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Upside-Down Priorities At the ProJo’s Parent

Friday, September 27, 2013

 

Now, I’m not too good at math; I admit that freely. But let me see if I can get a few things straight about The Providence Journal and the brain trust at the A.H. Belo Corp. that purports to be setting its strategy from Dallas.

Thanks to Ted Nesi’s excellent coverage over at WPRI, we learn in reverse chronological order:

“Projo plans roughly 30 job cuts amid ongoing slump in sales” –Last week.

“Projo lays off 23 as ad sales drop 13%; CEO remains gloomy” – Nov. 8, 2012.

“Projo management seeking $1.2M in concessions or layoffs” -- Oct. 11, 2012

Etc.

Now, stay with me for a second. During roughly the same period, we also learn:

“Projo parent company’s top four execs share $1.7M in bonuses” – April 2, 2013

“Projo company’s CEO will make $300,000 – after he retires,” June 19, 2013

“Projo parent AH Belo’s board awards big raises to top bosses,” March 2012

“Projo parent A.H. Belo’s execs get $1.6M in bonuses” – April 4, 2011.

Etc.

The math tells all

Now, again: Not a math major. But if you’re wondering, the answer is, in fact, yes, executive bonuses in just two of the years mentioned above amount to more than double the amount of concessions extracted from an already desiccated news and sales operation.

How can this be justified? I put that question to the company’s CFO, Alison K. Engel, listed as the company’s investor-relations contact, and will let you know if I hear back.

But, John Hill, president of the Providence Newspaper Guild, has an answer: It can’t! Says Hill on the phone the other day:

It is extremely disheartening to have sat across the table from them – multiple times -- to hear them say what dire condition the business is in, and that we have to make sacrifices, including to our membership, and then to see the top executives in Dallas literally three months later take as bonuses the money we gave them as savings. It makes it really hard to sell austerity.

Let’s just call that the understatement of the year.

Wrong and more wrong

In fact, though, bonuses in this environment are worse than inappropriate, irresponsible, and bad optics, although they are all three. They are a strategic mistake.

Editorial and advertising personnel who are members of the Guild, Hill says, have been reduced since 1980’s peaks by more than two thirds – from more than 500 to around 160 – before the newspaper crisis of the last decade or so really started to unravel industry finances. That number typically is made up 60 percent on the editorial side, so, rough body-count in the newsroom, runs well over 100 reporters and editors over the years.

The damage to the product is incalculable. The paper once had nine bureaus covering that tiny state: Woonsocket, Pawtucket, Attleboro (just over the border in Massachusetts), West Warwick, Warwick, East Bay, Newport, South County, and Westerly.

Think about that: a Warwick bureau, and a West Warwick bureau.

It is obviously not possible to do that now. That’s not the point. The point is: in this day of disaggregation in the media, when local newspapers don’t have a monopoly on local advertising, the newsroom is a newspaper’s primary asset.

It’s about the content. That’s all there is left. The news. Reporting. Writing. Photos. Graphics. The product.

What Belo gave away

Think about the intimacy created by having had those nine bureaus. I was there. It was pretty intimate. It didn’t mean everyone loved the Projo. It just meant they were connected to it, emotionally as well as intellectually. It was the hub of the community: it wasn’t interactive, like Facebook. True. But everybody knows today – even if we didn’t think about it then -- that kind of engagement creates value. You need boots on the ground to create it. But that engagement is what you are now selling.

Oh, and the number of Journal state bureaus today? Zero.

If Belo management has a strategy for rebuilding the newsroom – its main asset -- I would love to hear it, and if it worked, I would fly to Dallas to deliver poster-sized bonus checks myself, like they do when you win the lottery.

But whatever the strategy for the paper is, these have been the results during the period under discussion:

Daily circulation did this:

Providence Journal Daily Circulation, 2010-2012

Revenues have done this:

Providence Journal Revenue, 2010-2012

Yes, the rest of the industry is in bad shape. But the fact is the Projo has actually lost subscribers at a faster pace than the rest of the industry. From 1999, newspapers’ heyday, to 2012, newspaper circulation nationally was off 20 percent. The ProJo’s meanwhile is off a stunning 45 percent, from about 165,000 to 89,000.

