About this Blog

RealClearPolitics Media Watch

Media Watch Home Page --> February 2009

The Last Rocky Show

After 150 years of publishing, the Rocky Mountain News printed its final edition on Friday. The Rocky became the first major U.S. metro daily to fold since the Cincinnati Post did so in December 2007.

The final front page of the Rocky, a retro remembrance:


Columbia Journalism Review invited former Rocky staffers to express their feelings. The reaction ranged from relief, sadness, introspection to anger. What is most admirable, however, is that however they felt, they put out one heck of a final edition, as any good journalist should:

Final Edition from Matthew Roberts on Vimeo

Editor John Temple offered a few final thoughts on why Denver will cease to be a two-newspaper town:

(T)here's plenty of fault to go around. It costs more to produce two newspapers than one, because you have to pay for two newsrooms. Also, producing two newspapers introduces more complexity to the daily operations of the agency and adds more costs to its operations. That might have been OK at a time when newspapers typically were highly profitable, but became an enormous challenge when they were not.

A JOA is an unwieldy bureaucratic structure not suited to success in today's rapidly changing media environment. A JOA has been a way for Congress to keep two voices alive in a community. For newspaper owners, historically JOAs have been the equivalent of annuities. They calmed a competitive situation and spun off cash on a predictable basis.

But not anymore.

Newsday Plans to Charge for Web Site

Newsday on Long Island may become the first U.S. metro daily newspaper to jump into the pay fray as a way to sustain the current business model. During a conference call Thursday, Cablevision CEO Tom Rutledge said his company, which owns Newsday and News12, a cable TV network in the New York metro area, will be charging for content on their sites, though he did not specify a time.

"When we purchased Newsday, we were aware of the long-term issues facing the traditional newspaper industry," Rutledge said. "We plan to end the distribution of free web content and make our newsgathering capabilities a service to our customers."

Newsday reportedly lost over $300 million in the fourth quarter last year and, with a well-trafficked web site, pay-for-content may help to offset some of the losses. Currently, the Wall Street Journal is the only U.S. newspaper site that requires a subscription.

Of course, it didn't take long for skeptics to emerge. In his blog, Ken Doctor thinks Newsday may be committing web site suicide:

The average unique visitor on Newsday.com spends four minutes, 25 seconds per month on the site. Ouch. That number can sub for lots of focus groups, price elasticity testing and the like. Newsday's would-be digital audience has voted with its fingertips. That number is up almost one minute from a year earlier, here courtesy of E&P's monthly Nielsen rankings, but still ranks Newsday as having the lowest online engagement of the top 30 newspaper sites.

Confronted with having to pay for a site you may use less than five minutes a month, you think you are going to pay for it? Wrong site. Wrong year. Wrong metro area.

He may have a very valid point. The New York metro area is blanketed by newspaper web sites: The New York Times, Daily News, Post and Star-Ledger, not to mention the Journal. This goes back to the argument that if a paywall has to be erected, the most probable way for it to succeed is having a cooperative among all newspapers.

Rocky Mountain News to Fold

Denver's Rocky Mountain News will print its final edition on Friday, announced its parent company E.W. Scripps. The Rocky will become the first major U.S. metro daily to fold since the Cincinnati Post - also a Scripps paper - closed down in December 2007.

Scripps CEO Rich Boehne, in announcing the closure to a stunned newsroom Thursday, cited the economic difficulties all newspapers are currently experiencing. "Denver can't support two newspapers any longer," Boehne told staffers, some of whom cried at the news. "It's certainly not good news for you, and it's certainly not good news for Denver. ... This moment is nothing like any experience any of us have had. The industry is in serious, serious trouble."

