Wednesday, July 20, 2011

Sun-Times to cut 400

Will media company fall as The Rocky did? 

When I received the email alert Tuesday afternoon from Crain’s Chicago Business, the headline I saw, “Sun-Times newspapers will roll off rival Tribune presses,” caught me by surprise, although it should not have.

The first thing thought that came to my mind as I read the story was the Rocky Mountain News in Denver, long affectionately called The Rocky by its readers. I lived out West for 11 years, and I had read the Rocky Mountain News from time to time. Some of the folks I worked with for four years in Cheyenne, Wyo., went on to better jobs at The Rocky.

Then, as I read further into the Crain’s piece, I considered the fates of the 400 Sun-Times Media employees who will lose their jobs when Sun-Times Media ceases its print operations by the end of this year.

I have grown increasingly less hopeful about the future of Sun-Times Media, although I desperately want the company to succeed. I want my co-workers who remain there to continue working, albeit under better conditions. I also want the efforts we made, particularly during the three years leading up to my layoff, to amount to something other than a failed attempt at life-support.

And perhaps, just perhaps, this is the best move the company could make. Sun-Times Media wants desperately to be a media company, no longer just a newspaper company. The company has been moving progressively forward in focusing on its digital presentation in recent years. This move may be the next step in getting out of the print business and focusing entirely on new media. If Sun-Times Media is actually making enough money on its websites, this could be the right move.

Still, as I consider my initial reaction and my immediate comparison with the Rocky Mountain News, and as I consider the timing, I feel like this deal carries a whiff of decay.

When the former Sun-Times News Group was purchased out of bankruptcy by a consortium calling itself Sun-Times Media LLC, its leader, the late investment banker James Tyree, said he believed that by purchasing the company, he could save 1,800 jobs.

That was in October 2009, and as employees, we were told the new owners had a three-year plan to turn the ship around. Some higher-ups visited our newsroom and told us, point blank, that Tyree and his partners expected to lose money the first year and even into the second, but that by the third year, they expected to see a profit.

The clock is ticking, and the company indeed did lose money in its first and second years, we were told. The layoffs began in 2010, the first year under Tyree. I tallied more than 140 who were cut in 2010. More followed after the first of 2011, and my unofficial tally since the start of 2010 so far stands at nearly 190. Add the 400 people who will lose their jobs in this latest move, and by my reckoning, at the end of 2011, the company will have laid off nearly a third of the 1,800 people who worked there when Tyree’s group “saved” Sun-Times Media from liquidation.

The actual tally of layoffs may be higher, but company officials don’t feel inclined to discuss such details publicly. In media reports over the past two years, CEO Jeremy Halbreich has defended that several times, saying the company is no longer a publicly traded company.

But the cuts at Sun-Times Media already have taken a huge toll, particularly on the suburban papers, where the quality and quantity of local content has diminished. My hometown paper, The Courier-News, once boasted something like two dozen people on an editorial staff devoted to covering Elgin, Ill., and its surrounding villages and towns. The Courier staff now stands at three news reporters, and its three remaining editors share duties among multiple publications. The Courier’s sports desk has been decimated as well.

Readers in Elgin are well-aware of the erosion, judging by the paper’s downward spiral in circulation.

The entire industry continues to be in flux as it navigates the paradigm shift that began in the mid-1990s as the Internet bloomed, and along with it, ecommerce. That was crippling enough. Then came the recession in 2001, followed by the Great Recession of 2008, which accelerated the decline for many news publishers. I’ve spent time already in several posts on this  blog discussing some of that, focusing particularly on how the newspaper industry as a whole failed in its attempts to adapt to the digital age.

Similarly, the Rocky Mountain News was dealt a sore blow when new media sprouted up as a competitor for advertising. But The Rocky was in deep trouble long before E.W. Scripps Company finally shuttered it.

In its release announcing the closure, Scripps detailed some of that history, noting that after a decades-long circulation war, the Rocky Mountain News entered into a joint operating agreement with its rival, The Denver Post. Under the pact, the two papers agreed to share business and advertising operations while keeping their newsrooms separate. That was in 2001.

Their relationship was far more intertwined – more of a partnership – than the agreement between The Tribune and Sun-Times Media. Still, consider this: Sun-Times Media already contracts with the Tribune for much of its newspaper deliveries.

Until The Rocky closed, the two Denver papers ran off the same press, just as Sun-Times Media’s papers largely will roll off The Tribune’s press. I remember reading about the joint operating agreement in Denver when it was announced in 2001, and I recall that many journalists I knew believed it did not bode well for The Rocky. But the paper had been losing money for a long time, and in 2008, few were truly surprised when Scripps announced it would try to sell The Rocky or close it. No legitimate buyer materialized, and The Rocky put out its “Final Edition” on Friday, Feb. 27, 2009.

Granted, there are far more differences between Sun-Times Media’s papers and The Rocky. One publishes in the flatlands of northern Illinois and northwestern Indiana, The Rocky published in Denver, along the foothills of the Rocky Mountains from which the paper took its name. Sun-Times Media has changed hands – and corporate names – a number of times in recent years. Scripps, however, had owned The Rocky since 1926.

But they shared one other thing in common that is significant: Both papers bled money for years and failed either to rein in spending or to boost revenues.

Can Sun-Times Media recover? Only time will tell.

Under the timeline employees were given when Tyree’s group purchased the company, that timeline to profitability is running out. The new company’s third year of ownership starts in October. According to Crain’s, Sun-Times Media expects to save $10 million a year by having the Tribune print its papers. The real question is whether that savings will pull the company out of the red and make it profitable, or will it continue to bleed red ink as it has in the past.