In Connecticut, Local Ownership Debate Heats Up

By: Joe Strupp The national headlines about a proposed "bailout" from the state of Connecticut were inaccurate, but The Bristol Press and The Herald of New Britain could serve as a case study in the debate over local vs. national ownership. Recently sold by Journal Register Co. to a lone businessman, Central Connecticut Communications owner Michael E. Schroeder, the two dailies southwest of Hartford have been viewed as economically troubled, in large part due to their besieged, out-of-state former owners.

Journal Register ? which continues to own three other dailies in the state, including the New Haven Register ? is one of four non-Connecticut companies to operate newspapers in the Nutmeg State, and has been criticized as being too hands-off and lacking in any sort of community feel. While the industry is on a downward slide nearly everywhere, several local newspaper owners claim chain ownership is to blame for a good deal of the issues many Connecticut dailies are facing.

"Most of the problems we are seeing in Connecticut have more to do with the debt load and structure of the national companies than the local paper," says Jonathan Kellogg, executive editor of the Republican-American in Waterbury, a family-owned daily southwest of Hartford. "Some of the [difficulties] you have seen with the chains has nothing to do with journalism."

Schroeder, heralded as a savior by some in Bristol and New Britain, has a background that includes 15 years in news and business-side posts at Newsday, as well as a failed free Boston weekly in 2008 ? and he claims his local touch will make all the difference in its ownership. Although he has most recently resided in Huntington, N.Y., and has never lived in Connecticut, Schroeder vowed to move to his newspapers' circulation area by mid-winter and enter his new business with full force. "I am looking forward to being part of the community and rebuilding these newspapers," he tells E&P. "I believe you have to be part of the community you are serving. You can't phone it in."

As if to prove his point, once the deal was finalized, Schroeder personally delivered copies of the Jan. 26 edition to the two papers' longest-known subscribers.

Marc Levy, who edited both the Bristol Press and the Herald for nearly two years before Schroeder came in and plans to stay on, agrees: "It stands a better chance of doing better if we have local ownership that is, at the least, able to make fast decisions," he says. "The structure of some of the media companies makes that difficult." (Journal Register officials did not respond to several requests for comment.)

In recent years, however, several dailies including The Philadelphia Inquirer and the Star Tribune of Minneapolis found hope in new owners after their national chains faltered ? but wound up in just as bad or worse financial shape. Simply having a local owner is hardly enough to ensure success.

A closer look at Connecticut newspapers finds the ownership argument being fought there every day. "There is a very strong newspaper connection in these communities," says Tom Baden, editor of The Connecticut Post, one of four Hearst dailies in the state that had been controlled by MediaNews Group until last year.

The trickle-down effect
Connecticut might be the last place you'd look to find signs of newspaper-industry strain. A relatively well-off state, it boasts 17 daily papers ? despite being a fraction of the geographic size of, say, Oregon, which also has 17 ? and has been "one of the best newspaper markets in the country," says William Dean Singleton, CEO of MediaNews Group (which once owned the Bristol Press and recently sold The Connecticut Post to Hearst). "It has a highly educated population that is very interested in local affairs," he adds. "Readership penetration is quite high."

With a loyal readership base and families who tend to remain there for generations, "there are still a number of people in Connecticut who will buy as many papers as are available," says Chris Powell, managing editor of the Journal Inquirer in Manchester, one of several locally owned dailies: "We have always had the highest per capita newspaper readership." Fairfield County alone hosts five daily papers.

"We have a readership that is going to be around for a while," adds David Dear, publisher of the Danbury News-Times, one of the Fairfield five.

But in just the past year ? mostly due to economic problems plaguing the four media companies that recently have owned Connecticut newspapers ? several dailies have been in danger of closing, while numerous others have cut staff and coverage. Others have simply bounced from owner to owner.

"I think we are going to see some closings," fears Maureen Croteau, head of the journalism department at the University of Connecticut and a former Hartford Courant staffer. "One thing that is going to happen is more newspapers working together, finding more ways to operate together and share printing and distribution."

Based in Pennsylvania, Journal Register owned the most dailies in Connecticut until January, when it sold two of its five to Schroeder. Tribune Company, the Chicago-based media chain that filed for bankruptcy protection, owns the state's largest daily, The Hartford Courant ? which also claims to be the nation's oldest continuously published daily. Tribune's woes are blamed for much of the Courant's problems, which in September resulted in a 25% staff and news-page reduction.