Denver Post, the other half of the joint operating agency, wasted no time in scooping up a few of the Rocky's high-profile writers and columnists, according to the internal memo sent to Post staffers. Noted editor Greg Moore:

Obviously, we have only a short window to win over the Rocky readers. These moves will help. These hires represent less than 5% of the journalists at The Rocky. I plan to do all I can to integrate them into our paper and culture as quickly as possible and I am counting on your help. This all happens at a time of great uncertainty and personal sacrifices in our business. I know. But opportunities like these do not come along very often. And neither do the challenges. It will take the effort of all of us -- those of us who have been here for a while and the newcomers -- to make a go of it. I really need you to be focused on the challenge ahead. So please, be welcoming to our new colleagues and let's roll up our sleeves and put out the best, most interesting paper possible.

In our slide show published yesterday, the Rocky was placed No. 2 among the most troubled newspapers. Its readers quickly reacted to the demise of the 150-year-old paper, until now Colorado's oldest continuing operating business.

William Randolph Hearst, R.I.P.

There goes my pension.

OK, that's not exactly the first thing I thought of when the potential demise of the San Francisco Chronicle made the news yesterday. I count dozens of friends in that paper's newsroom after spending six years there in the 1990s. Bosses, colleagues, softball teammates ... in a few months, they all could be out on the street looking for jobs.

It's quite possible that that alarmist announcement by management is merely a negotiating tactic to extract more concessions from the guild. After all, publisher Frank Vega has a reputation as a union-buster. But he means business - it's no secret that the Hearst Corporation spent upwards of $1 billion since acquiring the Chron and divesting the Examiner in 1999.

Most of my friends at the paper seemed resigned to the new reality. No one is terribly surprised by this. One of them greeted the news with a mix of aplomb and regret - and also provided a colorful and insightful narrative on how we got here:

For you history/TV buffs, George Hearst, the mining magnate who was a real character on "Deadwood" acquired The Examiner in 1880 as payment for a gambling debt and gave it to his son William to run in 1887. William Randolph Hearst allegedly started the Spanish-American War by sinking the Maine to help newspaper circulation, went on to bigger and better things (building the Hearst Castle and cavorting with Marion Davies), then went on to "Citizen Kane" fame, being the basis for the movie and not pleased about it. He also had plans to become President of the United States but couldn't pull off that trick.

I arrived in 1982 when William Randolph Hearst III worked on the paper. In my time, Willie the 3rd eventually was made Editor/Publisher, then vanished with the bad times and went on to a new business where he continues to make more money. (His cousin was Patty Hearst, who was kidnapped by the Symbionese Liberation Army and ultimately joined her captors in furthering their cause. Apprehended after having taken part in a bank robbery with other SLA members, Hearst was imprisoned for almost two years before her sentence was commuted by President Jimmy Carter. She was later granted a presidential pardon by President Bill Clinton in his last act as president.)

More years down the road, The Examiner bought The Chronicle, the other original San Francisco paper that is celebrating its 144th birthday this year and running a series now which struck me as very funny. (I told lots of people, they want to run this because they know they won't make 150 years and want to do a historical perspective before it goes under using the pretense of the new presses; they're not laughing at me now.)

Also in my time here, you may remember Phil Bronstein, who was a very good reporter/writer that covered the fall of Marcos in the Philippines. As a reward, he married Sharon Stone, adopted a baby, got bitten by a Komodo dragon, divorced, married the heir of the Borders chain, which is on its way out the door too, got promoted to Editor, started a new promotion "Journalism of Action," then got booted downstairs (physically) but upstairs where all managers go when they've run the course and they don't want the bad publicity with a parting.

They brought in an optimistic new editor who "wouldn't take the job if good things weren't ahead." He's lasted a little more than a year and delivered the news along with the publisher who came here several years ago to put things in order. So they kept moving forward by cutting staff, changing the design, setting up a 15-year contract with the company that owns the new presses even though they're losing a million a week. I'll leave you readers out there to figure out how successful they have been.

But I'll close by adding a 2003 report that said the 61 family members of the Hearsts were worth more than $5.2 billion. I guess The Chronicle is eating into all that profit, and the old saying is, you can have even more if you get rid of the bad guys. Boy, our family would like to have those problems.

