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* I’m getting a real fear deep down that the Sun-Times won’t survive unless something drastic changes very soon…
Sun-Times Media Group Inc. said it lost $168.8 million in its third quarter as revenue sank amid a weak economy.
Ad sales in Chicago dropped 19% in the quarter, and likely won’t begin to increase again until 2010, CEO Cyrus Freidheim said in a letter to investors that was released along with its earnings report Thursday. The company plans to cut $45 million to $55 million in expenses over the next nine months to survive in the meantime.
Newspapers are struggling amid the worst advertising environment in years, and the operator of the Chicago Sun-Times and 70 other community newspapers is no exception. Its latest cost-cutting plan comes on top of a $50 million expense reduction that came in the first half of 2008. All told, the company will have trimmed its costs by 30% by the middle of next year, Mr. Freidheim wrote.
“In view of the worsening market conditions, the company is taking even more aggressive actions to reduce costs,” he wrote. “Our organization understands the severity of the situation and the need for urgent action.”
The latest cost-cutting plan will include “outsourcing, downsizing and the elimination of poorly performing products,” he wrote. No further details were available.
There was a time, not long ago, when I thought about putting together some financing to buy the chain. It wouldn’t cost much. The problems are many, however. The structural deficit is crazy scary. Uncollectable ad revenues are huge. You’d basically have to declare bankruptcy, break the union, strip the pensions, tell the banks to kiss off and try to start all over. But even then, it’s an iffy proposition.
…Adding… To be clear to my fellow union members, the top management would have to be swept out as well, along with their salaries. Everybody just take a breath, OK?
* These may be good intentions, but the moves could spell the death knell of even more newspapers…
President-elect Barack Obama will try to use his office to hinder media concentration and to increase local TV news coverage, objectives that have stirred resistance from industry groups.
The Illinois Democrat, who will succeed George W. Bush on Jan. 20, “is going to push for a more open, more diverse media,'’ Gloria Tristani, a former Democratic member of the Federal Communications Commission, said in an interview.
It’s just not right that the Tribune can own TV and radio stations and yet no TV station can buy the Sun-Times. We may need more consolidation between broadcast and print to save both industries. Print, except for a few papers, won’t last on its own.
* This may look better than it really is…
Don’t look now, but NBC is rolling out some sharp-looking local news sites for its owned-and-operated stations in New York, Washington, Chicago, Philadelphia, Los Angeles and elsewhere.
Using URLs like “NBCWashington.com” and the tagline “Locals Only,” these are quantum leaps over the usual crappy local TV news sites for a very simple reason: They’re actually focused on local news, and eschew the usual mindless over-promotion of the local NBC news team and primetime schedule. They’re also not limited to NBC-produced content–the sites promise to aggregate content from other local sources, as well, a la the very smart Examiner.com model.
I love the look of Channel 5’s new site. The parent company even offered me a spot over there, but I politely turned them down for various reasons. Right now, the site is more concept than execution, but it should improve over time.
* Meanwhile, the Tribune Co. needs to sell the Cubs to pay off its ginormous debt, but that’s in trouble now as well…
Tribune Co. may end up holding 50 percent or more of its storied Chicago Cubs baseball franchise as the credit crunch stalled sales talks, the Wall Street Journal said.
In recent weeks, an early plan to sell a 95 percent stake has fallen to about half as suitors’ ability to buy the team and its stadium on Chicago’s North Side waned, the paper said citing two people involved in the negotiations.
On Thursday, bidders were preparing to receive a request to submit new purchase proposals with financing details, those people told the paper.
Tribune is selling assets to help pay down debt, which stood at $12.5 billion at the end of the second quarter. Declines in readership and advertising dollars at such newspapers as the Chicago Tribune and Los Angeles Times have added to the pressure on the company to secure funds to avoid default.
* Related…
* Obama campaign’s text/mobile effort: A model for newsrooms?
posted by Rich Miller
Friday, Nov 7, 08 @ 10:36 am
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not true that newspapers cannot stand on their own — however, they do need to look to Europe for successful models in the internet age.
European newspapers are morphing into the Yahoo! model…developing their own search engines, providing customized news content, and putting their best reporters in their online division instead of filling their online content with second-stringers.
I guess what I’m saying is…newspapers need to be more like Capitolfax!
Comment by Yellow Dog Democrat Friday, Nov 7, 08 @ 10:50 am
Allowing cross-ownership between broadcast and newspapers only makes sense now. Lord knows all over the country local broadcast stations lift half their content from newspapers, anyway. And always have.
