We will be sent back into the ’30s.”
The mood is dark for many employees working under MediaNews and Hearst. The scrappy feel and hard-driving reportage of the CoCo Times under Lopez and Knight Ridder are believed by some to be at risk following the purchases. “No one thinks we’re going to be a better newspaper because of this,” one source at the paper told us.
In another memo MediaNews executive Armstrong wrote to Bay Area staffers last week, he stated that the company, in fact, predicted its “advertising revenue challenges.”
“We have no additional job reductions planned due to economic conditions, but we cannot guarantee that additional reductions might not be necessary in the future,” he wrote. “Our job level is dependent on our revenue performance.”
The memo also shows that the company plans to sell an office in Danville and two parking lots in downtown Oakland.
News accounts depicted third-quarter earnings for MediaNews based on Securities and Exchange Commission filings as a windfall profit caused by its purchases of the Times and the Merc. But the company’s ad revenue and circulation are actually down a few percentage points, and it made $16 million from the July sale of an office building in Long Beach, which offsets a simple analysis of its financial standing.
It’s still a company that topped $1 billion in revenue last year, a figure that has increased steadily since 2002, but Singleton has never feared doing business with loads of debt on the books, which he’s always used to fuel new purchases. For the Bay Area papers, MediaNews took on a $350 million bank loan in August.
MediaNews has still managed to take recent dire economic forecasts to a fever pitch despite its confidently large debt burden, enabling the company to implement a business model that’s hardly new for Singleton. He knows how to make money. Interestingly, for an industry that’s supposedly on the ropes, several billionaires (who didn't become wealthy by investing poorly) have in the last few weeks publicly expressed interest in purchasing some of the nation’s largest dailies.
The Boston Globe noted earlier this month that rock industry tycoon David Geffen and grocery chain investor Ron Burkle were considering a bid for the Tribune Co., which owns the Los Angeles Times. That paper recently endured a major shakeup when a top editor was fired for refusing to execute job cuts demanded by the company. Former General Electric CEO Jack Welch has considered a run for the Globe, and more buyout rumors have floated around the Baltimore Sun and the Hartford Courant. Such deals could signal a fundamental shift in how newspapers are regarded with respect to their newsgathering responsibilities.
“Geffen has reportedly told associates that he’d be happy with returns comparable to the 3 or 4 percent he might get from municipal bonds,” the Globe wrote. Others have discussed turning individual newspapers into nonprofits.
But Singleton probably isn’t going anywhere, and a lot of people are going to have to learn how to get along with him around here, Texas drawl and all, unless the feds shut down his party.
Knight Ridder was a respected newspaper chain before investors grew restless and demanded greater short-term profit margins. It was sold earlier this year to McClatchy (begrudgingly for some top execs and Pulitzer-wielding journalists who openly fought with Knight Ridder’s financial backers prior to the sale). Knight Ridder posted a profit margin of nearly 20 percent in 2004.
Employees of the chain wrote a chilling open letter shortly before it was sold: “Knight Ridder is not merely a public company. It is a public trust. It must balance corporate profitability with civic purpose. We oppose those who would cripple the purpose by coercing more profit. We abhor those for whom good business is insufficient and excellent journalism is irrelevant.” SFBG