John McIntyre, whom James Wolcott calls "the Dave Brubeck of the art and craft of copy editing," writes on language, editing, journalism, and other manifestations of human frailty. Comments welcome. Identifying his errors relieves him of the burden of omniscience. Write to jemcintyre@gmail.com, befriend at Facebook, or follow at Twitter: @johnemcintyre. Back 2009-2012 at the original site, http://weblogs.baltimoresun.com/news/mcintyre/blog/ and now at www.baltimoresun.com/news/language-blog/.

Sunday, June 14, 2009

Want to buy a used newspaper?

A few days ago, Baltimore Brew posted a short article on the possibility that a federal bankruptcy court might take management of the Tribune Company away from Sam Zell, concluding with an assertion, presented without evidence, that anyone but Zell would be an improvement.

This exercise in speculation also talked about the possibility of a return of The Baltimore Sun to local ownership.

Few of the discussions in Baltimore in recent years about a breakup of Tribune that would lead to transfer of The Sun to local ownership have gone into detail about the realities. While I have no specialized knowledge about the inner financial workings of Tribune or The Sun, and would sooner attempt to manage a professional baseball team than undertake ownership of a daily newspaper, I have questions about the feasibility of such a change. Have you looked under the hood?

The Tribune Company, like the other media conglomerates, has pursued cost savings through economies of scale, such as negotiation for lower newsprint prices than an individual paper could get. It has also consolidated a number of operations, such as payroll, human resources, and information technology, sharply reducing the number of employees at the constituent newspapers. Would a new owner find it necessary to hire additional staff to conduct these operations, or contract them out at some expense?

Moreover, the individual Tribune papers’ computer systems are linked to centralized servers. Would a new owner have the capital to invest in computer equipment? For that matter, would a new owner have the capital to invest in any technological improvements?

A new owner would have to buy the name, the physical property, and the goodwill, probably with borrowed money, paying off the debt through revenues. But the sickening drop in revenues is the main reason for the substantial reductions of staff, in the newsroom and elsewhere. Would the revenues be enough to pay off the debt, or would a new owner have to make ever further cost-cutting reductions in product and staff?

It is hard for me to shed the apprehension that any group of banks taking over the Tribune Company from Mr. Zell, or any local owner buying The Sun from a dismembered Tribune Company, could well wind up presiding over an even more drastic diminution of the operation.

The problem is not a lack of readers but a lack of revenue. The panelists and audience attending the Abell Symposium earlier this month on the survival of local news had lots of ideas about what newspapers could and should do.

But nobody could suggest where any substantial amount of money would come from.

4 comments:

  1. For a more compehensive perspective on the newspaper business at large, here's a bit of bracing realism from Jack Shafer at Slate.com:

    http://www.slate.com/id/2220223/

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  2. This comment has been removed by the author.

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  3. Or, if you're one of the remaining Sun employees, these plausible suggestions for a prospective buyer that Craig Branson posted on the Facebook listing of this post should keep you awake at night:

    * try to pay as little as possible to begin with
    * buy the nameplate and the physical assets only.
    * get rid of x% of the overall staff, probably through subcontracting (I'm thinking here of non-news jobs and non-advertising jobs, primarily).
    * make people reapply for their jobs. That would allow me to hire people back at at least 15 percent less than they were making and get rid of any union contracts.
    * do a leaseback of the existing real estate (I don't know that you could do much with a pressroom -- since they require a lot of space) while seeking to get rid of as much real estate overhead as possible
    * reduce zoning and the number of editions
    * get rid of AP and seek cheaper alternatives.
    * focus on the Internet product a great deal and hire people to figure monetizing that
    * hire a full-time lobbyist to let me structure as a non-profit (or in the meantime at least an S-corp structure that Zell has).

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  4. Much of the money made at The Sun right now is from commercial jobs. They are printing the Washington Times since they decommissioned their printing press, and printing the locally distributed copies of the New York Daily News and New York Post.

    Without these jobs the Sun would be in the red.

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