By: Joel Davis and Lucia Moses Profit Pressures Were Too Much, He Says
Amid a debilitating crash of the Silicon Valley economy, Jay T. Harris abruptly resigned last week as publisher of the San Jose (Calif.) Mercury News, citing excruciating Knight Ridder pressure to bring profits up while staffing and news space go down. The March 19 resignation of Harris - publisher of the 286,679-circulation Mercury News since 1994, Knight Ridder's rising star, and the nation's top African-American newspaper executive - jolted the industry.
Harris told E&P that he was troubled by a March 16 meeting with corporate executives over profitability, saying: "The magnitudes of the cuts that we were discussing ... would have been injurious to both the journalistic integrity of the Mercury News and the vitality of the franchise in the long term." Harris said that in the aftermath of that meeting he received an e-mail message from [Knight Ridder Newspapers Division President] Steve Rossi that led him to resign.
In the message, Rossi, promoted last month to his present position from senior vice president for operations, wrote: "[K]eep in mind here that the margins of the Mercury News have ranged between 22% and 29% over the past 10 years, largely dependent upon the strength of employment advertising. We need to move that range up in order to be in step with the goal to move KR's overall margins up."
In a resignation letter, Harris warned such lofty profit goals would require draconian cuts, including layoffs, that would create near-term savings at the expense of the paper's reputation. "The profit target Steve laid out cannot be achieved short of layoffs," he said. "My life's purpose is and always shall be grounded in means that are larger and nobler than that."
The Mercury News, which contributes about 10% of Knight Ridder's total operating revenue, played a key role in the company's prosperity as it rode the wave of the Silicon Valley boom for the past six years. But when the high-tech bubble burst last spring, times suddenly got a lot tougher. Total ad revenue at Knight Ridder declined 2.7% in February, with San Jose, Philadelphia, and Detroit showing the most weakness.
In a memo to staff, Harris wrote that help-wanted classified revenue, a particular growth driver, fell $2.5 million this February below the same month a year earlier. Knight Ridder has had to lower its first-quarter earnings estimate not once but twice.
However, Mercury News Managing Editor David Yarnold - who, the day after Harris quit, dramatically ripped up a layoff list in front of his staff to alleviate fears - told E&P a new publisher should be in place soon.
Although Harris significantly boosted the Mercury News' staff during the tech run-up and oversaw the San Francisco invasion last summer, he said he did everything with the blessing of Chairman and CEO Tony Ridder. Now the heavily promoted San Francisco edition, generally considered a bust, has been folded into the Peninsula edition, although an 11-person bureau will remain.
In a related development, despite comforting words from Yarnold and General Manager Mindi Keirnan, rumors spread that the Mercury News' Sunday Silicon Valley Magazine would fold. (After press time on Friday, the Mercury News announced that the last issue of SV Magazine would appear April 8. See MERCURY NEWS KILLS SUNDAY MAGAZINE (03/23/01).)
Harris said he's "had a number of very generous offers to do things" since resigning, but plans to spend a few months off with his family. However, rumors are already swirling that the Sacramento, Calif.-based McClatchy Co., known both for hiring women and minorities for top posts and for its journalistic integrity, is eyeing him. Harris said he has not spoken to Ridder since submitting his resignation, although he harbors no animosity toward him. Considered a leading successor to replace Ridder before he quit, Harris said he would not return to the company, adding, "I already had best job at Knight Ridder."
Joel Davis (jdavis@editorandpublisher.com) is West Coast editor for E&P.
Lucia Moses (lmoses@editorandpublisher.com) is an associate editor covering business for E&P.
Copyright 2001, Editor & Publisher.
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