Despite enviable profit margins, news media companies that once seemed as solid as the rock of Gibraltar — or in Dallas’ case, the Rock of Truth — felt the sea rising around them. Knight Ridder, former owner of the Fort Worth Star-Telegram and once considered one of the best newspaper companies in the country, was forced by a group of conservative investors to sell off their newspapers and break up their empire. In the alternative press, the two biggest alt-weekly chains gobbled each other up, leading to layoffs, firings, and major upheavals. Federal prosecutors jailed reporters right and left for trying to protect sources, and not even Dan Rather turned out to be on high enough ground to avoid the storm waves.
In Fort Worth, the Star-T seems to be settling down after the uncertainty of a change in ownership from Knight Ridder to the McClatchy chain, although rumors of another makeover in the paper’s appearance were floating around last week. Executive Editor Jim Witt said no major restructuring is expected. At the Dallas Observer, a well-regarded music critic just got the axe from out-of-state executives of the alt-weekly conglomerate that now owns that paper.
But in North Texas, it’s The Dallas Morning News and its owner, Belo Corp., that have embodied the turmoil in the business. Last month, less than two years after laying off 150 people, the paper announced a buyout program intended to reduce newsroom staff by at least another 85 warm bodies. At a paper once — and perhaps still — considered the best in the Southwest, winner of seven Pulitzers over the last 18 years, morale has gone into freefall. The list of people taking the buyout is a roll call of senior journalists, including award-winning reporters, highly placed editors, and much of its Washington, D.C., bureau. Local blogs have been flooded by readers lamenting the departure of columnists and writers they’d read for years. Friday is expected to be the last day of work for most of those taking the buyout.
Now it appears that the News, which in recent years has been hit by a scandal and criminal investigation over inflated circulation figures, may also be facing legal troubles rooted in the 2004 layoffs. A group of 16 veteran journalists who lost their jobs in that round have been given permission by the Equal Employment Opportunity Commission to take their complaint of age discrimination to court. At least one other age discrimination suit has been filed independent of that group’s complaints, but the former employees, on attorneys’ advice, declined to comment.
And it’s possible the company is purchasing more legal troubles with the buyouts. The federal law protecting older workers from discrimination requires that when employees are asked to sign a waiver of their right to sue, as a condition of receiving a buyout, they must be given 45 days to consider the offer. Other newspapers such as the Cleveland Plain Dealer and Washington Post have provided the required 45-day period. But the News, trying to meet a Sept. 15 deadline to reduce staff, didn’t give workers the full 45 days. Under the law, that could mean the waiver is invalid, at least as it pertains to age discrimination complaints. Belo officials declined to comment.
Around the country, journalists are questioning whether ownership — and in some cases mismanagement — of newspapers by publicly traded companies has hurt the industry and whether a new ownership model is needed. In November 2005, a small group of investors, Private Capital Management, having gained a strong ownership in Knight Ridder, demanded that the company directors sell the company. In March, the board complied, selling all 32 Knight Ridder papers, including the Star-Telegram, to the McClatchy Co. for $4.5 billion. McClatchy then sold off some of the papers. As a result, a major player in the newspaper business disappeared.
At the News, said one journalist who asked not to be named, “It’s extremely difficult … when we feel like we’re not being dealt with honestly. People are in the position of making a decision about their future with only partial information.”
In deciding whether to take the buyout, the journalists had to consider the possibility, admitted by management, of additional layoffs beyond the buyouts. And for those who did stay, there’s no guarantee that they’ll be doing a job they like. Managers are planning a major reorganization of the newsroom to give additional emphasis to the News’ web presence and to local news — rather ironic, since the 2004 layoffs and other management moves in recent years have, in many reporters’ eyes, severely weakened the paper’s local coverage.
Belo’s profit margin has consistently grown over the past three years. In 2005 the company reported a margin of close to 8 percent. However, stock prices have dropped from as high as $24 per share in 2005 to less than $16 currently.
Feature writer Bill Marvel, a 20-year veteran of the paper who has accepted the buyout, confirmed that the opinions of marketers and consultants seemed to carry a disproportional amount of weight with News bosses.
“They [management] don’t have a cluster of ideas,” he says. “The feeling is that they’ve talked to marketers and lawyers but not us.” Since 2004, staff attitudes toward management decisions have changed, he said. “Two years ago we were all scared. Now people are just angry.”
Staffers also noted that, after the 2004 layoffs, they were told they wouldn’t have to go through another staff cutback — and that management didn’t offer buyouts back then because they were afraid of losing too many good people.
Apparently that’s not a concern now — and many News reporters and editors believe that management has clearly come down on the side of profits rather than journalism. It’s a charge that Editor Bob Mong Jr. adamantly denies.
“Look around the country. We continue to be one of the most successful newspapers in the last few years,” he said. “There is a financial component to what we’re doing, but we’re going to have a really great newspaper.”
Few at the News share Mong’s point of view. Sportswriter Tim Cowlishaw, who was not offered a buyout, is one of many voicing concern about what the paper will look like after Friday. “If you lose about 100 or so good people it’s going to be different, and not as good,” he said.
Staffers’ anger is further fueled by some questionable and costly decisions by management. Two years ago, Belo Corp. ended three local cable news joint ventures with Time Warner, which had cost them around $10 million a year. A circulation scandal in 2004 cost the company upward of $30 million dollars in settlements with advertisers. A few years earlier, the company also threw away another $37 million on the technological debacle called the CueCat. And the Securities and Exchange Commission reported that the paper has spent a whopping $10 million to $16 million in consulting fees in the first six months of 2006 alone.
Mong insisted that the cost of all of those calamities and consultants has already been absorbed and did not factor into the buyout proposals.
The day after the DMN announced its buyouts, Cleveland’s Plain Dealer announced buyouts of its own. Later in August, the Akron Beacon Journal, one of the McClatchy’s cast-offs, said that it intends to lay off 40 people from its 161-person newsroom. In July, the Tribune Co. revealed plans to cut 120 jobs at the Chicago Tribune. The New York Times Co. plans to cut 250 jobs from its printing operation.
Dr. Karen Brown Dunlap, president of the Poynter Institute for Journalism Education, said such changes are a by-product of an industry being driven by the expectations of investors. “A number of news organizations went public; now investors are saying they want better performances,” she said.
Dunlap believes that the current slump is also due in part to the fact that news companies were slow to utilize the internet. “The industry was slow off the block,” she said. “A lot of resources were spent on research, and little was spent on training. As profit margins began to shrink, it was harder to write the big checks for something that was so unknown.”
In defending the management decisions at the News, Mong was quick to point to digital convergence, the buzz-term for changing newspapers into multimedia providers of news. Belo publishes a shorthand version of the News called Quick and a Spanish-language edition, El Dia. “We have to be able to compete on multiple platforms,” he said. “We’re trying to get out in front of a trend.” As a result, he said, “our audience has never been larger.”
Eric Griffey is a North Texas freelance journalist.