Jack Lessenberry's Take
6:43 am
Tue October 19, 2010

Detroit newspapers to squeeze the belt tighter

Newspapers aren’t doing well these days, though the companies that own them are still making money. Michigan Radio’s Jack Lessenberry says the result is being played out in Detroit.

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Thirty years ago, I worked for the publisher and owner of a family-owned newspaper in Ohio, a somewhat crotchety gentleman  in his early seventies who I came to know pretty well.

He told me once that his general manager wanted to make a bunch of changes and layoffs that could double his profit margin.

He wasn’t having any of it. “We try to pay our people well, in good times and bad,” he told me.  He was proud that he had never had to lay off workers. “This business isn’t about greed,“ he told me.

He was a millionaire, but one without extravagant tastes. If he got back an eight to ten percent return, that was good enough.

He’s been dead a long time now, and the publishing world has changed. Newspapers are in free fall, thanks to our changing lifestyle and the Internet. Most papers are now owned by large, publicly traded companies which are all about maximization of profits.

The result is being played out right now in Detroit. Twenty-five years ago, the News and Free Press were locked in the most competitive struggle in the nation. They circulated statewide, and together sold more than 1.3 million papers a day.

 Today, they are shadows of their former selves. Their combined circulation is less than a third of what it was. They charge more for thinner papers with smaller staffs, and only offer home delivery two or three days a week.

The Gannett Company, the nation’s largest newspaper chain, owns the Free Press and effectively controls the News, thanks to a one-sided joint operating agreement. Gannett is doing well. Last week, it posted a thirty-seven percent increase in quarterly earnings.

Newspaper revenue was down, true, and most of the increase in profits were due to better broadcast and digital performance. But according to the Associated Press, revenue from Gannett’s eighty newspapers still accounts for almost ninety percent of their total.

This month, contracts at Detroit’s newspapers are expiring, and here’s what the company says is its final offer to its workers.

They are demanding a 12 percent wage cut, followed by a wage freeze for two years. So, if you were making a thousand dollars a week, that will be cut to $880 dollars for the same work.

What’s more, workers will have to pay more for health care and perhaps get less coverage. After weeks of negotiation, the company is refusing to budge. The unions have scheduled a ratification vote for Halloween. In the old days, something like this would have almost guaranteed a strike. But don’t expect one now. 

The unions went on strike fifteen years ago, when they were much larger and stronger, but were badly beaten. What will happen is that these papers are likely to get even weaker. Good people will leave, for other professions if not other jobs in journalism.

One solid, thirty-year veteran journalist told me she’ll retire before working under such a contract. The real losers, of course will be the citizens. Newspapers are still the only media than can cover communities on a daily basis. Now, there’s bound to be less of that.

And I don’t see how that can be good for democracy.