Cutting costs, or profits?

Although controlling costs is undeniably a necessary part of managing a successful business, sometimes it's wiser to wield a scalpel, rather than an axe. This is something we've seen time and time again lately, as newsrooms across LANG and the rest of the country fall into the same herd mentality and reflexively slash newsroom staff every time revenue starts to droop.

Unfortunately, as we and many others have said all along, cutting into your core business product isn't a smart business decision. You don't need an MBA or a PhD in economics to see that. And now there are hard numbers to back up that argument.

Gary Scott posted a link to this study by the University of Missouri, which indicates that short-term savings, eked out by cutting news expenses, quickly translate into lower revenue and profits down the road.

The authors advised that newsrooms should be the last department cut. When cutting costs, newsroom cuts are by far the most damaging to revenues – and the longer the reductions occur, the greater the acceleration of damage. The authors wrote, “We find that newsroom cutbacks hurt a newspaper’s revenue many times more than cutbacks in either distribution or the sales force departments.”

This of course isn't news to anyone familiar with the vagaries of life inside LANG. MediaNews' ongoing pursuit of lower costs has been a case study in what happens to the bottom line when newsrooms become less important than the boardroom.

The real question is, what can we do to change course?

Sanfield out of Torrance

We're told that according to LANG management, Breeze EiC and interim publisher Philip Sanfield has left the company.

That's all we have for the moment. We'll follow up as more info becomes available.

...According to Gary Scott (posting from the phone, so no link), Sanfield told staffers in a memo that he's leaving to join the Port of Los Angeles as Director of Media Relations.

CWA Legislative Conference

The 2009 CWA Convention and Legislative-Political Conference adjourned last week, with several important resolutions. Guild rep and Vice President Vicki Di Paolo was good enough to share her take on what the conference means for working journalists facing the worst industry conditions in history, so here's a partial list of some of the issues CWA is tackling right now.

The subject matter is a little dry, but the information is critical to understanding how the Guild is working to help improve and preserve the lives and jobs of journalists in America.



United Labor

Because unity and solidarity are some of our guiding principles, CWA and other labor organizations like the AFL-CIO, Change to Win, and the NEA established a National Labor Coordinating Committee to work together and create a labor movement that maximizes the strength of its' members.



Employee Free Choice Act

Most of us realize that U.S. labor laws are no longer enforced as intended. The National Labor Relations Act of 1935 established rights for workers for the first time, and helped pave the way for the laws we take for granted today. But in the 70 years since its passage, the NLRA has been under constant attack by big business. In the last few years particularly labor laws have been interpreted vastly differently from those early days, and again the rights of workers are overlooked, unenforced, and disregarded by employers.

In an interview with Multinational Monitor magazine, David Bonior, Chair of American Rights at Work and former Michigan Congressman, says abuse of labor law by employers has become an "epidemic."

It is a huge problem. To give you some perspective on that: the International Labor Organization arm of the United Nations ranks all member countries based upon compliance with labor law, and the United States ranks in the bottom twentieth percentile. We are down there with Iran and with Afghanistan. We do not comply with our own labor law. As a result, we've seen the numbers of illegal firings and discriminations shoot up from five and six hundred in the 1960s to a few thousand in the 1970s now to epidemic proportions of 23,000 to 30,000 a year.

That's why CWA and so many others support the Employee Free Choice Act. Human Rights Watch says EFCA is absolutely necessary to "help remedy glaring deficiencies in current U.S. labor law that significantly impair the right of workers."

Despite what big business says, EFCA is not a way to sneak unions into a workplace, and it doesn't eliminate "secret ballot" elections. Instead it gives the decision over elections to the workers - not management, where it rests today. Currently, employers are legally entitled to force employees to "confirm" their decision, and endure harsh anti-union campaigns where employees are harassed, intimidated, and fired for supporting union representation. In some instances, employers have been able to force workers to vote more than six times before their decision was finally accepted! EFCA levels the playing field, and that's why big business has spent hundreds of millions of dollars fighting to maintain their stranglehold on employees.



