Bye, bye Bee?
Times are not good at The Sacramento Bee.
The company’s stock is plummeting, revenues are down and staff reductions are chipping away at the work force, at morale, and at the paper’s quality. Recent weeks brought news of executive editor Rick Rodriguez’s abrupt resignation in what could politely be characterized as less-than-amiable circumstances, and of yet another decline in circulation, which dropped 3.4 percent during the past six months alone. Despite hopes that new executive editor Melanie Sill can turn things around, the outlook has never been more grim at 2100 Q Street.
Given the amount of Bee-bashing that goes on in these pages, you might think we at SN&R would be enjoying this. We’re not. The simple fact is that our community needs a viable daily paper, and we know that Sacramento would suffer if The Bee—and the roughly 1,200 jobs it represents—were to disappear.
Could it happen? Could The Bee really go the way of Tower Records?
Consider the decline in the company’s stock price, which is now worth less than 25 percent of what it was two years ago. Ever since the McClatchy Co., which owns The Bee and 30 other papers, decided to spend spent $4.5 billion to buy the Knight Ridder newspaper chain, its stock prices have been in free fall, dropping from $66.29 per share two years ago when rumors of the deal first began to circulate to $16.32 at the beginning of this month, falling $26 just since January. Last week, McClatchy reported it took a $1.52 billion non-cash loss during its third quarter.
Unfortunately, this comes at a time when The Bee, like most newspapers, is struggling with declining circulation and falling revenues, as readers and advertisers alike migrate to the Web. It seems certain that Sill will re-tool sacbee.com to try to maximize online revenues, but most analysts hold that the online income potential for newspapers is likely to be minimal for the next 10 years or so. It’s difficult to see where McClatchy will find the funding to continue operations and also pay off the multibillion-dollar debt it owes from the Knight Ridder purchase.
So what’s the answer? Well, here’s a thought: McClatchy could accept smaller profit margins, re-commit itself to quality journalism, and rebuild readership by offering an outstanding product.
The truth is that newspapers still make money, even if they no longer offer the gaudy 20 percent to 30 percent profit margins that were the norm for decades. As revenues have declined, many companies—including McClatchy—have responded by cutting costs in order to maintain profit margins. This usually has meant laying off staff, foregoing investigative work, and other measures that result in a visibly poorer quality newspaper, which in turn fuels more declines in readership. In essence, companies like McClatchy have put profits ahead of their readers.
If newspapers are going to survive, that will have to change. Management will need to learn to accept smaller profits and start putting readers first by reinvesting in their editorial product. If they can’t or won’t do that, the end may be very, very near.