Tim Windsor’s online media and journalism blog

Photo by William Couch. 1/31/2008

Both the Wall Street Journal and New York Times are reporting tonight that the Tribune company has hired an investment bank and a law firm for a potential bankruptcy filing as early as this week. This is definitely a long way down the road from a year ago when the arrival of Sam Zell was seen as a bold move toward the reinvention of a once-great newspaper brand.

Now?

Here’s the New York Times take:

Tribune has hired bankruptcy advisers as the ailing newspaper company seeks to stave off a potential bankruptcy filing, people briefed on the matter said.

The newspaper, which was taken private last year by billionaire investor Samuel Zell, has hired the investment bank Lazard and the law firm Sidley Austin, these people said. Tribune has been hobbled by debt related to that sale last year, which has been compounded by the growing drought of advertising for newspapers.

The Wall Street Journal puts the Tribune distress in perspective:

The appointments underscore the deepening distress for Tribune and other publishers. Newspaper businesses are being battered by dwindling advertising sales and carrying debt loads that are unmanageable in current market conditions. People in the industry expect some papers will need to seek bankruptcy protection or fold in coming months.

Tribune has been on wobbly footing since last December, when real-estate mogul Sam Zell led a debt-backed deal to take the company private. Tribune so far has stayed ahead of its $12 billion in borrowings with the help of asset sales, but now dwindling profits are tightening the noose. The company’s cash flow may not be enough to cover nearly $1 billion in interest payments this year, and Tribune owes a $512 million debt payment in June.

Based on the state of declining revenues at the company and its lenders’ likely unwillingness to allow Tribune to simply sell off assets to make its payments (as it did with the sale of Newsday in 2008), bankruptcy looks increasingly inevitable. These actions seem to imply that the question may be called sooner than the mid-2009 period I had seen mentioned previously.

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I keep coming back to this: if the people, through their behavior, keep telling newspapers that they don’t want the paper part of the paper anymore AND the paper part of the paper is enormously expensive to create and distribute, then why doesn’t some market take a leap and try going all digital?

Yes, there will be financial downsides at first, but especially in the many markets with only one daily newspaper, this risk may be minimized by the fact that local and national advertisers still need to reach that market, and the audience that newspaper organizations gather remains uniquely strong when measured against other mass media television and radio.

Martin Langeveld, former newspaper publisher and VP and current hive-whacking mediablogger, recently took a look at the numbers behind such a leap. The short version: newspapers won’t get rich in the short term, but they just might survive.

This week, Langeveld digs deeper into what it would take for one market to make the leap, and introduces us to a publisher in Cedar Rapids (who will be familiar to readers of this blog) who just may be laying the groundwork for his own leap forward.

The strategy sounds simple: Transform the business from its manufacturing roots into a digital enterprise. I proposed a version of it in my second-ever post, back in September: “To have even a chance of survival, the mindset of the industry needs to become: We are in the business of publishing information content continuously on our web sites; every 24 hours (for now, and this may ultimately change to once or twice weekly) we gather some of that information into a printed product and distribute it, but our business is focused on and driven by our online operations.” And I’ve explained it again more recently when I explored the economics of a daily that morphs into a web-first weekly or twice-weekly, and previously as part of my Six Theses, and elsewhere. I’m not alone on this. “Digital is first” is at the top of Steve Outing’s list of suggestions for the industry as well; others have hammered away at it; it should simply be on everyone’s list…

Can any of this be even discussed in an organization demoralized by waves of layoffs and cutbacks? It won’t be easy, obviously, but it has to be done. A newspaper organization that chooses not to adopt, embrace and fully implement a strategy of becoming a digital enterprise will remain a manufacturing enterprise with a product that fewer people want or need, every day. Perhaps it will be remembered one day by a nice brass plaque on the historic printing plant.

Langeveld doesn’t yet get the attention of some of the usual suspects (Jarvis, Yelvington, Mutter, Potts, Rosen - all big thinkers worthy of your feed reader), but he should. He combines an insider’s experience with a sharp, analytical mind, and adds a willingness to consider the radical notion that there may yet be a future in the news business.

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Jason Calacanis suggests a solution to the ills that are plaguing us at the moment. And it’s not necessarily what you expect:

Work 20% harder.

It was our collective sloth, consumption and sense of entitlement that
got us into this mess, and the only thing that will get us out of will
be lots of hard work.

If you’ve got a good job, you should bust your butt to make your
company as successful and profitable as possible.  That way, salaries
can increase, jobs can be created and your products and services
become so world class, the phrase “Made in America” will come to mean
something other than “not worth buying.”

