Blue Mass Group

Reality-based commentary on politics.

Times Files to Close Globe

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Cross-posted from Blue News Tribune.

A question I’ve been asking. Who will tell us the Globe is gone? The Herald might rush to decide.

It might be the Washington Post:

The New York Times Co. said last night that it is notifying federal authorities of its plans to shut down the Boston Globe, raising the possibility that New England’s most storied newspaper could cease to exist within weeks.

After down-to-the-wire negotiations did not produce millions of dollars in union concessions, the Times Co. said that it will file today a required 60-day notice of the planned shutdown under the Worker Adjustment and Retraining Notification law.

The move could amount to a negotiating ploy to extract further concessions from the Globe’s unions, since the notice does not require the Times Co. to close the paper after 60 days. The deadline, however, would put the unions under fierce pressure to produce additional savings, and the Boston Newspaper Guild promptly called the step a “bullying” tactic by the company.

I don’t think it’s a negotiating tactic. I think it’s a process. They are trying to ease us into life without the Globe.

Some industry observers have expressed skepticism that Times Co. Chairman Arthur Sulzberger Jr. would want his legacy to include the shuttering of the Globe, which his company bought in 1993.

But the Times Co. itself is under strong financial pressure. It recently mortgaged its new Manhattan headquarters, borrowed $250 million from a Mexican billionaire at 14 percent interest, laid off 100 newsroom staffers and cut salaries by 5 percent.

I have little to add. But let’s say the whole thing is resolved in time for summer (I imagine Sox coverage improves circulation): it’s all moot. Whether it’s next year or 2014, the Globe will cease to exist in print form.

I think its owner is trying to figure out whether it wants to own the albatross (two of them) and hope it can return as a phoenix, or just get out now before the flames get too high (the phoenix, when it burns, destroys everything around it, at least according to one story I read).

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Comments

  1. The largest Globe union has walked out of the talks, but it may return. At issue are “lifetime guarantees,” according to WBUR, but I have no idea what that means in reality.  

  2. If the Times wanted to shut it down, they would have done so already. The Times knows full well that there will continue to be a market for news reporting in the future, regardless of technology, and are not going to walk away from a business that while losing money still will pull in over $400 million in revenues this year. If they can get the Globe’s costs in line, the paper will be in a strong position when the economy recovers.

    • I’ll randomly pick 80% chance of shut down if the unions don’t come up with something prior to.  Why not?  1) they’re losing money already; a brief shut-down won’t make thing significantly worse 2) amazing how a week or two with a paycheck may change the union’s collective mind.

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      p>It’s the same battle that ought to be fought re: state unions, but it won’t happen.

      • The unions have already responded big time, so I fully expect a deal to be made.

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        p>If the paper is shut down even briefly, existing subscribers and advertisers will be pissed, which will translate directly into lost revenue when the paper starts up again. They cannot shut the paper down without the 60-day warning, which will allow anyone who can find work somewhere else before then to jump ship. Of course, in this economy, jobs will be hard to find, but a shutdown would still run the risk of losing some of their best remaining workers.

  3. Yup. And it’s not 2014. Even with an agreement with the holdout unions were talking 6-8 months until the Globe ceases publication. It’s because there is no business model that can steer the Globe sufficiently away from huge losses. A $20 million giveback from the unions? That means the Globe loses $70 million this year (it’s already May). The giveback plus another $20-30 million from severe staff cuts? That means the Globe loses $50 to $35 million this year. And next year? Does anyone think that an improving economy is going to send Globe ad revenue back to where it was in 2005?

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    p>Jeff Jarvis in the Huff Post has the take on why this is going to happen. I’m saddened on a number of levels, but one has to accept reality. Not to do so is delusional (which doesn’t mean some folks won’t try the delusional route).

    • Event he people saying the NYT wants to keep the Globe operating haven’t answered the question of how the Globe will be making (and not losing) money. HOW? What’s the plan if they get the $20 million savings to overcome the additional $60 million loss?

      • not short term losses during an economic downturn. They expect to make money once the economy turns around. The Times’ prime objective here is to extract long-term concessions from the unions that will make it easier for them to make a profit in the future. It is also probable that the loss projections were based on the situation at the start of the year before they made cutbacks and increased the price of the paper.

  4. Perhaps the Globe’s revenue doesn’t go back to the record $600 million+ level seen in 2004. Does that mean there is no business? The Globe did fine for decades before that without reaching that level of revenue.

    • Not the revenue and not the costs. It doesn’t matter if the revenue is $100M — if it costs $120M to generate that revenue, the business will still close.