Gatehouse Media, whose stock fell so far that it was de-listed last year, has one daily, the Norwich Bulletin, in the state. The paper scaled back from 150 staffers to 115 in 2008, while MediaNews Group, which had operated three dailies for Hearst, sold control of those and the Connecticut Post to Hearst. For some of those papers, such as the Danbury News-Times, the move marked the third or fourth owner in less than three years.

Local owners, less pressure
Even with the national media company problems impacting 11 dailies, there are still six locally owned papers, including two ? The Day in New London and The Hour in Norwalk ? that operate essentially as non-profits, with their proceeds going either back into the newspaper or to charitable trusts. The four other papers say they have seen their share of challenges, but not to the extent of their chain-owned brethren.

"We have to make a profit, even in lean times, but it can be a dollar," says Timothy Dwyer, executive editor of the Day, which is formally owned by the Day Boudenwein Trust ? a charitable entity set up in 1939 following the death of former publisher Theodore Boudenwein, who operated the paper for 48 years. "Because of the unique structure of our ownership, there is a feeling that the newspaper has to be preserved and protected. But you still do it within the realm of the economy." The paper laid off eight staffers in November, and lost five more to attrition. The Day also cut back pages to the tune of some 20 per week. Dwyer adds, "We have become leaner, but we are still doing really good stories."

Norwalk Publisher Chet Valiante, who also splits revenue between the paper's needs and a charitable trust, made his own cutbacks last year, including unspecified job reductions and outsourced printing. Still, he stresses, "We don't have the corporate pressures from far away. That is a big difference."

Walter Rudewicz, general manager of the Journal Inquirer in Manchester, locally owned by the Ellis Family's Journal Publishing Co., has spent 30 years at the paper. Although his staff of 275 is about 20 fewer than two years ago, he notes those losses were through attrition. He says when Journal Register took over the Bristol and New Britain papers, it did not pay enough attention to their needs: "They were good papers when the owners sold them, but they have deteriorated. They have run those papers right into the ground."

Chris Powell, managing editor in Manchester and a 40-year employee, states: "We don't have Tribune to drag us down [or] Journal Register to drag us down, and being owned by a local family that is not as demanding helps." He admits that some areas of the state, like Hartford, have been bitten by economic problems that would affect any nearby newspaper, local or nationally owned. "Hartford has only about two-thirds of the population it had 40 years ago," he adds. "They are selling more papers in West Hartford, which has fewer people than Hartford."

While Fairfield County has its five dailies, Litchfield County in the northwest corner has one, The Register Citizen in Torrington. To the east, the Norwich Bulletin and The Day battle for New London County, but also contend with competition in Rhode Island. Both New Haven and Hartford also host television and radio markets; the Courant's parent company Tribune owns two Hartford TV stations.

And with 17 dailies squeezed into the third-smallest state in terms of size, few of the dailies can sit comfortably as competition changes and Web offerings increase. "Given the size of the state, most people who want a daily paper have options," says executive editor Kellogg in Waterbury. "There is no safe monopoly here."

Not all are crying foul
While out-of-state owners are in many cases passing their problems down the chain, some publishers say that assertion is often too simplistic.

"I can't say that their problems have impacted us at all," says Publisher Ellen Lind of the Norwich Bulletin, Gatehouse's lone Connecticut daily. "There have been times when they have asked us to manage cash in a certain way, and we have done that. They have been very reasonable with us." Her newsroom has lost at least three people in the past year, leaving it with 35.

In Hartford, Publisher Steve Carver also defends his ties to parent company Tribune. A veteran of TV stations, Carver joined the Courant just two years ago and quickly found himself working under the Sam Zell regime, which sparked a wave of cutbacks in 2008 prior to the company's bankruptcy filing. By year's end, he was forced to cut a quarter of his staff and page count. He also oversaw one of the most eyebrow-raising redesigns in the Tribune chain, which resulted in the Hartford Courant's flag being relocated vertically along the left side of Page One with a ".com" added to the end.

In addition to welcoming Tribune's push for a redesign, Carver also points out the positive aspects of having two sister television stations in the market owned by Tribune: "We benefit a lot from that in cross- promotion and cross-sell."

