Public Companies No Worse Than Private
This report is part of an effort by The Poynter Institute and the Project for Excellence in Journalism to develop standards for measuring news capacity.
Public media companies have taken a good deal of heat for reducing news staffs in recent years. Now a study of newspapers over 50,000 circulation shows that as a group newsrooms in private chains are no better staffed.
The surprising finding emerged from a close examination of data gathered each spring by the American Society of Newspaper Editors to prepare its annual census of newsroom diversity. Last April the census yielded the melancholy estimate that there had been a net loss of 2,000 news-editorial professionals in a single year.
ASNE gave Poynter permission to analyze the staffing patterns of 178 papers of more than 50,000 circulation that participated in the survey (80 percent of all papers in that range). The analysis shows wide variation in how individual papers are staffed but a surprising consistency among the universe of publicly-owned, private-chain and independently owned papers.
- On average, the staff-per-1,000 circulation ratio for the three groups was almost identical. The independents were a little more than 0.5 percent higher; the private chains about 1.5 percent lower than the publics.
- Nor did the publicly-owned companies make deeper cuts in 2001. With a 3 percent reduction in news professionals, they matched the average for the entire sample.
- Doing the math a different way – comparing against a moving average that reflects economies of scale – public companies and private chains still come out the same but the independents average about 7.5 percent higher.
Here's a snapshot of staffing ratios.
These findings would appear, at a glance, to deflate the standard notion that Wall Street, institutional investors and quarter-to-quarter earnings pressures are the villains driving progressive rounds of staff cuts at public-company papers – a trend that private ownership, adopting a longer view, can resist.
Yes, that piece of conventional wisdom seems to be wrong, or at least out of date.
There is also a slightly more complicated interpretation of the new data: The pressure editors perceive on staffing – especially as missions and zoning efforts have grown more complex – is real. The cuts of 2001 were real. And Gannett and other high-margin public companies may well have led a steady rise of profit expectations through the 1990s.
But by now these pressures are general to the industry – not particular to the half that is under public ownership. That stands to reason. Private chains have their own investors, seeking a competitive near-term return on capital, pretty much the same as do stock market players. And with a few exceptions -- the St. Petersburg Times, owned by The Poynter Institute, or the Seattle Times, led by I’ll-do-it-my-way publisher Frank Blethen – private-chain and independent papers have family owners in the background likely to grow restive if earnings soften.
So a more shaded discussion of newspaper staffing might better proceed from the working premise that something other than the broad type of ownership is driving variances in staffing levels. The private-chain and independent sectors have their own bottom-line operators, who seem rarely to see a long-term logic for investment in news capacity. Also, there is evidence public companies don’t mind staffing up when it makes business sense for the individual paper. The paper with the best staff ratio among all 178 papers in the Poynter study’s sample is owned by a public company, as is the best with 200,000-plus circulation.
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This analysis revisits and verifies some findings from a quick sampling of the ASNE numbers published earlier this year (Poynter.org, May 20). ASNE publishes minority percentages of each participating paper’s news staff but keeps the total staff number confidential. By agreement, this study is identifying papers and companies by name only if they grant permission.
Pie Chart ASNE papers
For starters, the prevailing ratio these days is 1.2–1.3 full-time equivalency (FTE) news–editorial staffers per 1,000 circulation. Economies of scale are a factor, so the average is somewhat higher for papers of less than 200,000 circulation, somewhat lower for bigger papers. Given the objectives of ASNE’s diversity study, its census counts only full-time professionals, rather than the more standard FTE totals used in newsroom budgeting. Including part-timers, clerks and library researchers, a typical newspaper appears to have 20 to 30 percent more total FTE’s than ASNE’s survey counts. (That can be calculated by comparing the averages to findings of a separate Inland Press Association cost and revenue survey, which included 100 papers this size).
Individual papers vary a great deal from these averages – this is a sample with lots of what the statisticians would call "dispersion." The very highest papers have a staff ratio of 1.5 professionals per 1,000 or a likely 1.8 to 1.9 FTE’s. By contrast, there are about 30 papers reporting fewer than 0.85 professionals per 1,000 circulation. In other words the staffing "haves" put nearly twice the professional staff to work per 1,000 readers as do the "have-nots."
The widely varying totals also indicate, as one corporate news executive said, that staffing decisions are "more art than science." While the "rule-of-thumb" and its stingier traditional formula of one staffer per thousand circulation may get cited in budget discussions, that is ultimately not how the numbers at each paper are decided. Otherwise they would fit the overall trendline fairly tightly rather than being scattered all over.
