Upside-Down Priorities Rule New England Newspapers

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.

Interestingly, all this plays into the hands of the Projo’s oft-overlooked neighbor to the north, The Worcester Telegram & Gazette, which becomes particularly interesting now that it's been sold as part of the Boston Globe group to mogul John Henry. A bit more on that below and in a later column.

But, stay with me on the Projo 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, Allison 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.