It is time to recognize that the Wisconsin State Journal and its parent company, Lee Enterprises, are on the edge of disaster. The once flourishing Lee Enterprises, $48/share as recently as 2004, is now trading at less than 1 % of that amount, 36 cents a share.
The newspapers's editorial policies are starting to make sense.
Last Sunday, the Wisconsin State Journal (WSJ) unfairly called upon the city of Madison to solve the Overture problem by screwing the organized employees:
...Labor costs are by no means the only part of Overture that deserves an overhaul. But they compose the largest expense item in Overture's budget. The city's pay structure is out of line in several places...
...For example, a study found that an Overture ticket cashier earns $18.34 an hour, compared to a statewide benchmark of $10.30.
I suggested on Monday that the newspaper was asking Overture Employees Take a Holiday Hit For Failed Leadership:
While salaries do comprise the largest expenditure in Overture's budget, the greatest discrepancy is in the largest budget item, revenues from performances - that would be ticket revenues for the producers...
It seemed to me that the WSJ had an ulterior motive for a series of editorial calling upon lower wages for workers. Last weekend I was perusing Roger Ebert's movie reviews and came across a commentary of the film critic blaming the collapse of the Tribune Corporation on the enormous debt its owner, Sam Zell, had created to finance his takeover of the company.
He (Sam Zell) paid way too much money to overpay for the Tribune, Los Angeles Times and other big papers, the Chicago Cubs and a stable of TV and radio stations. Now he cannot pay the interest. There is no evidence he had other than a financial interest in his purchase.
Which lead me to connect the dots and observe:
There must be a reason that the State Journal repeatedly attacks reasonable workers' wages whenever there is a financial crisis.
They are preparing for the obvious at the newspaper. The day the layoffs and the cuts come.
As Roger Ebert noted in analyzing the crash of the troubled Chicago Tribune, the problem is not the staff but the enormous debt that paper faces because its current owner, Sam Zell, bought the company on credit.
It turned out I was more right than I knew. Now the truth is out. Lee suffers from the same disease as the Chicago Tribune family of newspapers. From Reflections of a Newsosaur, which unknown to me appeared last Sunday:
The stock of Lee Enterprises was worth about $1.5 billion when the company borrowed almost an identical amount of money to buy the Pulitzer newspaper group in the summer of 2005. Today, Lee’s shares are worth only $13.5 million...
...Lee is but one example of what happened to many publishers who borrowed too much money to fund ambitious acquisitions between 2005 and 2007, taking advantage of the then-juicy profitability of newspapers and the once-easy access to abundant, relatively cheap debt...
...Lee today is struggling to avoid default on $1.4 billion in debt...
...The company also is in danger of (being).. booted off the New York Stock Exchange because the price of its shares has fallen below the required minimum...
...The severity of the situation is underscored by a warning from Lee’s auditors that they may have to add a statement to the company’s annual report questioning its “ability to continue as a going concern.”
My distaste for the Wisconsin State Journal's editorial policy does not translate into a distaste for the newspaper. I am part of a growing number of people deeply concerned about the ability of newspapers to survive in this electronic world. Their judgment in editorials, news content, opinion pieces, and investigative journalism is critical to the survival of our democracy.
I hope the newspaper and the entire chain survive and become healthy again.
If they need to raise cash I have one modest suggestion. Lee sell its interest Capital Newspapers Inc. to The Capital Times which will then resume publication as Madison's morning and Sunday newspaper.
It will be a shame to lose the Wisconsin State Journal. It would be worse for Madison to have no daily newspaper and for Lee Enterprises to collapse.
Historical Note:
In the 1950's the WSJ and The Capital Times agreed to share the same press. That meant one had to publish in the morning and one in the afternoon. The Capital Times 'won' the flip of the coin and choose to publish when more newspapers were sold, the afternoon. The State Journal as consolation for 'losing' published on Sundays.
Within a few years television took its toll and the WSJ passed and then doubled and tripled The Capital Times in circulation. Having the Sunday paper did not hurt either.
New advancements in electronic communications once again threaten the newspaper industry and it is evident that massive amounts of debt were not the answer to the Internet. Maybe news, sound editorial and opinoin content and investigative journalism along with a collection of important local and international news is the solution.
The thing that I find most interesting about the demise of newspapers is the cause. Most people think Internet news sources have been the cause, but that's not true. While many people have switched from newspapers to the Internet for their news, subscriptions was not a major profit center for newspapers.
