Recovering Journalist

Fish Rot From the Head—Especially When Wrapped in Newsprint

In the great "Broadcast News," there's a scene in which the fictional TV network's anchor, played by Jack Nicholson, is discussing the company's latest layoffs with a network exec. 

"This is a brutal layoff," Nicholson murmurs. And the executive replies, "You can make it less brutal by knocking a million or so off your salary. ... Bad joke. I'm sorry."

If that network executive didn't have the balls to suggest that a bulging salary be cut to save some jobs, maybe somebody in newspaper board rooms should step up. Because as layoffs and cutbacks continue to course through newsrooms, in no small part because of longstanding and chronic management incompetence, newspaper company CEOs still are taking home the big bucks, and even getting nice raises in their base pay. 

Most newspaper CEO compensation packages still add up to millions of dollars per year, in fact, with an average among the 13 public-company newspaper CEOs of just under $6 million a year in 2007, according to corporate proxy filings with the SEC. A little belt-tightening among the fat cats might help to save some jobs–and that's no joke.

As Alan Mutter has documented, newspaper CEO salaries generally haven't taken the kind of hits that the companies' stock prices have. But stockholders, obviously, aren't the only ones suffering from the industry's problems. Employees are taking it in the chin–and CEOs who failed to take bold steps to innovate and transform their companies until it was too late are laughing all the way to the bank.

Take the 1,400 McClatchy employees who were recently targeted for layoffs. As they head for the unemployment office, they can wonder how many jobs might have been saved if McClatchy CEO Gary Pruitt had agreed to give up some of $4.6 million (salary, bonus and stock) he took home in 2007. Of course, Pruitt did take a nearly $1 million pay cut from 2006–but that's only because his 2006 compensation package included a cool $1 million special bonus for overseeing the company's acquisition of Knight Ridder (gee, how'd that work out?). Indeed, his base bay for 2007 went up $50,000, to $1.1 million, and he still scored a $800,000 bonus, awarded to him by the company's board even though McClatchy missed operating targets for the year. His 2008 base salary has been frozen at $1.1 million, according to the company's proxy filing.

You've got to wonder if Pruitt could manage to maintain his lifestyle on, say, $2 million less, a few more McClatchy employees might still have jobs. As noted previously, Pruitt's doing a helluva job–in addition to the Knight Ridder fiasco and those missed financial targets last year, McClatchy stock is down 90 percent in the past four years. You'd think he'd be due for a cut.

And then there's Journal Communications Inc., whose Milwaukee Journal Sentinel announced 10 percent staff cuts last week. CEO Steven J. Smith did take home 13 percent less in 2007 than he did in 2006 ($1.19 million vs. $1.37 million), but that was mostly due to variations in stock compensation. In fact, his 2007 base salary rose 10 percent, and his 2007 bonus was just slightly less than his 2006 bonus. Journal Communications' stock performance? Down 77 percent in the past four years.

Newsroom employees who have been lucky to see 2 or 3 percent raises over the past couple of years must really appreciate the pay hikes their maximum leaders are getting. Indeed, while variations in stock compensation reduced the take-home pay for a number of newspaper company CEOs in 2007, many of them nonetheless got raises in their base pay–even as the first signs of the industry's severe problems were appearing. Given the industry's problems and plunging stock prices, it's a bit of a stretch to see how these could be merit raises: Gatehouse's Michael E. Reed got a 13 percent raise, to $500,000 (and his bonus jumped to $350,000 from $200,000). Belo's Robert Decherd got a 6 percent raise in base pay (more on him in a bit). E.W. Scripps Kenneth W. Lowe got a 5 percent raise, to $1.1 million. CEO Mary E. Junck at Lee Enterprises got a base-salary raise of just 3 percent, to $825,000, but not to worry–stock compensation increased her overall pay package to $3.79 million last year, a 20 percent jump from 2006. 

To be fair, some newspaper bosses have seen hefty bonuses cut back as the industry has gone south. Junck's $300,000 2006 bonus evaporated in 2007, and Washington Post Co. CEO Donald E. Graham's $400,000 2006 bonus went to zero last year. (Graham is by far the lowest paid large public newspaper company CEO, with total take-home of $411,700 last year. Of course, he owns billions of dollars in Post stock.) At News Corp., Rupert Murdoch's bonus was slashed to a mere $15.8 million last year from $21.1 million in 2006. He can probably afford it–his base pay almost doubled, to $8.1 million from $4.5 million. On the other hand, New York Times Co. CEO Arthur Sulzberger Jr., while keeping his base salary steady at a bit under $1.1 million, saw his 2007 bonus increase to $1.2 million from $560,000–in a year when the company was under fire from dissident investors for underperformance.

