Don't shoot the messengers

Don’t shoot the messengers, says Alan D. Mutter, writer of a blog called Reflections of a Newsosaur.

Chris Harte [a former BJ publisher] and Brian Tierney aren’t enemies of newspapers., Nutter writes. “They are just messengers reporting the danger the industry will face if it doesn’t adjust its economics to the new realities of the marketplace.

"Sniping at them won’t change the message. So, hold your fire and listen closely to what they have to say:

"Newspapers like the Philadelphia Inquirer and Minneapolis Star Tribune are getting dangerously close to defaulting on their debt – a development that would require far more draconian layoffs and expense reductions than anyone has imagined to date.

"Worst case, and no one is saying the worst case is upon us, some newspapers could go out of business. Then, where would be?

"In the interests of saving as many jobs and as much quality journalism as possible, it’s time for journalists – and their colleagues in the sales, production, circulation and other departments – to stop whining about the glories of yesteryear and start thinking of creative ways to make or save more money.

"The deteriorating economics of the industry were underscored for the third day in a row this week when publisher Brian Tierney told union representatives of the two Philadelphia dailies that their company will face “a dire situation” by summer if it he cannot cut operating costs by 10%, according to a Newspaper Guild press release.

"The Philadelphia meeting was reported the day after Chris Harte, the publisher of the Minneapolis Star Tribune, issued a strikingly similar warning to his staff.

"Two days earlier, editor Jim O’Shea departed the Los Angeles Times after excoriating the evidently modest reductions in the $120 million newsroom budget that had been requested by his publisher, David Hiller.

"The Strib’s operating profits fell by 50% in one year’s time to approximately $41 million in 2007. As recently as 2002, profits would have been more than triple that amount, according to knowledgeable sources, who asked not to be identified.

"Chris declined to comment on these calculations, saying the newspaper does not publicly discuss its finances.

"Based on what I estimate to be the structure of the financing that enabled the Strib to be bought from McClatchy in late 2006, I would put the annual interest on the debt at about $33 million.

"If I am right, this would have left the Strib a scant $8 million last year to cover the costs of everything from website initiatives and new video cameras to replacement vehicles and updated pressroom equipment.

"While the interest costs would remain essentially the same in 2008, weaker sales or higher costs could quickly erode the $8 million cushion. If the company could not fully pay its interest payments, it would default on its loans and the bankers would step in to restructure the business as rapidly and pitilessly as possible.

"In the worst case, Chris and his partners at Avista could lose some or all of the $125 million that I estimate they invested in the newspaper.

"Like Chris and Avista, Brian Tierney (plus his investors) and Tribune’s Sam Zell have put hundreds of millions of their own dollars at risk to try to save a few newspapers at the most perilous time in the history of the industry.

"Who among us would have been willing to do that?"

Click on the headline to go to Nutter’s blog..

Note: Alan D. Mutter began his career as a newspaper columnist and editor in Chicago, starting at the Chicago Daily News and later rising to City Editor of the Chicago Sun-Times. In 1984, he became the No. 2 editor of the San Francisco Chronicle. He left the newspaper business in 1988 to join InterMedia Partners, a start-up company that within five years became one of the 12 largest cable-TV companies in the U.S.