Papers' Cuts Put Readership at Risk

TIMES STAFF WRITER

The calls and letters and e-mails--400 or 500 of them in all, one complaint after another--have come pouring into Gloria Irwin at the Akron Beacon Journal.

The Beacon Journal is one of 32 daily newspapers published by Knight Ridder, and Irwin is its "public editor," responsible for responding to queries and criticisms from readers. This year, in response to an industrywide slump in advertising and profits, Knight Ridder has been slashing jobs and news coverage, and the Beacon Journal has been among the hardest hit.

The paper, a respected, medium-sized daily in northeast Ohio, has eliminated both its Sunday magazine and News and Views section; closed its Washington bureau and two regional bureaus; reduced its state capital bureau from the equivalent of four reporters to one; eliminated the Saturday editorial page; cut its daily editions and zoned sections from four to two; cut back its book and outdoors coverage, and eliminated many community correspondents and other freelance contributors.

Readers are upset that many weekend social events in Akron and community meetings in neighboring counties are no longer covered, and Irwin says she also received complaints from readers when cutbacks in the paper's sports staff forced it to use an Associated Press story, rather than a staff-written story, to cover the Akron Aeros minor league baseball team over the Memorial Day weekend.

"I can see the stadium from my window, but with our smaller staff, we had to decide between that game and some high school sports events, so we couldn't cover it," she says.

Irwin says two other cutbacks--the elimination of some stock listings and of a regularly published list of area deaths--triggered such vehement reader objections that both were reinstated.

"We've cut and cut and cut," says Janet Leach, editor of the Beacon Journal. "This has been excruciating. . . . When Knight Ridder executives were here . . . I told them I just can't have a windstorm every three weeks. This has to be the last one. But they couldn't give me any assurances."

Knight Ridder corporate executives haven't given such assurances to any of their papers, and they declined to be interviewed for this story, saying there were so many press inquiries these days that they had decided to do "no more interviews for some time."

If executives of a newspaper organization refusing to grant newspaper interviews seems incongruous, it's no more incongruous than Knight Ridder suddenly finding itself singled out as "an egregious example of a profit-oriented chain," in the recent words of a San Diego newspaper columnist.

Knight Ridder was created by the 1974 merger of Knight Newspapers and Ridder Publications. With a combined circulation of almost 4 million daily, Knight Ridder is the second-largest newspaper company in the country (after Gannett), and for many years it was singled out as proof that, unlike Gannett, a chain could produce both solid profits and very good newspapers.

Knight Ridder's Philadelphia Inquirer won 17 Pulitzer Prizes from 1975 to 1989. The Miami Herald won seven Pulitzers in the 1980s and was generally regarded as the best paper in the Southeast. The Beacon Journal, with a circulation today of 141,000, routinely outshone much larger newspapers in its home state, winning four Pulitzers and a reputation for hard-nosed investigative journalism.

But changes in the economic climate and in the top management of Knight Ridder have led to significant reductions in news staffs and space at all three of these papers and at other papers throughout the company. These cutbacks have led many inside and outside Knight Ridder to complain that increasing profits have become more important to management than journalistic excellence and community service.

"Our founders' commitment to publishing 'high-quality newspapers' is no longer the powerful driver in the company that it once was," is the way Jay Harris put it in March when he stunned the industry by suddenly resigning as publisher of the San Jose Mercury News.

Harris is just one of many high-level Knight Ridder executives--at corporate headquarters and at individual papers--who have left in recent years amid the company's many cutbacks and changing culture. Another came Monday, when Martin Baron announced that he would be leaving his job as executive editor of the Miami Herald after just 18 months to become editor of the Boston Globe.

Baron, who led the Herald to a Pulitzer Prize this year, said he is going to Boston because "this is a great opportunity for me professionally . . . at a paper that occupies a special place in American journalism," not because of cutbacks at the Herald or Knight Ridder. But he has privately voiced frustration about the retrenchments.

Profits have fallen at Knight Ridder this year, as they have at most other newspapers, in response to a 15% increase in the cost of raw newsprint and a decline in advertising revenue (down 5.1% at Knight Ridder in the first five months of the year, compared with the same period last year). Profitability is still high for Knight Ridder, as for most other newspaper companies, but Knight Ridder is in the process of cutting its 22,000-person work force by 10%. Although executives hope to achieve this goal by voluntary buyouts, job eliminations will take place if buyouts aren't accepted by enough employees.

Many other newspapers--the Los Angeles Times, New York Times and Boston Globe among them--have also announced staff reductions recently to cut expenses. But the cutbacks at Knight Ridder seem especially deep because they come on top of other recent job eliminations, buyouts, reductions in travel and a decrease in most papers' news hole, the space available for news and features.

