The Printer’s Devil

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Imagine if you will, an eager grocery store manager, newly promoted from stock clerk.

He’s diligent. She’s enthusiastic. He experiments and finds interesting merchandise that flies off the shelves. She motivates her staff to try imaginative and fulsome customer service that packs ‘em in.

Our young hero posts a 10-percent profit for the year. In an industry where 4 to 5 percent is a big deal, our hero is hailed as a genius, eagerly groomed by higher grocery executives for bigger and brighter things in the company, invited to grocery conventions to speak — at $10,000 a pop — on “How I Did It and You Can Too.”

Imagine if you will, an eager newly promoted publisher.

He’s diligent. She’s enthusiastic. He experiments and does interesting stuff that attracts more readers. She motivates her staff to try imaginative and fulsome customer service and advertising that makes everyone, from readers to advertisers happy.

Our new publisher posts a 10-percent profit for the year.

And is fired. Summarily dismissed. Disgraced.

The High Pooh-Bahs blast in on the corporate jet, impose stern cost-cutting , lay off half the news staff and giddily announce their new wonderful regime of Happy Hyperlocal News.

Thank God, things are back to normal in CorpsNews.

By the way, I’ve run this scenario past a good friend of mine, who has worked both in the grocery and news businesses and knew both intimately. He would swear on his well-thumbed Bible this scenario would be the gospel truth.

Outlandish? No. It happens every day in CorpsNews Land. Stupid? Yes. It happens every day in CorpsNews Land. Why do you think readers are deserting newspapers? Why are advertisers abandoning newspapers?

No doubt you’ve read all these sob stories about how the newspaper industry is suffering, especially in this economy.

Now you’ll get to read about one of the dirty secrets of the newspaper industry.

Stock insiders know that if you have a chance to buy newspaper stock, buy it pronto.

They may be losing readers. They may be losing ad revenue. But newspapers make gigantic profits — publishers’ editorials may sneer at high gasoline prices but their papers make profits that would make Big Oil executives blush. Twenty percent profits have been normal in CorpsNews Land. And it’s not unknown for some papers to post 50-percent profits. And CorpsNews and its greedy stockholders don’t take kindly to 6-percent profits, especially in this economy.

Newspapering is what I call a “process” industry. The economics of newspapering is like that other “process“ industries such as oil and chemical refining and railroads; a newspaper has certain fixed costs it must always meet merely by opening its doors.

Other businesses can change product lines, move, close parts of their business, reinvent themselves or move production to sweatshops in China or Mexico.

But to be a newspaper and to put that paper on a subscriber‘s doorstep each day, there are certain fixed costs you can’t avoid. And those fixed costs are higher than most other industries’. However, once newspapers and other process industries meet their fixed costs, any revenue beyond those fixed costs is pure profit — as one newspaper expert I know calls “100 percent pork gravy.” There are those days you don’t meet your fixed costs. But on those other days, the paper is a cash cow, and it‘s time for a milk bath. There’s a reason why most of those old-time newspaper publishers lived in the biggest, fanciest houses in town and could afford to run for governor of your state.

Sure, newspapers have had some bad times. Sure, newspapers fold up. But if you listen carefully, yon won’t hear that the newspaper wasn’t profitable. You’ll hear that the newspaper wasn’t profitable enough.

I remember a few years back the New York Times made a series of controversial layoffs. It wasn’t because the paper was losing money. Indeed, the profits were a lot better than those of other New York industries. The layoffs were a response to some Wall Street analyst who said that she thought the Times’ stock price would fall, panicking the speculators who had bought up the Times‘ stock.

Knight-Ridder, one of the few reasonably enlightened newspaper companies, imploded not because things were going badly but because stockholders demanded more profits. The company killed the golden goose, unloading its newspapers at a fire sale to come up with pay-day cash to satisfy the stockholders. Ironically, Mr. Knight and Mr. Ridder started and built their news empire during the Great Depression by hiring more reporters at their newspapers and offering them a decent salary at a time when most other newspapers were cutting reporters and staffs — and dying.

So why should you, newspaper managing editor or member of the reading public, care?

Like dot.com companies during the Computer Bubble of recent years, newspapers face powerful pressure to keep the profit levels up — and to increase them.

And for the last 25 years, newspapers have maintained their profit margins not by offering more news or better service but by merciless cost-cutting in newsrooms, one of the few places in the process where newspapers can cut without closing the doors. As one publisher , a former ad sales staffer, once boasted, “Advertising makes the money. Everything else is overhead.”

They’ve cut the number of reporters and editors, while demanding that those who stay try to pick up the slack, while keeping news staff wages literally at sweat-shop levels.