What does management say? In a recent conference call, CEO Robert Decherd placed the blame on Rhode Island state and local government, including how many cities and towns the state has. Seriously!

Well, as Jeff Bezos, a successful business executive, will tell you: “Complaining isn’t a strategy.”

And while Rhode Island’s economy is, indeed, in very tough shape, the economy of Worcester – all of 40 miles away -- isn’t that much better, and yet the Projo has lost circulation at a far faster rate than the Telegram & Gazette, which is off “only” 30 percent and is now not so much smaller than the once mighty Projo itself.

Weekly circulation of Worcester Telegram & Gazette v. Providence Journal

Yes, Belo manages two other newspapers, but nothing in their numbers comes close to justifying executive bonuses, which divert valuable resources from critical investments in the product, and the future. And that’s the real shame of it. Rhode Island is in the dumps now, but that won’t always be true. When the state does come back, Belo will have squandered its main asset and the loyalty – hard-won, over many years, believe me – of its customers.

Even worse?

This does not have to be. There are models being tried at other newspapers – ones roughly the size of the Projo – that have actually begun to inspire hope. The strategy involves – get this – involves reinvesting heavily in the newsroom, aka, “the product.” But you actually have to be committed to succeeding over the long term.

I’ll explore that in a future post.

 

Related Slideshow: Changing Newspaper Industry

In a column entitled, The smartest guys in media give up on print,  Alan Mutter, the former editor of San Francisco Chronicle, writes "For all the corporate-speak accompanying the dramatic restructurings of Twenty-First Century Fox, Time Warner and Tribune Co., the simple reason these diversified media giants are jettisoning their publishing assets is that their leaders fear for the future of print."

Throughout New England and across the country there is a dramatic decline in the print newspaper business. 

Prev Next

Boston Globe

The New York Times Company sells the Boston Globe for just $70 million - a loss of more than of more than $1 billion dollars over 20 years.

The new ownership - John Henry - a majority owner in the Boston Red Sox may have purchased the Globe for the value of the real estate. Estimated to be $40 million to $50 million.

Prev Next

Worcester Telegram

The Worcester daily paper has seen similar loss of circulation, revenue and staff cuts from 550 to now less than 200.

The paper was sold by The Boston Globe to Halifax Local Media for $19 million.

Today, the Worcester Telegram has circulation just over 50,000 per day.

Prev Next

Providence Journal

The once proud Providence-based newspaper has been devasted by cuts under the ownership of A.H. Belo, the Dallas-based newspaper group.

The Providence Journal has let more than 50 reporters and editors go in less than a year.

Prev Next

Fall River's Herald News

Now, the Herald News, the newspaper which is owned by Gatehouse Media, went into bankruptcy as the parent company tries to shed over $1 billion in debt.

The fate is now in greater question and circulation has dropped to just above 14,000.

Prev Next

Standard-Times

New Bedford's newspaper is now is flux as its parent group, which was own by Ruppert Murdock's Dow Jones Local Media Group (a subsidiary of News Corp) has been sold off and is being merged into the same company as Fall River's Herald News.  

The newco will be merging both the spinoff Dow Jones Local Media and the bankrupt Gatehouse into one media company.

Circulation is now just above 20,000 during the week.

 
 

Related Articles

 

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Comments:

There are no 2-ways about it....closing all of the Bureau Offices and not longer providing daily, local news, WHICH PEOPLE WANT TO SEE AND READ was the final nail in the coffin.

Also, Letters to the Editor...3 or 4 or maybe 5 on 2-large editorial pages and then limited as to content.

people want to hear and see their voices and the voices of others heard. The Boston Globe, also with 2-full Editorial pages per daily edition allows a whole 1/2-page to letters.

late sports news is now non-existent. If a game ends late, even somewhat late, there will be no coverage of it.

EXAMPLE: Boston's rout of Colorado the other night.

NOTHING in ProJo....the Globe had the entire story!

I could go on and on and on as to ProJo's going down the toilet.....but, why bother? It's management and especially Belo are not listening!

