Bailouts for everyone!
President-elect Barack Obama is The Sacramento Bee’s last best hope
It’s Monday, November 10, and I’m holding in my hands a remarkably telling document, this morning’s Sacramento Bee. See the teaser headline across the top of the recently redesigned front page: An interview with Thomas Kinkade, Painter of Light.
Allow your gaze to wander down, below The Sacramento Bee masthead with its infantile “Scoopy” icon, to the lead story, a nearly indecipherable piece on Rachel Rivas Dumbrique, a former state worker who got popped for illegally downloading a state-personnel roster.
What supposedly makes this otherwise uninteresting crime a story is the fact that Dumbrique is married to an inmate serving life for murder. There’s something you’ve never read before.
What’s truly astounding about the piece is not its subject, but the shocking break in design format. It begins with a three-sentence headline, stacked one on top of the other, replete with—God forbid—red ink and question marks: “What made this mother of three marry a murderer? Why did she have confidential state employee ID information? Did she do it for love?”
The writer, Andrew McIntosh, then proceeds to demonstrate why good editors almost never use a question mark, let alone three of them, in a headline: His story doesn’t answer any of the questions it poses! Did Dumbrique do it for love? Or has she just been watching too many soap operas with Bee executive editor Melanie Sill?
Enquiring minds want to know.
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Make no mistake. What we see here on the cover of the new, improved (read: smaller, thinner) Sacramento Bee can only be called an act of sheer desperation.
But then these are desperate times. The McClatchy Co., the Sacramento-based parent of the Bee and 31 other medium-sized daily newspapers across the country, is in dire straits. On one side, the rocky shore of Internet competition continues to gash gaping holes in advertising revenue. On the other, the downwardly spiraling economy threatens to suck out the little wind that’s left in McClatchy’s sails.
It’s been ugly, and it’s going to get uglier. Since reaching its all-time high of $74.80 in March 2005, McClatchy’s stock price has plummeted 98 percent, to $1.49 per share at this writing. That’s about the price of a 20-ounce bottle of Diet Coke, and you get the feeling if Wall Street investors had their druthers, they’d choose the beverage over the newspaper’s stock without blinking an eye.
Last month, McClatchy posted a third-quarter profit that exceeded the Street’s expectations. Unfortunately, the good news was coupled to September’s 16 percent drop in advertising revenue and a further downgrading of the company’s bond status, which has been in junk territory for months. Despite across-the-board layoffs and cutbacks, Fitch Ratings predicts that McClatchy faces yet another cash crunch as it attempts to meet its pension-fund obligations in the coming year.
While its descent has been more precipitous than most, McClatchy is not alone. Every major newspaper chain in the country faces similar financial pressure. Industry honchos are desperately waiting for what McClatchy CEO Gary Pruitt calls the “reset.” Eventually, the markets will stabilize, and investors will once again recognize the value of newspapers.
So, when does the reset happen? That’s the problem. No one knows. The chances are way more than even that many newspapers, McClatchy included, may not survive to see it.
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What’s next for McClatchy? When I last talked to Pruitt several months ago, the share price was floating around $4, and he said taking the company private wasn’t currently in the cards. Such a move would protect the company from creditors, but add to its debt significantly, since existing shareholders would have to be bought out at an agreed upon premium price. Still, if McClatchy’s share price continues downward, going private may become inevitable.
The wild card in all of this is President-elect Barack Obama. Democrats in Congress are already making noise about bailing out industries that provide real jobs, such as automobile manufacturers. Hey, Barack! How about a bailout for the newspaper industry?
Naturally, this would be counter to the free-market orthodoxy that has dominated our economic discourse for the past 30 years. Therefore, we shouldn’t bail out all of the newspapers at once.
No, for an experiment as radical as a newspaper bailout, it’d be best to start out small. As it happens, I know of a small alternative-newsweekly chain in Northern California that’s willing to volunteer for the cause. It’s dirty work, but someone has to do it.