Comment by wordslinger Friday, Nov 7, 08 @ 10:54 am
It would seem that all media are in flux right now. Newspapers are trying to figure out the future as their Web sites look more and more like CNN’s. Readers have found the net…now newspapers need to get their advertisers to realize that where the readers are.
With DTV coming on, TV stations will look for programming to fill their ancillary channels. Some sort of “Web-casting” could fill the void. News isn’t the only product produce by television, as is the case with newspapers, but they aren’t as afraid of the net. It won’t be long before the only screen in the house is a flat panel digital job from Panasonic. All info, news and entertainment, will be on that screen. There really won’t be “TV” stations or newspapers as we know them now, since all info will come down on one wire. Transmitters will simply become too expensive to operate. I could go on and on about how the transition will play out. My advice to you Rich is to not buy any newspapers. They are becoming huge revenue drains.
Comment by Deep South Friday, Nov 7, 08 @ 10:56 am
Uncollectable revenue? Then why sell them the ads? I’d think that’s basic accounting.
But the bottom line is the things that are suggested, no pensions, etc, are things most US firms did long ago.
There is a reason why there is unease in the land, globalization and mass immigration are a one - two punch to the middle class. Bush and McCain paid for failing to deal with that.
The next guy will find out about that soon enough.
Content is still king, and you still need to pay for it. How it is delivered is another story. The Sun times (and others) needs to make a GOOD ad and job section, not just rely on ads in various locations.
Careerbuilder sucks as a job site, the opportunity for someone is huge.
Comment by Pat Collins Friday, Nov 7, 08 @ 10:57 am
“break the union” What do you mean by breaking the union?
Comment by Unionizer Friday, Nov 7, 08 @ 11:13 am
Just like the music industry’s recent woes, we have a new generation (and a lot of the older generations) who are growing up with a sense of entitlement to free content. The perceived monetary value of art and literature is declining as a result. The value of these things in our environment is obviously not declining (otherwise, we wouldn’t be here, right?). Creative enterpreneurs in the arts have learned how to survive in this new environment, to create a “buzz” that creates a demand for hard, sellable products and downloads as well as the free content they are obliged to trade in. The Trib has sorta backed into being in a better position than some, by having hard, sellable assets like the Unmentionable Baseball Team and Stadium and its many revenue broadcast outlets. Aggressive branding and promotional tie-ins could bring additional hard, sellable assets to the new media.
Comment by Six Degrees of Separation Friday, Nov 7, 08 @ 11:25 am
Rich, you’re dead on about the structural deficit with the S-T. The budget cuts, which will cut skin and bone, will only total $50 million over 3 quarters. If the loss this quarter is matched for the next two, that’s $500 million in losses. $50 million in cuts won’t do it.
As fiercely as it would be opposed, I used to think Chicago might be cut out to have only 1 newspaper company. With a merger, perhaps there could be a morning Tribune and an afternoon Sun-Times. However, with Zell now intent on a Sherman-esque rampage, squeezing Tribune Co. for every last red cent, I honestly don’t know if either company will survive in the long run.
Are there any major cities, either in the US or abroad, which don’t have a local paper at all? Because right now, it seems that newspapers are like the airline industry. Everyone thinks they can run them and make money, but they always loose their shirt. I am a young (29 y.o) subscriber to the dead tree product, but I wonder if they’ll still be around by the time I’m fifty.
Comment by South Side Mike Friday, Nov 7, 08 @ 11:25 am
===What do you mean by breaking the union? ===
What do you mean, what do you mean? Are you unfamiliar with the concept?
Comment by Rich Miller Friday, Nov 7, 08 @ 11:28 am
SSM-
Can’t think of a city or metro area of 100,000 or more in the US with no daily paper. There are some smaller cities and counties which feature a weekly-only paper, but many readers get their daily news from the nearest metro, sometimes several counties away.
The Streator paper went from a daily to a 3 times a week format, then the owner merged it with the Ottawa paper and they went back to daily.
Comment by Six Degrees of Separation Friday, Nov 7, 08 @ 11:32 am
Sure. If you broke the union then the people who do the real work would make even less while the Conrad Black types who don’t even know what work is could steal even more. Shouldn’t the talent be fairly compensated?
Why is the union to blame every time a business has problems? What about the highly paid under worked management that runs the organization into the ground in the first place?
Comment by Bill Friday, Nov 7, 08 @ 11:43 am
I didn’t say I was willing to do it, Bill.
