Or, we could subtitle this post, “the numbers at Gannett leak out, and they reinforce what Gannett veterans already knew.”
That is, Gannett never has owned newspapers. By its own preferred corporate-speak, it has owned “profit centers” — and the greedy bastards who ran the company were bold enough to call it just that.
A former long-time Gannett employee (as I am) named Jim Hopkins has created a blog at gannettblog.com that just has to be the single most painful piece of citizen journalism Gannett Co. Inc. ever has encountered.
Gannett apparently is going to conduct a huge round of layoffs this week, even as the company’s newspaper-by-newspaper profit margins, from 2007, were released on (and this is the correct address) gannettblog.blogspot.com last week.
First, check out some of these numbers. They don’t border on the obscene, they have crossed the frontier and taken up residence in the capital city of Outrageous Profit.
Look at Green Bay. Look at Phoenix. Look at, closer to our SoCal home, Palm Springs.
Thing is, Gannett has been taking profit margins like that out of its “profit centers” for decades.
Those of us who worked in Gannett, as I did from 1976 until 1999, knew the company made boatloads of cash. But what we knew tended to be limited to numbers that sort of leaked around our particular newsrooms. We often were unaware of what the average Gannett newspaper profit center was generating. At my paper, we heard numbers like “30 percent” and were stunned.
Now, here, we have leaked to gannettblog.blogspot.com the whole shootin’ match (aside from USA Today), and it shows just how enormous profit margins were in 2007 — when the economic collapse was in the air and the company should have been investing in its infrastructure, and not raking off the usual take from the various and sundry communities it, uh, serves.
OK, America is a capitalist country. We are out to make a profit in whatever business we are part of, from the family restaurant to the Wall Street hedge funds.
The moral crime of newspaper chains such as Gannett is how much profit it deemed necessary.
People go nuts when Exxon or other oil companies report billions of dollars of profit. But that profit almost always is 10 percent or under. The profit itself is huge because the numbers are so big.
Gannett papers worked on smaller scales, but the percentage of what was taken out of each of its communities and sent off to Arlington (and, later, Reston) was staggering. Not even the oil companies expect, ever, 40 percent profit.
There is this, too: At some point, Gannett should have remembered it was a media company, a newspaper company, with all the First Amendment privileges and responsibilities that brings. It could have and should have spent more on its newspaper products and tried to scrape by on, oh, 20-25 percent profit.
Thus, when the crisis came — and we are in it now — Gannett papers had not progressed as they should have in new technologies. They are not as deeply enmeshed in their newspapers’ communities as they could have been and should be. They have not established a standard for competence and the accompanying reputation (as, say, the New York Times and Wall Street Journal have) for such … and in times of crisis Gannett papers’ readership felt marginal loyalty to the hometown paper and is just walking away.
Remember, too, the Gannett model was based on a sort of advertising tyranny. Gannett preferred medium-sized papers in markets with little or no local TV, with little or no print competition — so it could set advertising prices higher than they should have been because advertisers had no real options for communicating information.
And if a particular newspaper suddenly found itself in a bad situation, and was unable to hit those goals of 20, 25, 30 percent profit … then Gannett was looking for the “eject” button.
That is precisely what happened to my newspaper, the San Bernardino Sun (which, believe me, was quite a good suburban newspaper for about 20 years there). It reported a profit of only 8 percent in 1998, and so in 1999 it was abandoned to the not-so-tender mercies of MediaNews — that is, Dean Singleton’s ridiculously leveraged, cut-and-slash journalism gulag.
And, a decade later, The Sun is an empty shell, its communities underserved, its staff shriveled to perhaps 30 percent of its highs a decade before, and long-time readers alternately laughing and wincing at the thin, amateurish product dumped on their driveway — if the circulation department hasn’t suffered another of its collapses.
The biggest problem for American newspapers is this: It isn’t that they all are unprofitable, because even now most of them are. It’s that they are not profitable enough. Wall Street got used to those enormous profit margins, and when Gannett couldn’t produce them, Wall Street dumped the company like a bad habit. The stock price now is about $8. During my Gannett career, it ranged from $30 and up — and it was $30 only because it had just split and soon would be climbing again.
The L.A. Times still makes money. The Chicago Tribune still makes money. Most U.S. newspaper still make money, and will even in a horrible year like this one. But it isn’t enough. That is what is killing American journalism outside the handful of papers owned by families or individuals with the moxie (and authority) to ride this out.
So, because Gannett’s profit isn’t high enough, a bunch of people inside Gannett will become casualties of the Great Newspaper Die Off of 2008, specifics of which are expected to come down this week, according to gannettblog.blogspot.com.
Oh, and here is one amusing sidelight from the same blogger, about the mechanics of firing people — a skill set the soul-dead management drones have mastered over the past year.
I can imagine Gannett, being the highly centralized kingdom it is, long ago issued very detailed memos on exactly how to get this done. As opposed to, say, Dean Singleton, whose company allowed me to clean out my own desk and e-mail myself a bunch of files before they got around to severing my company links. Gannett doesn’t make that sort of mistake. (I just hope the lackeys they have cleaning out desks don’t break too much crockery. And make sure you pack my pica poll; I am attached to that thing.)
Anyway, the way out of this? Something like not-for-profit institutions, or locally owned publications backed by deep-pockets guys with deep ties to the community who can stand living off a 10 percent profit margin and are willing to endure the “pain” of a couple of bad quarters or even a bad year before they start chucking employees into the abyss.
The corporate model of print journalism has failed. Better off with some hometown idiot running the business, because at least you have a shot that everyone knows his personal preferences and can edit them out of their newspaper reading … and what is left is a local product that actually covers the community and plows its profits back into it.
I still know lots of people who work for Gannett. Good luck, all of you.
For those of you about to be fired … don’t be surprised at what happens, even if you gave most of your adult life to Gannett. There is no loyalty here. There is no sentiment. You will be on your own.
Don’t take it personally. You probably made too much money because you were too good and stayed too long, and that salary stuck out on the ledger sheets.
You will be OK. And there will be some relief, actually, knowing it is over. It will be liberating.
Take a few months. Or more. Look around and give serious thought to what you would like to do next. (And, no, this is not a good time for a lot of discretionary spending.) Journalism may seem like a really narrow skill set, but you know more about a lot of things than the average person. You will find a slot somewhere, whether it’s public relations or some small online startup or a bookstore or teaching.
You didn’t fail. The company you worked for failed.