Newspaper Newsroom Investment

We are left with a question raised in the first two editions of this report: Why do some newspaper companies, but so few, see logic in reinvesting in the core strength of their newsrooms and news quality? The national papers do. McClatchy does. So do several private companies and independents. They believe in putting the journalism first as a matter of principle, AND they make it work in a business way, too. The potential for circulation and advertising growth, however, appears much better in communities whose populations are growing rather than those that are stagnant and must be sustained over decades. But to take the obvious example, the Washington Post, consistently posting among the lowest margins in the business (12% or so in 2005) has performed fine as an investment over time.

The majority of companies, however, have appeared to be practicing a version of hard-nosed capitalism in which you reduce investments in those products or markets among your company portfolio that have lagging returns. Even as a business proposition, though, that viewpoint is subject to challenge when applied to the newsgathering capacity of a newspaper. The Boston Consulting Group matrix advocated liquidating “dogs” — low-profit businesses with limited growth potential. But “cash cows” are another story. A cash cow is a very good thing that pays everyone’s salaries and provides the kitty for new ventures. They should be kept as strong as possible for as long as possible.

Our sense based on the data is that deep news-staff cuts, however logical a response to tough times, may be undermining the core product in dangerous ways. The practice is certainly eating away at the range and depth of newspaper journalism in many communities.

Note on updated employment figures dated May 8, 2006: The census, conducted primarily to measure industry progress on diversity goals, has been conducted for more than 25 years. This year 928 of 1,417 American dailies responded, and the response rate is the highest among the biggest circulation papers. The industry total is reached by projecting employment at non-responding papers according to their circulation.

This year the census added an estimate for 11 free dailies, most in large cities. With a smaller universe and several key non-respondents, ASNE is estimating employment of 1,300 in this group. It is also unclear whether the census captures newspaper online editorial employees, particularly at newspapers where online is treated as a separate unit organizationally.

Including the latest numbers, the industry has lost about 2,800 fulltime professional newsroom jobs so far this decade. But an important part of the jobs story is redeployment to online, free, youth-targeted, ethnic and non-newspaper publications, all important growth areas as traditional newspaper growth has stalled.