Top 10 Newspapers in Trouble

The Atlantic stirred the pot two months ago with a sensational "End Times" piece that questioned the continued existence of the New York Times. While the Grey Lady has stayed in the news with all her financial woes, other papers are suffering silently, with certain death just around the corner for some.

The Christian Science Monitor announced that it was abandoning its print edition back in October last year, and then the avalanche came. The Tribune Co. was the first to file for bankruptcy protection, and then the Minneapolis Star Tribune, Journal Register and Philadelphia Newspapers followed suit. In the meantime, Gannett and Media News announced unpaid furlough programs, and the Los Angeles Times was but one of many to announce yet another round of massive newsroom cuts.

The Seattle Post-Intelligencer, Rocky Mountain News and Tucson Citizen all might not see April Fools Day. Then yesterday, the San Francisco Chronicle hinted that it could be going away soon as well. Even the Washington Post, one of the most stable papers, reported a 77% drop in earnings in the fourth quarter of 2008. In todays gloomy newspaper landscape, no one is safe.

With that in mind, we present you with the top 10 major metro newspapers in trouble.

No. 10 New York Daily News

Erecting the Great (Pay) Wall for Newspapers

Let's face it, pay-per-view will be returning to newspaper web sites with a vengeance in the near future. If not by the second half of this year, definitely 2010. Ad revenue is way down - for both print and online - and the recession isn't going anywhere soon.

By now, everyone's shared their own ideas about how to rescue the business. But lately, it's become apparent that we've run out of new thoughts. Most everyone has returned to some variation of a pay scheme.

No one except the Christian Science Monitor dares to do the obvious, which is to shut down the print edition altogether. Newspapers are still too afraid to embrace the new world by leaving the "paper" part of their legacy behind. Since that's the case, a paywall seems to be the only thing that might keep more newspapers from going out of business, for now.

But if we must erect a paywall, let's not make it just any wall. Let's build a Great (pay) Wall that's strong enough to keep the barbarians at bay.

Let's start by creating a cooperative, managed by the NAA (Newspaper Association of America). Every paper that's part of the NAA may participate in this cooperative, which will serve as the clearinghouse for the new great paywall.

Then, with ample warning to the readers, put up the wall on September 1. Why September 1? Because the summer is over, kids are back in school and adults are back at their computer terminals. But more important, it's the dawn of the football season, when web traffic typically spikes for news sites.

Once the wall is up, every newspaper web site is accessible only to paid subscribers. Each paper may decide to allow some free content daily, but it must be extremely limited. The index page for every paper's site should be so full of teasers on the good stuff that a reader just can't help himself but to pay to see what he's missing.

So how do you subscribe? There would be two kinds of subscribers. Anyone who subscribes to the print edition of any paper would be granted a complimentary online subscription. If you don't want to subscribe to your local paper - or any paper, for that matter - you may become an online-only subscriber, at say, $50 a year for the privilege.

Your unique username and password would allow you access to every newspaper site that's part of this cooperative. But here's one catch - you could only access it from one computer at a time (like how an AOL account works) so you won't be so inclined to share your account with dozens of your buddies. Educational institutions and large companies may purchase corporate accounts so that individuals using school or company terminals will be able to bypass the wall.

So how would the money be distributed? Papers get to keep all of the print subscriber money, so it makes sense for individual papers to work to drive up circulation. As for the online-only subscribers, half of the money would be equally divided among all members (socialism), the other half would be distributed according to web site traffic (capitalism), so papers would have an incentive to drive in more traffic to their own sites.

Let's do a little, and very crude, math. According to the NAA, its 2,000 member sites average about 75 million unique visitors. About 25 million already subscribe to a paper, so leave them out. If we may extract 50 bucks out of the rest of the 50 million heretofore freeloaders, that's $2.5 billion. Counting conservatively, at $1 billion, that means under the 50-50 scheme, the smallest of the papers would make about $250,000 annually. The New York Times, on the other hand, would make about $90 million, Wall Street Journal $33.5 million, San Francisco Chronicle, $38 million.

