Media Watch

Daily Newspapers Just Aren't Worth What They Used to Be ...

Needing to offset declining advertising revenues, the Arizona Daily Star has been hit by layoffs, layout modifications and other cost-saving changes in the past several months.

The news isn't any better at the Star's parent company, Lee Enterprises.

Based in Davenport, Iowa, Lee Enterprises owns 50 daily newspapers as well as hundreds of weeklies and other publications around the country. Following up on a preliminary announcement in March, Lee Enterprises said in a filing with the Securities and Exchange Commission last week that it was taking a $722 million reduction to its "goodwill" asset.

In accounting terms, goodwill is defined by as "a type of intangible business asset ... goodwill is the amount in excess of the company's book value that a purchaser would be willing to pay to acquire it."

Two reasons Lee Enterprises gave for its substantial goodwill reduction: "Recent deterioration in the company's revenue and the overall recessionary operating environment for the company."

A look at Lee Enterprises' balance sheet offers some additional insight into its problems. The company's operating cash flow in the first quarter of this year was $44 million, down $14 million from the same period in 2007. That is a 24 percent drop.

At the same time, revenue declined by almost 5 percent in the first quarter compared to the first quarter of 2007, while circulation was down about 2 percent; meanwhile, the company's expenses rose slightly.

All of these are signs of a company facing major financial challenges in both tough economic times and as a rapidly changing marketplace for print media.

"Lots of other companies are also taking this reduction," pointed out Dan Hayes, vice president of corporate communications for Lee Enterprises, of the goodwill adjustment.

"This has nothing to do with operations," Hayes added. "It's an accounting process to match the fair value of the company."

That value has been falling like a rock. A year ago, shares of Lee Enterprises were worth more than $26. They closed last Friday, May 16, at $7.11, up only slightly from their 52-week low.

To provide some context, the publishing sector of the New York Stock Exchange has lost about 30 percent of its value in the past year. But Lee Enterprises' decline of more than 70 percent is noteworthy even within this poorly performing group.

Along with reducing its goodwill asset last week, Lee Enterprises took a similar step concerning Tucson Newspapers Inc. It dropped its "carrying value" by $90 million in TNI, the jointly owned company which prints and distributes the Star as well as the Tucson Citizen.

Because of the complexities of all these accounting measures, Lee Enterprises' financials may be revised even further. Hayes called this "putting fine points on things" and says these additionally refined figures might not be available for several more months. --D.D.


Without question, the border/immigration issue is the most polarizing topic in Southern Arizona--yet the manpower dedicated to covering it has dropped in light of budget concerns at the state's major newspapers.

"When I started at the Star in 2003, there were seven reporters at the state's four major newspapers--the Yuma Daily Sun, Tucson Citizen, Arizona Republic and Arizona Daily Star--three of those at the Star," said Michael Marizco. "Right now, there are two, a guy at the Star and a guy at The Arizona Republic, but he's placed 2 1/2 hours away from the border in Phoenix. The Yuma Daily Sun dark-horsed that beat last year. Claudine LoMonaco left a year ago, and the Citizen hasn't replaced her. I've looked at their border coverage, and they're running wire copy.

"There's no one here. The largest paper in Sonora has reduced its outside papers along the border, so you have one guy in Caborca, which is two hours from the border; you have one guy when there used to be three or four in Nogales, and there's no one in Agua Prieta."

Enter Marizco, who launched his Web site,, after concluding his stint covering border issues for the Star. (Marizco now contributes to the Tucson Weekly.)

"This is the hottest border in the country. This is ground zero. This is the No. 1 corridor, raw tonnage-wise, for narcotics, the No. 1 corridor for migrant smuggling. There are so few people who give it consistent coverage," Marizco said. "One of my Latin American author friends says everybody wants to do something about Latin America except read about it, and I don't agree. I think people do want to read about this place. I've had a steadily growing readership since I started the Web site. People are fascinated by this place. It became an issue of giving this place coverage."

Coverage on two fronts: first, in terms of the sheer variety of material available along a line of demarcation between two countries and two vastly different economic and cultural perspectives.

"The border is an amazing place," Marizco said. "It can be tragic. It can be amazing. There are stories that will take your breath away, good and bad. After I left the paper, I wanted to keep writing about it."

On the second front, Marizco feels also acts as a resource for accurate information, as opposed to the rash of stereotypical material he contends is reported by often out-of-touch mainstream media.

"There's so much misinformation that comes out of this place. There are plenty of real issues to cover along the border without having to bullshit it up," Marizco said. "People seem to have an imagination of how things are here, and that's what gets to the press. That's unfortunate, because there's enough real drama here to captivate anyone's imagination. That's the stuff that needs to be covered.

"My readership wants to move away from the rancor and debate and sentiment, and they're trying to get hard facts. That's why people come to" --J.S.

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