Newspapers are being hit with another round of layoffs. The Orange County Register, where I worked for 19 years, today announced it was laying off another 80-90 people, about 5% of the work force. It’s the fourth round of job cutting — beginning with the buyout in November 2006, which I took.
Even the NY Times, home of Pulitzer Prize-winning journalist Walter Duranty, is laying off his successors.
I feel for the people who are losing their jobs in the midst of a recession.
It’s likely to get worse. I’ve been writing about the new inflation, caused by he country not being on the gold standard since 1971. Bush, Greenspan, and Bernanke have been creating too much money, dropping the value of the dollar to that of toilet paper .
Gold — the only real money — has been gaining in value against the increasingly worthless dollar. Other commodities are closely tied to gold. The Bushflation is driving up newsprint prices, by 20% the past year. That should bring even more newspaper layoffs.
Maybe if newspapers had put some talent onto the gold standard story, instead of just parroting what government officials say about monetary policy, we’d be back on gold and wouldn’t have any inflation at all. Newsprint prices would be steady, and low — postponing newspapers’ inevitable deaths by a month or two.
But I’m one of the few newspapermen who ever wrote about gold, and I’m not in newspapers anymore.
“Perfect storm”
This is a “perfect storm” for the newspaper industry. The Internet keeps chewing up circulation and advertising. Newsprint prices are rising. A general recession is fast approaching, and could be deep. Demographic are changing: more immigrants come here who don’t read much English.
And unlike past recessions, when this one ends there’s no reason to believe that readership and advertising will return. Online, free resources just keep getting more plentiful, while computers and the Internet keep dropping in price as technological improvements avoid the inflation in other areas of life.
The Register’s circulation in the last six months that ended March 31 crashed by 11.9%, to 250,724 daily. Just a few years ago daily circulation was around 350,000. The big circulation drop, according to the Register, partly was due to ending freebies in hotels and other places.
But the Register now has dropped from the third biggest circulation paper in California, a position it long held, to the fifth biggest. So, comparatively it has done worse than other California papers in a similar media and demographic environment. Indeed, without a real local TV news market — except for a couple hours on KDOC every morning — one would think the Register would have an advantage.
It seems to me that the cause is a breakdown in management, which keeps failing to find out how to retard circulation erosion while transitioning to the Web. It still bothers me that my talented multimedia friends, Jocelyn Leger and Mike Shelton, were tossed overboard.
20% profits?
Part of the problem may be that newspapers, including the Register, long have expected, even demanded, 20% profit margins. This was because most papers in recent decades have been monopolies, or near-monopolies like the Register (the L.A. Times circulates in O.C., but a decade ago cut most of its local coverage). But the Internet changed that equation, bringing competition in news from global news sources, in commentary from blogs, and in advertising from Craig’s List and other sources.
Maybe, instead of insisting on perpetual 20% profits, newspapers should have invested some of that dough in new technologies and in maintaining more journalists and artists. Maybe profit margins now should be around 5%, as in the grocery business. I don’t know. I’m just speculating.
But the market has hammered newspaper valuations, indicating that the current model isn’t working for investors. Here’s an update on a graph I’ve included before, of the stock prices of the NY Times, Gannett, and McClatchy. These companies are publicly traded, unlike Freedom Communications, the parent company of the Register; so the graph allows us to extrapolate Freedom’s value from the value of similar companies.
Here’s the last 5 years:
Here’s a graph for the past year alone:
The NY Times is doing better in recent months, but Gannett and McClatchy are not.
It just doesn’t look good for anybody. Historically, this is a classic shakeout of an old industry by a new one. It’s cars replacing horses and buggies, planes replacing trains, and iPods replacing CDs, which earlier had replaced LPs.
What lies ahead probably is more newspaper consolidation until, in half a decade or so, the print editions finally give up Great Caesar’s Ghost.
An idea…
In the interim, here’s an idea to help boost circulation and online readership: Have every newspaper manager, from top honchos such as Freedom CEO Scott Flanders down to copy editors, write a weekly column and daily blogs. Let’s see how well they can write, and think.
And their words would fill the spaces of those they fired.
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