On their own

Gannett´s newspapers, LSJ included, cut loose

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It happened without fanfare or public notice, but last week was significant in more than 100 communities, five of them in Michigan, most notably here in Lansing.

The ownership of their newspapers shifted to a new company with an old name: Gannett. It owns the Lansing State Journal, the Detroit Free Press, USA TO- DAY, newspapers in 33 states, Guam and in England. And as of last Monday, it´s on its own.

The old Gannett was a combination of newspapers and television stations. TV was the cash cow; print was the dead weight. Management gambled that separating the two very different businesses would increase the value to shareholders, so it did what other large newspaper/television companies have done —divorce.

It was amiable — the new Gannett newspaper-only operation has no debt and shares headquarters with the TV company, now named TEGNA Inc. —with uncertain prospects, which for readers and their communities portends even weaker newspapers. Absent good financial news — and we´ll come to that next — the new Gannett will likely do what the old Gannett did: cut staff, cut the page count in its papers and end publication on low-advertising days. The demand for profits will leave it little choice. Already the stock market is skittish about the new company. Its share opened on the New York Stock Exchange last week at $14.75. On Monday, the value had declined to the $11.75 range, about a 20 percent decline. Granted the market has been troubled by the Greece calamity. But other newspaper stocks have held up better.

Detailing the financial prospects of the new Gannett for shareholders, management compared first-quarter year-over-year performance of its newspaper-based operations. Not good. It said:

“Advertising revenue for the first quarter of 2015 decreased $55 million or 12 percent from the same period in 2014.”

“Circulation revenue for the first quarter of 2015 decreased $8 million or 3 percent … .

“Commercial printing and other publishing revenue totaled $49 million and were down 14 percent … .”

In fact, what passes for good news from the company is “Operating expenses decreased to $688 million from $740 million in the same period in 2014 due to continued cost reductions and efficiency efforts as well as lower print volumes.” Translation: The company eliminated jobs and sold fewer newspapers.

With companies like Gannett there really is no basement for job cuts. The Lansing State Journal now operates at staffing levels that were unthinkable a decade ago. In 2005 it had about 65 full-time positions, now it has fewer than 40, and four or five of those people do double duty working on the digital sites of newspapers in Battle Creek, Port Huron and Livingston County. Despite the fluffy language in its report to shareholders about Gannett´s “long-standing reputation for journalistic excellence” and the “talented group of writers, editors, reporters, photographers and designers who work to fulfill the company´s mission to provide trusted news and information,” people are an expense and expendable. Another round of layoffs and the paper would still come out each morning; there would still be items —not necessarily traditional news — on the website.

But isn´t that the problem?The future is digital and untamed. Consider what populates one of the leading “journalistic sites,” Huffington Post.

Mixed in with news it produces and stories it take from others are these gems: “Caitlyn Jenner Pens Emotional HuffPost Blog,” “Roswell´s Unanswered UFO Questions,” “Two Countries Are Going To Have An Actual Giant Robot Battle,” and “Shirtless Firefighter Poses With Abused Pit Bull For Charity, Sets our Hearts Aflame.”

For audiences, these compete for eyeball time with items about crime in Lansing, development in Charlotte or high school sports in Mason. And there are far bigger distractions competing for readers.

Acknowledging the grim advertising outlook, Robert Dickey, Gannett´s new president, was quoted by Barrons in a June 27 article saying, “All of our attention is to be a digital company. The print platform will be there for some time to come, but that´s not the future.”

And the present? Look for consolidations. News organizations believe they can find cost savings by combining and centralizing their operations. In Michigan, Detroit is the hub with the outlying newspapers increasingly operated as bureaus. They have been stripped of their printing facilities and distribution operations. The concept of highly local copy is replaced by what´s available from the statewide or national collective. And Gannett wants even more “sharing” and was planning to make the former USA TODAY editor Larry Kramer its chief content officer until he quit. It is likely to appoint a company-wide editor-inchief. Editors who now work for publishers also will report to this corporate boss. Good luck with that.

While Dickey talks of digital acquisitions, there may be opportunities in some forms of print investment. Certainly not in the communities they already serve, but with purchases and trades. Michigan is an interesting case. It has two large newspaper chains: Gannett with Detroit and the smaller satellites and MLive, an arm of Advance Digital Media, with newspapers in Ann Arbor, Bay City, Flint, Grand Rapids, Jackson, Kalamazoo, Muskegon and Saginaw.

Consider the economies available if a single company owned all these news operations.

The newspaper landscape in New Jersey is similar to Michigan. Advance has 12 daily and weekly newspapers and one big operation, the Newark Star-Ledger. Gannett has six newspapers, the largest of which is the Asbury Park Press and smaller newspapers in Bridgewater, Cherry Hill, East Brunswick, Morristown and Vineland.

Again, consider the economies available if a single company owned all of these. Gannett takes everything Michigan. Advance gets all of Jersey. Or the other way around. With ever declining revenues, newspaperbased companies are like sharks. Keep moving — keep growing — or die.

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