There’s a wonderful moment in “Citizen Kane” when Charles Foster Kane is confronted with the fact that his New York Enquirer is losing $1 million a year. “You’re right,” Kane replies. “We did lose a million dollars last year. We expect to lose a million next year, too. You know, Mr. Thatcher — at the rate of a million a year — we’ll have to close this place in 60 years.”
Boston Herald publisher Pat Purcell today summons Orson Welles’ bravado, if not his insouciance, in a front-page essay accompanied by a photo of his smiling face. Beneath a headline that reads, “You bet we’re alive — and kicking!,” Purcell declares:
So let me dash the fondest hopes of the politicians, the prognosticators and our competitors at the Globe:
The Boston Herald is here to stay.
Two-newspaper cities are a vanishing species. That’s a real shame. Monopolies in any business hurt the consumer. And you — our readers — would lose most if coverage of Boston was filtered through the lens — and the agenda — of one paper.
Well, long live the Herald. And I think it would be foolish to predict the Herald’s imminent demise after a deal that supposedly left Purcell debt-free. But according to the Globe’s Steve Bailey, the Herald lost $2 million last year, even as Purcell’s 100-newspaper suburban chain, Community Newspaper Co. (CNC) — which he just sold — made $20 million. I have no idea how long Purcell can continue to lose $2 million a year, but I’m sure it’s not 60 years.
The overwhelming challenge facing Purcell — and every newspaper publisher — is that what’s going on now isn’t cyclical. The advertising that’s disappeared in recent years isn’t coming back. Classifieds, always the most lucrative part of a daily, have largely absconded to Craigslist and Monster.com. Consolidation has eliminated all but a few department stores and banks and, thus, their ad budgets.
Large, profitable media companies such as the New York Times Co., which owns the money-losing Globe, should have the time and resources necessary to make the transition to an all- or mostly online business model. An unprofitable number-two tabloid such as the Herald, on the other hand, is really up against it.
It remains to be seen what is to become of CNC as well. The company — which owns mostly weeklies and a few dailies in Eastern Massachusetts, the most prominent of which is the Framingham-based MetroWest Daily News — is what might be called a second-generation chain. In the 1960s, ’70s and ’80s, scores of independent newspapers were gathered into regional groups such as North Shore Weeklies and the Harte-Hanks papers of MetroWest. Starting in the early ’90s, Fidelity Capital began acquiring these regional groups and combining them. Newer chains, such as the Newton-based Tab papers, were acquired as well.
Fidelity never seemed to figure out what to do with CNC, and it finally sold out to Purcell for a reported $150 million in 2001. Purcell lacked the resources to beef up CNC, and thus those papers continued to operate on a shoestring. Will life be any better under the new owner, the Illinois-based Liberty Group Publishing?
Hard to say. Mats Tolander (via Universal Hub) notes that Liberty Group — which will soon change its name to GateHouse Media — is itself owned by Fortress Investment Group, a New York City-based private-equity company that does not exactly appear to be dedicated to high-quality journalism.
There are a number of curious wrinkles to this deal. Here are three:
— Tolander links to an Editor & Publisher story from last Monday reporting that Liberty Group had acquired the New West papers, potentially bringing into the fold Michael Gartner, a former president of NBC News. Gartner won a Pulitzer Prize for editorial writing in 1997, when he was editor and co-owner of the Daily Tribune in Ames, Iowa. These days Gartner is the owner of the Iowa Cubs, so perhaps there’s not much chance of his moving to Massachusetts and whipping CNC into shape.
— As has been previously reported, the CEO of Liberty Group is Mike Reed, previously the CEO of the Alabama-based Community Newspaper Holdings Inc. (CNHI). According to this article in the Patriot Ledger of Quincy, Reed last year oversaw CNHI’s acquisition of the Eagle-Tribune newspapers — the Eagle-Tribune of Lawrence, the Salem News, the Daily News of Newburyport and the Gloucester Daily Times. Now Liberty Group, in addition to buying CNC, is also buying the Ledger, the Enterprise of Brockton and their affiliated weeklies. Who would be surprised if CNHI and Liberty Group attempted to combine their Massachusetts holdings? Not me.
— The chief executive of Enterprise NewsMedia (the Ledger, the Enterprise and their weeklies) is none other than Kirk Davis, who was chief executive of CNC in the late Fidelity/early Purcell era. Maybe I’m misreading the tea leaves, but it looks to me like Davis is poised to re-emerge in a big way.
I hope I’m proven wrong, but this all seems to be about money first, second and third, with journalism coming well down on the list of priorities. If nothing else, all this consolidation should serve as a further impetus to citizen-journalism projects such as Watertown’s H2otown and the Hopkinton News.