Comment #1 by TOM LETOURNEAU on 2013 09 27

Times are changing and RI is the bottom of the barrel in the USA. We get national coverage primarily laughing at our political landscape, goofy governor, GA of missing people, state waste and fraud, congressmen and senators that like to travel OUT of RI to other countries, etc. The state is used occasionally as an example of how not to do things in state and local government.
Most of that is so old hat in RI that we don't want to read about it nor is it newsworthy in our local paper.
The PorJo is just another casualty of a state run by fools.

Comment #2 by Gary Arnold on 2013 09 27

Sorry Dean, I don't buy it. The Providence Journal's decline is due to the fact that they forgot first and foremost that they are a business. Businesses have to be run using time tested business principals whereby the customer is king. About 20 years ago The Projo started to make it extremely difficult for small businesses to use the newspaper's commercial advertising services. At that time someone in the Projo's accounting department figured out that they we the only game in town. This revelation created an extremely arrogant monster. Unlike Boston and New York, the Providence Journal basically had the lock on readership around these parts, specifically classified advertising, which small businesses deperately need to survive. I was/am one of those small business owners who put up with Projo's iron hand tactics because I knew unless I dealt with the monster, there was no other alternative in place at the time that would yield the same circulation results. When the marketplace shifted to the internet in a more prevelant manner, many of us small business owners thanked the lord above. As crazy and diluted as the world wide web was, it was still easier than dealing with the inflexablility of a giant who believed it was untouchable. Of course, it was these same business geniuses that began giving the paper away for free on the internet before they even understood an advertisers needs and the differences between internet advertising and advertising for a print media demographic. My company hasn't used The Providence Journal for advertising in over 8 years (And I'm damn happy for it).

Comment #3 by Paul Vanasse on 2013 09 27

This is a one horse town as far as print media AND radio is concerned. WPRO is really the only news/talk radio available to the entire state as the Providence Journal is with the news paper. WPRO has gotten stronger in their market, WITH competition. Seems strange that the ProJo cannot remain viable, with NO competition.

Comment #4 by David Beagle on 2013 09 27

I've already commented and rarely, if ever, do so twice.

However, under the circumstances, and also reading all of the other well-thought out comments being made by others....I cannot help but wonder if the Management types at ProJo and BELO might get wind of this article and read it?

More-so, they read the comments of all of us that took the time to do so.

Well thought out comments and suggestions that should be listened to....more-so taken to heart and action!

but, these comments and suggestions have been being made for close to 20-years now....and the know-it-alls at ProJo and Belo have continuously ignored them!

So....why should today be any different?

Comment #5 by TOM LETOURNEAU on 2013 09 27

Great story, Dean. It's so sad to see the Projo die. It inspired me to become a journalist, employed me as one for several years and recently quoted me as a source in a story that was poorly reported and fact-checked - something that never would have happened when people in the newsroom cared.

Comment #6 by SUE Resnick on 2013 09 27

seems like management lived off the fruits of Michael Metcalf's great vision and strategy and infrastructure for many years after his passing.


the industry changed radically but I don't see the projo management making many good decisions in the last 15-20 years.

keep in mind their investment is worth about 10 cents on the dollar from what they paid.

hey what was the name of that computer project they wasted millions on about 10 years ago??? it was little bug or something with a funny name.

Comment #7 by john paycheck on 2013 09 27

The ProJo can't even afford to print its own obituary. Have you seen what they charge per line? Good riddance.

Comment #8 by Trixie Turnbuckle on 2013 09 27

Whose bright idea was it to sell a liberal New England newspaper to a deeply conservative company in a deeply conservative state? The corporate fat cats are eventually going to sell the ProJo to Murdoch or the Koch Brothers to spew their nonsense. They are in a media buying frenzy right now and paying themselves before they unload the ProJo at a bargain basement price, write off the losses and give it to their conservative masters as a gift. Everything is bigger in Texas, even the B.S.

Comment #9 by Rob K on 2013 09 27

Rob K nailed my biggest problem with the ProJo and why I (with sadness) cancelled me subscription when they ran a toxic political cartoon that was Tea Party-worthy. The editorial policy was completely out of tune with any local readership, and there was no reason to read the ProJo if not for the well-written and often incisive local news. It was a paper that lost its way, and I miss it, and regret what it could have been. And it's always sad to lose a newspaper.