At least one newspaper CEO has stepped forward and taken a voluntary pay cut: Earlier this year, Belo's Decherd asked to have his annual base salary reduced to $800,000 from $950,000. Of course, Decherd earned a total of $10.2 million in 2007 and $5.7 million in 2006, so he can easily afford it. But you have to appreciate the gesture, even though the cut might only pay for two or three extra employees.

We don't know what the CEO salaries are for the private newspaper companies like Tribune and Hearst, but we can trust that they're generous. In Silicon Valley, it's not unusual for top executives like Steve Jobs to work for $1 a year so that they can plow cashflow back into the business (in fairness, Jobs and the other dollar-a-year CEOs have enormous stock holdings). But in the newspaper business, handsome pay packages still are the norm. 

Given the industry's problems, it's a little hard to see why more newspaper CEOs aren't stepping forward to take a little less swag in exchange for keeping more of their valuable human assets on the payroll. Just imagine the goodwill, good morale and good press that would be generated if some newspaper CEO said, "You know what? If it means saving the statehouse bureau, the copy desk and our features section–and making some smart investments in the Web site–I'm going to take a couple million less next year."

Ad Subtraction

How bad is it in the newspaper business? Go get a copy of your Sunday paper and count the ads. Go ahead. I'll wait. It probably won't take you very long.

Editorial types tend not to pay much attention to ads, even though they pay most of their salaries. But the stark problems facing newspapers are easily understood if you go through a paper and look at the advertising. If you can find it.

My Sunday newspaper is The Washington Post, long one of the most successful papers in the nation, by any measure. The Post rules the local advertising market (at one point, it was claimed, something like 80 percent of the ad dollars in the Washington market were spent on The Post), and commands high penetration among its audience (though not what it used to be), which should make it catnip for advertisers.

But those were the good old days. I was reading today's Post and suddenly found myself saying, "Um, where are the ads?" So I sat down and counted the ads in the paper's news sections. The results: Not good. 

Today's paper, by my count, has just over 14 pages of ads in 102 pages in its main news sections (A section, Metro, Business, Sports, Outlook, Style & Arts, Sunday Source, Travel and Book World). That's less than a 14 percent ratio of ads to news. Total number of display ads bigger than an a column inch or two? About 60 (a few classifieds-like directory pages help pad the overall ad total). Total full-page ads: Just three.

Most of the sections had fewer than a page of ads in them (the A section had the vast majority). Business, Sports and the Sunday Source "living" section didn't have a full page of ads between them—in 32 pages of newsprint. Yikes.

But wait, you say! It's a holiday weekend! Fair enough. So I went to the recycling pile and got last Sunday's paper. The results were better, but not much: Just under 18 pages of ads in 96 total pages, a 19.5 percent ratio. The other measures were proportionally similar to this week's paper.

That's not good, and it gets even scarier when you hear about publishers like Tribune Co. moving to tighten its papers to a 50-50 news/ad ratio. A ratio like that would have tightened today's Post to, gulp, 28 pages. It may not be that bad if classifieds sections, which have virtually no news content, are included in the ratio. But the Post's classifieds sections are flimsy these days, too. On Sundays, inserts and coupons help bulk up the advertising take, as well—but even those getting thinner.

These are hard times for newspapers, as has been well-documented. But it really hits home when you pick up a paper, count the ads, and find yourself wondering how much news space you'd have to cut to match the steep decline in advertising space. Or how long a business can go on without enough revenue to pay for producing its primary product.

The End of Mass

Stowe Boyd has a good post on hyperlocal that touches on something I've said before: hyperlocal has to be a "fully edged phenomenon," drawing from a variety of the hyperlocal models we've seen so far.

But then Boyd segues into something even better: a discourse on how newspapers simply don't understand that their previous model of being all things to all audiences is permanently broken.

What the newspapers' management fail to understand is the end of mass: people simply do not hold with mass identity now that they are free to find human-scale identity, and once they find it, they will not go back. Newspapers and other mass media is falling first and fastest because we are rejecting the erstatz, mass belonging that they offered, as part of the expansion of the industrial Western democratic ideals. 

Newspapers–and other media–just can't keep following the old playbook of publishing for a general audience. The audience is rejecting that model and wants more specificity—products that are mostly useful to them, not mostly thrown away. (What percentage of the newspaper do you actually read, anyway? What a waste!)

