Severe Cutbacks At Knight-Ridder Newspapers p. 16

By: Tony Case Philadelphia dailies, Miami Herald eliminating jobs; closing
of the 70-year-old Philadelphia Daily News a possibility sp.

HAMPERED BY HIGHER newsprint costs, plummeting revenues and circulation, and the ongoing Detroit newspaper strike, Knight-Ridder Inc. is instituting severe cutbacks at some of its best-known properties.
The most extreme measure being considered: the shutdown of the award-winning Philadelphia Daily News.
At the very least, several of the media giant's big metropolitan newspapers ? among them, the Daily News, Philadelphia Inquirer and Miami Herald ? are slashing hundreds of jobs, asking readers to pay more and making noteworthy editorial changes.
In a memo last week to employees of the Philadelphia papers, chairman and publisher Robert J. Hall revealed plans to eliminate the equivalent of up to 250 full-time positions and "flatten" the management structure there.
The Philadelphia Inquirer and Daily News, which share business and production operations, employ about 3,300 people. The Inquirer has about 500 news staffers, the Daily News around 200.
Buyout offers were extended to all full-time Newspaper Guild members, as well as independent employees. Layoffs aren't ruled out if enough workers don't leave voluntarily.
Citing the unprecedented newsprint price increases that have sent shock waves through the entire newspaper industry, the Inquirer boosted its weekday cover price to 50?, from 35?, and the Daily News went up a dime to 60?. Subscription and Sunday prices stayed the same.
And the Inquirer is reducing the number of broadsheet sections it produces. The zoned Neighbors and South Jersey sections will be combined with City & Region.
But the bombshell in Hall's internal correspondence was the disclosure that executives were looking at the viability of the 70-year-old Daily News, the afternoon tabloid that has garnered two Pulitzer Prizes and countless other journalism trophies.
"As you can imagine, our review of the Daily News is extremely complex," Hall wrote. "We are reviewing the impact of a number of proposals on our readers, our advertisers, our position in this market and our employees. Our goal remains to address the financial impact of the Daily News" on the Philadelphia papers.
Hall also left open the possibility of doing away with the Inquirer's Sunday magazine.
"We know it is an important part of the Sunday newspaper and one that we would like to preserve," he said in his memo. "We also know that, as one of our more expensive products, its elimination would help us meet our immediate financial objectives. We are continuing to explore options that would allow us to achieve our 1996 financial goals while publishing the magazine."
The Philadelphia dailies, like most newspapers, have watched their circulation drop year after year as the competition has closed in and demographics have shifted.
According to the most recent Audit Bureau of Circulations FAS-FAX report, for the period ending Sept. 30, the Inquirer's daily circulation of about 479,000 fell 9,600 compared with the same period last year, and its Sunday run of over 930,000 declined by a whopping 24,000. The Daily News, with a weekday circulation of over 196,000 and no Sunday distribution, was off only slightly, with a loss of nearly 800 copies.
The Inquirer and Daily News combined make up Knight-Ridder's largest daily circulation.
Southward, the Miami Herald is in the process of gutting 300 from its total staff of 2,200 and scaling back some of its Sunday sections. Management hopes to save $32 million in the process.
The paper is trying to reach its staff-reduction goal through attrition and an early-retirement program, without resorting to layoffs.
By year's end, the Herald will have cut its 455-member editorial department by about 20 positions, and it plans to eliminate about the same number next year, said senior vice president and executive editor Doug Clifton. El Nuevo Herald, a Spanish-language supplement with a separate staff, will have lost eight of its 96 news employees by the close of next year.
No newsroom layoffs are planned.
"Like everybody else, we've been socked with huge newsprint increases, which have meant $22 million in extra expense this year and a very big expense next year, as well," chairman and publisher David Lawrence Jr. said in an interview.
As expenditures rise, the Herald's circulation ? which totaled more than 400,000 just a few years ago ? is in steady decline.
According to the latest Audit Bureau FAS-FAX, the Herald's daily run of over 380,000 and Sunday circulation of nearly 500,000 each fell by about 12,000 since September 1994.
The circulation slid, according to Lawrence, after the newspaper eliminated a chunk of its out-of-state distribution.
Noting that the Miami-Fort Lauderdale area comprise the daily's core market, the publisher said, "Our future lies in doing right by readers who are closer to home."
The retrenchment aside, the Herald is also tinkering with its highly respected news product.
In a memorandum last month, Lawrence said the newspaper would now concentrate on nine coverage areas that a focus group of 1,500 readers considered important. They are local government, education, sports, the environment, consumer news, Florida news, Latin America, health and medicine, and crime.
Clifton called "ludicrous" the speculation that the Herald was going to pay less attention to national and international news stories.
"The notion that the Herald would stop covering things that didn't fall into the nine subject areas we've said would be worthy of sharper focus, it just takes my breath away," he said. "Every newspaper in America makes choices as to how it's going to deploy its staff and its newsgathering resources."
The recent belt-tightening initiatives in Miami and Philadelphia ? being carried out on the eve of budget parleys at Miami headquarters next week ? are just the latest moves in Knight-Ridder's campaign to bolster its sagging revenues.
Key transactions this year include the $115 million sale of the New York-based Journal of Commerce business daily and the closure of the Information Design Laboratory in Colorado, which aimed to develop a portable, flat-panel newspaper.
While shedding some assets, the company is also building its enviable stable of media holdings, having acquired the Contra Costa Times and other Northern California dailies from Lesher Communications Inc.
The strike at the Detroit Free Press and Gannett Co.'s Detroit News, entering its fourth month, remains a drain on Knight-Ridder's profits.
Operating revenue for the third quarter was down 1.4%, to $205.2 million. Excluding losses related to Detroit, revenue was up 2.1%.
The performance of the company's newspapers as a whole last quarter, while improved over last year, was hardly dazzling by Wall Street standards.
Largely due to the Detroit situation, operating revenue in the newspaper division was up less than one percentage point last quarter, operating income fell by 63% and advertising revenue was flat.
A bombshell was the disclosure that executives are looking at the viability of the award-winning Philadelphia Daily News.
?("Like everybody else, we've been socked with huge newsprint increases, which have meant $22 million in extra expense this year and a very big expense next year, as well.") [Caption]
?(? David Lawrence Jr., Miami Herald chairman and publisher) [Photo]
?(A bombshell was the disclosure that executives are looking at the viability of the award-winning Philadelphia Daily News) [Caption & Photo]