A fairly obvious question is whether high-quality papers have more generous staffing (at least as measured by this ratio). On the whole, yes, but not invariably. The quick sample last May compared five papers among the top 30 in a 1999 Columbia Journalism Review poll with five papers identified informally as weaker by a survey of editors and Poynter faculty. The well-regarded papers were 25 percent better staffed – though all that difference was driven by the two most highly-staffed of the top papers and the two skimpiest of the weak.
It did not seem fruitful to go further in the subjective exercise of classifying a large group of papers as good or weak. However, looking at the 21 highest-rated papers in the CJR poll, 13 were above average in staffing ratio (making the adjustment for economies of scale and measuring against the moving average). Three were slightly below average, three well below average and two (USA Today and the Wall Street Journal) so large this study excluded them from the comparison of ratios.
The message here is equivocal. Having more people does seem, much more often than not, part of the investment in doing an outstanding job editorially. On the other hand, there is also clearly a coefficient of leadership applied to staffing level and other news resources that translates – or fails to – into a quality news report. The staff-to-circulation indicator can also slide past various special circumstances. One of the low-staff/high quality papers has been operating for years with a supplement of 40 reporters it doesn’t classify as full-time professionals; another has chosen a tight-by-design metropolitan report with a bare minimum of zoning. Also, both have little suburban daily competition.
Looked at another way, the dozen papers with the very highest staffing ratios "doesn’t look like any list of the best," as Poynter President Jim Naughton put it when shown the results. Rather, the group shows the influence of special market characteristics, identified by news executives in the preliminary sampling of the survey results as justifying extra news staff investment. These include intense competition in all or a large part of the circulation area, an outsized zoning effort, and perhaps a few situations particular to private owners and their objectives. [This is the topic of a second article tomorrow.]
With the adjustment for scale, two of nation’s highest circulation papers with the two biggest staffs – The New York Times and Los Angeles Times – are among the top 20 (compared to a moving average). But scanning the upper reaches of the list, there also appear to be a few papers, especially among the independents, with a generous complement of staff but nothing special journalistically to show for it. That is further indication that how a staff is mobilized and led may be at least as important as the number of reporters and editors.
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Close inspection of the cuts of 2001 shows the picture is again more mixed than might be expected. Of the sample, a quarter, 43 papers, ended 2001 about where they started, up or down three or fewer full-time news professionals. Another 29 papers, 17 percent, actually had staff increases. (For this part of the analysis, the Wall Street Journal and USA Today were added back in and seven papers that had not participated in the ASNE survey the previous year were dropped).
The ranks of those that kept growing in a bad year are heavy with a third kind of paper news executives had said often get comparatively generous staffing – those in fast-growing markets. There the papers may be thick with ads in the first place, and the investment in a bigger and better local report is more likely to pay off as the business grows over time.
In presentations to investors and analysts, public companies typically discuss the entire newspaper group and, especially in tough years like the last two, highlight cost control. They may thus be soft-pedaling how they are also effectively moving resources around and will continue to expand a news staff when and where that makes business sense.
The converse is not especially palatable, internally to editors and publishers or externally to the affected communities. Though boosters talk as if their hometowns, like the children of Lake Wobegon, are all above average, it stands to reason half these 176 communities are growing comparatively slowly. They are particularly at risk for smaller-than-average and stagnant news staffing -- and probably a skimpy newshole as well.
ASNE does its own analysis of the staffing totals by broad bands of circulation. ASNE diversity director Bobbi Bowman said it showed the largest papers (250,000 circulation and above) stayed close to even in 2001. A disproportionate share of the cuts, she said, were at papers in the 50,000 to 250,000 range.
The staffing data do highlight one matter of record, albeit obscure, that may have been misinterpreted in accounts of the 2001 cuts.
Several times during the course of 2001, Knight Ridder said it was paring news staffs about 10 percent overall – considerably more at some of its papers. The concentration on bottom-line considerations provoked Jay Harris’s very public resignation in protest as publisher of the San Jose Mercury News and turmoil over layoffs and buyouts among the editing and reporting rank-and-file at newspapers in Philadelphia and Akron.
However, Knight Ridder was atypical rather than representative. Several other companies -- Gannett most explicitly – told investors they already had staffing at an appropriately tight level or had started holding positions open as the downturn began in late 2000. The other dozen public companies ranged from a high of 5 percent cuts to modest increases. Knight Ridder accounted for an astonishing 60 percent of the net cuts among public-company newspapers in this analysis during 2001.