This model may tide the papers over the tough times until they figure out just what needs to be done for long-term survival. And there are challenges to implement this scheme: The Justice Department may have to sign off on the cooperative. There may be fierce pushback initially by the consumers. An independent auditor would be required to referee disputes.

And finally, the newspaper business has to be ready for the potential that this concept may be more like the Berlin Wall than the Great Wall of China - merely a flawed stop-gap rather than something that brings about stability and longevity. At some point in the future, the papers must accept the new reality and act accordingly.

That starts with stopping the presses.

ESPN Goes Loco ... er, Local

Like a vulture swooping down on a defenseless, wounded animal, ESPN is embarking on a new venture by creating offshoots that cater to individual cities and regions. Our comrade Ryan Hudson of RealClearSports has some interesting details.

ESPN's first target is Chicago, ripe for the picking because it's a city of passionate sports fans - and its two local papers are in financial distress. The Tribune's parent company filed for bankruptcy protection last December, and its rival Sun-Times is arguably in worse shape.

It's certain that Chicago will be just the first of the many, as a number of major metros are easy preys:

Denver - Rocky Mountain News may be closing in a month. Denver Post's parent company Media News is in financial dire straits.

Seattle - The P-I is going out of business, barring an 11th-hour deal. The Times is asking state legislature for a tax break to stay afloat.

Twin Cities - Minneapolis Star-Tribune is in bankruptcy, St. Paul Pioneer Press is in worse shape.

Detroit - The two papers are cutting back deliveries to three days a week and are expected to slash staff if it doesn't go well.

Philadelphia - The joint operating company of the two papers just filed for bankruptcy, with the Daily News teetering on the brink.

These are but a few cities with at least an NFL and a Major League Baseball franchise. With ESPN's reach from its TV, radio and web properties, it's not difficult to see how it may pull this off with relatively low cost. In addition, these markets may offer ESPN a prime opportunity to scoop up freshly unemployed sportswriters on the cheap - don't think for a minute that this idea isn't on its business plan.

About a week ago Steven Stark, writing in the Boston Phoenix, suggested that newspapers may want to consider shrinking down to just sports papers with a little bit of local news thrown in it.

Can local papers charge something for what they're offering now on the Web? Well, yeah -- but not much. But let's say local papers beef up their sports sections, as suggested. Would there be an audience willing to pay more for that? Quite likely, particularly in sports-mad towns. And there might be some incentive for individual papers along the line to develop types of expertise they could sell -- say, rugby for one paper or international news in India and Pakistan for another, and so on.

Stark may be onto something there. Other than the national papers such as the New York Times and the Wall Street Journal, the sports section has always been the one that drives a paper's sales. (How many times have you been to a coffee shop to find a newspaper completely intact - only to realize that the sports section was missing?)

But if this is a survival strategy, the papers had better catch on fast. ESPN isn't going to wait.

Philadelphia Story: Bankruptcy

Philadelphia Newspapers LLC, the JOA that runs the Philadelphia Inquirer, Philadelphia Daily News and the shared online portal philly.com, filed for Chapter 11 bankruptcy protection on Sunday, becoming the fourth newspaper holding company to do so in the last three months.

Picture 1.png

The company is seeking to restructure its $390 million in debt, brought upon in part by the downturn in advertising over the last year. The company apparently had been in negotiations with its creditors for 11 months but was unable to reach a settlement.

A day earlier, the Journal Register Company, which owns 20 small dailies in the Philadelphia and Cleveland areas as well as in Michigan, filed for bankruptcy to seek relief from its debt of over $1 billion. That came after the Minneapolis Star-Tribune and the Tribune Co., owner of the Chicago Tribune and Los Angeles Times, also filed for bankruptcy in January and December, respectively.

Two other papers' fates likely will be determined next month: The Seattle Post-Intelligencer and Rocky Mountain News were both put up for sale by their respective parent companies as a formality in December. If no buyer is found - and so far there hasn't been any interest - the papers would cease publication before the end of March.

