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Friday, February 6, 2009

More bad news at N&O

Posted by on Fri, Feb 6, 2009 at 1:30 PM

Employees at The News & Observer started feeling the pain of the financial downturn early on, with layoffs and buyouts that began last spring and have so far amounted to 233 lost jobs.

Today, the paper announced more layoffs are coming, though it's unclear how many.

"We had hoped that previous cuts would be sufficient to see us through the sharp revenue declines affecting our industry," N&O publisher Orage Quarles III said in a statement e-mailed to employees this morning.

"Unfortunately, we have seen an unprecedented loss in advertising revenue with many of our retailers and auto dealers either going out of business or leaving the area, and employment advertising dropping to all time lows," he said. "Instead, we must continue to respond to the deepening financial crisis that is threatening not only our industry but all kinds of businesses in almost every sector of the economy."

The N&O also has to respond to the more than $2 billion in debt and tanking stock price of its parent company, McClatchy, which risks being de-listed from the New York Stock Exchange.

In a recent conversation, N&O Executive Editor John Drescher told me he'd freed business reporter Jonathan Cox from his regular news duties to work for two months on a project to find alternate streams of revenue for the newspaper. Cox, who has a business degree, came to Drescher with the idea of selling content the company has already created -- its bank of photos, for example -- to bring in an additional $100,000 in revenue. That's not much when you consider The News & Observer Publishing Company is a $100 million a year operation. But as Drescher pointed out, $100K is enough to save a couple newsroom jobs. No word yet on the details of that plan.

Finding new streams of revenue seems to fit with McClatchy CEO and Chairman Gary Pruitt's thinking.

Pruitt recently told investors the company isn't just sitting idly by, but plans to push for more revenue from the Web.

That could include experimenting with charging readers for some online features, instead of giving it all away. "Our costs of delivery online is lower, so the distinction between ‘print is pay and online is free’ is wrong," Pruitt was quoted as saying. "We’ll experiment with paid content online. But most experiments show that you lose more online revenue than you gain per subscriber."

Most major newspapers did away with paid online subscriptions following the lead of the The New York Times which in 2007 abandoned the TimesSelect service that put its columnists and archives behind a pay wall. In a Q&A with readers this week, NYT Editor Bill Keller defended the basic idea behind paid content, saying it was one concept the paper is looking into along with micro-payments (an iTunes for news, as NYT media columnist David Carr recently imagined) and selling content to reading devices like the Kindle. There's also been a lot of talk lately of creating endowments for newspapers, which would allow them to operate on a nonprofit model.

I doubt anybody's going to crack the big question of how to pay for journalism between now and the next MNI earnings report. So meanwhile, what does it all mean for the worried and demoralized employees on South McDowell Street?

An N&O Web site redesign isn't on the horizon for many months, Drescher said.

The company's also using a more conventional delivering-newsprint-by-vehicle approach: Last month, it launched two new weeklies, the Garner-Clayton Record and Southwest Wake News. Like its other community weeklies, the new editions are delivered free to the homes of non-subscribers as well as subscribers. This "total market penetration" approach, as its called in the industry (the same industry that brought us the term "news hole") makes money through localized advertising.

But while the new editions funded the hire of an additional reporter (a good and rare thing these days), it's unclear how much good launching new print editions with scant resources will do for either business or journalism. One new reporter for two new papers? Thanks to layoffs and budget cuts, The Cary News is a shell of its former self and no longer has a newsroom presence in Cary. Neither does The Durham News, which now shares an editor and an office with The Chapel Hill News. And gas prices are starting to rise again -- how long before the physical delivery of all those local ads make them more trouble than they're worth?

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