by Randolph T. Holhut
American Reporter Correspondent
June 12, 2014
HOW TO RUN A BUSINESS INTO THE GROUND
DUMMERSTON, Vt. -- The first daily newspaper that I worked for, the Worcester (Mass.) Telegram & Gazette, was sold a couple of weeks ago to a Florida-based company called Halifax Media Group.
Halifax, founded in 2010 by three private equity investment firms, bought the paper for - depending on whose estimate you believe - between $7 million and $15 million.
I was at the T&G in 1986 when the paper was sold the first time, to the family that owned the San Francisco Chronicle, for $180 million. A little over two years after the sale, I no longer had a job there, and I got my first introduction to the notion that newspapering could be a nasty, cutthroat business.
The T&G was sold again in 2000 to The New York Times Co, for $296 million, only seven years after the Times Co. paid $1.1 billion for The Boston Globe.
Last year, the Times dumped both the T&G and the Globe into the hands of Red Sox owner and billionaire John Henry for $70 million. Henry didn't want the Worcester paper, but had to take it to buy the Globe, and he started shopping the T&G as soon the ink was dry on the paperwork.
That the dominant news source in Central Massachusetts lost 90 percent of its value in less than 15 years was disheartening, but not nearly as disheartening as what went on in the T&G newsroom on the morning of June 2.
That day, the first business day under Halifax ownership, about 20 of the T&G's 80 news employees were told they would not have jobs with the new company. Many of them were people I worked with in the 1980s.
After Halifax completed the layoffs, their CEO, Michael Redding, said that getting rid of a quarter of the newsroom staff, including some of the most experienced reporters, photographers, and editors, "will not impact our news coverage in any way."
That statement doesn't pass the smell test. I've worked at enough newspapers over the years to know that fewer news staffers means less news coverage, and that no paper has ever cut its way to prosperity. Less is never more. Less is less.
When the Times bought the T&G, it had more than 500 employees and more than a dozen regional bureaus. Its profit margin was about 30 percent and its daily circulation was more than 100,000.
Now, the T&G has just one-third of the employees it had a decade ago, all the bureaus are gone, circulation stands at about 75,000, and then only if you add in digital circulation - numbers which many in the industry say are bogus.
What happened in Worcester isn't unusual. However, you can't blame it all on the Internet. Newspapers have been cutting back since the early 1990s, after the fat, profitable days of the 1980s gave way to recession. For the last two decades, newspapers have kept cutting and cutting to desperately maintain high profit margins that will never return.
But make no mistake, newspapers are still profitable, especially in places where the local newspaper is the dominant and trusted source for news. In small and medium-sized markets, they're still doing OK. The problem is the hedge funders and private equity firms that have been buying up newspapers not to preserve good journalism, but to squeeze the last bit of profit out of them before flipping them to another owner.
News is a commodity now, rather than a public service, and when something is a commodity, its price can drop like a stone.
I don't have an answer to the question of what can help save journalism, and anyone who says they know the answer is probably jiving you. After more than three decades in journalism, I can't say I'm optimistic about the trends for the business.
At a time when we need good, accurate reporting more than ever, all we get is buzz and spin and cheap sensationalism. Now, there are three public relations operatives for every reporter in America. And our civic life suffers as a result.
AR's Chief of Correspondents, Randolph T. Holhut, holds an M.P.A. from the Kennedy School of Government at Harvard University and has been an award-winning journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.