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      p>There is no way to turn a profit distributing hard-copy news on a scale anything like today’s Boston Globe. That means there is no way to pay, never mind make a profit on, the payroll for the thousands of jobs (union or otherwise) created to distribute hard-copy information. The elimination of lifetime guarantees is just one step along the way, and both sides know it.

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      p>When the news contained in one story can be delivered instantly to hundreds of thousands of readers at essentially zero marginal cost, it is delusional to pretend that somehow hundreds of workers can be profitably paid to deliver that same news on hard copy.

      <

      p>Polaroid faced the same dilemma, attempted the same delusional “strategy”, and came to the same predictable end.

      <

      p>All of us who love journalism experience the pain, trauma, and suffering that these wrenching changes cause. We do no good for anybody by perpetuating the deceit that the changes can somehow be avoided.

      <

      p>It seems to me that a more constructive approach is to discuss how we can compassionately help those afflicted by these changes deal with their losses, and how we can help the soon-to-be-unemployed become happy, healthy, and productive contributors in the new economy that is emerging.

      • People making this claim that there is no way for the business model to work, but no one has come up with any numbers to prove the point.

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        p>The fact is that people still buy newspapers in large numbers, and to date there has not been a hint of any technology that would provide anything like the same large, portable reading format as a newspaper, so I expect that there will continue to be a large market for newspapers for some time to come.

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        p>In any case, the real product is not the physical paper but its content, so even when the time comes for paper newspapers to be supplanted by some yet-to-be-invented technology, the Globe should still be able to continue as a business. In the long run, I do expect to see many of the traditional paper production jobs to go away, but there will never be a replacement for real journalists.

        <

        p>

        • People are the product, not the news.  The consumer is the advertiser, especially the classified advertiser.  The consumer can get the product elsewhere for less money.

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          p>To the extent that one views the consumer as the subscriber/reader, the consumer can get the product elsewhere for less money.

          <

          p>Together, those two forces mean it is just a matter of time.

          • I pay money for the Globe – apparently not enough to pay for its production, but it is not nothing either. Obviously, advertisers pay as well for the privilege of having Globe readers see their ads. Without news, there are no readers, and without readers there is no advertisers. As long as there is a market for readers of news, there will be a market for news advertising.

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            p>

            • I think that advertising is left to the legal notices, all of which can’t be placed on the internet.  Everything else can be placed elsewhere, more effectively, and for far, far less money.

        • You asked for it, you’ve got it — Quarterly results for the New York Times Company, as reported last November. The specifics may change, but I think it’s good enough for our purposes.

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          p>I draw your attention to the “Production costs” for the quarter ended September 28, 2008 (in thousands):

          <

          p>

          RawMaterials:            62,645
Wages and benefits:     148,183
Other:                  111,418
Total production costs: 322,246

          <

          p>According a January 2009 letter from Catherine Mathis (Senior VP at NYTCo) to the Atlantic:

          We have 830,000 loyal readers who have subscribed to The New York Times for more than two years, a number that has increased by about a third over the past decade.

          <

          p>Since this are very broad-brush numbers, I hope I’ll be permitted to make some engineering-approximation back-of-the-envelope style calculations:

          <

          p>$322M in costs for 830K subscribers is about $388/quarter per subscriber. That’s about $4 per day per hard-copy subscriber.

          <

          p>According to the BMG Traffic Report for this blog, our own BMG is viewed by about 3K visitors per day, and provides about 6.8K page loads per day.

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          p>If this site had costs comparable to those cited above, it would cost TWELVE THOUSAND DOLLARS PER DAY to operate — 3,000 unique visitors x $4 per visitor.

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          p>I might be mistaken, but somehow I doubt it’s that expensive to operate this blog.

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          p>I freely stipulate that there are costs associated with writing and editing the content that will be the same for both channels. Nevertheless, we are talking about massive differences here.

          <

          p>The business model doesn’t work; the market, as strong as it is, is not nearly willing to pay the costs of hard-copy distribution when the same online content is available for tiny fraction of the (delivery) cost.

          • I appreciate the attempt, but you are making up way too much for your analysis to be meaningful. Don’t forget that there are many more readers than just the subscribers. You also assume that it is impossible for them to cut their costs. For instance, if the Globe could find a way to identify subscribers who don’t want the Sunday Automotive section they could save significant money by not printing it for those people without hurting their advertisers.

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            p>I am tired of lazy armchair analysis of the problem.

            • One person’s “lazy armchair analysis” is another’s “engineering approximation”.

