Friday, July 22, 2011

Is the Arizona Daily Star Following the Path of the Tucson Citizen?

Posted By on Fri, Jul 22, 2011 at 1:00 PM

The Arizona Daily Star confirmed that 52 people were laid off from the publication Thursday. If its figure of roughly 400 employees cutting paychecks in some capacity at the Compound at Park and Irvington is accurate, yesterday’s gutting would account for about 12 percent of the work force.

Gone: an estimated 15 newsroom employees and workforce reductions in advertising, circulation, finance and IT. The Star didn’t make reference to the massive drawback, by accounts the largest in the paper’s history, until midnight Friday in the business section at azstarnet.com, and of course in the print edition. However, online they were able to provide an update on a house fire that displaced a family of four and a story on Alzheimer’s testing Thursday evening. Would they have ignored a 12 percent workforce cutback until the following day, making no mention on the Web site, for any other large business in town, or even in regards to other media layoffs that occurred at the likes of radio clusters Clear Channel or Citadel, not to mention the numerous layoff cycles and eventual shutdown of the print edition of the Tucson Citizen?

Company financial woes have a way of being a distant issue-that doesn’t affect me just yet—until the salvos are launched. Star employees were broadsided Thursday.

Said Star President and Publisher John Humenik in Thursday’s Star story:

Our leadership team is confident that these steps will enable us to focus our efforts and position us for a bright future.

Really? Let’s match that statement with that of Tucson Citizen publisher Jennifer Boice during an August 2008 layoff cycle.

While these steps we are taking are painful, I hope we can all emerge from this economic downturn stronger.

As the record shows, that was one of many layoff swaths at the Tucson Citizen, until the paper finally shut its doors in May of 2009.

This is what management says when it’s against the ropes. It talks, as Humenik did, about how tough a day it was, and I’m sure it was. As easy as it is to pigeonhole management as the evil ogre behind the fancy closed door, it’s probably not terribly fun to announce the dissolution of much of your workforce, and then watch as an asinine corporate HR decision degrades them further with the assistance of a security escort. Then management desperately tries to put a positive spin on the future as a result of the downsizing, hoping it can somehow appease the remaining employees and right the ship, or buy some time before abandoning it altogether, as long-time Tucson Citizen publisher Michael Chihak (some might argue wisely and with a view on reality—a view he might not have shared directly with others) did.

Now to state the obvious. What Humenik says is not what Humenik knows. Lee Enterprises, the publisher of the Arizona Daily Star, is in deep shit. The reality remains the company is staring at a billion dollar debt payment due in April, and has yet to reach a negotiation on the financial terms it would prefer. But Lee doesn’t have much bargaining power, and if any of the more than 150 investors Lee has met with don’t like the terms, their patience could be the company’s demise. If that happens, Lee goes belly up, because Lee needs to make a deal with someone. There were rumblings from sources quoted in a Bloomberg.com story said to be inside Lee negotiations a week or so ago suggesting bankruptcy was very much on the table.

According to company CEO Mary Junck, Lee has cut debt by more than 700 million dollars since 2005. It actually turned a profit of 46 million dollars in 2010, and says it has a cashflow of 110 million dollars, but those numbers don’t add up very well when a billion dollar bill comes due in eight months. On July 15, Lee reported it expects another third-quarter decline, down 4.2 percent from the same period a year before. Lee received a delisting warning from the New York Stock Exchange July 8 when its stock, which has gone into freefall the last three months, trickled below the one-dollar threshold.

There is no bright future in morning daily print journalism. We’ve known this for most of the last decade, but the public’s transition to online news has moved much faster than the industry’s ability to effectively monetize it. The option as it sees it: cut staff, and therefore almost certainly sacrifice the quality of the overall product, and hope nobody really notices.

That said, unlike the Tucson Citizen, which suffered from the additional technological time deficiency of being an outdated afternoon paper, the Star will be a major part of the media landscape for the foreseeable future. But whether that means it will do so under the Lee banner, or while being operated by another entity such as Gannett, which still has its grubbies on a profit-sharing model and probably loves the prospect of operating the state’s second largest newspaper in addition to its stranglehold in the Valley with the Arizona Republic, that remains to be seen.

But in this industry, and in this community, if this bright future has shown us one thing, Thursday’s 52 layoffs may not be the last.

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