The P-I's staff is meeting Tuesday to discuss a proposal that would allow the employees to buy out the paper and save it from extinction. The P-I's rival Seattle Times, itself in severe financial distress, is lobbying Washington State lawmakers to reduce business tax levied on newspapers.

Satellite Radio War Continues

Financially troubled Sirius-XM reached a deal with Liberty Media, parent company of DirecTV, on Tuesday night to stave off bankruptcy. On the surface, it looks like the satellite radio saga is over for now. But is it really?

Sirius-XM's troubles first became public in late December, when it was apparent that the company would not be able to deal with its mounting debt of over $3 billion. That, coupled with the impending collapse of the Big Three auto companies, made the future look rather bleak for satellite radio.

Sirius-XM chief Mel Karmazin rebuffed an offer from EchoStar CEO Charles Ergen in December. But by January, the situation became more desperate. Then emerged Ergen's rival John Malone, whose DirecTV is locked in a battle for satellite TV superiority with Ergen's Dish Network.

Malone's offer of a $530 million loan in exchange for 40% of the company saved the day for now - and Sirius-XM officials insisted that it was the best deal they got, better than anything Ergen had offered.

Malone said he won't be meddling with Sirius-XM's operations, content to allow it to run the way it is. But don't count out Ergen, though. He still owns a considerable amount of Sirius debt, so he's not out of the game by any means.

From the Wall Street Journal:

One way Mr. Ergen could try to scuttle the Liberty deal would be to acquire some of the $350 million in bank debt outstanding and then refuse to extend the maturity; Liberty might then back out of its deal. In that case, Sirius would likely have difficulty repaying Mr. Ergen for the December notes he holds. He could use the debt as leverage to make another attempt to seize control of the company.

Stay tuned.

The Hot Air over 'Fairness Doctrine'

Talk radio recently has been abuzz over the possible return of the Fairness Doctrine. First, Michigan senator Debbie Stabenow brought it up with Bill Press. Then Iowa's Tom Harkin did the same. Finally, former president Bill Clinton said this to Mario Solis Marich:

Well, you either ought to have the Fairness Doctrine or we ought to have more balance on the other side. Because essentially there's always been a lot of big money to support the right wing talk shows and let face it, you know, Rush Limbaugh is fairly entertaining even when he is saying things that I think are ridiculous.

President Obama could've put this dog to bed if he wanted to. After all, as a candidate, he let it be known that he's not interested in reimposing the Fairness Doctrine, which was abolished in 1987. But when given a chance to re-affirm that pledge, his senior adviser demurred.

When asked by Chris Wallace on Fox News Sunday whether the Fairness Doctrine is coming back, Axelrod replied: "I'm going to leave that issue to Julius Genachowski, our new head of the FCC, to, and the president, to discuss. So I don't have an answer for you now."

Audio from Politico

It seems a mystery why the Obama administration would allow this issue to dangle out there like a pinata for the conservative radio crowd to whack at. Axelrod simply could've said, "No, the Fairness Doctrine is not coming back. We've got better things to do." Then it would've been dead. It's pretty obvious that there is no political will, either from Congress or the White House, to start something from which the Democrats have little to gain from. Even just the talk seems to galvanize their political adversaries.

The best I can gather is that by allowing the issue to be a hot topic, it takes some heat off the Obama administration on the highly-contested stimulus bill. But that's like assuming Limbaugh, Hannity, Boortz, et al, can't talk and chew gum at the same time. They have plenty of time to bash both.

Just a wild guess. Turn on your radio today to hear for yourself.

Media Job Losses Mounting

Over 65,000 people in the media industry lost their jobs in 2008, casualties of the recession that began near the end of 2007. In December 2008 alone, 18,000 jobs were shed, according to the Bureau of Labor Statistics.

