November 8, 2015

layoffs-cut-deepMid-September to mid-November brings changing leaves and football but also rampant newsroom downsizing, and this has been an especially cruel season.

Just last week saw 46 layoffs to the Philadelphia Inquirer and Daily News and the website plus deep cuts at National Geographic. That’s not counting the 75 in process at the Los Angeles Times or the 50 at the New York Daily News and 40 at the Boston Globe.

Why now is straightforward. Companies do their budget planning for next year in the fall.  If the numbers indicate the necessity of shrinking the newsroom, sooner is better than later.  The savings are greater, the bad press of firing people during the holidays is avoided and, especially for public companies, the cost of severance payments gets deducted from current earnings rather than hanging over the new year.

Why so many cuts in 2015 is also straightforward. This has been a worse year, not a stabilizing one, for advertising. Digital and other new revenues are not making up those losses. As new strategies (like paid digital subscriptions or contract printing) settle in for a few years, they still generate revenue but not growing revenue.

And of course there is the accelerating shift of audience from print to web to mobile where subscriptions and ads remain works in progress.

But I see a couple of less obvious factors. Standard contemporary strategy calls for a harder tilt to digital and rapid experimentation.  But when experiments don’t blossom to successes, it may make sense to let go those hired for the project rather than redeploy them.

That appears to have been the case at The New York Times, where first the editor and business head of its video left, and last week much of the staff turned over too. As a digital site regular, I don’t see anything egregiously wrong with Times videos, but the effort must be failing to deliver the audience growth and potential advertising Times executives are shooting for.

I suspect some of the same in hitting with 17 cuts out of a news staff of 30. The site has been a longtime under-performer, and with fast-changing ownership has had a succession of stop-and-go strategies. So without knowing new publisher Terry Egger’s plans, I’m pretty sure he had decided to hit the restart button again.

The National Geographic cuts fall into a third category — those precipitated by a change in ownership — in this case the sale of a controlling share of the media portions of the company to  Rupert Murdoch’s 21st Century Fox.

New owners always buy because they think they can run the company better than the old guys have — and more often than not that means leaner.  The cuts, however,  may not arrive with the new owners  At National Geographic, current ownership is taking on the downsizing itself to ease the transition once the deal is completed.

Another variation is to cut back staff to polish properties for sale.   Digital First Media folded the Thunderdome national digital news project and made other newsroom reductions in what turned out to be an unsuccessful year-long attempt to sell its 75 papers. Richard Mirman CEO at Freedom Communications had spent more than a year paring back the spending excesses of his predecessor before last week’s bankruptcy filing from which he and partners aim to emerge as new owners.

A fourth genre of staff reduction, practiced at Advance’s papers and some of Gannett’s, is to ask the entire newsroom to resign and reapply for a new set of jobs. That’s an occasion for replacing senior, expensive print-era journalists with younger ones and also a device to force reorientation to digital publishing rhythms in a hurry.

At the Globe the cuts paired (awkwardly) with owner John Henry’s launch last week of Stat, a life sciences site, with a news staff of 40 to 50.  There is a business 101 logic to investing resources in what has growth potential, often transferring them away from the aging cash cow.

For all the business sense of what’s happening, I deplore the early end to so many fine journalism careers and the reduction in local news capacity (partly made up, but not entirely, by a continuing wave of launches).

But even the most heartless C-suite executive has a sense of the business gamble involved. My friend and mentor Phil Meyer, pointed out more than a decade ago a vicious circle (he called it, borrowing an aviation phrase, a death spiral). Reduced news effort leads to loss of circulation, leads to lower ad rates and revenues, leads to even more news reductions — and so on.

Meyer’s diagnosis was pre-digital, Now it plays out with double-force.

Also, as I was beginning this work more than a decade ago, I asked Polk Laffoon, Knight-Ridder’s head of investor relations, how management could tell when a staff had been cut too deeply. His reply, “I suppose when you can’t get the paper out anymore,” was widely noted and held up as an example of corporate insensitivity.

These days, Laffoon looks more like a prophet. In the name of financial necessity, legacy media is getting on with finding a place in the digital future but at the peril of producing news products that are trim to the point of anorexic.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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