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Newspaper industry's uncurable malaise

The death of newspapers has been oft foretold. That it hasn't arrived speaks of a tenacious hunger among citizens for news, since newspapers themselves often appear to be doing their best to hasten the end.

It was the telegraph that was first thought to be newspapers' death knell. Then came radio. But newspapers were still around for television, which seemed sure to seal our fate. Yet it spared us until the Internet could arise, our certain executioner.

Indeed, dot-coms were lavished with dough, even as returns on the investments remained stubbornly non-existent. Confidence _ even arrogance _ was in the air. As late as a year ago, the founders of Inside.com were scorning old print-on-paper relics as "legacy publications."

Now, of course, the stock bubble has burst, and Webzines are gasping for life. The relics, meanwhile, are doing what they always do in down times _ bleeding themselves to keep profits at the levels to which their shareholders have become accustomed. During the boom, while all the excitement and new capital flowed to Net enterprises, newspapers hung in there, providing readers with news _ and investors with very nice returns.

This behavior has its cost. The newspaper business is cyclical. Advertising revenues rise and fall; so does the price of newsprint. Each time the former falls and the latter rises, newspapers chew off a chunk or two of themselves to keep margins high. Since our behavior more assiduously tracks the down cycles than the ups, the year-by-year effect is diminution: of newspapers, of what they provide citizens, and of their readership.

Right now we're deep into shrinkage. The Akron Beacon Journal killed its Sunday magazine and cut 10 of its 164 journalists. The Arizona Republic has nipped at news space. The Philadelphia Inquirer is moving away from an aggressive zoning effort in surrounding communities. And the Inquirer will soon move, as have many papers, to a smaller news sheet _ 8 percent less newspaper for its readers, millions more dollars for its bottom line.

Often, editors present such moves as improvements. And they write defiant "let-it-be-understood" staff memos, vowing that, despite this reduction and that elimination, there'll be no lessening in journalistic quality.

The Kansas City Star, however, has an unusually frank editor who gave readers a chance to react to proposed cuts. Mark Zieman wrote his staff recently, "Because of the budget pressures that we all know about, we have been asked by Knight Ridder to dramatically reduce expenses for 2001. For the newsroom, that largely has meant a hiring freeze and significant cuts in newshole. The good news (such as it is) is that most of those cuts have already taken place, without vocal complaints from readers. The bad news is that more was demanded, and we are fresh out of surgical extractions that won't be visible to our customers."

The Star decided to take virtually all the remaining reductions out of the Monday paper, revamping it and cutting four pages of content. Having shown the prototype to readers, Zieman came back with a new report: Readers had cried foul. They didn't want national news reduced, the op-ed page eliminated. Zieman pledged to find other ways to cut.

If all editors were this frank about reductions _ and if newspapers were as straightforward as well about the profit levels these cuts maintain _ we'd have more readers protesting. And journalists would have more powerful allies in the effort to keep journalism healthy amid ceaseless profit pressures.

A columnist at the San Jose Mercury News _ another paper planning layoffs _ wrote a letter to the chief executive of the paper's owner, Knight Ridder, suggesting it's time someone "stand up to irrational markets and redefine financial success." An article in the trade magazine Editor & Publisher carries a similar recommendation. "The fundamental reason for the malaise in newspaper stocks is that the medium is perceived on Wall Street as old-world, declining and incurably cyclical. . . . What the Street wants is growth, or the promise thereof."

Investing in newspapers, advertising them, getting aggressive about market share _ these are the article's recommendations to an industry bent on the opposite. An industry that is known, as one investor told an interviewer, for being "very good at ratcheting down expenses."

Many readers think of newspapers as almost a member of the family: familiar, reliable, even lovable _ not to mention essential to democracy. Investors think of them as cash cows, and owners oblige. Decade after decade, threat after threat, newspapers have survived, thanks to readers' belief in them. Imagine how they might thrive if the industry believed half so much in itself.

Geneva Overholser is a syndicated columnist with the Washington Post Writers Group.

Washington Post Writers Group

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