The other major media company with dailies in Connecticut is Hearst, which has used its three Fairfield County dailies to employ the kind of convergence/sharing that MediaNews has implemented elsewhere. Prior to August 2008, MediaNews had managed the Danbury News-Times, Greenwich Time, and The Advocate of Stamford for Hearst, while owning and operating the Connecticut Post. But it chose to sell the Post, handed over management of the other three back to Hearst, and got out of the state.

"Hearst was interested in running the whole thing, and it allowed us to pay down about 25% of our bank debt," Media News' Singleton says. "They were willing to pay a relatively high price to buy the [Post]."

Hearst officials say the close proximity of the papers, all in the same county, makes them more viable if their resources are pooled. "It gives us the opportunity to operate with the economics of a true cluster," says Lincoln Millstein, senior vice president for Hearst Newspapers. "It is the first true cluster of newspapers that we own in one geographic area."

Millstein said the four papers have already consolidated their help-wanted sections. And according to Post editor Baden, a shared weekend tab is in the pipeline. Still, Hearst has seen the same financial problems as its other Connecticut neighbors, in late December announcing a buyout seeking an undetermined number of takers.

"The primary reason for the buyout is that when you start operating these units together, you want to eliminate duplication of efforts," Millstein explains. "We are facing some of the same challenges and we don't see things getting much better ? in fact, more challenging."

He too blames some Connecticut dailies' issues on their parent chains, even if he does not count his own paper among them. "The Hartford Courant is a good example," he says. "It is extremely profitable, but it has a parent company that is highly leveraged."

Adds newspaper analyst John Morton: "The word that answers all of those questions is debt. Most local newspaper owners do not feel the need to take on much debt."

No bailouts in this boat
Connecticut recently gained considerable attention among newspaper folk with the first talk of government aid for newspapers. Both Bristol and New Britain officials, as well as a small group of state legislators and the Connecticut Economic Development Commission, held meetings on ways to provide tax incentives or other assistance to would-be buyers of the Journal Register dailies and possibly others.

As word spread, the term "bailout" popped up, sparking an immediate clarification from such statehouse officials as Rep. Frank Nicastro, D-Bristol. "We went in front of several TV cameras and explained that this is not a bailout," Nicastro said in early January before the Schroeder deal was announced, "but tax incentives like anyone else. It doesn't last forever and it is not a bailout, we made that clear."

The Economic Development Commission went a step further, sending out letters to 16 potential buyers in December informing them of the Journal Register papers' availability. Schroeder was not among them, and he tells E&P he received neither any tax incentives nor any other financial stimulus from the state. Nicastro, who was a Bristol Press carrier in his teens, defended the state efforts, saying they were offering the same tax-break possibilities that any other industry gets ? and only for potential buyers. "I wouldn't give the current owners five cents," Nicastro said of Journal Register before the sale. "They created the problem."

But the idea of government assistance for a newspaper drew concerns from some Connecticut newspaper industry observers, as well as national journalism leaders. Many believe newspapers should not get involved with a government entity they would then have to cover.

"I probably come down on the side that the business has to operate as independent as it can," says Carver at the Courant. "All they were trying to do was facilitate an ownership change, help those two papers in particular. But it is not like newspapers have never gone out of business before."

Prof. Croteau at the University of Connecticut sees both sides, but also the potential problems. "You have an awkward situation of several papers looking to survive, and economic incentives to do so," she says. "It makes sense in so many ways, the way people feel about newspapers. But in other ways, it doesn't make sense ? maybe if you could build enough of a firewall [between the business and news sides]. But I don't know if there is enough of a wall there."

In Norwalk, however, Publisher Valiante of the Hour states: "I would put my hand out as well. Newspapers are important to the community and tax incentives really don't cost [the state] anything because if they go out of business, they wouldn't pay any taxes."

Whatever happens to Connecticut's papers, both nationally owned and locally operated, the future will likely mean less original reporting, perhaps fewer actual papers and more competition for news and ad revenue.

As two-time Connecticut newspaper owner Singleton adds: "Who owns a newspaper today has little to do with the economics. When advertising takes a dive, circulation takes a dive, and the economy takes a dive, you have to cut costs."