Magazine article Editor & Publisher

POLL Finds PROFITS RULE

Magazine article Editor & Publisher

POLL Finds PROFITS RULE

Article excerpt

Most publishers and editors feel margins in error, and fear negative impact on industry

Aclear majority of a broad sample of U.S. newspaper publishers and editors have told E&P that recent cutbacks at their papers were directed by their parent companies, in most cases mandated to maintain a certain profit margin. While these publishers and editors carried out the orders, most of them believe the cuts will have a negative impact, both in the short term and long term.

And, by about a 4-to-3 ratio, they feel that margin management is "bad for the newspaper industry."

Surprisingly, however, most of the respondents believe that the worst, in terms of cutbacks, is over. The first cuts may have been the deepest.

The latest E&P/TIPP poll of 77 publishers and 62 editors from around the country was commissioned in the midst of the landmark debate set off by the abrupt resignation of San Jose (Calif.) Mercury News Publisher Jay T. Harris last month.

Harris, as nearly everyone must know by now, quit after the paper's parent, Knight Ridder, ordered him to hike the Mercury News' already hefty profit margin (which has varied from 22% to 29%), despite a slowing of the national economy and the severe downturn in Silicon Valley. Harris said the cuts that would have followed these demands "would have been injurious to both the journalistic integrity" of his paper and "the vitality of the franchise in the long term."

This episode forced to the surface rarely aired fears about how long the newspaper industry as a whole can expect to maintain margins double the 10% to 15% norm in other industries -- and what would happen in a recession. Analysts point out that publicly owned companies are particularly vulnerable, with impatient shareholders to satisfy.

And so we asked TIPP to survey publishers and editors at both privately and publicly owned dailies, with responses reflecting the industry's proportion of small, midsize, and large papers. TIPP, a unit of TechnoMetrica Market Intelligence, based in Oradell, N.J., has carried out several other surveys for E&P in the past two years.

Raghavan Mayur, TIPP's president, points out "one silver lining" in his latest findings. "Over two-thirds of those surveyed," he points out, "believe they can still grow their newspapers in economically slow periods."

Cutting remarks

Evidence of widespread cuts has been mainly anecdotal, not quantified. Now, however, TIPP has found that 50% of publicly owned papers, and 38% of privately owned papers, have cut staff. The most popular area to slash is the newsroom, with production and circulation close behind (and the Web and marketing touched fairly lightly).

But cuts go beyond staffing, eating away at the printed product -- with publicly owned papers (as many have suspected) leading the way. These cuts are more pervasive than we might have guessed: 84% of all papers have cut general operating expenses; 70%, the number of pages; 37%, the length of some sections; and 28%, certain sections altogether. In each area, the publicly owned papers were more prone than the privates to swing the ax. And in every case, midsize and larger papers were more likely to cut than smaller papers (with less than 50,000 circulation).

The public/private split again showed up in the question of who ordered the cutbacks. At the publicly owned papers, cuts were largely or partly directed by the parent company in 94% of cases, exactly twice the percentage reported at privately owned papers. …

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