Yesterday, three newspapers across Tennessee, including the Commercial Appeal announced that around 30 employees had been laid off.
The layoffs leave just 48 folks writing the CA. 48 is a tiny staff for a daily newspaper serving an area the size of the Memphis area.
The head of Gannett’s Tennessee Newspapers, Laura Hollingsworth, is set to deliver a new plan for the state’s largest newspapers today. By the time you read this, it could already be out. I’ll update this post when it is.
The layoffs follow a consistent trend pursued by parent company Gannett to trim staffs to skeleton crews.
Since Gannett’s split from its broadcast division in 2014, the company has been aggressively acquiring newspapers. The acquisitions include two large publishing groups, one of which was the former owner of the Commercial Appeal after newspaper operations were spun off to Journal Media Group in 2015.
Gannett’s senior leadership believes they can deliver greater shareholder value through strategic combinations with large newspaper operations nationwide.
Go back and read that sentence…shareholder value should pop out at you (since I put it in bold).
Gannett’s central strategy is not better journalism, its shareholder value. That, is what’s really driving these layoffs.
Since the 2014 split with their former broadcast operations, Gannett has delivered earnings per share (EPS) of $1.83 (2014), $1.25 (2015), and $.44 (2016).
The steady decline in EPS is more the result of aggressive acquisitions rather than business failings. But considering the acquisitions, the EPS would be lower but for the aggressive nature of layoffs over the past several years, predating the separation with the broadcast element.
They essentially say that in their most recent 10-K filing.
The layoffs weren’t because of lower revenue. Gross revenue is generally up about 150m over 2015 and assets have increased by $400m.
The company is repurchasing some $150m worth of stock (3.7m shares), about 16% of their total market capitalization, in an effort to drive their stock price up…and deliver more shareholder value. That’s $150m that could be spent on strategic investments in their properties. Instead, its basically being doled out to investors to prop up senior-level management.
This is capitalism in America today.
The State of Print Journalism
From reading all this you might conclude that print journalism is dying. There’s no question that print has been having problems, but it ain’t dying. If anything, its experiencing a kind of renaissance right now.
Back in December, the Washington Post announced it was hiring 70 new journalists.
In the wake of the November election, large newspapers saw a surge in subscriptions.
What these properties have in common is top notch talent, delivering compelling news stories 24-7. They’ve got deep dives on everything from politics to business. Don’t want to read a deep dive? They’ve got a 500 word version of their 2500 word story, for folks who want a news snack rather than a meal.
They’re doing digital right. They’re optimizing their print operations. Most of all, they haven’t forgotten the central proposition of their business…journalism.
Gannett, on the other hand, has seen nearly every property get smaller…from reporters to page count. Their digital strategy both on the web and for mobile devices, is a un-navigable mess that’s both frustrating and a misrepresentation of the biggest news of the day.
In the mean time, the vampires of business…shareholders…are getting fat at the expense of the business’ central proposition. This might work for the quarterly earnings hawks for now, but its not good for the overall health of the business.
All this adds up to a loss of the central proposition of their business…journalism. They initiated their own bloodletting, and don’t seem to have a plan to stop the bleeding.
Waiting for a Savior
By contrast, the Commercial Appeal has been in a kind of holding pattern since Scripps spun off the print division in 2014.
The digital strategy the paper announced in 2011, which included the introduction of a paywall, has languished. This isn’t because it wasn’t working. In fact, it was showing promise through the final days of Scripps management in 2014.
But the last two years haven’t been kind to the paper. A steady stream of departures, either through layoffs or people pursuing new opportunities, has left the paper with few recognizable voices outside of the sports pages.
General local reporting appears stunted. This is not because of bad writing, but due to editorial decisions about brevity over clarity. Rarely is more than one topic covered on local political report even though there’s almost always more than one topic. This is further hampered by the general lack of local reporting resources.
I’m not saying these things are bad. Honestly, I read “The 901” every day. But they shouldn’t be mistaken or a replacement for the kind of journalism that has made properties like the Washington Post more successful.
Yes, WaPo has a lot of listicles. But they further an overarching purpose at the paper. They bring together content to connect the dots for readers. This, of course, is part of their central proposition.
To Drive Eyeballs you need Content not Shareholders
When the CA introduced the paywall in 2011, I wrote a long piece on what needed to happen to make it, and the paper, more financially successful.
Here’s what I said back then:
At the end of the day, content brings in readers which should increase circulation. Greater circulation brings in more dollars. More dollars should allow for more content spurring for more growth. But that’s not how its worked out.
News organizations are expected to outperform the economy, just like every other business out there. If they don’t do it, then there have to be cuts, and that’s been at the expense of hard working reporters, printers and editors.
Eventually, someone’s gonna lose. So far it’s been lifelong newspeople and consumers, which, in my view has depressed the upside of the business. I’m not sure that shareholders and boards get this.
This is still true today. But the holding pattern the CA has been in for nearly 3 years due to media consolidation has damaged the brand. We saw progress at the paper. Then we saw management move away from the promise they made. They did this without telling readers what was happening or why. This is a pretty massive violation of trust.
As former Commercial Appeal Reporter, turned City of Memphis hack, Kyle Veazey notes:
Maybe we’ll find out more about this today from Nashville, but I doubt it. Details about the “Newsroom of the Future” have been mostly platitudes not a plan.
If that’s what travels west down I-40 to the Commercial Appeal, it won’t be positive.