Seattle P-I's expected closure a sign of the times

After chronicling more than 3,000 newspaper jobs lost so far this year — on top of more than 15,000 layoffs she counted last year — Erica Smith decided to look for another job.

A page designer at the St. Louis Post-Dispatch, Smith started a blog a few years ago to keep a body count as newspaper journalism entered a cycle of bloodletting that has yet to relent.

The trouble plaguing newspapers here in Seattle, including the likely shutdown of the Seattle Post-Intelligencer, with roots stretching back to 1863, is going on all over the country.

The Hearst Corp. announced in January that, after $14 million in losses last year, it was putting the P-I up for sale. Failing that, the company said it would cease publication of a print version of the paper, a closure that could come this week.

Indications are Hearst intends to continue the paper as an online-only operation, with a much smaller staff. One way or the other, more than 150 people are likely to join out-of-work colleagues all over the country.

The Seattle Times is published by a local, privately held company owned by the Blethen family, which does not disclose financial information. But Publisher and Chief Executive Frank Blethen says the paper must cut operating costs to survive what he calls a short-term crisis.

The Times is struggling to meet debt payments, even as ad revenue has fallen precipitously. The company has put up for sale about $100 million in property and papers it owns in Maine. But because of the bad economy, buyers so far haven't been able to swing the purchase. The Times is also asking employees companywide for cuts in pay and benefits.

Newspapers everywhere are squeezed in a vise of debt and falling revenue that is wringing life out of once-vibrant publications all over the country.

The Rocky Mountain News shut recently after nearly 150 years of publication. Other papers are in bankruptcy proceedings, near it or converting to online only. And cutbacks have reduced once-prizewinning papers to shells of their former selves. Papers are cutting their staffs, eliminating free-standing sections and cutting pages.

At the San Jose Mercury News in California, the newsroom staff has been cut from about 275 to 140 people over the past several years. The paper has closed nearly all of its regional bureaus, reduced its education team from five reporters to two and no longer has a movie or television critic.

The copy desk reading the main, metro, business and features sections is about the same size as the paper's former business copy desk. And the number of pages for telling stories of every kind is drastically smaller than it used to be.

Readership up

Readership isn't the problem. Newspapers are reaching more readers than ever, if online readers — 59 million of them in third quarter 2007 alone — are counted, according to the State of the News Media 2008 report by the Project for Excellence in Journalism.

And some newspapers are still making money. But analysts say at least a third and maybe half the top 50 dailies in the country today are unprofitable on an operating basis. And many that are still making money don't generate enough cash flow to cover heavy debt.

The revenue crash is driven by two problems: First, the recession has hit the advertisers papers depend on the most, from auto dealers to retailers. Second, the economic downturn has also worsened a trend plaguing papers for years. Instead of taking out classified ads in newspapers, which provided from half to as much as 70 percent of the revenue at metro papers, people today are using free advertising on Craigslist.org and other Internet sites to buy and sell just about everything.

Bite down deeper, analysts say, and ad revenues, down 23 percent from 2007 to 2008, are falling even faster this year to about half of what they were as recently as three years ago.

"It's like catching a falling knife," said Lauren Rich Fine, a practitioner in residence at Kent State University's College of Communication and Information, and a former media analyst at Merrill Lynch. "Newspapers have been forced to scramble. There is a lot of criticism that newspapers didn't act fast enough, and that is true. They could have been more like entrepreneurs and recognized every second matters."

A profitable model

New models are emerging, including an idea now afloat to create a community-supported online-news service in which readers would buy shares. Other approaches include general-interest online publications such as Crosscut.com, specializing in regional and local news.

But so far, no one has figured out how to make a sustainable online business that can support a full-time living wage with benefits for a large staff of journalists.

David Brewster, publisher, editor and co-founder of Crosscut and founding editor of the Seattle Weekly, helped start Crosscut about two years ago. He relies on part timers and freelancers donating their work or working for as little as $25 for a blog item to $250 for a story.

The site provides some original, issue-oriented journalism, and it posts headlines that link to newspapers, blogs and other Web sites.

While pleased with the depth and range of the content and the buzz some Crosscut pieces create, Brewster is converting to a nonprofit, because advertising alone isn't paying the bills.

"If you go back two and three years ago, people thought online would be easy to do because the movement of advertising to online was so strong," Brewster said. "But that has proved to be too optimistic, even before the recession came."

Free content

Meanwhile, the competition from online news and information sources has bedeviled newspapers, which are providing much of the content free, even as advertisers ditch them for the Internet.

"It's not a matter of not being profitable enough, it's a matter of how much of a check do you want to write to keep the place going," said Alan Mutter, a former newspaper editor who writes the Reflections of a Newsosaur blog at newsosaur.blogspot.com. "And with the way the economy is going, everyone can see if you lost money in 2008, you will lose more in 2009,"

Revenue from the newspapers' own Web sites isn't making up the difference, Mutter said, because online ads pay less than print ads.

"If you take away print, it matters because you are taking away the revenue engine," Mutter said. "It's like taking away your day job and just working in a part-time job at Wal-Mart.

"If you want to preserve the kind of journalism that newspapers are uniquely able to afford, you have to be able to figure out how to at least approximate the revenue structure that exists today to support all these reporters."

After all, much of what is online isn't original content at all — it is repackaged and aggregated content from newspapers. So is much of what is on TV and on radio.

Picking up the slack

The transformation of the news industry under way has upsides. Rick Edmonds, media-business analyst at the Poynter Institute, sees an emerging "ecology of news," in which the newspaper is part of a range of information choices, including blogs and community and specialized-subject journalism on the Internet.

"But there are certain kinds of important, difficult, watchdog and investigative work that newspapers do very well, and it is not clear at all that these new formats are going to pick up the slack, especially when it requires professional reporters and editors to get at the matter," Edmonds said. "And institutional weight helps, when you are going against powerful forces with strong lawyers."

As newspapers stagger and even fall, news-industry analyst Ken Doctor at Outsell Inc., based in Burlingame, Calif., sees a special kind of loss.

"It's a fundamental problem of democracy; you can't operate a democracy if you don't know what is going on," Doctor said. "We know less about what is going on in our local communities than we did before.

"We have failed to distinguish between the distribution of information and the production of information, which takes thinking and paying people to do it. Now we have a reader emergency."

Seattle Times researcher Gene Balk contributed to this report.

Lynda V. Mapes: 206-464-2736 or lmapes@seattletimes.com