Shortly before midnight on May 23, the Times-Picayune staff learned from a New York Times post by David Carr that Advance Publications, the Newhouse family media conglomerate, would end daily publication of the 175-year-old paper and move to a three-day delivery, a change that would be accompanied by deep staff cuts. Incoming publisher Ricky Mathews, down from Alabama, had huddled with key editors at the deluxe Windsor Court Hotel to map a shift from daily print to heavier coverage at Nola.com , the TP website. Carr wrote that managing editors Peter Kovacs and Dan Shea were excluded from the meetings and would lose their jobs. Kevin Allman, the editor of Gambit, the city’s alternative weekly, echoed that in a post three hours later, citing “multiple sources”:
All employees with whom Gambit spoke—even longtime senior writers and editors—said they learned of their fates from the New York Times report. “My supervisor didn’t even fucking know,” said one reporter. “My supervisor.”
As editor Jim Amoss tried to mollify an angry newsroom, the decision by Steven Newhouse, 55, chairman of the Internet division of Advance in New York, took on the shape of a hostile corporate takeover. Advance’s plan, under the new Nola Media Company, is to drive consumers to the Nola.com website, which is part of the TP brand. By cutting four print days, they reduce 60 percent of production costs to boost profit while squeezing journalism into short posts on Nola.com, which tilts toward sports and entertainment. This seems in sync with the strategy Advance used at its Ann Arbor News, which shifted from a print daily to a spectral website of the newspaper. But in New Orleans—a city where 36 percent of the population does not utilize the Internet—the loss of a daily paper will cut deeper still.
The Times and the Wall Street Journal have pay walls for online readers. The websites replicate the print front page with easy links to articles. Nola.com is different. It follows the model of other Advance properties, with a vertical column that the reader scrolls down for headlines, photos, lead paragraphs and links to the full copy.
“This is one of the dumbest decisions by any newspaper publisher ever,” states historian John Barry, a New Orleans resident, authority on the levee system and author of Rising Tide, an award-winning history of the 1927 Mississippi River flood. “The Nola.com website is one of the worst I’ve ever dealt with. By coincidence, for the last few years—because I have a personal interest in something that happens in Ann Arbor—I’ve been going to the website and it is exactly the same—awful. Frustrating, unnavigable, with a terrible search engine.”
“I don’t rely on Nola.com as a news source,” Dennis Woltering, anchor of WWL-TV, the New Orleans CBS affiliate, said by e-mail. “I read the Times-Picayune daily. Love it. And I will miss getting it on a daily basis. I think the loss may be a business opportunity for someone smart enough to give this community the kind of daily newspaper it deserves.”
“This is a breathtaking gamble,” says Bruce Nolan, the TP religion reporter, who has worked there forty-one years. “Some of the best brains in the country are working on an Internet model that creates revenues of sufficient strength to support serious journalism. No one has that model yet. But we’re going to double down with a website that is seriously problematic.”
The asset in Advance’s gamble is the Times-Picayune’s popularity, which was dramatically boosted by its Hurricane Katrina coverage. For a city that nearly drowned on television in 2005, only to absorb the BP oil spill’s economic impact on fishermen, seafood and restaurants, the Advance decision to end the newspaper as a daily hit like a sledgehammer.
“Selling goodwill is a dangerous strategy because once sold, it’s difficult to reacquire,” notes Reuters media analyst Jack Shafer in a June 5 overview  of the news industry shift to online platforms. “But a newspaper owner who feels trapped by losses and can’t find a new owner at what he considers a fair price may feel he has no alternative but to cheapen his newspaper bit-by-bit, month-by-month.… Sellers of newspaper goodwill might protest that the financial losses they’re absorbing constitute a serious investment in the newspaper’s future, that they’re harvesting nothing. But don’t be fooled. If you’re winding your company down with no strategy to wind it up, you’re burning goodwill even if you don’t acknowledge it.”
Sunday circulation had fallen from 285,00 to 155,000 since 2005, in large part because of a 29 percent post-Katrina population loss. “By other measures,” The Economist observed , “the Times-Picayune was thriving. Its market penetration was 65%, the fourth-highest of any newspaper in the country.”
Last year the TP had $64.7 million in print ad revenues, and $5.7 million from Nola.com, reports  Advertising Age. Papers of this size typically earn another third of gross income from paid circulation. TP staffers generally believe that the paper took in around $90 million last year. With mid-sized papers averaging 8–10 percent profit margins, that means the paper grossed about $8 million last year. In any case, it made its budget, according to one high-level source at the paper as well as a June 7 report  in Fortune by Dan Mitchell.
But newsgathering and print costs have increased for producing the zoned editions of TP’s twice-weekly local editions, which reach deep into outlying towns and civil parishes. These “local Picayunes,” with lots of photographs of school groups, social, civic, sports and religious events, overpowered small dailies in sprawling St. Tammany Parish across Lake Pontchartrain. The zone strategy that made the pre-Internet Times-Picayune so profitable was the brainchild of Ashton Phelps, the fifth-generation publisher of the paper.
Phelps, 66, announced his retirement several weeks before the cutback news. He filled the publisher’s chair held by his grandfather and his father, Ashton Phelps Sr., who sold the paper to Samuel Newhouse in 1962, while staying on as publisher.
“The Newhouses were pioneers of absentee corporate owners that we see with Gannett today,” Thomas Maier, a Newsday journalist and biographer of the founding patriarch, Samuel Newhouse, explains. “Sam was superb at finding the schisms in families who owned a newspaper; he offered record prices that induced them to sell. Sam believed that newspapers existed for advertisers, which made them cash machines. His monopoly newspapers would reach profit margins of 25 percent annually. The Times-Picayune was a large monopoly paper whose out-of-town owners didn’t care much about editorial quality in the past, particularly when it was on the wrong side of the civil rights era.”
