The Cardus Daily

Melt, baby, melt

Peter Stockland  |  May 29, 2012  |  Business, Journalism

Standing outside the newspaper industry looking in is like watching a plastic bag tossed into a fire pit. It is unable to so much as burst into multi-colored flame. It will just shrink and shrivel until it eventually melts away.

Even people who haven’t read, never mind bought, a newspaper for years would agree it’s not a pretty sight. Most would also agree that the looming disappearance of substantial local daily newspapers is a sad and serious thing. Simultaneously, dabbing at their tears, they rush to embrace the abundant forms of e-content commonly blamed for rendering print publications irrelevant.

Their contrary behaviour embeds in the hearts and minds of newspaper owners a paradoxical combination of handy excuse and death wish. Nobody wants to read newspapers anymore, the logic goes, so let’s cut the heart out of them and make them so bad nobody wants to read them. Wish fulfillment becomes self-fulfilling prophecy.

Such was certainly the line of thought evident in Postmedia CEO Paul Godfrey’s memo to employees yesterday that there will be yet another round of layoffs in the chain’s newsrooms, and that the Calgary Herald, Edmonton Journal, and Ottawa Citizen will stop producing Sunday editions.

“Along with moving editorial production out of our local newsrooms, each of our operations will implement various programs aimed at reducing print-related infrastructure costs with a focus on investing our energies and resources in digital platforms,” Mr. Godfrey’s memo said.

Now, I must make clear that I have complete respect for Paul Godfrey. When I worked for him in the heyday of the Sun newspapers, and indirectly when he was on the board of the corporation that owned The Gazette in Montreal, he proved to be honourable, honest, and generous as a leader. He also loves newspapers, which is why he returned to Postmedia to try to save it from the catastrophic incompetence of its previous owners.

Yet yesterday’s memo outlining the current cuts—or updating the meltdown status if you prefer—was, at best, a sin of omission. It failed to include the truth that, at a time of intense content competition among all media forms, some Postmedia papers are being pressed to rake in almost 45 per cent EBITDA (earnings before interest, taxation, depreciation and amortization).

By contrast, when I was editor-in-chief of The Gazette, we were giddy at achieving about 32 per cent EBITDA. That was a decade ago when newspaper circulation and readership were far more robust than currently.

I was told that Conrad Black and David Radler, always caricatured as rapacious capitalist villains, had fantasized about pushing the operating cash flow above 20 per cent when they owned the papers a few years previous.

So, in an era of ferocious fighting for consumer interest, publishers must squeeze more than double the EBITDA out of their papers compared with what could be only dreamed of 15 years ago. And they must do it with a product produced by about half the previous editorial staff. If what I have read is correct, for example, The Gazette will have a newsroom of fewer than 100 journalists after the current cuts go through. When I was editor in chief, our full time equivalent staff peaked at about 190. Do the math to see the future.

In fairness, Paul Godfrey may have written yesterday’s Black Monday memo but he certainly didn’t dictate it. The dictation would have come from the Wall Street moneybags who hold Postmedia’s debt. They could not possibly care any less about newspaper audiences across Canada. Nor, arguably, should they.

Their only interest is in earning interest from their debtors. And if newspapers are too poor to fill their bags with the requisite cash, their programmatic response is to fire employees.

Sad and serious, yes. But let’s not blame technology for it all. The shriveling, the shrinking, the melting away is the fault of an industry that has stumbled into a pit of its own making.



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