Crunch comes to US newspapers
VIEW FROM LOS ANGELES
Monday 24 July 1995
Newsprint prices have also taken their toll of jobs in the UK. Hundreds of jobs have been lost recently at United Newspapers, Associated Newspapers, and at the Independent.
The cuts at British papers are overshadowed, however, by the storm whipped up in the US by "Cap'n Crunch".
In the last fortnight, Mr Willes has closed New York Newsday, one of the city's four papers, and cut 1,000 jobs at the Los Angeles Times, the flagship title at Times-Mirror, creating general appraisal of the industry's financial prospects.
The Manhattan edition of Newsday - the so-called "tabloid in a tutu" - had lost $100m over 10 years and the shutdown will save Times-Mirror $10m annually with the loss of 800 jobs.
Elsewhere, 1,750 more jobs will be lost. The Los Angeles Times will cut 150 editorial positions and close a daily Washington edition, the loss of which marks the end of plans to rival the Washington Post and the New York Times.
Under pressure from the majority-owning Chandler family and investors, Mr Willes was brought in to improve Times-Mirror's lagging performance.
He was a former governor of the Federal Reserve Bank in Minneapolis and also revamped General Mills, which involved the sale of its restaurant division and retail holding. He began at Times-Mirror six weeks ago.
The speed at which the axe came down on Newsday, a Pulitzer Prize-winner with a circulation of 231,000, has created interest in a man with no previous experience in publishing but one with a keen eye on the bottom line of finances.
"You need to be relentless in pursuing change. You can't take small steps; you must take big, discontinuous steps," he said recently. Mr Willes, media analysts point out, has no profile in the industry, which allows him to make drastic changes.
"He's by no means tied to the newspaper culture. I don't think anything is sacred to him," said a person close to the company.
Times-Mirror's stock has long lagged behind that of other media companies, partly because Wall Street has judged the company's costs to be too high. After the cuts, estimated eventually to save the company $50m, shares in Times-Mirror rose 25 cents to a year's high of $27.25.
The company, which has cut its workforce from 8,500 to 6,200 since 1990, was once so plush that its journalists called it the "velvet coffin". In recent years, the once-acquisitive company has become the subject of numerous takeover rumours.
The LA paper's editor, Shelby Coffer, noted that the title still has the largest editorial staff in America with more than 1,100, complete with a news-gathering budget of $110m a year. At its peak in 1990, the paper enjoyed a revenue of $1.125bn. This slid to $992m in 1993 before rising slightly this year.
"Publishing is a business, and journalism isn't," Mr Coffey said after the cuts, which he blamed on California's still sluggish economic performance. "We are inextricably tied. If we don't succeed on the publishing side, we can't be a journalistic success."
The changes at Times-Mirror reflect the trends in America's newspaper industry, which started to retrench in 1991 during the recession and has been hit this year with a 30-40 per cent increase in the cost of newsprint.
There are 1,538 daily papers in the US and print remains the primary news distribution source. According to the Newspaper Association of America, slightly more than 60 per cent, or 115 million adult Americans, read a daily paper. Sunday editions reach 59 million, or 70 per cent of adults.
Contrary to public perception, the $44bn newspaper industry is still the largest media business in the US. "The reality is that broadcast television news only has a 48 per cent share of the adult population. By any measure, newspapers are still the nation's number one news source and advertising outlet," says Paul Luthringer of the NAA.
However, a glacially slow decline in readership and increased competition made it harder to sustain a second or third newspaper in any market. At the turn of the century, there were 15 papers in New York. There are now three, and only 23 cities in the US currently support more than one paper.
"Evening papers have declined in circulation, and morning papers and Sunday editions have grown," Mr Luthringer said. Industry analysts predict that, as a maturing industry, it will not be as profitable as it has been.
There are more than 100 papers offering on-line editions as supplements or archive services.Other revenue streams, such as movie listings and sports scores are also being explored. "It shows newspapers are offering news distribution in a different way," Mr Luthringer said. "This is how they will stay ahead."
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