Business of News: Newspapers Should Be Transparent About Their Financial Challenges

By: Tim Gallagher

In my first summer as a copy desk intern (electric typewriters were in use), I heard the managing editor engaged in a lively but frustrating telephone conversation with a reader that ended in an unsatisfied sigh.

Trying to save money and newsprint, the managing editor had recently dropped the daytime TV listings. An elderly reader was upset because he could no longer see in the TV grid that “The Andy Griffith Show” was on every weekday at 3 p.m. “But it’s the same schedule every day,” the managing editor told him. “The schedule never changes.”

“Doesn’t matter,” Pete, our ancient rim man on the copy desk, observed. “He thinks you took something away from him and you can’t explain that away.”

Today we are taking a lot more than TV listings away from readers. We remove reporters, photographers and copy editors. We take away local content. We shrink the size of the paper.

And we try to explain it away.

I read letters from editors to readers filled with sophistry and vague promises to “preserve what’s most important to you—the reader.” This goes on from my local newspaper (which just moved up its final deadline to about 8 p.m. so baseball box scores are regularly one day behind) to the New York Times where the editor explains that losing copy editors will not affect the quality of the newspaper to a Phoenix-area weekly that just laid off reporters.

I call bullshit.

Readers know when they are being short-changed. And we damage our credibility when we are not honest with them. We should tell them that these are painfully difficult times for our industry and we want to keep bringing them a local paper. This means we cut expenses, just to stay in business.

Yet we tend to cover our own business with the finest in kid gloves and pink clouds. Job cuts and layoffs are reported piecemeal and rarely put into perspective. We don’t report the profitability of the parent company or its corporate tax rate. We cover the challenges facing our local non-profit community, but never mention how the newspaper’s support for those non-profits has been drastically cut.

And we have the nerve to demand transparency from the government agencies and businesses we cover.

If our currency is credibility, we cannot create a climate of trust with our readers when we are dishonest about our business’s troubles. We want readers to respect our mission; to reject the president’s claim that the media is dishonest. But when it comes to reporting our own financial challenges, we are dishonest.

The rarely reported truth of the news industry is that our owners and corporate leaders took their companies public in the late 20th century and put those profits in their pockets. Stock options became de riguer in our compensation packages. (I was one of those given lucrative stock options.) Instead of spending those enormous profits on research and development, we allowed our industry to be disrupted by innovators such as Craig Newmark and Jeff Bezos. They understood the secular change to the advertising model that too many of us dismissed as another cycle or passing fancy.

While other companies routinely sought millions from angel investors and spent it developing the websites and later the apps that took away the newspaper market for readers and advertisers, we spent less than half a percentage point on research and development.

Now we are scrambling to catch up, but we are like lumberjack staying atop a rolling log that is moving downriver fast.

Our credibility and our future depend on honest reporting about ourselves, so if you want to re-establish credibility with your readership, here are four things I would do:

  1. Pay a local retired journalist to write a quarterly report to your readers and advertisers that details your circulation, profitability, advertising sales and employment numbers.
  2. Convince Poynter or one of the other large newspaper organizations to do the same report for largest corporate owners.
  3. Give a regular report on the amount of local news you are producing.
  4. Give an annual state of your business report and invite the public to tell you what they want to know. Shape the report around their questions and not just the numbers that make you look good.

Tim Gallagher is president of The 20/20 Network, a public relations and strategic communications firm. He is a former Pulitzer Prize-winning editor and publisher at The Albuquerque Tribune and the Ventura County Star newspapers. Reach him at tim@the2020network.com.

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Published: September 19, 2017

8 thoughts on “Business of News: Newspapers Should Be Transparent About Their Financial Challenges

  • September 19, 2017 at 6:28 am
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    Tim: Could not agree more. When newspaper companies went “public” they were “obligated” to produce financial results that increased profit, operating margins, dividends and stock price QUARTERLY… and executive bonuses DEPENDED on increasing EBITDA… the results? You either raise prices(hence revenue) or you cut costs(hence you wear a black hat with suppliers to reduce prices or you cut personnel… oh, and you never cut the revenue department… you cut the editorial department, you cut pages to save newsprint, you cut out stock pages, you cut the TV guide, you cut “content”… Why? To make more $$$$ to pass on to executives in the form or bonuses, stock awards, dividends to shareholders, bonuses to corporate executives who “drive” the local editors and publishers… We live in a Capitalistic Democracy that promotes “greed”… in simple terms: The more you get the more you want….and it has been the downfall of newspapers… and just may be the ultimate downfall our our Democracy…

    Reply
    • September 19, 2017 at 8:22 am
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      Thanks, Frank. We lived through that time together, didn’t we? I wish we could have changed things.

      Reply
  • September 19, 2017 at 7:40 am
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    Tim,

    Go back to the PR world. You are out of touch with reality.

    Our history is full of newspaper companies trying to do technology and diversifying away from print into other businesses. To suggest otherwise is someone who would rather rant than be factual.

    Our readers are fully aware the business is in difficult times. That is not news. To suggest otherwise is someone who hasn’t talked to a newspaper customer in a long long time. They know. What is news is that many businesses are doing just fine – particularly those focused on local markets.

    You are what you do and how your customer experiences you. If you are delivering quality the customer will know and if you are cutting quality the customer will know.

    We don’t need Poynter to tell our customers the difference.

    Reply
    • September 19, 2017 at 8:24 am
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      Thanks for commenting, David. Let’s just say we respectfully disagree.

      Reply
  • September 19, 2017 at 8:49 am
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    frightful nonsense … straight from the “role of journalism is to comfort the afflicted and afflict the comfortable” school of thought … a newspaper (any publication, for that matter, unless it is a government news release service) is a business … if it is a partnership with stockholders, it is bound by law to inform the shareholders, and only a really stupid (or a vicious one, with an axe to grind) shareholder would trumpet the internal news to all and sundry, but that is all … just as it is the role of journalism to inform, and to inform as truthfully, fully and as fast as possible, it is the job of management to keep the place afloat … if for no other reason than to keep themselves gainfully employed, enjoying the high standard of living they have grown used to … just imagine anyone going to the grocery store owner and asking, so, how’s your cash flow going these days?
    so, to sum up: wake up and smell the coffee … please … at long last …

    Reply
    • September 19, 2017 at 1:01 pm
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      Thanks, Peter. I appreciate your thoughts. (By the way, I shop at Kroger’s – ticker symbol KR – so I know how their cash flow is before I enter the store.) I would counter that newspapers are unlike any other business because we frequently invoke the privileges afforded us by the First Amendment. If we are going to use the Bill of Rights as a sword, we cannot use it as a shield.

      Reply
  • September 19, 2017 at 12:31 pm
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    I sorta agree with David Dunn-Rankin, which frightens me because he’s such a curmudgeon (sorry, David). I seriously doubt that readers give a hoot about their papers’ readership numbers or financials. They simply want great, nowhere-else-to-be-found insights about the community in which they live. Hire a retired journalist, by all means, but have him or her write stories, not business reports.

    Reply
    • September 19, 2017 at 1:03 pm
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      Thanks, Gordon. It’s good to read a comment from a sage whose opinion I highly respect. I believe the fulcrum of this column is being ignored. My central point is that newspaper leaders mislead their readers with pablum whenever they make serious cuts to the operation. They put lipstick on the pig and I think readers see through that nonsense. And they demonstrate this by deciding to cancel their subscriptions.

      Reply

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