The real cause of the newspaper industry's demise is craiglist. Yes, craigslist. Turns out the most significant source of profit for newspapers was the classifieds. They were raping, err, charging customers high rates for those ads, because their was little or no competition. Now that craigslist offers an alternative at a much lower rate (free), classified ads, and hence profits, have evaporated.
While reporters and columnists like to think that they pursue a noble profession (and I'd like to believe it too), the business of a newspaper is to make money. Like most American businesses, the management of newspapers have been slow to respond to this disruptive technology. Sic transit gloria mundi.
Posted by: Jon | December 26, 2008 at 11:39 AM
At least The State Journal and Madison Newspapers managed to break all of the unions in the building 30 years ago, so workers will have no recourse if layoffs, wage and benefit cuts, or other take-aways are imposed.
Posted by: xoff | December 26, 2008 at 01:20 PM
So the banks created the money with which borrowers bought these papers?
More evidence that fiat money-that is money that is manufactured out of thin air-is bad for the economy. Too often this legal counterfeiting drives the price up to the point that enterprises can not be viable. One great economist said it best: "Counterfeit money creates counterfeit businesses which can only be sustained by further debasing the currency."
In the short term, it is often the rich who benefit while driving up prices for the rest of us. But the resulting boom/bust economic roller coaster can be devastating to most of us, as in the current crisis.
For peace, prosperity and liberty, END THE FED!!!
Posted by: Ken Van Doren | December 26, 2008 at 09:21 PM
Trying to shore up newspapers in the wake of the Internet seems a bit like trying to rescue Budweiser in the wake of the microbrew revolution. Why? There are better things out there in every category, and you don't even have to look very hard to find them. Claiming that a city newspaper is critical to the survival of our democracy is like claiming that the Overture center is critical to the survival of our culture. It's not. It's an appeal to authority, nothing more. I relish the fall of the ivory tower of newspapers in the same way I hope to see the Overture center collapse. Officially approved institutional news, opinions and culture are not the voice of our democracy or our and they never have been, they're just the easiest thing to find for people that can't be bothered to care.
Posted by: Chuck | December 26, 2008 at 10:30 PM
It's been well known since the 60s, when the northern California burnouts started coming to Madison that the newspapers were nothing more than a front and a bullypulpit for the Democratic Party. The times have changed, yet the stuffed shirts in the newspaper newsrooms are smoking the same weed they did 40 years ago and will not change with the times, simple fact, newspapers either change to meet the demand of today's news consumer, or they die (hopefully some faster than others). TV is the same, analog dies 2/17/09 like it or not. It's called change, there will be technology and you WILL embrace it, you have no other choice. Newspapers must comply with this today, increase their presence on-line, and use the same newsgathering and long form pieces that they did before, only in a technology-based format that will keep them competitive, and they can use more technology to deliver. Local TV news has lost 12% of their audience to the internet, print had better learn that....rapidly, and let's hope the Cap Times Hammer and Sickle stays electronic, and the editors learn todays media and not an internet version of Pravda.
Posted by: Correct Thinking | December 27, 2008 at 08:03 PM
"coming to Madison that the newspapers were nothing more than a front and a bullypulpit for the Democratic Party. "
The Wisconsin State Journal has a right-wing editorial page.
Posted by: | December 29, 2008 at 01:44 AM
The La Crosse Tribune (owned by Lee) is going through the same problems. They have cut the amount of space devoted to text, reorganized their paper to have more photos, and have shrunk the overall size of their paper. The editors are hearing about it, not only in face to face encounters with friends who complain about the loss of quality, but also in sales. People are simply canceling their La Crosse Tribune subscriptions, opting to view the three or four articles they are actually interested in on the web. It's too bad, I know some people who work there, and they are not happy with the cuts, but what's a reporter to do when managment is terrible.
Posted by: Irish | December 29, 2008 at 12:13 PM
The end of newspapers as we remember them is a syndrome of sorts - a collection of events all now coming together. I will address just one. The owners and editors of papers have been smug and comfortable with the idea of being in control of "news." They decide what we should read/hear. This of course is contrary to new media formats of ubiquitous information for, God forbid, free. I see the Journal Sentinel is up to a scheme to try to charge for old articles on the Web. Seems like a last gasp to try to scrounge up some cash - like losing your job and hunting aluminum cans.
The old newspaper culture just seemed deaf to the idea their world was under rapid assault. It is like the crew of the Titanic realizing the ship is lost, long after the interior is full of water. Papers have tried to adapt, but way too late. Radio is next - note the recent loss of local talk on WTDY 1670 AM. I am thinking 24 hour news stations may follow. They cannot get past putting rich millionaire hosts on their shows - they speak to no one but themselves. They try to appeal to the Web crowd with gimmicks, but it is so obviously contrived and condescending to us rabble. Good luck "old media," you will need it times 10.
