No More Fun in the Sun

By: Mark Fitzgerald Florida hasn't been hit by a major hurricane since Wilma slammed ashore in October 2005. But at least one publisher believes newspapers in the Sunshine State might be better off if one had. "Don't get me wrong,"" says Steve Erlanger, ""I hope I never see another hurricane again. But we had four hurricanes in a matter of two years, and it brought in billions of dollars in spending money. People had $21,000 worth of damage, and got $100,000 checks. And they spent it.""

It was a surreal time, says Erlanger, who launched free-distribution Hometown News weeklies in 2002 and rode the Florida boom by expanding along the Treasure Coast from north of Fort Lauderdale all the way up to Daytona Beach in one of the newspaper industry's greatest recent success stories.

Real estate values doubled in just a couple of years, and kept going up as investors paid record prices and flipped homes, condos, and building lots for record-breaking sales ? sometimes just hours after they were purchased. The huge infusions of cash came on top of demographics that have long made Florida a natural market for newspapers: retirees and older snowbirds who are the most loyal readers.

While newspapers in much of the nation struggled to recover from the economic devastation of 9/11, Florida was becoming the best, albeit most competitive, place to publish a newspaper. ""Florida has been and will continue to be probably the most competitive newspaper state because everything is right to make Florida a great place for a newspaper to do business,"" Dean Ridings, executive director of the Florida Press Association, told E&P at what turned out to be the peak of the market during the summer of 2005.

""The business people got spoiled, and my salespeople got spoiled,"" says Erlanger, a 27-year veteran of community newspapering. ""It was truly an unreal time, and I tried to tell my guys, 'This is not how the business is.'""

They know now. Florida's bubble burst as 2006 dawned. Investors skedaddled, and construction crews followed them home.

Newspaper real estate advertising cratered, and soon so did the ad categories that were fed by the boom: furniture, auto, help wanted, financial services. Newspapers tightened their belts, then cinched them again and again as the housing crisis deepened as foreclosures soared and prices sank 20% or more from their peak.

In 2008, the pain continues for Florida newspapers. Where once metro dailies clashed with four or five local papers as they surged out of their core markets to chase the growth deeper into central Florida, now the state's biggest dailies seem to be in a competition to see how deeply they can cut newsrooms, newshole, and distribution areas.

Cuts started coming in earnest last summer. The Sarasota Herald-Tribune eliminated 21 jobs, then offered buyouts to employees over the age of 50. The Tampa Tribune cut 70 jobs, including 10 from its newsroom. The Florida Times Union in Jacksonville shrank its news staff, with Editor in Chief Pat Yack, Publisher Carl Cannon, and Managing Editor Michael Richey among those who departed.

The St. Petersburg Times, with an ownership structure intended to keep it from Wall Street and corporate pressures, was not immune. It scheduled the elimination of about 90 jobs through attrition.

But all those staff cuts were trumped by Media General Inc., which announced last month that it was offering buyout offers to half of the 1,326 employees at its Tampa Bay properties including the Tribune, the Spanish-language Centro, and its related weeklies.

But the hard times at Florida newspapers are not only a consequence of a sagging economy. At many papers, other forces are also at work.

""You've got significant uncertainty about the future in what had been the best newspaper market in the country,"" says Gil Thelen, former Tampa Tribune publisher and editor who runs the Florida Society of Newspaper Editors. ""You've got the Sun-Sentinel and the Orlando Sentinel wondering what Sam Zell is going to do. You've got Harbinger [Capital Partners] as an overlay to what's happening with Media General and Tampa.""

He could add, too, that the heavy debt load and swooning stock of the McClatchy Co. keeps its dailies in Miami and Bradenton on edge.

Goodbye boom, hello bust
Florida's history is a long chronicle of real estate booms and busts, of course. By some accounts, the real estate explosion of the early 1920s turned The Miami Herald into literally the heaviest newspaper in the world due to its wealth of real estate ads. That bubble collapsed four years later, plunging Florida into economic misery well before the 1929 stock market crash.

And economic slowdowns that might be shrugged off elsewhere cut Florida to its very core. The state is addicted to growth, according to Gregg Fields, an associate professor who heads Florida International University's masters of science in business journalism program. ""The rest of the country doesn't really know how important growth itself is to the economy here,"" says Fields, who writes a weekly business column for the Miami Herald. ""We've got a very dis-proportionate financial services industry because of all the retirees, and their portfolios. Growth in Florida is kind of like what cars used to be to Detroit.""