If you’re working at a government job, you should be putting in extra
hours to reduce government spending. Come in this weekend and make the
government more efficient. (Yes, I just told a government worker to
come in on Saturday.)

If you’ve got credit card debt, pay it down if you can.

If you’ve got a mortgage, pay it off if you can.

If you work in the service industry, try to work 20% faster and come
up with ideas to make your team more efficient.

Like all great ideas, it’s over-simplified and a little flawed in the details if you poke at it, but it’s still brilliantly direct, and easy to remember: whatever you’re doing, kick it up a notch.

Our grandparents and great-grandparents got this. They all sacrificed so that we could get fat and happy. Now it’s time to start thinking of the kids of 2050, and what kind of country they’re going to inherit, based on our work ethic now.

Take a few moments and read it. As is the case with all good advice, it’s both memorable and attainable.

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Yesterday, Alan Mutter promised a detailing of just what newspapers might do when things turn really sour in Q1 of 2009. Today, he delivers. But the list - at least at the beginning -  sounds awfully familiar already:

The list of potential expense reductions includes squeezing staffing, shuttering bureaus, carving out layers of middle management, telescoping multiple sections of the paper into one, tightening newshole, scrapping syndicated features and wire serevices, axing op-ed pages and book sections and eliminating classified ads on certain days of the week….

Another alternative will be to ask employees to accept voluntary pay cuts, to agree to work longer hours, and to ease manning requirements and other work rules. Bonuses may be reduced or eliminated for the fortunate few who still would have qualified for them.

He then walks through the increasingly extreme cuts papers could and, in many cases, will make, ending with this cheery thought:

This will last as long as the newspapers continue to generate operating profits. But it is highly unlikely in this environment that any creditor would provide additional cash to prop up a money-losing newspaper.

In other words, a newspaper that cannot sell enough advertising or cut enough expenses to sustain profitable operations is not likley to make it to the other side of 2009.

Is it time for a newspaper dead pool?

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Jobs in journalism are becoming rarer with each passing day. But at Scott Karp’s Publish2.com, there’s a great job for the taking. All you have to do is win their contest.

It’s a job with Publish2, a start-up focused on helping journalism thrive in the digital age. We already employ two incredibly talented journalists, Tammi Marcoullier and Josh Korr, and we want to expand our team.

But since we can only hire one journalist, we’re going to promote all entries to news organizations and media companies that are looking for journalists who are focused on the future and who want to help journalism evolve.

To enter the contest, you can submit a video, a slide show, or a written statement (or all three) about why you believe you are the future of journalism.

“I am the future of journalism because…”

If you’re interested, you can enter here.

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As she often does, Amy Gahran got me thinking today, this time about the average-at-best job local news organizations do covering consumer news. She asks whether news orgs could focus on shopping year-round, and not just on Black Friday, to do a better job of offering utility to readers.

The short answer: yes. The long answer, though, needs to also address the nagging question of why newspapers aren’t doing this already.

Ultimately, I think the problem is how we define what journalism is. And under currently-accepted definitions, helping shoppers find deals isn’t up there with Comforting the Afflicted and Afflicting the Comfortable. The irony is - especially in our current economy - data-driven consumer reporting could be of incredible value to local communities.

To figure why this is - why What’s On Sale is relegated to the commercial side of the house - let’s step back for a second and look at what newspaper do cover.

Is this journalism?

I think we’d all agree that covering the intricacies of local government counts as journalism. Certainly tallying the numbers and types of crimes – whether through narrative journalism or in a database – is journalism as well. Grading a movie? Tracking baseball stats? Charting the financial performance of local companies? All journalism.

But what about sales and deals? What if news organizations reported on that? Where are the best shoe sales? Which grocery chain has the cheapest milk? Which stores have the worst parking lots or the shortest check-out times? Is this journalism?

And what about auto mechanics? Who can you trust? Who specializes in Mini Cooper repair? What’s the going rate for an oil change? Is this journalism?

These examples may not read like dream assignments, even for someone fresh out of J-school. But they could very well be exactly the information that people in our market are looking for, but can’t find. Anywhere.

So, if it is journalism, why not do it?

So the question is simple, but provocative: if it’s just as difficult to report on the machinations of a complex government bureaucracy as it is to scope out the best deals this week at Big Box Mall (both can’t be effectively automated and both require reporting) why do news organizations choose to do one and not the other? And are we sure that readers would agree with that choice?

