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Starkman: If Misery Loves Company, Projo, Meet Hartford Courant

Friday, January 10, 2014


One of the great tragedies of New England newspapers is the degree to which their near-mortal wounds have been self-inflicted.

Of the three formerly dominant pillars of the region’s media, the Providence Journal, the Hartford Courant, and the Boston Globe, two can be said to have been particularly unlucky in their ownership.

The Projo’s story is by now well known. Essentially, it has been run as a lonely and neglected outpost by a Dallas-based media company, AH Belo, that itself has been shrinking by the minute.


As recounted here, and elsewhere, Belo’s response to the shocking deterioration in the Journal’s strategic and financial position has been one of reaction and retreat – revenue declines followed by staffing cuts that struck at the very quality of product, the essence of the paper’s identity and credibility. These quality declines were followed by more revenue declines and more staff cuts.

These charts continue to boggle the mind:





















And that’s in just the past three years, years when the rest of the industry had started to stabilize.

Adding insult to injury has been debilitating executive bonuses totaling at least $3.3 million in the last three years– bonuses that more than doubled the concessions the same managers demanded from the rank-and-file workforce and that severely eroded product quality.

Similar strategies

And, in a move that as we’ll see finds echoes at the Courant, the downhill slide became irreversible in 2007 when Belo, to appease demands for short-term rewards for investors, separated its relatively healthy collection of TV stations from its newspaper group, including the Projo, which was just entering its defining period of collapse and disruption. The result was that the newspapers had no diversified revenue stream to cushion the downturn and to navigate the transition to the digital future, leading the papers into a dead end.

After years of withering assets and declining revenues, Belo decided to sell the Projo, leaving it to its fate.

And yet, believe it or not, the Projo was actually luckier in its parent than its rival 70 miles down US 6. Founded in 1764, the Courant is older than the United States itself and was once a regional powerhouse and dominant voice.


Its journalistic peak came after it was bought by Times Mirror, the Los Angeles Times publisher, in 1979. It would pick up two Pulitzers and many other accolades in the 1990s, and like a lot of papers, seemed invulnerable.

That ended after 2000, when Times Mirror was bought by the Chicago-based Tribune Company, and, like the rest of the industry, struggled to adapt to the havoc wrecked by the Internet, which destroyed newspaper advertising revenue. Things went from bad to worse at the Courant’s parent after the lackluster TribCo went private in 2007 in a wildly leveraged deal led by vulture investor Sam Zell, a deal widely considered one of the most destructive in American newspaper history.

The Zell team’s juvenile antics became the stuff of legend and were detailed in excruciating detail by David Carr in The New York Times in 2010 and later in James O’Shea’s aptly titled, Deal From Hell: How Moguls and Wall Street Plundered Great American Newspapers.

Collateral damage

The Courant was just collateral damage in a sense, but suffered just the same. The TribCo entered bankruptcy in 2008 and only to emerge recently, now controlled by the same Wall Street firms that loaned Zell the money for the original transaction. Newspaper people, these aren’t.

Since the company went private and then into bankruptcy, the Courant’s financial information has been lumped in with the rest of the company. But even so it’s clear the paper has been suffering, and by some measures performing even worse than others in the Tribune Company portfolio, which also includes such still-viable stalwarts as The Baltimore Sun and the Sun Sentinel in southeast Florida.

Overall, revenue at the publishing segment of the Tribune Company has looked like this over the last three years:









And in recent filings with the Securities and Exchange Commission, the company has said the Courant has lagged others in the newspaper group. When circulation revenue declined 2 percent in 2011 across the group, for instance, the company noted that, “the largest revenue declines in 2011 were at Chicago, South Florida and Hartford.”

Circulation nosedive

And there’s little wonder why, when you look at circulation figures provided by the Alliance for Audited Media. Daily circulation at the Courant fell to 133,684 in 2012, down 28 percent from 185, 358 in 2006.

It’s true that Hartford’s circulation slide hasn’t matched the complete collapse of the neighboring Projo, which plummeted fully 44 percent during the same period, to 86,534 from 153,578.

Still, it’s not a pretty picture as illustrated here:










And notice that the Courant, like the Projo, has consistently has performed worse than the national average in circulation losses. That’s here:










True, few can beat the Projo in utter circulation futility, particularly when you consider the Connecticut economy is actually performing worse even than Rhode Island’s.

But, really, the Courant deserved much better.

Clouds ahead

The trouble is, the worst is almost certainly yet to come.

Last month, the Tribune Company announced--just as Belo did six years ago--that it was separating its relatively healthy TV assets and spinning off its eight ailing newspapers as a standalone company.

This is a classic short-term strategy, reaping immediate profits on the healthy assets while stripping newspapers of the cushion they need to navigate the digital transition.

But it gets even worse than that. Unlike Belo, and for that matter Rupert Murdoch’s News Corporation, which also recently separated into TV and newspaper companies, the Tribune Company is saddling the new Tribune Publishing Company with new debt, which has not been disclosed but is expected to be significant. The new debt not will not be for reinvestment but will be to pay a special dividend to investors.

As Crain’s Chicago Business put it in writing about the deal: “Such dividends are fairly common in corporate spinoffs, but Tribune Publishing isn’t a fast-growing spinoff looking to spread its wings. It’s an old-line company fighting for long-term survival.”

No cushion

Not only will the Courant and its peers have no cushion, they will be burdened by unproductive debt expenses going forward. Adding insult to injury, the newspapers, including the Courant, will be stripped of the very real estate in which their reporters, editors, and sales people operate. So on top of other indignities, the Courant will be paying rent on the downtown Hartford headquarters it used to own.

Morale at the paper is said to be at rock bottom, understandably so.

“If I were working there, I’d be looking for somewhere else to go,” says Maureen E. Croteau, a professor and head of the Journalism Department at the University of Connecticut in Storrs.

In November, Tribco announced 700 job cuts, about six percent of the workforce, including in Hartford. And no one expects those to be the last.

So problems at the Projo find echoes down US 6. And the dilemma there is the same here.

The out-of-town owners have no stake in the paper’s future. But the rest of us do.


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