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Paper Cuts

Is E.W. Scripps cutting the legs from under its newspaper division?

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On Wednesday, March 21st, Joseph Pepe, president and publisher of The Commercial Appeal, issued a memo filled with good news and bad. He acknowledged the paper's implementation of "many cost-saving measures" and noted the creation of nine new advertising zones. Then he dropped the bomb. "These steps have not been enough to stabilize our profitability," Pepe wrote, announcing yet another round of employee buy-outs to reduce the Memphis Publishing Company's payroll costs.

By week's end, employees of three more Scripps newspapers received similar notes from their publishers. In each case, management cited declining ad revenues and stressed that "attractive" buy-out packages, with severance pay and short-term insurance plans, are a realistic, humane alternative to layoffs.

At a glance, this looks like an evenhanded act of corporate benevolence in the face of irreversibly dire circumstances. But that's not exactly the case.

If daily newspapers are dying, it isn't because they're not profitable. It's because the 15 to 20 percent profit margins that would make most CEOs giddy just aren't enough for modern media conglomerates. And instead of making a full-frontal assault on the real problem -- dwindling circulation -- newspapers across the country continue to reduce the size of their products, cut staff, and lean more heavily on wire copy and reader-supplied content. Scripps has followed in the footsteps of newspaper giant Gannett, which, as newspaper scholar Aurora Wallace aptly cited, "champions the local in the abstract as it commits fewer and fewer resources to its service."

Scripps execs pulled a head-fake in January by suggesting that the company might sell or otherwise separate itself from the "sagging" newspaper division. Then, almost immediately, they said they wouldn't. The reversal was duly noted by Ad Age magazine in a January 22nd column explaining how Scripps -- "a mid-tier media company from Cincinnati" -- became a Wall Street favorite with stock prices at a 52-week high and poised to climb. Scripps has the 16th-largest online audience in the country. It's bigger than Comcast, Viacom, G.E., and CBS. Scripps also made an expensive but wise decision to own all content created for the company's ever-more-profitable cable holdings.

Buy-outs at the CA and other Scripps papers come on the heels of news that the projected decline in first-quarter revenue, a figure originally pegged at 5 to 7 percent, might be closer to 6 to 8 percent. The numbers don't inspire confidence, but previous efforts to staunch the bleeding by cutting staff and gutting their newspapers have done little to attract more readers and more revenue. Does anybody really think that this time things will be different?

Newspapers across the country are struggling to maintain their big bottom lines, but Scripps is in a unique position to reinvest and rebuild its print division. Its diverse holdings and healthy outlook should create an environment conducive to enlarging newsrooms, stepping up local coverage, and broadening product visibility. But instead of reinvesting in the communities it hopes to profit from, Scripps is once again applying leeches. Consider this: The CA has reduced staff in six of the past seven years. If you think that doesn't affect the quality of local news coverage, I've got a bridge in Brooklyn to sell you.

In 2006, advertisers spent $46.6 billion on daily-newspaper advertising nationwide, down 1.6 percent from 2005. Circulation took its largest plunge in 15 years. Nevertheless, newspapers remain profitable, and since they often set the editorial agenda for local radio, television, and Internet news sites, they are arguably more important and influential than ever. Scripps has taken risks in the development of its cable and Internet properties. The company has the resources to be similarly courageous with its newspapers, but instead they are in death mode.

"You're either dying or growing," Pepe told the Flyer in 2006. "You've got to pick one." Based on the uncannily similar language in the memos distributed to Scripps employees last week, it would appear that the CA's parent company has made its decision.

Chris Davis is a Flyer staff writer.

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