NEWSPAPERS CONTINUE LAYOFFS

HOW MUCH IS ENOUGH?

By Mark Sommer

How much profit is enough, and at what cost?

That's a question being heard in newsrooms across the country as newspaper companies have targeted staffing levels to protect slumping profit margins.

NEW YORK TIMES 1,200 jobs at the Times and its 16 other newspapers	LA TIMES Elimination of 1,611 mostly part-timers; 8 offices closed
KANSAS CITY STAR Reduction of 125 workers	MIAMI HERALD Elimination of 180 jobs
PHILADELPHIA Combined loss of 200 jobs at the Inquirer and Daily News	ST. PAUL PIONEER PRESS Loss of 84 jobs
AKRON BEACON JOURNAL Seeking elimination of equivalent of 55 jobs	SAN JOSE MERCURY NEWS Seeking elimination of 120 jobs and Sunday magazine
MACON TELEGRAPH Loss of 27 jobs	GRAND FORKS (ND) HERALD Loss of 25 jobs
MILWAUKEE JOURNAL SENTINEL Loss of 30 jobs	CINCINNATI POST Loss of 20 jobs, or 18 percent of the workforce

It's also been a subject of discussion inside The News, where a hiring freeze exists at the nation's most profitable large circulation newspaper amid gloomy company forecasts for this year and beyond.

The issue was raised most prominently, and unexpectedly, in March by Jay Harris when he announced his resignation as publisher of the San Jose Mercury News. Harris protested parent company Knight Ridder's rigid budget targets, which he concluded would result in "significant and lasting harm" to the paper. Harris also warned newspaper companies not to be beholden to investors at the expense of readers.

"People who work in newsrooms were objecting and puling about their lot in life, but the fact that Jay Harris said what he did, about the focus being solely on profitability and not on the responsibility to readers, had far more weight. He was among the most successful publishers in American journalism," said James Naughton, a former executive editor of the Philadelphia Inquirer and president of the Poynter Institute for Media Studies.

Naughton said Harris was right on target.

"Unfortunately, there are not enough media companies with executives focused on the purpose of journalism, not to make money but to make democracy work, doing it in a manner where profitability is highly desirable, but not paramount," Naughton said.

Harris' concerns fell on deaf ears, however. Knight Ridder, which had a 20.8 percent operating profit margin last year (up from 12.5 percent just five years earlier), decided to take swift action after its margin slipped to 18.5 percent in the first quarter.

Knight Ridder said goodbye to some 1,700 full-time positions saved through layoffs, buyouts and losses through attrition at its 32 daily newspapers, among them 180 jobs at the Miami Herald and 125 jobs at the Kansas City Star. Tony Ridder, Knight Ridder's chief executive, has said the job cuts would not be restored.

Knight Ridder is hardly alone, however, in wielding an ax to newspaper staffs to satisfy Wall Street. Many other publicly held media companies, in pursuing desperate measures to maintain stock prices for shareholders, are resorting to layoffs, news hole reductions and other cost-cutting measures.

"So much of what is going on is below the radar screen," said John Morton, a newspaper industry analyst. "You hear about it when a Knight Ridder or New York Times does something, but there are hundreds of small daily newspapers and a lot of what they do you never hear about."

Last year, the operating profit margin for U.S. newspapers was 22.7 percent, according to Morton. This year's first quarter, despite the economic downturn and the dire predictions of newspaper companies, was still at 17.6 percent.

The News is expecting to see a steep decline in its profit margin this year, due to a sharp decline in advertising revenue and shrinking circulation. But it's starting from an enviable position.

For the past four years, The News' profit margin has hovered between 34 and 35 percent, boosting the margin since 1990 to 33.3 percent. Last year, the paper posted a 34 percent return. That, according to Morton Research, Inc., compares favorably to all publicly reported newspaper companies in the country, among them Gannett (28 percent), Dow Jones (26.3), E.W. Scripps (21.5), New York Times (21.4), McClatchy (20.5), A.H. Belo (21.7) and the Washington Post (15.5).

Although a hiring freeze has been in effect at The News, it has not laid off employees in response to the stalled economy. But News Publisher Stanford Lipsey did take note of the pink slips going around the country in a June interview, when he gave a bleak assessment of the future.

"The fortunes of newspapers are just not looking very good. You're seeing layoffs all over the country. For years, we rode high, and I'm afraid those days are over," he said.

One notable exception to the job cut approach has been the Newhouse Newspapers, which operates the Cleveland Plain Dealer, The (Syracuse) Post-Standard and the Oregonian in Portland. Newhouse has a long-standing policy not to lay off workers to weather rough economic periods.

Naughton applauds the way print and broadcast media presented news during the week after the terrorist attacks, seemingly without concern for advertising revenue, but he worries there could be a price to pay in further cutbacks later in the year.

"My fear is that when we get closer to something approaching normal, they will clamp down even harder to accomplish for the year the margin they had anticipated before the attacks on New York and Washington," he said. "If that happens, it will be very unfortunate."