Health Care Reform

With the support of President Barack Obama, CWA has joined the call for national health care reform. The high cost of health care is not only the leading cause of bankruptcy in America, but hurts our ability to compete in the global marketplace. Affordable health care is probably one of the biggest issues facing Americans today, and CWA is working hard to support passage of legislation that will ensure quality affordable health care is available to everyone. Coalitions like Health Care for America Now! stand at the forefront of this fight, and CWA is a proud member.



Trade Reform

The U.S. trade deficit continues to wreak havoc on our economy, and the effects travel far beyond the manufacturing sector. That's why CWA supports balanced trade agreements that will create genuine opportunity and make it harder for multinational corporations to move production overseas. The Trade Reform, Accountability, Development and Employment (TRADE) Act of 2009 calls for a comprehensive review of U.S. trade policy, with a priority on the interests of working families, farmers, the environment, and domestic manufacturers.



Shield law for journalists

Although most states have a shield law in place, there is still no federal protection for journalists.

Irwin Gratz, SPJ president, points out that without this legislation, protection for journalists remains an uncertain proposition.

Posner's findings have been echoed by several other judges in the past two years, leading to the increased likelihood that prosecutors would subpoena reporters. And they have. In the most notorious case to date, New York Times reporter Judy Miller has been jailed for refusing to comply with a subpoena. So, we, and other journalism groups are turning to a practical solution that has worked in 31 other states: a shield law.

CWA recognizes the importance of ensuring that the media's ability to gather information is not compromised, and is a proud supporter of the Free Flow of Information Act of 2009.



Media Antitrust

Although the media conglomerates might argue that relaxing the rules on media ownership is necessary, CWA knows allowing even more local newspapers to be swallowed up will only "accelerate newspaper monopolies, thereby perpetuating a downward spiral of layoffs and closings." CWA-TNG President Bernie Lunzer spoke with Congress about the need to preserve independence and diversity, as part of this commitment to protect journalistic freedom and integrity.

Although there's no legislation related to this issue, CWA opposes any efforts to relax the rules on media ownership.

Bankruptcy ahead?

Bankruptcy is imminent.

That's the word from Michael Roberts, longtime MediaNews watcher for the alt-weekly Denver Westword.

Unfortunately much or Roberts' evidence - a subscriber-only report with anonymous sources - can't be easily verified, so it's hard to determine the accuracy of these dire predictions. But the numbers Roberts cites are downright horrifying if they're correct.

According to numbers pulled from Debtwire, and culled from a filing with the Securities and Exchange Commission, Roberts calculates MediaNews' debt obligation at $1.28 billion. Spread out over six loans ranging from $100 million to $350 million, these obligations establish a constant set of hurdles for the company to negotiate. The first of which, a $235 million "revolving" loan, is due December of this year.

MediaNews has disputed the accuracy of the story. In response to the Debtwire report, the company released a statement saying the plans were not a bankruptcy, but merely a restructuring of their debt and organization. But while the statement calls Bankwire's report "inaccurate in almost all respects," they don't dispute the fundamentals of the story, only the details.

MediaNews acknowledges that the proposed restructuring will trade debt for equity, but claims such a move will not affect control of the company. They also state that these plans are in no way a bankruptcy procedure. But with an unknown amount of company equity in the hands of lenders, the question is whether MediaNews' executive control will be an extension of their authority, or a matter of agreement between the company and lenders who simply have no interest or experience in managing a newspaper empire.

The difference of course, is that a subordinate leadership organization is responsible for implementing policy, not setting it.

An independent executive team, freed from the burden of meeting an impossible payment schedule, could develop a long term plan for viability and profitability. But a financial institution intent of recouping or minimizing their losses may not offer the same opportunities, if short-term profits are on the table. There's been enough of that already, this industry doesn't need any more.