It’s official. This is the biggest year for newsroom cutbacks at America’s dailies in recent memory. It looks like newsrooms have sustained a loss of 3.5 percent of jobs within one year, accelerating a trend that began in 1990.
As Outsell affiliate analyst Ken Doctor noted earlier (“The Content Engines Are Sputtering”), daily newspapers are cutting back on their core products, in reducing both staff and the space allotted for news. Most importantly to their future, they’re cutting the content production that can drive newer companies on the Web. These include maturing companies like Yahoo!, Google, and MSN, but also others that are just a glint in the eyes of entrepreneurs – imagine the many entrepreneurs that are hiring talent and bringing their own content directly to the Web. The money looks like it will come from contextual advertising, and that’s a game at which newspaper companies continue to play catch-up.
This week the Orlando Sentinel added 54 cuts to the total, which an Editor & Publisher magazine chart lays out. The total so far in 2005: approximately 1,900. Assume that number is low, since it counts only major announced cuts, and not unfilled openings or the smaller cuts – three or four at a time – in smaller newsrooms.
Overall, the best historic numbers are collected by the American Society of Newspaper Editors (ASNE), which does an annual survey in December. According to the ASNE, newsroom employment peaked in 1990 at 56,900, and was down to 54,000 in 2004, before the larger newsroom cuts of this year began. It looks like we’ll begin 2006 with no more than 52,000 newsroom jobs. "Begin" is the operative word as we look forward.
Knight Ridder: Expect More Cuts There
The Knight Ridder sale drama continues to unfold, as Reuters reports today that three private equity companies – Blackstone, Providence, and KKR – may combine to buy the company, with first bids coming in as soon as Dec. 9. That news follows KR’s announcement that it had hired Morgan Stanley (in addition to Goldman Sachs) to advise it, including on restructuring.
Restructuring means, in part, more cuts. Morgan Stanley analyst Doug Arthur believes the "absolute prerequisite" for any potential buyer, whether a rival newspaper company or a buyout firm, "is a view that a significant amount of both cost-cutting and value can be harvested and that some of Knight Ridder's depressed markets can grow again." He said that the cost of running Knight Ridder's newspapers and digital media operations could be trimmed by as much as $350 million under a "scorched earth'' reduction of 1,064 of the company's 18,000 employees, the shutdown of the Philadelphia Daily News, and heavy cuts at corporate headquarters and Knight Ridder Digital.
Even under a "medium" scenario, he said $150 million in costs could be trimmed by eliminating 5 percent of its workforce, or 887 employees, cutting corporate expenses, and realizing other savings. Unknown in that scenario is how many of the cuts would be newsroom ones. Unofficial estimates put the cost of KR Digital operations at $80 million.
It’s ironic that as more and more opportunities arise for using news – think news readers, cell phone delivery, cable Media Center enablement, podcast/blog alternatives – the greatest engines of news content are slowing down rather than picking up speed. As they slow down, look for new funders of content creation – remember the string of Yahoo! content-creating announcements at midyear – to make more noise and change the rules of the game in 2006.