              <

              p>You mentioned the difference between “readers” and “subscribers” — but that is not germane to the costs (not prices) of distributing newspapers.

              <

              p>The salient question is how many papers have to published and distributed (and recycled, by the way), how much does that cost, and how does that cost compare to the costs of internet-based distribution of the same content?

              <

              p>Similarly, you correctly observe that cost savings are possible. How much? Ten percent? Fifty percent? One way or another, it is an undeniable fact of the physical universe that it takes more people to create, handle, and move tons of dead tree pulp than to copy bits of information. People who deserve and have to be paid a living wage. COSTS.

              <

              p>Suppose the volume is twice as high (reflecting your first observation) — 1.6M readers. Suppose the costs can be cut in half — to “only” $161M per quarter. Let’s take a look at what that means: 

              $161M in costs / 1.6M readers / 90 days = $1/day per reader

              <

              p>Please compare that to the cost of operating this blog at its current volume of about 3,000 unique visitors per day — THREE THOUSAND DOLLARS PER DAY. I would be very surprised if this blog costs even $300/day to operate (corresponding to a monthly cost of about $9,000).

              <

              p>Even with your optimistic scenario, the costs of a hard-copy newspaper are still at least ten times the cost of operating a blog like this (and more than one hundred times the monthly cost to me of hosting any of the sites I’ve ever supported).

              <

              p>

              I am tired of lazy armchair analysis of the problem.

              <

              p>I understand. I, in turn, am tired of hand-waving and denial instead of hard-nosed engineering analysis.

              <

              p>If you have some energetic hands-on analysis to offer as an alternative to my “lazy armchair” version — analysis that shows how a print version can come within even a factor of two of an online alternative — I eagerly welcome it.

              <

              p>Maybe there are people who will pay $1/day to continue reading their paper. I can’t afford it. I somehow doubt that 1.6 million Boston-area consumers are prepared to sign up for it, when they can get the same (or more) information for well under a penny a day from the web.

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              p>I love reading hard-copy newspapers. I also love sitting outside under the soft light of kerosene lamps and eating dinner inside under the romantic glow of candles. When I want to read a paper, I turn on the electric light. When I want to read the news, I turn to my web browser.

              • Sure the blog is much cheaper to operate. In addition to the fact that there is no paper or ink or trucks, there is very little reporting.

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                p>I can write a book report a lot quicker and easier than I can write a book, but one ain’t the other.

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                p>Take away the primary news gathering–the sources everyone here relies on–and you won’t have a blog much worth reading, I dare say.

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                p>The problem I see with the decline of newspapers is the disappearance of professional journalism. Sure we’ll have lots of bloggers “reporting” what’s going on in their community. But can they be trusted to gather and present information with the same standards as professional journalists? In my humble opinion, not even close.

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                p>So we’ll go from the equivalent of a decent meal to fast food. And we’ll all be fat and dumb and happy in our Banana Republic.

                • The structural costs of delivering any content in hard-copy dwarf those of delivering the same content electronically. I already stated, above, that the reporting and editing costs will be the same.

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                  p>The best way to assure professional journalism is to pay journalists professional salaries. A business model that liberates the cost of journalists from the costs of the legions of people involved with the acquisition, handling, and distribution of paper is likely to improve, rather than harm, the quality of journalism. By and large, the best way to improve the quality of any profession is to increase the compensation available to qualified practitioners.

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                  p>The structural costs of operating an online “newspaper” — technology, bandwidth, software, user management, etc. — are substantially the same as those of operating a blog with comparable traffic.

                  <

                  p>

                  But can they be trusted to gather and present information with the same standards as professional journalists?

                  <

                  p>If they are paid more than they are today, if their professional advancement is limited primarily by their skill and talent and supported by business models that provides each of them with significant opportunities for their own wealth creation, then they absolutely can and will be deliver the same — or more — information with the same — or higher — standards than we have seen in the Boston Globe for the past 2-3 years.

                  <

                  p>Furthermore, there is a near-certainty that the first generation of these online journalists will be the same reporters, writers, editors, and designers currently employed by newspapers (and hard-copy journals, professional trade magazines, and similar entities) like the Globe.

                  <

                  p>My vision of the impact of this shift towards online content distribution is that it will greatly increase journalistic standards; you seem to be more pessimistic. I suppose time will tell.

                • …,of course, is far from guaranteed in the future.  Net neutrality was the keystone in the system that let the cost of entry be so low and created the surge in new businesses we’ve recently enjoyed.  Interests are trying to tamper with the model.

                • This issue is certainly important, and transcends the newspaper question.

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