For years, Knight Ridder had been criticized by analysts for being overstaffed, its stock trading at an industry-low multiple of earnings. So, as management said, the 2001 cuts were more a remedial action to bring staffing levels closer to the industry norm than a pace-setting move.
Independent companies actually had the highest average level of cuts among the three groups, nearly 5 percent. (Private chains were just over 1.5 percent). In the non-public half of the industry, cuts and the financial pressures driving them frequently play out in private, but they do occasionally spill out into the public eye. Two examples from this year:
- Some members of the Hoiles family, dissatisfied with the financial performance of Freedom Communications, agitated for putting the large private corporation up for auction. After a top management change and a "liquidity forum" aimed at making it easier for the dissidents to sell their stock, the company announced in August it was not for sale. But as part of the push for better financial performance, there have been several rounds of announced newsroom cuts at Freedom’s flagship paper, the Orange County Register.
- In June, a competing Pittsburgh paper obtained a copy of a private bond offering prospectus for Block Communications, owner of the Pittsburgh Post-Gazette and Toledo Blade. Block was offering the refinancing at an eye-popping 9.25 percent and hoping to improve financial performance and its credit rating by, among other things, cutting the Post-Gazette’s news budget by $1 million this year.
Looking at staffing for all papers over a longer time perspective, ASNE’s estimate of total professional staffing as of the end of last year was identical to that of five years ago at about 54,000 professionals. That is 2,500 off the all-time peak in 1990. Hardly progress, but on its face, not a drastic reduction since the number of newspapers has declined and total newspaper circulation has fallen about 10 percent during that decade.
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A final question about these staffing numbers might be their currency – since this is a snapshot as of the end of 2001. As it happens, 2002 has been a year of stasis in the industry, expenses buttoned down awaiting an advertising recovery that hasn’t arrived. So a best guess is that staffing levels changed very little over the course of the year. A CJR web site tracking cuts found none between February and late October when the latest Orange County Register squeeze of seven more positions was announced, followed by the Wall Street Journal saying in November it was reducing its news staff by 23. Nor is there any indication of a widespread staff-up.
The future is being defined in 2003 news budget planning around the nation right now, results to be evident before long. It will be of note whether corporate news executives see this as a time to reinvest and rebuild or to take profit margins back on course to yet loftier heights (Wall Street having tolerantly bid up stock prices through two years of flat earnings) or how they strike a balance.
In that regard, some unexpected voices – Media News CEO William Dean Singleton, retired Gannett CEO John Curley -- have opined publicly that ratcheting up margins has gone far enough, maybe too far. The industry’s original bottom-line executive, retired Gannett CEO Al Neuharth, and E.W. Scripps CEO Ken Lowe also have spoken in recent months about recognizing news as the key asset of a newspaper enterprise and putting it at the center of the corporate mission. The next few quarters will show whether the industry will start managing that way
How This Study Was Done
Circulation is daily (excluding Sunday) as reported to the Audit Bureau of Circulations for the six-month period ending March 31, 2002. The sample of 178 includes 80 percent of papers with 50,000-plus circulation. Of these, 96 are owned by public companies, 42 by private chains, and 40 by independent companies – defined as owning one or two papers in the chosen size range. All but a handful of the public and private-chain papers participate in the ASNE diversity survey. So independents are disproportionately represented among the non-participants. An informed guess is that, choosing not to commit to the ASNE survey and have minority staffing percentages disclosed, they are likely to be somewhat less well-staffed than the independents in the sample. The Wall Street Journal and USA Today were excluded from the analysis of staffing ratios because their huge circulations make them a special case that would skew comparisons.
Public, private-chain and independent papers had virtually the same overall staffing pattern when comparing the mean average of the groups. Measuring variance from a best-fit straight line (or, similarly, when looking at the median paper in each group), the independents appeared 7.5 percent better staffed. Simplifying slightly, the very largest public papers in the sample – the New York Times, Los Angeles Times and Washington Post -- are heavily weighted in calculating a mean and their high staffing levels pull the public group up on that basis of comparison.
The average professional news-editorial level of the 176 papers in that part of the analysis was 0.947 per 1,000 circulation. The median was 1.024. The full sample in this study has a combined circulation of about 34,000,000, 60 percent of the total for the American newspaper industry.
Leslie Pelley of the Poynter Institute provided Excel spreadsheet analysis of the sample.
Coming Friday afternoon: The best-staffed metro newspaper in the U.S.: It's not what you might think.