Stan Smith, director of the University of Florida's Bureau of Economic and Business Research, adds that this is a boom-and-bust on steroids. ""The years from 2002 to 2006 were the four biggest years of population growth in Florida's history,"" he says. ""So this isn't just a decline from a normal economy.""

And don't tell Florida publishers that this bust is nothing new.

Sun Coast Media Group Chairman Derek Dunn-Rankin, considered the dean of Florida publishers, says this slump is a new one on him: ""I came to Florida in 1936, and I would say that in our little part of the world ? in Charlotte County and Lee County on the Coast ? this is probably the worst I've ever seen it.""

Retail sales are down as much as 20% in the core markets of Sun Coast papers, Dunn-Rankin says, compared to single- digit declines elsewhere in Florida: ""So we did all the things almost all newspapers here have done. Our head-count numbers came down, mostly by attrition but we had to make layoffs, too. We went to lighter newsprint and a narrower web. We combined sections. And where we once had three press operations, we've mothballed one very small pressroom for the time being, and our medium pressroom went from a day-and-night shift to just a night shift.""

Sun Coast papers continue to invest in circulation, though: ""All through this we have not had a circulation loss at any of our papers,"" he points out. That's partly because its main metro competition ? The New York Times Co.'s Sarasota Herald-Tribune ? is not pushing as hard in the area, but mostly it's because the chain continues to invest in building sales and improving service, Dunn-Rankin says.

But at the core of newspaper woes is real estate. ""The real estate market is just horrific,"" says Gerald Mulligan, publisher of the Citrus County Chronicle in Crystal River. ""I've been in this market 30 years, so I've been through a number of recessions ? and I've never seen it this bad.""

Located on western Florida's still somewhat undeveloped Nature Coast, the Chronicle was in the center of some of the most fevered speculation. Buildable lots that went for $3,000 to $4,000 in 2001 zoomed to $40,000 three years later. ""People weren't planning on living on these things, they were just investing,"" he says. Now the lots are worth about $10,000. For the Chronicle, the fallout from the bursting bubble virtually wiped out the real estate and help-wanted ad categories.

""It's not like Monster got them,"" Mulligan says. ""Go on Monster, and you'll see they don't have any job listings, either."" The Landmark Community Newspapers-owned Chronicle has managed to avoid layoffs or buyouts, but some jobs are going unfilled and the cushion a small-market newspaper in the Sun Belt usually enjoys against downturns is uncomfortably thin.

Ironically, the Chronicle's circulation has increased, partly because the housing collapse chased the St. Petersburg Times ? which published a Citrus County edition ? out of the market. On one recent week, circulation was running 10% above the same week in 2007.

One thing leads to another
Newspapers are hardly alone in suffering from Florida's economy.

The U.S. Bureau of Labor Statistics says that layoffs in all industries in February (the most recent month available) jumped 162% from February 2007, which surely no one remembers as good times. Initial unemployment claims were up 151% in that period.

But as Gil Thelen noted, other forces far afield are also at work.

It's not yet clear what if any dramatic changes Chairman/CEO Sam Zell and the top executives at newly private Tribune Co. have in mind for its Florida papers in Fort Lauderdale and Orlando beyond the staff and budget cuts already imposed. What is clear is that with some $13 billion in debt to service, the Chicago media giant cannot wait long for a turnaround at papers that had been Tribune's best performers.

And the stockholder disenchantment at Media General Inc. has added even more pressure on the Tampa Tribune and its siblings. Media General has said Tampa is largely to blame for the company's lower revenues. But it rejects the demand by dissident shareholder group Harbinger Capital Partners to sell the Tribune and exit Tampa. In presentations he was making as the two sides headed into a proxy showdown at its annual meeting, CEO Marshall N. Morton defended the properties as ""our crown-jewel assets.""

And yet, days after one of those presentations, Media General moved to effectively cut that crown jewel in half. The company denies the huge buyout offer was a reaction to Harbinger's contention that it is not cutting costs sufficiently in Tampa. ""The Tribune has been having a very rough year,"" Thelen says. ""I think this buyout opportunity would have been extended whether there was this Harbinger thing or not. But Harbinger is another thing on peoples' minds there.""

Gimme shelter
Another remarkable trait of the Florida bust is that it imposed its pain even on the nimblest of publishers.

