The Newspaper Biz: 'More Poison, Please'?
The men and women who continue to work in the newspaper business inhabit a surreal world. It's as if they are organisms inside a body felled by a fatal disease, and all the doctors prescribe is more poison. Charge for individual articles on the web? That would just send people to the free stuff. Demand that Google compensate the newspapers for the links? Watch your stories disappear when they stop coming up in Google searches. Stop publishing a print edition? Lose what's left of your only significant earnings base. Oh well--there's always more room for deeper budget cuts, more section cuts, more buyouts, fewer editors, etc.
The absurdity of the current moment is best exemplified by the recent threat by the New York Times Company to shut down the Boston Globe within thirty days if the paper doesn't find $20 million in immediate savings, including $10 million from its Newspaper Guild unit. While the guild did not reject the notion of concessions, neither did it give much indication that it appreciates the precariousness of its position. Its representatives insisted on a set of conditions that show little awareness on their part that their industry is in the process of evaporating before our eyes. Demands, for instance, that the paper institute a "revenue sharing" plan presuppose the existence of "revenue" in the future. But the Globe lost $50 million last year and is expected to lose $85 million this year. Between 2004 and 2010 revenue is projected to fall more than 40 percent, its pension plan is significantly underfunded and some of its members enjoy lifetime job guarantees. And yet the Times Company is demanding only $20 million in cuts? It strikes me that the guild is awfully lucky that the Times is willing to continue to subsidize so expensive an enterprise so generously. In fact, were I a Times Company shareholder, I'd be tempted to march into its annual meeting and ask, "Just what the hell kind of business is this, anyway?"
The meagerness of the cuts makes sense only if one believes that the downturn in the Globe's financial fortunes is temporary. Alas, you'd get better odds betting on the cryogenic regeneration of Ted Williams's severed head. In fact, everything is getting worse, fast. At the end of 2008, print advertising sales had fallen by more than 25 percent industrywide in just three years. And guess what? The first quarter of 2009 is estimated to have been the worst one yet; a drop of 30 percent for many papers, with no end in sight. (Times Company ad revenue fell 27 percent during the quarter, leading to losses of approximately $75 million.) Even the growth in online advertising has recently reversed itself, leaving no imaginable lifeline.
Again, from a purely business standpoint, no one at the Globe is in a position to demand anything of the Times Company at all, so long as its only realistic plan is to continue to lose lots of money.
One can argue that newspapers are a "public trust" and that their owners are morally obliged to subsidize their communities by providing a service, as a philanthropic enterprise, destined to lose tens of millions--and possibly more than that--every year. But that's not going to be a popular argument at a shareholders' meeting. And if you argue that the Sulzbergers owe it, for historical and familial reasons, to the New York Times--well, maybe. But they sure don't owe it to the Boston Globe.
It will be tempting for the Globe guild to tell the Times Company to take a hike. After all, if the business is dying, they might as well march to its funeral with full pay in their pockets. Professor Robert Forrant, of the University of Massachusetts, Lowell, is surely right when he points out that concessions rarely save dying production facilities in businesses threatened with extinction. "You give back wages, and the structural problems remain," he notes. It's an agonizing choice, no doubt, for the people involved, and not one anyone needs my advice about how to address.
But so long as we continue to think of the business of providing our society with news as a "business" in the traditional sense, we will keep feeding it the poison that is hastening its death. A recent Princeton University study on the consequences of the 2007 shutdown of the Cincinnati Post found a decline in the number of people voting in local elections as well as the number of candidates willing to challenge incumbents. "If voter turnout, a broad choice of candidates and accountability for incumbents are important to democracy," say its authors, economist Sam Schulhofer-Wohl and researcher Miguel Garrido, then this indicates that the loss of local newspapers implies an immediate and measurable decline in the quality of local democracy.
The Times Company's threat to the Boston Globe was followed by a meeting of "civic leaders and innovators," called by the Boston Foundation to try to address questions exactly like this one. Originally, an e-mail circulated by the Boston Business Journal said that the foundation was also planning to discuss the possibility of locating a buyer. Alas, a correction was soon issued to clarify the point that the meeting would not address trying to find the Globe a buyer. That would simply be too much to ask...
Rumblings in the Senate--including a bill introduced by Benjamin Cardin of Maryland to allow newspapers to become nonprofit entities and a set of hearings, recently announced by John Kerry, directly related to the Globe's troubles--indicate some awareness of the crisis. But the notion that Congress is likely to act in time, and with sufficient creativity, to help save a business that cannot save itself is one more fairy tale I cannot bring myself to believe. It's painful to admit, but admit it we must: we have no more hope today of saving the "newspaper business" than we do the "telegraph business." What is needed--pronto--is a plan to save the collection and dissemination of the news itself.