The impact is being felt across the media spectrum, from newspapers, magazines, television, radio, advertising and marketing. About the only sector that escaped the mass slashing is Internet media, which managed to add 5,400 jobs in 2008, including about 800 in December.

Advertising Age broke down the carnage:

Media's biggest loser last year: newspapers, which slashed 31,200 jobs, or 9.1% of staff. Radio cut 8,100 jobs, or 7.4% of staff. Broadcast TV cut 5,100 jobs, or 4%, while cable TV added 2,500 jobs, or 3%. Magazine publishers cut 4,500 jobs, or 3.2%. Bright spot: internet-media companies, which added 5,400 jobs, or 7%.

Among advertising/marketing-services companies, ad agencies last year cut 6,000 jobs, or 3.2% of staff, and graphic-design firms eliminated 7,400 jobs, or 9.9%. There were bright spots: Marketing-consulting employment rose by 2,200, or 1.4%, and public-relations agencies added 1,200 jobs, or 2.4%

Satellite Tug-of-War

Just a quick followup on the potential Sirius-XM bankruptcy filing.

Hoping to forestall the Chapter 11 filing, Sirius-XM has approached Liberty Media, parent of DirecTV, on a potential deal. DirecTV already has a relationship with the satellite radio company, carrying XM music on its channels. This puts DirecTV in competition with its satellite TV rival EchoStar, owner of the Dish Network.

A deal may stave off bankruptcy, and even liquidation, of the satellite radio entity. Fred Moran of the Stanford Group told the L.A. Times that it makes sense for the satellite TV companies to bid for Sirius-XM:

All of these companies are satellite-delivered media. If you can cross-market, cross-promote and intertwine services between satellite video and satellite audio, you could strengthen your competitive position.

Sirius-XM is trading at about 6 cents a share. EchoStar, which owns considerable amount of Sirius-XM's debt, is at about $15. DirecTV's stocks have held steady in the past year despite the plunging market, trading at about $23 a share.

Sirius XM Heading for Bankruptcy?

It looks like the credit market crisis has claimed yet another victim. Satellite radio, in its short existence managed to spend a lot of money but never made any, might not be around much longer.

The New York Times is reporting that Sirius XM Radio Inc., the entity formed when former competitors merged last year, is preparing to file for bankruptcy protection. It will not be able to pay a $175 million debt due at the end of February and may end up being absorbed by creditor EchoStar, owner of the satellite television Dish Network.

EchoStar's Charles Ergen made a bid to take over Sirius XM in late 2008, according to the Wall Street Journal, but was rebuffed. Now, with the company $3.25 billion in debt and credit drying up, the threat of a Chapter 11 filing might be Sirius XM's last chance to reach a settlement with EchoStar.

No matter what happens, one of the biggest losers may be Howard Stern, who took the leap into satellite radio with his record five-year, $500 million contract with Sirius in 2006. He probably won't be able to collect the remaining two years of his deal and his popularity has sagged considerably after he abandoned terrestrial radio.

Some technology proved to be ahead of its time. Some, like satellite radio, became obsolete before it even mattered.

Stimulating Television Viewing

While Congress continues to squabble over what's in and what's out of the stimulus package, 20 million television viewers will be waiting breathlessly to see if they'll need to shell out a few bucks just to catch American Idol.

Currently still in the bill is a $650 million provision that will send $40 rebate checks to 6 million households that have yet to convert their analog TVs to digital. (If you do the math, we really only need $240 million, but how could they possibly do anything without larding it up with a little pork?) After Friday's Senate compromise, the provision stayed in, pending this week's negotiations with the House - then President Obama's signature.

All of the U.S.'s broadcast signals were to be converted to digital-only by February 17. But at the urging of President Obama, the deadline has been extended to June 12. Unless given another extension, all analog television sets (sold before 2004) will be rendered obsolete unless they're connected to cable, satellite or a converter box.