But the Newhouse philosophy improved in the 1990s under the grandson, Steven, who supported better budgets at papers like the Oregonian, the Cleveland Plain Dealer and the Times-Picayune, which saw stronger reporting win major awards. “The long-held criticism of some Newhouse papers, that they were plantation money makers with little attention to quality journalism, has not been true in recent years, largely because of Steve. But a multibillion-dollar fortune was derived from certain papers in times when they were not very good.” More recently, Newhouse papers have taken hard staff cuts.
One reason Times-Picayune employees never unionized is because Advance offered good benefits, decent salaries, racial diversity in recent years and a long-held policy of job security. The job guarantee faded as the industry’s economic lurches set in. Nevertheless, just before Christmas 2011, Phelps refunded two weeks’ unpaid furlough to employees, after revenues rebounded, a gift of more than $2 million, according to sources at the paper. He did the same in 2010.
“Phelps prided himself on how people were treated,” says Los Angeles Times online political editor David Meeks, a former TP editor and pivotal figure in its Hurricane Katrina coverage. “When he saw these changes coming, I believe he decided it was time to leave.”
The editorials often reflected Phelps’s conservatism at a paper that avoided hard scrutiny of the business establishment, particularly developers. But TP coverage of politics, music, the courts, the city’s Dickensian poverty and soaring homicides has held a mirror to the baroque tapestry of this soul-rocking, exotic, break-your-heart town. The newspaper’s golden era has been the last two decades under editor Amoss, a Yale-educated Rhodes Scholar.
Among its awards since 1997: a George Polk and four Pulitzers, two of which were for heroic coverage of Hurricane Katrina. As editors fanned out to borrowed newsrooms, a team of journalists and photographers kept reporting after their families evacuated. Many staffers whose homes flooded kept working. The paper tracked Mayor Ray Nagin’s staggering ineptitudes through the aching recovery with patience and resolve. A deep camaraderie grew among a group of staffers who devoted Saturdays to gutting one another’s flooded homes.
When Mathews the Advanceman hit Amoss with the blueprint for change, the editor could have retired quietly, like Phelps, or done so in dramatic protest. Amoss did not respond to an interview request. That he chose to lead the paper through a traumatic change has two interpretations, by various sources. Some believe he acted out of loyalty to the newsroom staff, trying to negotiate the best possible transition in a bad situation. Others see him getting on board with the model as the shape of things to come.
“Jim is a great editor, a good friend, and he’s done a lot for the paper,” says reporter Nolan, who graduated with Amoss from Jesuit High School of New Orleans in 1965. “He’s being savaged, and that’s a cause of great personal pain to me.” On the other hand, says Nolan, “They’ve handled this disastrously.”
Publisher Ricky Mathews pledged the small circle at the Windsor Court meetings to secrecy and has been absent from the newsroom since. The newsroom staff of 270 before Katrina is now 160, with more cuts imminent. On June 3 the news staff sent a long list of questions to Amoss on hiring, severance and pension, and requested an organizational chart for the new corporate name NOLA Media Group. Many of the questions reflected palpable fear that Advance’s dismembering of the Ann Arbor News would be replicated at the TP.
Advance also announced that three of its Alabama properties—dailies in Mobile, Birmingham and Huntsville—would scale back to three print days and more web coverage too. But where Alabama civic leaders responded passively, passions surged in New Orleans. “A daily Times-Picayune has been the backbone of the community of our post-Katrina environment and provides the foundation for all civic dialogue and discourse,” stated Anne Milling, a civic activist with close ties to Phelps and founder of Women of the Storm, a local group that lobbied Congress to assist the city after Hurricane Katrina. The public statement Milling spearheaded, which covered by the paper and posted on several websites, drew signatures from university presidents Scott Cowan (Tulane) and Norman Francis (Xavier), restaurateur Ralph Brennan, James Carville and Mary Matalin, actor Harry Shearer and many others.
But protests by a civic elite are powerless without economic leverage. A “Friends of Times-Picayune” Facebook site became a sounding board for friends and supporters of the news force, as everyone waited to learn about their jobs. Kovacs, one of the managing editors, replied on June 6 to an e-mail about his status: “Thanks for asking. Nobody has told me anything. Peter.”
“Since the New York Times story I have not heard anything,” said Dan Shea, the other managing editor. “I’m in the same boat as the majority of the staff.”
To Meeks, the former city editor now at the LA Times, “The lack of consultation with the community, where people feel bonded to the paper, is heart-breaking.”
If the TP follows the Advance model in Ann Arbor, the editing will be far less rigorous and with a steeply reduced staff. In that event, says Meeks, “There won’t be a lot of editing on the front end. Stuff will be posted to the website quickly with errors corrected after the fact. This will all happen in the Nola.com offices, which are in a downtown building distant from the newspaper headquarters in Mid-City. On the print days, you’ll see copy editing on the back end by a very small staff as they try to cobble together a paper three days a week with many stories as compilations of blog posts. The focus will be to churn out short stories on the web and try to use some of that to create a paper.
“Who will cover the vital local issues like levee protection, and important local issues with national relevance, like coastal erosion, rising sea levels, global warming, loss of wetlands? These will be felt in Louisiana before they hit other US locations, with New Orleans in a highly vulnerable place. And what of crime, police corruption, the charter school movement? A city erodes if its people lack the information to make informed choices. The Nola.com model looks pretty grim on the important things. For that to be the main news site in New Orleans, built on the brand of a venerable newspaper it then destroyed, is something I just don’t think the smart money will swallow.”
Editor's Note: This article first mistakenly stated that the Washington Post has a paywall. It does not.