Many inside and outside Knight Ridder trace the economic moves in the company to the rise of Tony Ridder, who succeeded James Batten as CEO in 1995. Batten, like two of his predecessors as CEO--Lee Hills and founder John S. Knight--came to the executive suite through the news side of the company. Ridder is a businessman, with less than a year of newsroom experience almost 40 years ago, and editors say that since he took over they've had to spend more time worrying about profit margins and less on how to cover the news.

David Lawrence, a Knight Ridder editor and executive for more than 25 years, the last 10 as publisher of the Miami Herald, before he left in 1999, says the company "lost a special part of its soul when Jim Batten died. I think Tony Ridder is smart, very tough, and he loves it when his papers win Pulitzer Prizes. But he has, in his gut, no special passion for what turns journalists on."

Many top Knight Ridder executives have left in recent years, departures widely attributed to both the company's shift in priorities and to Ridder's personal style, which many say has created a fortress mentality that brooks no dissent.

When Ridder was president of the Knight Ridder newspaper division, says Gene Roberts, executive editor of the Philadelphia Inquirer from 1972 to 1990, he essentially eliminated the traditional give-and-take between editors and corporate executives about the annual budget.

"Tony said it was useless to carry on negotiation when he knew . . . what the outcome was because he knew what the corporate profit goal was," Roberts says.

Previous corporate executives encouraged editors to speak out whenever they disagreed on any policy matters, financial or otherwise, Roberts says, but Ridder's "stifling of dissent" has both diminished the stature of editors and "made it possible to impose cutbacks without discussion of their consequences."

Knight Ridder newspapers, like most newspapers, continue to be very profitable--a profit margin of 20.8% last year and, despite this year's sour economy, 18.5% in the first quarter of 2001, slightly better than the industry average. That is more than double the profitability of the average Fortune 500 company.

"For all this moaning and groaning about advertising falling [and] new newsprint prices going up . . . newspaper segments of publicly owned companies had operating margins of 17.6% in the first quarter of this year," says industry analyst John Morton. "Although that's down from 22.6% last year . . . ask Ford Motor Co. if they'd like 17.6%. Ask Safeway. Ask almost any industrial enterprise if they'd like 17.6%."

But newspaper companies aren't competing with Ford or Safeway. They're competing with each other. Wall Street expects high profit margins from newspapers not because there's anything unique about newspapers but because some newspaper companies--Gannett foremost among them--do get profit margins of 25% or more, and that, Morton and other analysts say, forces their competitors to seek similar margins or risk losing large institutional investors as their stock prices slide.

The cuts now underway to prop up profit margins at Knight Ridder vary from paper to paper, depending on each paper's competitive position, profitability and current staffing levels.

Already, editors at many Knight Ridder papers say, they've had to cut back on suburban coverage and what Robert Rosenthal, executive editor of the Philadelphia Inquirer, calls "routine, incremental cops and court coverage."

Editors say they won't know just how much more their news coverage will be diminished until they see who on their newsroom staffs takes the voluntary buyouts that have been offered in recent weeks.

At the once-proud Inquirer, the latest round of buyouts will leave the newsroom staff 20% smaller than it was a decade ago, according to columnist Tom Ferick, an officer in the local Newspaper Guild.Butch Ward, the paper's highly regarded managing editor, said last month that he's taking the paper's buyout offer, and several other top editors and reporters have made or are considering similar decisions.

The Miami Herald's newsroom staff has declined from more than 500 a little over a decade ago to 375, and another 18 staffers are expected to leave during the current buyouts. The Herald also eliminated several local bureaus and editions in the 1990s.

"When I was a reporter here in the late '70s, we had bureaus and editions halfway up the [Florida] coast," departing editor Baron said in an interview last month. "We don't have those anymore."

The San Jose Mercury News, which had a newsroom staff of 405 last year, will see that number fall to about 370 to 375 through buyouts and early retirement, says Executive Editor David Yarnold. The paper has eliminated its Sunday magazine, cut zoned sections from seven to four, reduced the staff in its San Francisco edition, eliminated one weekly feature section and shrunk (and merged) its book section.

In better times, Yarnold says, the Mercury News would have sent a reporter to Sandpoint, Idaho, early last month to cover the five-day standoff between sheriff's deputies and six children whose mother had been arrested for child neglect. Instead, Yarnold says, "we evaluated that against other stories we're doing and decided to pass on it."

Similar decisions and similar reductions are being made at most Knight Ridder papers, from Contra Costa, Calif., to Tallahassee, Fla. But nowhere has the ax fallen more punishingly than at the Beacon Journal, which, as John Knight's original paper, had long enjoyed privileged status.