All four major networks have pledged to wait until the June 12 deadline to extinguish the analog signals. But many people - unaware of the extension - have already worked themselves up into a tizzy:

Betty Poesch, a retired dental assistant in Holladay, spent about $430 to convert four televisions to digital, including buying two converter boxes, two antennas, and a VCR/DVD player and digital tuner. All this so she could record shows such as "CSI" and "NCIS."

"It's a big inconvenience," she said. "I don't understand why they had to do it. We had to go replace everything."

Here's an idea: Maybe that provision should be scratched out of the stimulus bill. People will go on a television-buying binge and maybe kill the recession just like that. Americans can't live without their TVs.

Return of 'Fairness Doctrine'?

Michigan senator Debbie Stabenow apparently has decided to be the flag-bearer of the "Fairness Doctrine" debate. Speaking to Bill Press (who lost his gig on Obama 1260 in Washington when the station switched from liberal talk to financial news), Stabenow couched her argument with the term "accountability":

BILL PRESS: Yeah, I mean, look: They have a right to say that. They've got a right to express that. But, they should not be the only voices heard. So, is it time to bring back the Fairness Doctrine?

SENATOR DEBBIE STABENOW (D-MI): I think it's absolutely time to pass a standard. Now, whether it's called the Fairness Standard, whether it's called something else -- I absolutely think it's time to be bringing accountability to the airwaves. I mean, our new president has talked rightly about accountability and transparency. You know, that we all have to step up and be responsible. And, I think in this case, there needs to be some accountability and standards put in place.

BILL PRESS: Can we count on you to push for some hearings in the United States Senate this year, to bring these owners in and hold them accountable?

SENATOR DEBBIE STABENOW (D-MI): I have already had some discussions with colleagues and, you know, I feel like that's gonna happen. Yep.

Audio from Politico

Stabenow has a vested interest in this issue. Her husband Tom Athans is currently the executive VP of Air America. The liberal radio network has never gained much of a foothold on the radio landscape that's dominated by conservatives. Air America, launched in 2004, has a scant 66 affiliates - compared with nearly 600 carrying the Rush Limbaugh Show.

Stabenow has an ally in House Speaker Nancy Pelosi. President Obama, while he was a candidate, opposed the reimposition of the Fairness Doctrine, which was abolished by the FCC in 1987.

A Newspaper Bailout?

With newspapers seemingly failing faster than banks, many ideas have sprouted in an effort to "save" the business. Content-sharing between former rivals is one. Reducing or eliminating print editions is another. And a couple of chains have resorted to unpaid furloughs to save jobs.

L.A. Times' Tim Rutten, his own paper also in a world of trouble, thinks that making the readers pay is the only way out. His idea certainly isn't original, but his proposal adds one twist - allowing the newspaper business to be exempt from existing anti-trust laws:

Two major newspapers -- the Wall Street Journal and the Financial Times -- charge readers tiered fees to view their online journalism. The rest of the industry has decided there's more money to be made in charging advertisers for the larger audiences that free content attracts than in selling online subscriptions.

That's wrong, in my view, but it's hard to argue with as long as some major newspapers are giving their online journalism away; until they stop, nobody can risk charging for theirs. That's where the antitrust exemption would come in: It would allow all U.S. newspaper companies -- and others in the English-speaking world, as well as popular broadcast-based sites such as CNN.com -- to sit down and negotiate an agreement on how to scale prices and, then, to begin imposing them simultaneously.

Walter Isaacson, former managing editor of Time, thinks a model based on the concepts of iTunes and PayPal might work. And his system could be used to encompass all media, including magazines, blogs and even garage bands.

Another idea, suggested by two Yale money men David Swensen and Michael Schmidt, is to get rich guys to endow newspapers, as they do universities. Essentially, they'd be sugar daddies subsidizing non-profit outfits:

Note that just as endowed educational institutions charge tuition, endowed newspapers would generate incremental revenues from hard-copy sales and online subscriptions. If revenues were to exceed the costs of distribution, the endowment requirement would decline.

