June 17, 2020

Shutdown has made impact in newspaper industry

Ryan Herrera

The Covid-19 pandemic has ravaged the journalism industry.

It was already in a rough spot, as a number of local papers shut their doors for good, and newspaper chain owners such as The McClatchy Company and GateHouse Media filed for bankruptcy reorganization and announced intentions to cut millions of dollars in overhead, respectively, prior to the pandemic. But budget cuts have hit even more major media and publishing companies since the pandemic forced shutdowns in many parts of the country.

As a number of media companies continue to face these challenges, Hearst Corporation seems to be weathering the storm.

Poynter reported April 8 that Hearst’s newsrooms would not face any layoffs, furloughs or pay cuts during the pandemic. Hearst CEO Steven Swartz even announced pay raises, including a 1% bonus to all employees. In roughly the month and a half since, Hearst, which owns newspapers like the Houston Chronicle and San Francisco Chronicle and magazines like Cosmopolitan and Esquire, has continued its commitment to keeping its newsrooms fully staffed and with stable cash flow.

Other newspaper chains haven’t been as financially fortunate.

Lee Enterprises, which owns the St. Louis Post-Dispatch and the Omaha World-Herald, instituted 20% pay cuts for executives and two-week furloughs for employees between the beginning of April and the end of June.

Gannett, which merged with GateHouse in November 2019 and owns USA Today, the Detroit Free Press and The Indianapolis Star, instituted 25% pay cuts for executives and announced that all employees earning over $38,000 per year would have to take one week of unpaid leave per month in April, May and June.

Tribune Publishing, owner of the Chicago Tribune, the New York Daily News and The Baltimore Sun, instituted pay cuts of 2% to 10% for higher-salaried employees and three weeks of furloughs over the course of three months for employees making $40,000 to $67,000.

These newspaper chains have seen their national network of media outlets hit hard by a decline in advertising revenue that not even some increases in subscriptions have been able to offset.

“The unfortunate reality is it’s pretty difficult in the Internet-era to wring dollars out of news and information, at least at the local or metro level,” said Charlie Johnson, a homepage editor for the Chicago Tribune and a vice president of the Chicago Tribune Guild. “The pandemic threatens to potentially be an extinction-level event for lots and lots of media.”

 With a number of companies struggling to keep their employees working, how has Hearst managed to keep its word?

Ken Doctor, a news industry analyst and creator and writer for newsonomics.com, a website studying and detailing changes in the business of news, believes there are three key reasons:

  • Hearst is privately owned and not subject to the public market, quarterly reports or short-term profits;
  • It has the financial capacity to afford to invest in and take a long-term view for its properties;
  • It has a strategy that acknowledges that the product itself is important.

“Hearst is more of a traditional publisher in seeing value and trying to be rewarded for value,” Doctor said.

Doctor said Hearst’s overall revenue as a company, which includes properties outside of newspapers and magazines, also plays a big part in keeping its media properties stable.

“Now, newspapers and magazines make up less than 10% of their revenue and probably less than 10% of their profit,” Doctor said. “They have a lot of other ways to make money, and they do believe in the mission of newspapers and so they have been willing to take lower profit margins on newspapers as they have been under stress but continue to own them.

“The relatively lesser performance of their newspaper and magazine properties are propped up by their other businesses, which are more profitable.”

Johnson said the Chicago Tribune had at least 17 employees in the sports and entertainment departments furloughed “more or less permanently” throughout the summer.

But the Hearst-owned Houston Chronicle has not had furloughs or layoffs, and it has maintained its 13-person sports staff, even with many sports suspended because of the Covid-19 pandemic.

However, the staff has had to make changes to accommodate both the lack of game coverage and the increase in pandemic coverage.

Chronicle sports editor Reid Laymance said the sports section has been condensed to run in the A-section Monday through Saturday, which allows for a daily 6-8 page section dedicated to coronavirus coverage. The paper has lost much of its regular sports coverage, which would have included the beginning of the season for the Houston Astros of Major League Baseball and the Houston Rockets in the NBA playoffs. The pandemic, however, has added new angles for the sports department to cover, including the NFL holding its annual draft on a virtual platform.

Laymance has seen how layoffs and financial cuts have impacted the industry in the past few months, which makes him even more thankful to be a part of Hearst’s commitment to journalism.

“We just are all extremely grateful,” Laymance said. “We all have friends who work for different organizations who’ve been affected. You just feel very lucky and cross your fingers and hope it continues.”

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