The Beacon Journal, which suffered an 8% drop in ad revenue during the first five months of the year, let nine of its 165 newsroom employees go in April--the first such firings in the paper's history. Fourteen more jobs will be cut in the current retrenchment.

Like her counterparts at other Knight Ridder papers, editor Leach acknowledges the paper is "doing less" than it once did but insists the staff at the Beacon Journal is talented, works hard and continues to produce "excellent journalism."

But the Beacon Journal, named Ohio's best paper by Associated Press nine times in 14 years in the 1980s and early '90s, hasn't won that distinction since 1996. In recent years, Beacon Journal reporters and editors, alarmed by the direction of the paper and its parent company, have, for the first time, been leaving in significant numbers, often to go to rival papers. Staffers at the Beacon Journal are especially pained that more than a dozen of their colleagues have gone to the much larger Cleveland Plain Dealer, which the Beacon Journal used to delight in beating.

"I left before most of the cutbacks actually took place, but the drumbeat of budget-tightening was already going on," says Bob Paynter, an investigative reporter who was part of the team that won a Pulitzer Prize in 1994 and who moved from the Beacon Journal to the Plain Dealer in December 1999. "The Beacon Journal was a paper on the decline, and it wouldn't surprise me if more people left."

Akron community leaders are concerned about the long-term effect of the cutbacks on the area.

"Reporters used to be at every meeting of boards and commissions that the county and city governments maintained," says Dave Lieberth, radio journalist-turned-lawyer-turned civic leader in Akron. "That began to change before these budget cuts, but it's certainly accelerated, and a lot of events are now covered by phone or not at all.

"There are opportunities for mischief when reporters aren't present. I've been on committees and heard members say, 'Oh, God, there's a reporter here.' You do the public's business differently when the press is present."

Even more important, Lieberth says, "with all this cutting, I worry that major issues won't be covered. . . . Citizens won't have an opportunity to be informed and a fundamental part of our citizenship will be lost."

Lieberth chaired a committee that last September presented an 18-month study of Akron's future, and one of his conclusions, he says, was that "the homogeneity and cohesiveness that a city of our size, with a population of about 200,000, gets from its daily newspaper is missing. . . . When Knight Ridder starts firing reporters who are in the front lines, in the trenches, our community can't function as well as when they are there."

Circulation in Akron, as at other key Knight Ridder papers, has dropped more than the industry average in recent years.

"Readers aren't fools. They know when they're getting less," says Jim Naughton, former executive editor of the Inquirer and now president of the Poynter Institute, a mid-career school for journalists.

The more readers a paper has, the more it can charge its advertisers. Since advertising accounts for about 75% of most newspapers' revenue, a continued drop in readers is likely to lead to a similar drop in advertising--and in profits.

Most publicly held newspaper companies consistently promise Wall Street higher profit margins in an effort to maintain their stock prices. But when profits are already up significantly, as they were last year, it's difficult to do even better the next year--and when profits are down, as they are this year, the only way to increase profits is to cut expenses.

Morton says newspaper executives should be able to tell stockholders that doing so will damage the quality of their papers and that wouldn't be good for the company or its investors in the long term. But they're reluctant to do so for fear their stock prices will fall and institutional investors will flee.

So the companies--Knight Ridder most notable among them--cut and cut and risk the consequence.

"You can't keep losing that talent and those numbers [of people] and put out high-quality papers," says Stephen Seplow, who has spent most of the last 30 years as a reporter and editor at the Inquirer. "But there's a clear sense that nobody at corporate headquarters . . . much cares about what goes in the paper; they care about what goes in the bank."

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Shrinking Profits

First-quarter profit margins for newspaper segments of publicly held companies, ranked by revenue:

*

Gannett

2000: 26.6%

2001: 23.2%

*

Tribune

2000: 20.3%

2001: 15.8%

*

New York Times

2000: 20.7%

2001: 17.3%

*

Knight Ridder

2000: 21.8%

2001: 18.5%

*

Dow Jones / Print Publishing

2000: 30.4%

2001: 6.8%

*

Dow Jones / Community Papers

2000: 22.1%

2001: 18.2%

*

McClatchy

2000: 17.6%

2001: 13.0%

*

Washington Post

2000: 16.1%

2001: 12.0%

*

A.H. Belo

2000: 21.0%

2001: 13.2%

*

E.W. Scripps

2000: 31.6%

2001: 27.1%

*

Media General

2000: 26.9%

2001: 23.8%

Note: Profit as a percentage of revenue, before interest and taxes.

*

Source: Morton Research Inc.

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