One Publisher Says No Profits Are OK

By: Joe Strupp

The Frostproof (Fla.) News has been operating in the red the last five years, and it may lose $25,000 this year. So why hasn’t the paper’s parent, Independent Newspapers Inc. (INI) of Dover, Del., folded the tiny paper and cut its losses?

Hey, that’s not their style.

“We want our papers to be driven by journalistic service to the community and not by corporate ownership or stockholders,” said Joe Smyth, CEO of INI, which owns three dailies and 28 weeklies in four states, including Arizona and Maryland. “I sometimes refer to us as ‘Gan-not.'”

He stressed that INI’s goal is to make money on all its properties, but said it sometimes will put up with losses to continue providing coverage to the communities it serves. “When a town like Frostproof is in trouble or in recession, that is when they need a good newspaper more,” said Smyth, who noted six INI papers, including the Okeechobee (Fla.) News, are losing money.

Smyth’s father, Jack, started the company with the Delaware State News in 1953, the same year his son became a delivery boy for the daily. By 1969, Jack Smyth had health problems and chose to sell the chain to his son and three daughters. Joe Smyth bought out his sisters’ shares the following year and continued to add properties.

To keep the company independent, Smyth in 1991 created a public trust overseen by five trustees who receive no income. The trust returns all profit to the company and seeks margins of between 5% and 10%. Although Smyth as CEO draws $74,000 in salary, he has no ownership stake in the company. “Making money is not my mission,” he said.

While the company pays taxes on its revenue, the trust could not have been created without an Internal Revenue Service exemption.

Along with its small profit margins and commitment to local coverage, INI operates under a strict no-layoff policy, has no union presence at any of its papers, and pays advertising-sales representatives straight salaries with no commissions. “We do that because we want them to help customers, not be pushing for a [financial] return,” said Delaware State News Publisher Tamra Brittingham, who oversees many of INI’s East Coast papers.

Although INI shuns layoffs, it has cut its staff to about 350 today from 450 in 1996 via attrition and more streamlined operations. Since 1995, two centralized locations in Delaware and Arizona have opened to carry out pagination and classified-ad placement. Three central printing plants in Arizona, Florida, and Delaware handle all press runs.

“It saves a lot,” Smyth said of the streamlining. “There’s no other way we could produce some of the papers.”

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