Bob Keith
cooldadiomedia.com
Posted by: Bob Keith | December 29, 2008 at 04:52 PM
Aside from the issue discussed in the crux of Paul’s post – that being people buying businesses that have no concept of how to run them and never having worked in that particular business; and, only with getting rich quickly as the priority – there are other components to the syndrome tearing media apart.
Wisconsin papers, television, radio, and magazines will spend millions to send hacks to follow around a mediocre college football team to unimportant bowl games. Yet, they have collectively only sent 10 Wisconsin journalists to Iraq and Afghanistan as we creep precariously close to being in the latter for eight years, the former for six.
Local media outlets rely heavily on wire service clearing houses – no sources; no authors; poorly written; and usually validating social conditions most of us have know about for years.
I once went to a media meeting where the boss was explaining company changes. He said, “Don’t worry about news content; it is all about advertising anyway.” My heart sank. This is folly when the advertisers have dried up and the news staff had been downsized. Once advertising is gone, one still needs to be a reason for us schleps to pick up a paper (a now hollow product without advertising, or content).
In addition to the theme in the above paragraph, if something does happen in the world besides a lame football bowl game, there is no specialized staff left to go to the event. Let’s put a sports hack and a perky breast news reader in Israel and the Gaza – whatever.
As mentioned in my previous comment, the “old media” generally operates as if they own information. They offer up packages of news. Their tired mantra: Here’s your news you rabble, celebrate our genius in presenting it to you.
Like so many businesses run by outsiders and absentee owners, the goal is to keep the upper inner circle in nice cars and big houses. It is a transparent pyramid scheme – now the pyramid is crumbling.
Bob Keith
cooldadiomedia.com
Posted by: Bob Keith | December 30, 2008 at 09:16 AM
Parts of this are inaccurate, mean, vengeful and just cranky. Happy Holidays. Your only beef is with the edit page - gee, now there's news - so you advocate closing the whole thing because of it. Right. Not logical. An institution with a noble purpose does not always act nobly, but it still has that purpose. The innumerable charitable acts, the phone calls to check out complaints, the efforts to keep public officials accountable, the occasional pointing out that some emperors are naked, the coverage of the mundane, perhaps you believe a community would be better without them, but I don't. You would have been a lousy mayor without the give and take with the media, especially when it was out in the open, and if the media hadn't been around to accurately log the infamous "decent" quote, you may not have ever become a mayor at all. The more media, the better off the community. The problem with mayors - and I have covered Dyke to Dave - is that every one of them thought he or she was perfect and was shocked if it was pointed out this was not true. (Same as newspaper editors, actually.) Funny, I never once thought the community would be better in any way without one.
There is a goodness in examining the financial structure of the media, its failures and its victims, and the totalitarianism of media management, but this particular extrapolation is not very helpful.
Posted by: George Hesselberg | December 31, 2008 at 11:03 AM
Sounds to me like karmic comeuppance for the State Urinal's complicity in Bush's Iraqi holocaust.
Posted by: Ishmael T. Malawanquix | January 07, 2009 at 04:05 PM
There is a link to this blog entry on my blog. http://www.chitowndailynews.org/Media_Insider/Isthmus_Capital_Times_buy_out_Lee_Enterprises_in_Madison,20933
Posted by: Lou Grant | January 08, 2009 at 03:05 PM
I would suggest that you check for grammatical errors prior to the posting of
any article.
Posted by: | January 18, 2009 at 08:08 AM
I suppose we should have a press like Cuba hey?
Can we get the keys to the city back from Fidel now
or maybe you can tell his brother how to run their
press.
Posted by: | January 18, 2009 at 08:15 AM
George Hesselberg's remarks give me pause, because I respect him a great deal, but newspapers have brought this on themselves. Long gone are the days when your local paper was the community tribune. Union-busting Lee Enterprises never cared about Madison, nor has the State Journal, openly defiant and even scornful of all things liberal and progressive in the this bastion of the same. Why exactly should we in the community give a rap about them as an institution, and this said with due respect for the many good people working for these bums who are truly unworthy of their own employees.
Newspapers are caught in a vise today, caught in a financial trap of their own making at exactly the moment when any number of vibrant alternatives are flourishing. I emphatically disagree that newspapers are necessary for healthy democratic life. They have filled that role sporadically in the past, but those days are long gone and the mantle is being assumed by others.
Posted by: Al | January 21, 2009 at 01:09 PM