Interestingly enough, the person who comes out of this appearing to be the least interested in money is Pat Purcell. He sold his profitable company and kept his ailing urban tabloid, apparently for no reason other than passion. I’m not thrilled with the brand of journalism that the Herald often practices. But Purcell is right in arguing that Boston would be a lesser city with just one daily paper. Now we’ll see if getting out from under the debt he took on to buy CNC five years ago is the impetus he needs to reinvent the Herald yet again.
Mark Jurkowitz analyzes the sale here.
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Anonymous
The Herald seems to embodie the gritty heart of Boston while the broadsheet the mind across the Charles. To lose this would be a blow beyond the loss of the second city daily.Perhaps the death of papers is a sign of the post-liberate society. Where images, and greater top-down social manipulation become the norm.EmperorNortonIIEmperorNortonII@myway.com
Anonymous
yeah, literate…liter…b…liberate……where my heart really is…EmperorNortonII
Anonymous
Great write up, Dan!You raise the natural questions about the what’s next for the Herald.I found his piece and picture display to be a bit odd today. I just don’t get it why do they always have to mention the Globe and the supposed ” competition” from Morrissey and that the Globe ” is reveling in the Herald’s misery.”I wish they wouldn’t be so insecure to mention that at every turn.Don’t worry about the Globe or how nice or elitist they are etc…Just put out the best paper you possibly can and forget about this high-school petty rivalry stuff.The fact is Mass and New England is two layers. One very snooty “upper” crust either corporate or in academia, and the other very blue collar, truck driving type from the good old NewEngland handicraft, tough fisherman or carpenter lineage.Both are great in their own ways and coexist side by side very peacefully, even if they’re ignoring each other, as if embarasses by the other almost. Yet, neither paper is able to capture both at the same time, nor each one fully.Neither paper knows what the heck it wants or what to look like.Does the Globe concentrate on the liberal, rich “upper” crust and go John Kerry on us all the way?? Wait a second, there is a great deal of republican executives and upper middle class Irish families that resent the paper for its stands and its beliefs and votes consitently republican.Does the Herald go Blue Collar all the way on us as well? Wait again, there are quite a few disgruntled low income people and seniors in the state that feel left behind and helpless. You can’t put on a smiley face for those and get away with it.So neither is able to capture sides fully and ideally, they shouldn’t have to worry about such divisions, just report the FACTS and THEN give me your editorial, right or left or bottom or whatever, plus your gossip or artsy fluff pieces and let me decide.But nooooo, they manipulate the coverage and the tone.The Herald seems to not be a great conservative paper. Far from. They just seem like they thrive on other people’s misery. That’s what they are watching for. What’s the next front page splash…No direction, no principle, just sensation.They even tried their hand at “T&A” and never made it work for them either.We’ll see how many quality people they add after this cash infusion. Let’s see how they change the paper look to be more user-friendly.This Liberty group seems to be transforming its personality with many recent acquisitions and a name change to probably get out from under behemoth Liberty Media’s name shadow and cast itself as a more dynamic niche newpaper group that actualy makes money. I smell a makeover job by leverage-buyout types to spin the eventual company for a lot more profit. So far from being on safe harbor, these suburban papers will face a big question mark for the coming years.Does this sale mean the Herald will now acquire/invest or broaden partnership in any radio outlet??? With the sad demise of the Greater Media-Sox deal, GM has to dump one station per federal rules. IS the Herald a palyer in that aspect??Time will tell. Hopefully both papers will smartly learn from the tough cards they are being dealt now and emerge stronger for the sake of Boston media’s sanity and balance.N.
Lisa
Psst! Over here!I dug up a lot more stuff on this. I’m looking at the portfolio of the different private equity investors who bankrolled these deals. It’s pretty interesting, and few people are mentioning it, but they’re like the elephant in the room — all the sales and mergers are driven by their desire to get their money in and out of investments. Would Purcell have bought CNC without Audax, Weston, Presidio, etc? Or sold if they hadn’t signaled their intention to get out? They called their marker, that’s what started all this. And all the people are buying are bankrolled by other private equity investors, who have the same objective: make the big chain attractive and flip it. How to do that? Snip snip snip.
Anonymous
As an MPG Newsgroup (the “affiliated weeklies”) employee, I have to say I’m leaving while I can. Liberty currently puts out 296 publications with around 3,200 employees; that works out to –from publisher down to paperboy — ten staff members per publication. So far as I know, there’s only one way to do that: shared reporters, stringers, and buckets of wire copy. It’s cookie-cutter community news, and I don’t want any part of it. Besides, the math I’ve been doing since Saturday goes like this: If Liberty averages 10 employees per publication and Enterprise NewsMedia averages 36, how many of us get to keep our jobs?
Anonymous
Good Job, Lisa and good luck to you Anon, I am sure you’ll rebound post-Liberty…on your own terms.N.
Lisa
Clearly I’m going to have to commercialize H2otown just to give all these good reporters that are just being foolishly tossed out a job!