Comment #10 by evelyn lincoln on 2013 09 27

Your story states the current circulation as 89,000, However, the Ted Nesi article (your first story link above) says it was just 79,000 as of March 31. And it has likely dropped since then...

Comment #11 by Ciaran Ceitinn on 2013 09 27

again amazed at the underlying cluelessness of the article....make yourself valuable and you will get paid , whether as an individual or a business...whining about the unfairness or comps gets you fired in most enterprises....it certainly would in mine

Comment #12 by michael riley on 2013 09 27

ProJo’s slow demise is ultimately about the publisher, Howard Sutton, his mindset and mentality. His worldview is to play dress up once year in a costumed ball and fundraiser for Crossroads homeless shelter. I’m not sure where he thinks he is.

Look who he put in control of the editorial pages? Edward Achorn is smart guy and a good editor but he is a hard core manipulator and reactionary who is completely out of step with the people of R.I. We are now able to see some of the letters that never make it into The Journal in local weekly newspapers. ProJo is no longer able to completely silence people, as they once did.

With the Internet, and alternative weeklies, Sutton will slowly find out that his paper no longer has a monopoly on public opinion or an ability to shape and control the perception of events - in what was once a one-paper state.

The Letters to the Editor are extremely popular. Many, many people go the letters first before they read anything else. And the “letters” are not something that people skip if they read the paper at all. You think they don’t know this? Can they say the same about anything else in their newspaper? So why don't they make room for public opinion?

There are newspapers that are increasing their circulation. But they are managed and run by people who understand their own limitations, and don’t live in another century.

Comment #13 by Johnny cakes on 2013 09 27

The strategy may be wrong, but the only people who should be upset with executive compensation are the shareholders. Why would you give C-suite execs bonuses when the corporation is losing money. The board should be held responsible.

Comment #14 by Redd Ratt on 2013 09 27

First of all, anyone who thinks the current ProJo is a conservative paper is smoking marijuana (medical or otherwise).
Their editorial pages routinely feature toxic political cartoons against congressional Republicans not to mention weekly articles by that bastion of liberalism, Froma Harrop.

Fact is, the Journal does a lousy job and is not worthy of its subscription price. I dropped it years ago and haven't missed it one iota.

The fact that Belo exec's are doling themselves unwarranted bonuses while squeezing the workers who produce their product is disturbing but all I can do is what I already did; CANCEL MY SUBSCRIPTION!

Comment #15 by Walter Miller on 2013 09 27

Perhaps Mr. Starkman and others should actually read the 10-K document referenced in the article.

Belo has gone from a loss of $6/share to breakeven ($.01/share gain) in the last couple of years. Maybe one might disagree with the strategy of how they turnaround the bottom line. However, unless it was illegal or the accounting is fraudulent, Mr. Starkman's statement that " but nothing in their numbers comes close to justifying executive bonuses" seems either poorly researched or perhaps reflective of some bias. Then again, he did state up front that he is not good in math.

Also, why is this a surprise? In 2002, the guild stated in reference to the ProJo winning a national award that "Readers tell us time and time again that the newspaper is much diminished since a bottom-line-focused Texas company took it over."

Maybe Belo has a long memory too..

Comment #16 by Prof Steve on 2013 09 27

I was at the RI Public Radio fall fundraiser last night at Trinity Rep. It was a celebration of Excellence in Journalism with a nicely done video piece on Stephen Hamblett, the highly regarded Pulitzer-winning-era Journal publisher. I couldn't help but wonder how the current publisher Howard Sutton, who was present, must've felt listening to the lauding commentary on when the paper was seemingly more vital, respected, and award winning. Knowing parent company Belo's history with the Journal, the steady circulation decline, plus the most recent announcement of an additional 30x layoff/staff buyout, the idea of such huge and frequent management bonuses is frankly, sickening. Seeing this article today was affirming, thanks Ted Nesi for digging, and Dean Starkman for stringing it together.

Comment #17 by Frank Mullin on 2013 09 27

Driving while intoxicated would get me fired in my enterprise.

Comment #18 by lupe fiasco on 2013 09 27




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