More Wretched News for Newspapers as Advertising Woes Drive Anxiety
More Wretched News for Newspapers as Advertising Woes
Drive Anxiety
By SYDNEY EMBER OCT. 27, 2016
The gloom began earlier this month, when Gerard Baker,
the editor in chief of The Wall Street Journal, sent a memo to employees that
said, in part, “every story should be as short as it needs to be.” The next week,
William Lewis, the chief executive of Dow Jones, which owns The Journal,
announced a newsroom review that he said would be “underpinned by a series of
cost-management initiatives.”
Two days later, on Oct. 21, the anvil fell: Mr. Baker
informed employees in another memo that The Journal was looking for a
“substantial” number of them to take buyouts, and that layoffs were in the
offing.
With print advertising continuing to drop precipitously,
you would be hard-pressed to find a newsroom devoid of uncertainty anywhere in
the country. Companies like Gannett have recently announced layoffs, and its
stock price has plunged during a months long pursuit of the company that owns
The Los Angeles Times and The Chicago Tribune. The New York Times recently went
through buyouts and has acknowledged that its newsroom will get even smaller
next year. And for journalists at The Wall Street Journal, anxiety in the last
several weeks has been especially pronounced.
Numerous Journal employees, who spoke on condition of anonymity
because they feared endangering their jobs, said in interviews and
conversations that they have received few specifics from management about the
size and scope of the coming cuts. Mr. Baker said in one of his memos last week
that changes to the print newspaper would “involve some consolidation of
sections of the paper and the teams that produce it.” The employees said that
the staff is now openly speculating about the potential for once-prized
sections, including Greater New York and Personal Journal, to be folded or
significantly reduced. Separately, employees have been working without a union
contract since Oct. 1, and negotiations with the company are ongoing.
“There’s a lot of concern, a lot of worry,” said Timothy
Martell, the executive director of the Independent Association of Publishers’
Employees, the union that represents about 1,300 workers at Dow Jones. “People
are anxious, and they want to know how these changes will affect them and their
families.”
A spokeswoman for Dow Jones declined to comment for this
article.
Across the country, those working in the newspaper
industry are fretting as the end of the year approaches. Driving much of the
anxiety is a steep drop in print ad revenue, once the lifeblood for newspapers.
Spending on newspaper advertising in the United States is projected to fall 11
percent this year, to about $12.5 billion, according to the Interpublic Group’s
Magna.
At the same time, digital advertising and other forms of
revenue have been slow to pick up the slack, leading news companies, including
The New York Times, The Guardian and Gannett, the owner of USA Today, to cut
costs by downsizing.
“More and more publishers are coming to the recognition
that there’s a new normal,” said Alan D. Mutter, who teaches media economics at
the University of California, Berkeley, and writes about the media on the blog
Reflections of a Newsosaur. “And the new normal is not nearly as nice as the old
normal was.”
With quarterly earnings looming, newspaper companies are
facing something of a reckoning.
On Thursday, Gannett, which announced this week that it
was laying off 2 percent of its work force, said print advertising revenue in
its publishing segment fell 15 percent compared with the same period a year
earlier, driven in part by a 35 percent decline in national print advertising.
Digital ad revenue rose 6 percent, but the increase was largely because of
recent acquisitions. Gannett is among the biggest publishers in the country,
with more than 100 newspapers.
“While we saw signs of improvement late in the third
quarter, we were disappointed with our performance,” Robert J. Dickey, the
chief executive of Gannett, said in an earnings release. “As we expected, it
was our most challenging period in 2016.”
Gannett has been pursuing an acquisition of Tronc, which
owns The Los Angeles Times and The Chicago Tribune and was formerly known as
Tribune Publishing, since late April. In that time, Tronc has rebuffed several
offers, and Gannett’s share price has fallen roughly 50 percent. Gannett did
not discuss the deal with Tronc in its earnings release or during its earnings
call on Thursday. Stock prices for both Gannett and Tronc plummeted on Thursday
after a report by Bloomberg News said that the banks financing the potential
deal had backed out; trading of Tronc’s stock was halted at one point and ended
the day down 28 percent. (Tronc, whose new chairman, Michael W. Ferro Jr., has
opposed a sale, will report its third-quarter earnings on Tuesday.)
On Thursday evening, however, three people briefed on the
negotiations said the deal discussions were not on the verge of breaking down.
The people spoke on condition of anonymity because the discussions were ongoing.
Representatives from both Tronc and Gannett declined to comment.
Across the industry, similar declines in print
advertising coupled with the shift to digital and, increasingly, mobile, are
driving newspaper companies to reconfigure their newsrooms. Earlier this year,
The New York Times introduced a newsroomwide strategy review, with the goal of
providing something of a guide for how the newsroom should be reshaped for the
digital age. Dean Baquet, the executive editor of The Times, is expected to
release the resulting report in some form in the coming weeks, and layoffs are
expected early next year. About 70 Times employees took buyouts this year, and
the company is considering other areas of cost-cutting. The contract for its
union employees expired in March, and negotiations are moving slowly. The Times
has also announced its intent to make subscriptions the driving source of its
revenue, an acknowledgment that newspaper advertising, both print and digital,
can no longer be counted on to finance the company’s journalism on its own.
The New York Times Company, which will report its
third-quarter earnings on Wednesday, said in August that its print ad revenue
had fallen 14 percent in the second quarter. Digital advertising revenue
dropped 7 percent.
Last week, The Journal, which has a print circulation of
about 1.4 million and about 1 million digital-only subscribers, announced its
own newsroom review, called WSJ2020.
“These are days of accelerating change in the newspaper
business,” Mr. Baker, The Journal’s editor in chief, said in his memo about the
review. “None of our competitors is immune from the challenges.”
News Corp., the parent company of Dow Jones, is scheduled
to report earnings on Nov. 7. In August, Bedi Ajay Singh, the chief financial
officer of News Corp., said on an earnings call that domestic advertising at
The Journal had dropped about 12 percent compared with the same period a year
earlier.
Buyout requests are due Oct. 31, and Mr. Martell of the
union and several other Journal employees said they expected the company to
announce the layoffs by the middle of November.
Anxiety within Dow Jones is even being stoked by emails
sent by mistake. Last week, Ed Finn, the editor and president of Barron’s,
unwittingly announced layoffs at the business publication when he sent an email
meant for people in management and human resources to the entire Journal
newsroom.
Leslie Picker contributed reporting.
A version of this article appears in print on October 28,
2016, on page B1 of the New York edition with the headline: More Gloom in the
Newsroom.
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