I’d argue that if newspapers want to grow readership and revenue, they to do both. They need to think even more broadly about what they mean when they talk about “reporting.” And they need to think of new and more useful ways to deliver that information that gets to the user when she wants it and needs it. This flips the existing reporting hierarchy upside-down:

Imagine a team of reporters whose job it is to cover consumer spending – arguably one of the most important drivers of our local economies and something all of our readers spend many hours doing – from the point-of-view of the consumer. And not in the traditional way, through columns and slice-of-life narratives, but with real-world data that will make it easier for people in our markets to live their lives. How surprising and welcome would that be?

And imagine a structure that would allow for data to come from multiple sources - reporting shoe-leather, data-feeds from participating retailers, reports submitted by readers - and distributed at the moment of greatest need: when a reader is at the mall, in the supermarket or in the car.

For a significant portion of the local audience, this is exactly the kind of high-utility, relevant information they need and that a large, organized newsroom is uniquely qualified to provide.

If only we’d agree that it’s journalism.

Who’s doing this well? Any examples of any US newspapers marshalling significant forces against retail data reporting?

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Alan Mutter was paying attention when The NAA tried to quietly dump its latest revenue numbers on the afternoon before Thanksgiving. And what he saw was grim, including continued falloff in all categories, and the second quarter in a row of declining interactive numbers.

The performance in the third quarter was affected only partially by the worldwide financial panic that froze the credit markets in mid-September, throttling the already waning demand for hiring, auto sales and home purchases.

The outlook for the final period of the year is worse, when the three classified verticals are likely to experience the full impact of the economic meltdown.

So it looks like I’ll need to update this chart I created at the end of Q2, showing constant-dollar print revenue at newspapers dropping below 1982 levels. When I made that estimate in September, I said 2008 print revenue would hit $36 billion, a number that needs to come down by at least a half billion (applying 2007 Q4 decline percentages, clearly an optimistic projection), if not a whole lot more.

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Yesterday, 140 characters at a time, I hacked into Sam Zell and his far-ranging interview with Portfolio as signifying a man who is 1. very good at identifying the newspaper industry’s problems but (and this extends to his key advisor Lee Abrams) 2. woefully inept at articulating real responses to the crisis (other than to cut costs, which is necessary, and to add visual flash to the papers, which may or may not help), simply because as non-participants in where news is going (digital), he and Lee can’t begin to imagine its future.

On the flip side of that coin is Jeff Jarvis, who has been taking flak of late for being a supposed journalism hater, but who, in my opinion, has been a steady source of ideas over the years - mostly solid, a few shaky - for where we might try to steer this battleship.

A few days back, he gathered many of those ideas into one post. It’s step-by-step instructions on one (informed) guy’s recipe for saving the business:

Note well that none of this is new. The essential functions of journalism - reporting, watching, sharing, answering, explaining - and its verities - factualness, completeness, fairness, timeliness, relevance - are eternal, but the means of performing them are multiplying magnificently. That is why I so enjoy teaching journalism, because we need no longer pick a medium and its tools for a career but can select them every time we need to tell a story - and because journalism is no longer about preservation (it never should have been) but is instead about change and growth.

Could journalism die? Yes, but I have faith and optimism that it will survive, evolve, and grow. I believe there will be a growing market demand for journalism; I know there is a growing need.

Journalism doesn’t need THINK PIECES!! It needs solid thinking. Like this.

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Thanks to Journalism Iconoclast (Pat Thornton), I just found the “Don’t Let Newspapers Die” Facebook “cause” page.

My first thought, especially after reading point #3 (“Newspapers are cool!”) was that this was a big fat furry sock-puppet created by the NAA. But instead, it appears to be a genuine effort from an Indiana mom. Who loves newspapers and thinks they’re cool. And hopes you’ll buy a copy to help save a journalist’s job.

I love journalism (as much as anyone can be said to “love” a craft or a skill or, even, a calling). Journalists are underpaid and undervalued by a society that often forgets that they help keep this Democracy thing moving.

But I’m not so sure I feel the same way about newspapers.

For several hundred years, newspapers were the most efficient way to transmit news and information. Cheap. Fast. Disposable. In many ways, the newspaper was the internet long before the httprotocol came along. It was a printed database, filtered for our needs by trusted agents (AKA editors) who did their best to assemble in the daily pages what we needed to know. Or at least what they thought we needed to know.

But do we need newspapers anymore - in paper form? I think the jury’s still out.

If you’re surer of the answer, you should check out their Facebook page and join the 10,000+ members of the group.

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