Reader Elmer sends this fascinating analysis of the problems at The Daily Advertiser, a Gannett Paper in Lafayette, Louisiana. Layfayette is about half the size of Rochester, and the Advertiser is less than half the size of the D&C: the 200 or so remaining employees put out a paper as small as 16 pages on some days.
Though the Advertiser is paid $240K per year to publish public notices, Gannett laid off the legal clerk who handled those notices. This led to a cancellation of a City-Parish council meeting because the Advertiser failed to publish the meeting notice.
In the first three quarters of 2007, the Advertiser made 33.5% margins on revenue of $23.2 million. That's $7.8 million of profit for Gannett.
In the same period, the Democrat and Chronicle made 28.5% margins on revenue of $62.3 million. That's $17.8 million in profit, according to Gannett Blog.
The Lafayette story contrasts the cutbacks at the Advertiser with a nearby family-owned daily in Arcadia, LA. That paper hasn't cut a single job, and the publisher isn't planning to do so.
With all the hysteria about the death of newspapers, it's important to remember that what's shrinking is profit margins. Newspapers are still very profitable, and 30-40% margins can take quite a hit before a paper starts to lose money. Gannett is cutting to save margins, not to save the company.
The whole Lafayette story is worth a close read. It's the well-researched, lengthy and well-written product of a Lafayette alt-weekly that's only been around since 2003. I haven't read anything as good in City Newspaper, which continues to be an alternative in name, not in content.
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With regard to the family-owned paper, it should be noted that the article also stated per the executive editor:
"...(The Advocate) is critically analyzing all positions as they open up."
“I have no doubt as the year goes along, probably positions won’t be filled."
So they too have something in common with Gannett's recent actions.
You also must consider the local angle of the Gates-Chili News as the last family-owned paper to hold out in a buyout scenario. When the price reached an appropriate price for the owner it was over. Period.
A decision not based on a troubled paper needing to sell but the need to fill a void in the then Post's almost complete array of local pubs. And they wanted it....bad.
You're right that locally-owned papers are not a magic solution to the problem. There are also many bad local papers, and they aren't getting any better with the money crunch.
I just think that locally-owned, good papers are more likely to let their margins suffer in order to produce a quality product.
And, yeah, once they're bought out, the party's over.
Even the Indys play a role in in such a downward economic spiral.
Take for instance Buffalo Rising, a deadbeat publication barely making it to the stands, literally.
I'll be curious to see GateHouse and The Times go toe to toe next week. Even our local The Batavian is named in the countersuit.
A well managed locally owned paper would still do well and perhaps even thrive. A poorly managed local paper would go out of business.
A well managed corporate paper still goes downhill because they have to cut positions to benefit the corporation and poorly run papers. A poorly managed corporate paper is covered in the corporate scheme of things by cuts at other properties, and if the management is bad it may not be removed depending on connections and friendships with the corporate higher ups.
A local owner can see his or her return on sales fall yet still live quite comfortably. If the corporate return on sales gets too low then the stockholders will pressure the board to get rid of the CEO. Since the CEO doesn't want that, he will cut as many positions as it takes, keeping his job for the short term but putting the company in peril for the longer range.
Gatehouse in New York has not reduced jobs significantly which speaks well of their CEO and his longer term thinking. The same cannot be said about Gannett.
Very true, Elmer.
However, it is difficult to squeeze the powers that be with a return on a penny stock. The suspension of a 401K match is the first step for darker times to come.
It will be interesting to see Gannett and Gatehouse release their fourth quarter earnings. Gannett goes on January 30th. Gatehouse hasn't announced yet, but if it keeps to past practices they will release their earnings report the first half of February.
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