In years past, people spent their entire lives working at newspapers, making a careful but decent living, with the promise of a decent pension when they retired. The history of nearly every small-town paper will have at least one long-time reporter who became a local institution because he worked there for 40 years, hat on head and cigarette dangling from lip and dropping ash into his battered Royal typewriter. Now, publishers boast of their revolving door and newsroom staffers are encouraged to move on or out of the trade so newspapers to cut labor costs to the bone.

Contrary to popular opinion, it’s rare for a writer to become good in 30 minutes. It’s been said that it takes 1 million words for a writer — or a reporter — to hit her stride. (L. Ron Hubbard, sci-fi paperback writer and creator of Scientology, said it took 2 million words.) It takes time and a certain amount of smarts.

But shrunken newsrooms, crummy pay and revolving personnel doors don’t produces good writing. They produce crappy newspapers with mediocre to crappy writing.

It also blights the industry’s future. The best and brightest college graduates avoid newspapers. Ask any dean of any decent college journalism school — if any still exist — and inquire how many graduates who want to work for newspapers.

Why do people buy newspapers? Because they want to read the stories in them. Why do advertisers buy ads? Because that’s where the readers are.

Stupid publishers, being stupid, think that their readers are as stupid as they are. Stupid but busy publishers loudly offer a variety of gimmicks — “community journalism,” “hyper local news” “Newspaper Hext” — to try to hide from their readers that they can’t be bothered to pay to provide even a modicum of decent “product.“

Want to know why readers are deserting newspapers? Hint: It isn’t about the Internet. It isn’t about TV. It isn’t about the lack of leisure time. Readers aren’t as stupid as publishers.

As the American automobile industry found out, customers won’t pay for substandard goods. The same applies to American newspapers. It’s just that publishers and publishing companies are so greedy and stupid that it takes them 10 years longer than automobile and steel executives to figure it out.

As someone who lives in Kansas, I’ve been a long and loyal fan of the Kansas City Royals professional baseball team. During its history, the Royals were one of the most innovative and hard -charging teams and despite being in one of the small pro-baseball markets was one of the best and most consistent winners, winning one World Series pennant and flirting with others., and being reasonably profitable.

In recent years, the team has become a joke as one of the biggest, consistent losers in baseball. The team was bought by an executive of the biggest big-box retail chains and he applied the retailer’s same cost-cutting philosophy to baseball. Cheap players. Cheap baseball. Royals fans are always been known for being doggedly loyal but something after years of losses, they lost hope and faith when it became apparent to them that the Royals would continue to lose and that the owner was content with the status quo.

The most patient and loyal baseball fans in the world stopped buying tickets. They stopped even talking about or even being concerned about the Royals. During the baseball season, they talked about the pro football Kansas City Chiefs or collegiate basketball.

Facing financial catastrophe — and a long-term lease for the Royals’ stadium they would have difficulty getting out of — the owner changed course. They made changes in the club office and started spending more to get better players. The team has started winning more games and now people are talking about the Royals. Both the fans and the owner are more optimist about the Royals’ future in Kansas City.

At least the owner wised up. If it had been your standard CorpsNews publisher in charge, the Royals would try to put seven Little Leaguers on the field next year and offer free blue and yellow cotton candy — made locally — to the first 25 ticket buyers and try to squeeze out a 20 percent profit next year.

Thank God, things are back to normal in CorpsNews.

I’ve noticed the recent reports about the Chicago Tribune holding company teetering on the brink of bankruptcy and is trying to sell the Chicago Cubs baseball team and Wrigley Field as one way to generate cash.

No doubt you saw those several reports about how the Tribune company, which owns several other newspapers besides Chicago, was near bankruptcy because people weren’t reading newspapers any more. The company was whacking its newsrooms and coverage right and left.

However, perhaps you also heard a National Public Radio morning newscast that mentioned the Tribune Company’s financial problems are because Samuel Zell, the company’s owner, used very little of his money to buy the company. Once he took control, the company issued $13 billion in debt to finance his takeover. At the same time, he made massive cuts in news staffs in all of the company’s news staffs to come up with the money.

I can’t say I’m surprised. The Tribune is one of those CorpsNews companies that loves that 20 percent.

A few years back, the Tribune company ordered a series of highly publicized, controversial and messy newroom layoffs and cutbacks in news coverage at the Los Angeles Times — it used to be one of the best newspapers in the country — which it owns. The company announced the paper was for sale.

One of the most likely bidders was a Southern California group that included some Hollywood types. Things were going along swimmingly when the Hollywood group made a terrible strategic error. They publicly said they would beef up the Times’ news staff and would be happy with a 5-percent profit to boot.

That Wouldn‘t Do.

Suddenly, there were a series of stories ricocheting around CorpsNews about how the Hollywood hacks “didn‘t know anything about running newspapers” and how they Would Be Bad for the Times in particular and newspapering in general. Embarrassed Tribune officials quickly yanked the Times off the sale block.

Pay reporters decent salaries? Five percent profits? Preposterous.

Thank God, things are back to normal in CorpsNews.