The Shrinking Staff

By: Mark Fitzgerald Terry Ganey is the author of several books and was a finalist for the 1993 Pulitzer Prize for investigative reporting. He was the Missouri capital bureau chief for the St. Louis Post-Dispatch, where he worked for 28 years and where, at age 57, he fully expected to continue working until he retired.

Terry Ganey is also a statistic -- a job cut. He is one of 130 employees who in October accepted offers of early retirement. After lining up a job at the much smaller Columbia (Mo.) Daily Tribune, Ganey took the package -- a year's salary in a lump sum, accelerated pension payments, and retirement health benefits. "It's not how I thought I would end my days at Pulitzer and the St. Louis Post-Dispatch, but then I always thought the Post-Dispatch would be owned by Pulitzer," he says of the chain that was bought by Lee Enterprises Inc. earlier this year.

Ganey the statistic also can be included in a larger number: He's one of at least 1,200 positions eliminated by newspapers since Labor Day, and more than 2,000 going back to January. The pace accelerated in mid-November with slashings of dozens or more at several Tribune Co. papers, from Los Angeles to Baltimore to Orlando. While a few papers, such as the Chicago Tribune, opted for layoffs, it's increasingly apparent that offering buyouts has become a permanent part of newspaper management. They are often seen, in an age of economic uncertainty, as a "humane" form of cutting costs.

Yet not all newspapers go the buyout route. Typically, buyouts are offered at larger papers with unions or guilds, says newspaper analyst John Morton. Contracts vary, but the guild (now in place at 110 newspapers) insists it must be involved in negotiations -- and the burden is on management if it wants layoffs. Rick Edmonds, a researcher and writer with the Poynter Institute, says that even when papers are allowed to lay off they tend to offer the same kind of severance found in buyout packages.

As they did in early 2001 when advertising suddenly swooned, newspapers are swinging the axe in newsrooms, business offices, and on shop floors. In 2001, according to an estimate by the American Society of Newspaper Editors, the industry cut about 2,000 full-time positions in newsrooms alone, or about 4% of newspapers' professional staffs.

This year's round of buyouts and layoffs can be traced back to the plunge this spring in newspaper company stock prices, says Donald P. Rogers, an expert in workforce management who is a professor and director of the masters program in human resources at Rollins College in Winter Park, Fla. "This kind of downsizing is pretty normal, and it comes about whenever an industry is experiencing two things: first of all, a decline in revenues, and second, a declining future."

Not every industry experiencing hard times automatically resorts to layoffs, says Rogers: "The restaurant industry is not in great shape, but they are not laying off people because there's a sense that it is an industry that will come back." Having long ago trimmed the obvious fat, newspapers are now looking to cut things they believe are not crucial to their business, after years of circulation losses.

Other academics worry that circ declines are not so much a cause of reduced newsrooms and editorial content, but an effect of the cuts. This latest round of downsizing "horrifies" Esther Thorson of the University of Missouri School of Journalism.

"What you've got is a gigantic negative-feedback circle here," Thorson says. "You take resources out of the newsroom. As a result, quality goes down, and as a result, circulation goes down, and you leave an opportunity for competitors to come into the market, leading to taking more resources out of the newsroom."

Many observers see Wall Street as the culprit in this story. The relentless demand for quarter-over-quarter financial improvement -- and the punishment investors can dole out by driving down stock prices -- pressure newspapers to cut corners, then content, according to this argument.

"I wish these things didn't have to happen, but I think they're a logical consequence of being a publicly held corporation," says George Harmon, an associate professor of journalism specializing in the newspaper business at Northwestern University's Medill School of Journalism. "Being publicly held has the advantage of giving you access to capital for expansion and equipment, but in some ways it's a pact with the devil. The investor has no appreciation for local business cycles." With traditional margins of 20% to 25%, newspapers are held to an "unfair standard," he adds: "By some measurements, newspapers are twice as profitable as the average business in America. But I don't think they get credit for it at all."

But that debate isn't settled either. Last winter, in the quarterly Newspaper Research Journal, Edmonds of the Poynter Institute analyzed 178 papers with circulation over 50,000 and found that "on average, the public-company, private-chain, and independent-owned papers had virtually identical staffing ratios as groups."

Still, offering buyouts now seems to be a well-accepted part of business management. An analysis conducted by the Inland Press Association of 415 newspapers participating in its Newspaper Industry Compensation Survey showed that in 2003 and 2004 -- years when the industry was in a recovery mode -- layoffs and buyouts were the second-highest reason for employee turnover in all newspaper departments (only the number who voluntarily quit was higher). Buyouts and layoffs were significantly higher than retirement or termination for cause in 2003, and were as high or higher in all categories in 2004.

The Fix Is 'In'

What's beyond debate is that layoffs and buyouts can be a quick fix for balance sheets. At the Post-Dispatch, for example, the early retirement plan is expected to save $6.5 to $7 million annually.

The Post-Dispatch buyout program also proved to be surprisingly popular among the staff. The paper wanted to eliminate 130 employees. It got 260 volunteers -- some with invaluable experience, and not all of them heading for geezerhood.

Medill's Harmon, who was visiting the Post-Dispatch newsroom when the buyouts were being finalized, says that surprisingly it was employees who were closest to the minimum eligible age of 50 who were most inclined to take the offer, rather than those closer to retirement age. The younger staffers seemed to think they had a better shot at getting a job elsewhere, he says.

Employers who offer buyouts can choose who they want to keep but they cannot give advance indications to employees, according to the Society for Human Resources Management. The Post-Dispatch's Ganey, who worked far from the downtown St. Louis headquarters as the Jefferson City bureau chief, made the decision to leave without any input from managers or colleagues.

His calculus included both financial and professional factors. At 57, his children were grown and out of the house, but he realized he needed to keep working. "For a person in my position, you can't live for long on the lump-sum payment and the pension without another job," he says. "If you were older and of Social Security age, you could put it all together. But I had to have another job."

Ganey also looked at where he thought the Post-Dispatch was going under its new Lee Enterprise ownership -- and he didn't much like what he saw. Even the buyout offer itself, he says, played a part in forming his final decision. "I thought about what the newspaper would be like when others took the buyout," he says. "The paper is changing, and I didn't think I would be happy sticking with the paper with this revolution going on."

When he received an offer from the 18,650-circulation Daily Tribune to cover higher education, Ganey says he made up his mind to leave the Post-Dispatch, his workplace for 28 years. He was one of 41 newsroom employees who left. In the time since the paper's sale to Lee, "I'd seen the changes, the redesign, the new managers, and it made me feel that, for myself, it was time to move. I wanted to stay in journalism, and the Daily Tribune is family-owned, with good journalistic values," Ganey says. "I just decided, well, I'm going to take the package."