Many newspapers will not weather the digital storm on their own. Only a handful of foundations and wealthy individuals have the money required to endow, and thereby preserve, our nation's premier news-gathering organizations. Enlightened philanthropists must act now or watch a vital component of American democracy fade into irrelevance.

Either method, however, introduces the potential dangers of polarizing both the publications and the audience. Sure, maybe the New York Times and Wall Street Journal might get an endowment from Bill Gates or Warren Buffet, but what of the Bakersfield Californian and The State of Columbia, S.C.? And if we go the route of the cartels, inevitably the big papers and large chains will band together, leaving the smaller, locally-owned papers in the cold.

It is the demise of the local papers that would have a greater impact on journalism. After all, the masses - the majority of the people in the United States - do not read the Times or the Journal to get their news. If the smaller chains and papers disappear - or are forced to a pay model that their customers are unwilling to support, then we would have an increasingly ignorant and less engaged public. They cannot be blithely written off - as the elites wish. They need to be part of this conversation.

Barbarians at the Gate

Just when was the dawn of the Internet age? It was earlier than you think. And the newspapers, as was pointed out in a previous post, they were really early adapters.

Check out this vintage video from a San Francisco newscast in 1981.

The anchor's parting shot seemed cute at the time, but it was that kind of complacency - or an underestimation of the power of the Internet - that put the newspapers in the bind they're in today.

During lunch yesterday with an editor of the besieged L.A. Times, we mused over just how newspapers lost their power over the readers. One thing was clear: Back in the day when the AP and other news wires were only available to the editors in newsrooms, the print media were the kingmaker. When the masses started getting their own wire reports from portals such as Yahoo!, Google and AOL over the Internet, the genie simply left the bottle for good.

Troubled Times at the L.A. Times

I grew up reading the Los Angeles Times. Back when I was a teenager and a new immigrant to this country, I read the Times religiously - first just the numbers in the back of the sports pages, then gradually the contents in the voluminous sections. I literally learned and improved my English by reading the Times.

Spending the week in L.A., I discovered that the Times is but a shell of its former self. Check that - saying so would be giving "shell" a bad name.


The near-death spiral for the Times appears to be continuing unabated. On Saturday, the paper announced that it's trimming another 300 jobs. And it's also eliminating the "California" section, the primary local news page of the paper. According to a well-placed source, the morale at the paper has reached an all-time low.

That's saying something. This will be the fourth massive layoff by the Times in the last 12 months. After this round of reductions, the newsroom staff will be down to about 600, roughly half of its size in 2001.

The mass and frequent layoffs, not coincidentally, mirrored the plummeting circulation numbers of the paper. While it's still the fourth-largest paper in the country, the Times has experienced a readership loss that's unrivaled by any metro daily in the U.S. In 1998, the LAT's circulation was well over 1 million. At the end of 2008, it's down to 773,000.

Many point to the Times' troubles to its acquisition by the Tribune Co. in 2000. And it's not difficult to see why. The constant downsizing of both staff and content drove many readers away. The Times used to publish separate sections in both San Fernando Valley and Orange County, but they were both shut down in 2006 as readers fled to the Daily News and Orange County Register, respectively.

Moreover, the Times was slow to react to the challenges of the Internet age. Until initiating "The Spring Street Project" in late 2006, the Times web site was known for its unreliability and difficulty to navigate, leading to a scathing internal memo to describe the publication as "not web-savvy but web-stupid." To this day, the Times is still playing catch-up, as the traffic at latimes.com is dwarfed by other media portals and many papers with much lower circulation numbers.

The memos from publisher Eddy Hartenstein and editor Russ Stanton spelled out the latest round of changes (the Times is so sick of its internal memos being leaked by the staff, now it puts them up on its own web site so it doesn't get scooped!). Stanton managed to spin out this gem:

We are all too familiar with this process, but over the past year in particular, we have come through each of these downsizings and continued to produce some of the highest-quality journalism in our industry. We simply don't know how to do otherwise.

And to reward their readers, the Times also just jacked up the newsstand price from 50 cents to 75 cents.