The corporate suite would have to be cleaned out as well. I’ll make a note up top to soothe your delicate sensibilities. lol
Comment by Rich Miller Friday, Nov 7, 08 @ 11:48 am
I think the stock price reflects your sentiment. New business model idea: Shut down the paper entirely and just sell the Obama reprints for ridiculous prices.
Comment by Greg Friday, Nov 7, 08 @ 11:55 am
I hope the Sun-Times makes it. They’re investigative stuff in recent years has been tops.
But, let’s face it, they’ve cut in the wrong place — local news.
How many gossip columnists do you really need? If you want to know what’s going to be in Sneed tomorow, read last week’s NY Daily News and Post.
Who’s a must-read columnist in news and sports? Navel-gazers, except for Brown. Do you know what they were paying Mariotti?
They’re lucky Ebert stuck with them all these years. He’s been a cash cow.
Comment by wordslinger Friday, Nov 7, 08 @ 12:17 pm
Bill - of all people - wrote: If you broke the union then the people who do the real work would make even less while the Conrad Black types who don’t even know what work is could steal even more. Shouldn’t the talent be fairly compensated? Why is the union to blame every time a business has problems? What about the highly paid under worked management that runs the organization into the ground in the first place?
Operations stripped, workers dumped on or laid off, unions blamed - all while top managers get fat, and the big boss and his cronies loot the place.
Sounds like Rod Blagojevich’s state government.
(rich: pls delete preceding double-post)
Comment by Ain't that ironical? Friday, Nov 7, 08 @ 12:56 pm
I see strip pensions (basically tell a bunch of retirees that there checks will b 50% of what they were thru no fault of their own) break the union (strip benefits and turn it into Wal-Times) Clean Corp Suite (with Golden parachutes). What out of the box thinking, stick with journalism Rich.
Comment by ANONYmous Friday, Nov 7, 08 @ 1:30 pm
Look at the STNG (Sun-Times News Group). One reason they have all those different little locals floating out there is that local governments had to publish legal notices in the locale (normally a political township) where the newspaper of general circulation is “first published” (read as “location where first distributed to the public”). Now, all the legal publication notices/stuff this is a throwback to the 1950’s, 60’s, and 70’s. It brings in money, but only part of the year.
But it adds to each little newspaper’s locations and related cost structure all year round, because you’ve got to have some sort of physical location at each place. And the problem is, they see the revenue, but have limited understanding of the associated costs, because they aren’t obvious - they are structural costs.
What the newspapers really need to do is to change the laws governing the legal publication, and then adjust accordingly, but they were GREEDY, and now they are both GREEDY and DESPERATE. Always has been greedy in the past - When different entities of local government in the late 1990’s/early 2000’s wanted to make changes in the laws governing legal publications to do things like use the Internet to post searchable legal publications (by name, property address, etc.), the newspapers didn’t want any part of it unless they could charge maximum dollars, if not an actual increase in costs.
So why should anybody try and play ball with them, when they know full well that the newspapers in the past have tried to stick it to them each and every time that local governments tried to take advantage of new technology to reduce costs, or at least make operations more efficient.
Looks like the newspapers generally had a business model based upon two components: (a) thinly disguised GREED, and (b) Influence peddling. Not working too well for them these days.
Comment by Judgment Day Is On The Way Friday, Nov 7, 08 @ 1:34 pm
Rich, the question you raise concerning the future of the Sun-Times is much less important than how well new media publishers like you seize the day! I think advertising and other revenue will follow great content. Technology reduces the marginal cost of your product to zero. You don’t need a printing plant, distribution system, Amazon tree forests, ink, etc. You do need to be able to pay for people who can research, investigate, report, write. You’ve come along way from peddling Hannah, but now is the time to expand the role of your site. Channel the blog babble in a different way and create an electronic journal with original content presented in a manner consistent with the highest standards of journalism and you will capture readers/subscribers. RCP is moving in this direction very quickly. I think you can compete with them.
Comment by Punley Dieter Finn Saturday, Nov 8, 08 @ 12:26 pm
Just when everyone thought “dead tree” newspapers were as dead as the trees, people are buying up “dead tree” copies of last Wednesday’s papers by the thousands!
I guess, when it comes to truly historic events, printing out or saving a .pdf file to your desktop just ain’t the same as having a good, old-fashioned front page to remember it by.
Comment by Bookworm Monday, Nov 10, 08 @ 2:58 am