenue, a fact that may presage an era of news organizations that are smaller, weaker and less able to fulfill their traditional function as the nation’s watchdog.

“I can’t imagine what civil society would be like,” said Buzz Woolley, a wealthy San Diego businessman who has been a vocal critic of the paper there, The Union-Tribune, and the primary backer of an Internet news site, VoiceofSanDiego.org. “I don’t want to imagine it. A huge amount of information would just never get out.”

Not everyone agrees. The death of a newspaper should result in an explosion of much smaller news sources online, producing at least as much coverage as the paper did, says Jeff Jarvis, director of interactive journalism at the City University of New York’s graduate journalism school. Those sources might be less polished, Mr. Jarvis said, but they would be competitive, ending the monopolies many newspapers have long enjoyed.

A number of money-losing papers should “have the guts to shut down print and go online,” he said. “It will have to be a much smaller product, but that’s where we’re headed anyway.”

Industry executives who once scoffed at the idea of an Internet-only product now concede that they are probably headed in that direction, but the consensus is that newspapers going all digital would become drastically smaller news sources for the foreseeable future.

Until then, papers have turned to measures that would have been unthinkable just a year or two ago, including many that are weighing whether to begin charging readers for online access, as The Wall Street Journal does.

Starting March 30, the major Detroit papers, The Free Press and The News, will deliver to subscribers only three days a week, to save money on printing and trucking. The Christian Science Monitor will print its last daily edition on March 27, becoming primarily an online operation, with a printed weekly paper.

“It’s not so much that everyone has a great plan,” said John Yemma, editor of The Monitor. Rather, he said, “everybody is so desperate, they’re looking at every possibility.”