Just as the magazine industry fragmented in the late 1960s and early 1970s from general-interest titles like Life and Look into specialty titles for every audience under the sun, newspapers have to find new ways to target key audiences with focused products. Those audiences may be geographic or they may be demographic. But the era of the large-scale, regional, mass-market newspaper is over, as painfully demonstrated by declining advertising and circulation numbers. 

The sooner newspaper publishers and editors recognize that, and move on to competing in niches within their own markets, the sooner they'll start to pull out of the current death spiral. Mass just doesn't cut it anymore.

A Smart Outsider Looks at Newspapers

There's a terrific angry blog about the music industry by a guy named Bob Lefsetz, a former industry executive who delights in pointing out how record companies, led by ossified management, have been totally eclipsed by the Internet and changing technology to the point where they're in danger of going out of business.

Sound familiar?

Anybody who's interested in the music business, or in changing industries, should read Lefsetz regularly. If nothing else, he's great fun–every blog should have his spirit and passion. There's nothing like a good Lefsetz rant.

But today he turns his sights on....the newspaper business. It's the view from an outsider who's a fan of quality news but understands how change can roil an industry. It's well worth a read, with a warning: Lefsetz has nice things to say about Sam Zell's Tribune crowd, including chief innovator Lee Abrams, who came from the radio industry–another business in upheaval that Lefsetz knows well.

Quoth Lefsetz: "The traditional news business is excoriating Lee Abrams. For his endless memos, complaining about his grammar. For his occasional gaffe. And for his new ideas. If those running the newspapers were so damn smart, they wouldn't be in this predicament. Lee Abrams is looking to save their business." He's got a point, similar to something I've said before. Trying something different, even if it seems nutty, is far preferable to stubbornly going down with the ship.

It's a great read, and worth pondering as an outsider's perspective on what some of us have been saying for years about the need for true fundamental change.

Computational Journalism

When you have the daily news meeting in your newsroom, are there programmers or tech people sitting at the table?

Really? Why not?

It's a given that representatives from the photo and graphics department are there, to talk about ways to tell stories visually. And I sure hope your Web producers are regular attendants at news meetings, to talk about how coverage should be coordinated online–and what people are reading on the Web site.

But few if any papers also bring their code-writers in to hear and talk about that day's top stories. And that's too bad, because they could be helping you break ground in storytelling and information presentation.

Look around the Web–not at newspaper sites–and you'll see interesting things being done with maps, data-mining, flash graphics, social media and other Web 2.0 tools. These should be in the regular arsenals for newspapers and their Web sites, but too often they're afterthoughts, or relegated to big projects. Call it "computational journalism"–taking advantage of these technological tools to communicate news and information to readers in new ways.

Just as a good photo or graphics editor can suggest an interesting visual approach, a smart programmer who's facile in these Web 2,0 technologies may be able to come up with a fresh way to plot a story on a Google map, or to whip up a quick flash graphic that can explain what words (or photos or graphics) cannot. Smart programmers think about information in fresh ways that can reinvent the way news and information are presented. Even something as simple as an audio or video link or an online discussion or reader forum can add greatly to a story.

Your online readers expect no less, because they see examples of the technologies underlying computational journalism all around them. They may be clicking from your site to smart new computational journalism sites like Adrian Holovaty's EveryBlock, which is grabbing information from databases, news sources and other places and mashing it up with maps and other tools to provide fascinating new ways to look at city life. Or they may be clicking to Outside.In, which automatically culls local information from blogs and other sources and creates deep wells of local news and information that newspapers can only dream about. Or they may be clicking to Zillow, which combines maps, tax information and a bit of clever programming to track home values throughout the nation. (At least some newspapers are now partnering with Zillow for more advanced home-sale classifieds, but it demonstrates what can be done with computational journalism, as well.) 

And of course your readers are spending time on social sites like Facebook, video sites like YouTube and photo sites like Flickr–all of which do things that most newspaper sites can't begin to match. All of a sudden, the print newspaper and largely static Web site look might old-fashioned–stodgy, even—by comparison.

Readers take these sort of technologies for granted in their daily Web experience, and it's vital that newspaper sites break out of the traditional words/photo/graphics paradigm to start thinking in similar ways and adopting computational journalism. You can do that by making your smart programmers equal partners in thinking about how news should be covered on a daily basis. They're going to have ideas you never even dreamed of. And that's a good thing.