PRIVATELY HELD PAPERS TAKE CUTS SLOWLY

By: Wayne Robins

E&P Special Report: Journalism At the Margins


This is one of those moments that makes everybody understand the
advantage of working for a family-owned company,” says Vivian
Waixel, vice president and executive editor of The Record,
in Hackensack, N.J., and the North Jersey Herald & News in
nearby West Paterson, both owned by North Jersey Media Group Inc.
(formerly Macromedia).

Yes, the papers have diminished revenue expectations. “Several of
our advertisers have gone out of business, and we’re girding
against a tough year,” Waixel says. “But, happily, we’re not
looking at hiring freezes, salary freezes, or layoffs.”

There may not be a newspaper in the country that isn’t looking to
control costs and improve profit margins after years of seemingly
effortless growth. But after many conversations with publishers,
editors, and executives with organizations, big and small, it’s
clear the breathing is a little easier for privately owned
newspaper companies, such as North Jersey Media Group, which can
operate without Wall Street spotlighting monthly margins and
shareholder value.

Waixel credits the leadership and proximity of Chairman and CEO
Malcolm Borg, whose family owns The Record, for equanimity
in the face of discouraging profit margins. “From the top, we
were told that there was not going to be a blanket strategy [of
across-the-board cuts] that would keep us from getting where we
needed to go,” Waixel says. “The decisions are made under your
roof; you have more input on how to achieve the results you need
to succeed. I’m not dealing with someone halfway around the
world. Malcolm Borg’s office is literally two doors down from
mine, and that makes a lot of difference.”

Cost reductions are coming by trying to control newsprint and
convention travel costs, and by re-examining areas of low reader
interest. “We’ve looked for ways to hold the line below the sight
line of our readers,” Waixel says. “It took a lot of work, but we
hit the numbers we want to work with this year, barring an
unforeseen downturn much worse than expected.”

Even at a very large, privately held company, such as Hearst
Corp., newsrooms are buffered to some degree from the quick-fix
needs of public companies. “You’re always conscious of your
employer’s profit expectations,” says Rex Smith, managing editor
of Hearst’s Times Union in Albany N.Y. “But the Gannetts
and Knight Ridders are forced to respond more quickly and
dramatically to market fluctuations.”

The news hole for the Albany paper’s suburban sections has been
trimmed, and the kind of enterprise-news projects Smith favors
might run six or so columns shorter than they might have. “Our
publisher is certainly given numbers by Hearst’s newspaper
division that he needs to hit,” Smith says. (Hearst, like other
privately held companies, does not disclose those margins.) But
there are no plans to do anything in Albany that would
dramatically affect coverage or staffing.

The unforgiving economy has certainly not escaped the attention
of Jonathan Segal, president of the Freedom Communications Inc.’s
Community Newspaper Division, based in Irvine, Calif. (Freedom’s
flagship Orange County Register in Santa Ana has its own
management team; Segal is responsible for the company’s 28 other
dailies.) Freedom’s papers are as large as The Gazette in
Colorado Springs, Colo., but most are smaller, forming a crescent
through the Sunbelt – from Barstow, Calif., to Clovis, N.M.,
to Brownsville, Texas, and then to Mississippi, Florida, and
North Carolina.

“Every paper doesn’t have to make the same amount of money,”
Segal says. “We don’t expect a larger paper in a competitive
market with a lot of expenses to have the same margins as a
small-market paper with no competition.”

Freedom is privately owned. “The heirs of the founder own the
company, and it is ‘patient’ capital,” Segal says. “Our folks
want to make as much money as anyone, but we can afford a longer-
term perspective than if we were a public company.”

Segal’s management style is to facilitate rather than dictate, so
when he hears from one of his publishers about a useful cost
reduction technique, he’ll share it with the others. “One
discovered they had 75 cell phones they were paying for,” he
says, “and realized that’s a whole lot of money that has nothing
to do with newspaper quality. Maybe 20 phones is about right.

“What I tell my publishers is, ‘We need to address economic
conditions, be prudent at what we do, but not do anything to hurt
the long-term franchise.’ We’re able to take that perspective
because we don’t have to worry about analysts’ second-quarter
reports.”

Some private companies take another tack altogether during
downturns, increasing resources to get a step up on retrenching
competitors. The Donrey Media Group, which includes the Las
Vegas Review-Journal and papers from Arkansas to Hawaii, is
not publicly traded, and therefore “we have no shareholder
issues,” according to Donrey Media Group President Sherm
Frederick.

“We’ve seen economic downturns before and know that newspapers
can and do thrive in them with a little foresight,” Frederick
says in an e-mail interview. “Economic downturns can be
clarifying events in the marketplace. By that I mean when
advertising dollars shrink, we find that if we continue to
hustle, continue to put out good newspapers, and get our pricing
right, we will continue to get our share of those dollars …
along that line, we also find that economic downturns are exactly
the wrong time to stop looking at new ventures.”

As an afterthought, Frederick adds, “We are not operating under
any specific margin demands.”



Wayne Robins (wrobins@editorandpublisher.com) is an associate editor covering new media for E&P.



Copyright 2001, Editor & Publisher.

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