Sun Newspapers President David Dunn-Rankin was among the publishers who could sense the bubble about to burst in 2005. ""So that fall we began to do some restructuring"" at the Charlotte Sun and its four sibling Suns and dozen weeklies, he says. ""We gradually brought down our expenses over the next 12 months by 10%, which is how deep we figured [the downturn] would be. Unfortunately, it was bigger than that."" For the first time in its 30-year history, parent Sun Coast Media Group Inc. had involuntary layoffs.

Some community papers emerged in somewhat better shape because they were not so dependent on the bubble itself. ""We have not been hurt as bad as some of the dailies because we didn't get as much real estate, frankly,"" says Mark Mathes, owner and publisher of the 11-paper Community News Publications in suburban Tampa. Community News augments continued strong ad categories such as fitness, and health and beauty with sponsored hyper- local items like pet of the week. ""These are small revenue streams that sooner or later add up to bigger streams,"" he adds.

Ironically, Community News is benefiting from the housing collapse in one way, says Mathes: ""The classified sweet spot for us is in the legal notices ? the foreclosures and the auctions.""

The chain, he adds, also has its pick of newspaper talent these days: ""With all the buyouts, I have never seen a time like this last six to nine months when there have ever been more qualified people who are seeking us out.""



Who's minding the store?

Not that Mathes thinks that's necessarily good. The loss, especially of newsroom and publishing veterans who have quit or been forced out in the downturn, has changed newspapering in Florida, he says.

""This was newspaper heaven in the mid-1980s,"" Mathes notes. ""Florida has gone from being the launching pad for great careers of editors and publishers who did so well in Knight Ridder and Scripps, and now there's been just enormous turnover in the senior ranks, and what's lost is a lot of institutional knowledge.""

Newspapers just look different, too, as a result of the bubble. Several papers around the state have dropped features sections altogether on slow-selling Mondays and Tuesdays. Separate business sections are largely a thing of the past in the Sunshine State. And for all the talk of a ""local, local, local"" focus, Florida's strained newsrooms have trouble producing that kind of news in a state full of newcomers with, often, little sense of community, according to Florida International's Gregg Fields.

""I am the No. 1 fan-for-life of the Miami Herald, but it just doesn't have those second- and third-string players, that deep bench, that it used to,"" Fields says. ""My Neighbors section often has not one single story from my actual neighborhood. The Herald is absolutely filled with dozens of talented people, but there are far fewer than there were.""

Beyond that, Fields says, Florida's newspapers haven't seized the opportunity of the housing crash to assert themselves as leaders helping the community make sense of the situation. That journalistic inaction contrasts with newspapers' performance after Hurricane Andrew devastated South Florida in 1992. ""Hurricane Andrew was our 9/11,"" he says, ""and the Herald just performed masterfully. It really reasserted its institutional dominance. I don't feel that way about any of the newspapers now. They are so much more focused on cash flow and head count ? and the traditional role of steward is gone by the wayside.""

Ready for rebound
While the mass exits at the Tampa Tribune and its once-ballyhooed convergence partners certainly signals a deep pessimism about Florida's economy, other publishers say they see signs that the worst is over ? or nearly over.

Sun Newspapers' Dunn-Rankin, who foresaw the bubble bursting in 2005, now says he sees an end to the downturn, perhaps as early as the fall. Home prices that were an unsustainable five times median household income in Florida markets have settled back to a normal multiple of three times. ""The free market is working,"" he says. And in fact, real estate is now beginning to run ahead of last year, although help wanted remains ""terrible,"" he adds.

Over at the Nature Coast, Chronicle Publisher Gerald Mulligan marvels at a lunch he had the other day with real estate agents who say they're selling again: ""It's been at least a year since I heard an optimistic Realtor.""

Across the state on the Treasure Coast, Hometown News' Steve Erlanger says if everyone can hold on for a little while longer, they'll adjust to what is really a normal newspaper economy. ""It's been a tough year for us, but we haven't fallen off the face of the earth, based on a couple of reasons,"" he says. ""One is that a lot of business owners are starting to realize that doing nothing isn't working, so they're going to have to get off the dime to get going again.""

So is Florida really at bottom? Its state press association's executive director sure wishes he knew.

""Everyone's looking for the bottom. but I'm not sure that we have found it yet,"" Dean Ridings says, adding with a little laugh: ""We keep reaching with our toes thinking we're going touch bottom maybe this time.""