Long live print

How I learned to stop worrying about the newspaper business and just get on with it

It seems like a day doesn’t go by without reading a new article on print journalism’s demise due to this, that or the other. Some say the major dailies, including Sacramento-based McClatchy Co., simply got too big for their own britches. Others attribute the decline to the rise of the Internet. Still others point the finger at a culture that allegedly no longer reads.

All of these arguments have their merits. But allow me to be the first to say it: The reports of print journalism’s pending death have been greatly exaggerated.

More than 10 years ago, SN&R publisher Jeff vonKaenel successfully predicted the financial woes the major dailies are currently enduring in his seminal article, “Mainstream Newspapers, R.I.P.” (SN&R Feature; November 21, 1996). Although many factors for the coming decline were cited, of particular note was a decrease in cash flow, the revenue that’s left over after the bills are paid.

As the major chains became larger and more profitable, they gobbled up their weaker siblings in an orgy of mergers—witness McClatchy’s purchase of the defunct Knight Ridder chain in 2006. In doing so, they took on an increasing amount of debt. Instead of using profits to aggressively pay down debt, newspapers sent in only the minimum payment, just like you do with your credit card every month.

Thus, a company that looks good on paper, that’s making those double-digit profits we’ve all heard about, can in reality be a cash-strapped behemoth one recession away from having its legs cut out from under it. Which is where we’re at today.

I like McClatchy chairman and CEO Gary Pruitt, and I’m not just saying that because I want the Iggy Pop biography I loaned him back. Pruitt’s a likeable guy, as anyone who’s ever met him will tell you. Until very recently, he was the mainstream daily newspaper industry’s wunderkind. Now he’s the local whipping boy for laid-off Sacramento Bee employees.

You should see their eyes roll back in their heads when I defend Pruitt. The stock market’s like a roulette wheel, I’ll tell them. No matter how many times in a row it comes up black, sooner or later it’s going to come up red. Is it Pruitt’s fault the wheel came up red on pretty much the same day the ink dried on the Knight Ridder purchase?

They’ll mutter something about the $4 million in annual compensation Pruitt earns, then try to stick me with the lunch tab. But this should soothe my Q Street colleagues: Pruitt’s salary is roughly $1 million annually; the $4 million figure is arrived at by counting the stock options and stock appreciation rights he’s received for incentive and bonus pay.

Pretty sweet when the wheel kept coming up black. But what happens when the wheel comes up red and McClatchy’s price per share plummets from $75 to 50 cents? You guessed it. According to Editor & Publisher’s Fitz & Jen financial blog, Pruitt’s millions are now worth $42,525.

Not that any of this comes as a surprise to Pruitt. When I interviewed him last year and asked him about the plunging value of his stock incentives, he just winced.

The scary thing, Pruitt told me last year, is that no one knows where the bottom is. That still holds true today, but as Editor & Publisher’s blog reports, someone at McClatchy appears to be bailing out before the big splat. On March 31, “an astounding 9.815 million shares of MNI [McClatchy] traded at 49.5 cents. The single trade accounted for nearly all the volume 10.3 million shares in the entire session—twenty times the normal handle of 482,000 shares.”

Translation: Someone in the company—details of the trade have yet to be filed with the Securities and Exchange Commission—is dumping McClatchy stock before it loses what little value it has left. Not exactly high up on your list of positive economic indicators. Is this a portent that some sort of major restructuring—taking the company private, going black or even bankruptcy—is in the works at McClatchy?

No doubt some major retooling is in order, and that may not necessarily be a bad thing for The Sacramento Bee. It’s difficult to imagine the McClatchy family abandoning the paper co-founded by James McClatchy in 1857. Northern California has no lack of newspaper readers. During the last so-called Media Audit of the region, this paper set a new all-time record for readership; the Bee enjoyed a more modest increase, as did most of the rest of Sacramento’s newspaper and magazine offerings.

So what about that Internet thing stealing all these readers away? Well, there’s always going to be some new jack in town claiming they’re the hot new thing, printing glossy fliers, extolling their paper-free Web site, plastering a sticker with their logo on it over the ATM at my bank. Telling, the way it covered up the bumps on the Braille instructions for blind customers.

The slogan on the sticker read: “How’s this working for you?” Not very well, so far, I’m afraid. It looks to me like print journalism is here to stay, for a very, very long time.

Long live print.