Anonymous
Let’s not jump to conclusions. Have you seen some of the towns these Liberty papers cover? Most of them seem populated primarily by tumbleweeds. Hopefully they’ll see the wisdom in not gutting staff in this highly competitive, sophisticated market they’ve inherited. Although if the new HR director is wearing a hood and carrying a scythe, it’s time to worry.-Bob
BosPhotog
I had written this in an earlier CNC/Herald thread but fear it was kind of buried due to this newer thread and with your understanding, would like to re-publish it…here it is…Just one more good example of why Boston needs to stay a two paper town can be found in both the Herald and the Globe today (Monday May 8 ’06)Very late Saturday night a well known peace activist mom loses her second son to violence. Both papers had COMMUNITY sources that “dropped a dime” on exactly who this victim was. *AT NOON NO TV CREWS at scene* Police had not given out the victim’s name until 5:30pm the next day (Sunday)…Both papers had teams there interviewing and photographing all day Sunday.*STILL NO TV CREWS AT 3pm* The Herald took it one step further by having Peter Gelzinis, the heart and soul of the Herald and the city, spin his yarn. *5PM and STILL NO TV CREWS*…7 dead in a week, as the Herald puts it and NO TV…No tv even after the police had given out the Mendes name. Can you say institutional memory failure?Alright, now it’s 9ish Monday morning and wbz radio still has not mentioned this stry….hmmm, I wonder how the tv will play this one today.
Anonymous
1. While a few may have done actual journalism, the CNC papers are basically shoppers. 2. Where is the evidence the Globe is “money losing?” I have seen stories of the budget slashing and a whole lot of speculation, but just where has there been an authoritative report that the Globe has lost money? Linking to a claim that there are “stunning bits of speculation percolating around the newsroom” doesn’t make it true. Or are we resorting to the right-wing mantra that endless repetition equals truth?
Dan Kennedy
Anon 6:37 –1. Your observation that CNC papers are “basically shoppers” is ridiculous. Our town is served by a medium-sized CNC weekly. It has an editor, two full-time reporters and a part-time reporter. But, frankly, even weeklies with one full-time reporter can do quite a bit of journalism. It’s not ideal, but neither is it shopper-land.2. Here is a recent article on the Globe’s horrible financial performance. No, it does not say specifically that the Globe is losing money. But I can assure you that I have first-hand knowledge that Globe staff members have been told the paper is running in the red right now. No doubt a temporary situation — but true nevertheless.
Anonymous
Dan,I am a bit confused:So the Globe is losing money “for sure” but it “isn’t losing readership” is basically your contention.But there is no connection between the two…Right…?!?!?N.
Dan Kennedy
N. — That’s absolutely correct, and it’s not difficult to understand, so hold the sarcasm. I’ll give you an example: the New York Times recently reported that the San Jose Mercury News’s revenue from help-wanted ads has dropped from $119 million to just $19 million during the past five years. The economic basis of print journalism is collapsing, and it has very little to do with readership numbers.
Anonymous
Well, pardon my ignorance here, Dan. I’ll hold the sarcasm when it starts to coherently make sense and match the facts.I am perplexed by the fact that you are STILL adamant that the Globe is NOT losing readers and that it has little to do with its losing money but more to do with the changing ad and classified market.I am not ready to reconcile it your way yet.”San Jose Mercury News’s revenue from help-wanted ads has dropped from $119 million to just $19 million “Fine. What does that have to do with anything? My point is and Bake’s point is that poorer and poorer content is driving reader interest and purchase of the paper down and that affects their ability to make money or at least NOT LOSE as much money.You seem zoned in on the classified ads going to Craigs. Fine. Advertisers are looking for more eyeballs and more immediate results thanks to instant interactivity online. That money is not going to come back. So should they fold the paper?? I say there are other ways to make money and some papers are making money.You give alot of importance to the online presence. That is a huge aspect. The most profitable one. But I haven’t given up yet on the PHYSICAL paper. SO according to you, then why don’t we shut down brick and mortar Boston Globe and focus solely on Boston.com, cutting costs dramatically and put up a Craigs list-style engine and officially just operate like an online portal?So why don’t we do that to satisfy your theory????No one is doing that. Companies are still paying billions for papers. Online revenue is great and growing but we are not letting go of paper newspapers anytime soon, regardless if they lose ALL of the classifieds.My firm belief is that GREAT papers will still find ways to be relevant and profitable and attractive to advertisers, maybe a diff crop or kind of advertisers but it can still be done.It is time we reaffirm faith in print news and time we teach kids today to appreciate and BUY newspapers, especially in your capacity Dan. Is subscribing to a newspaper compulsory in your class, Dan??? I would make it. Forget about Lexus Nexis and Northeaster institutional copies avaible at the library.Are college profs instilling in them that they buy their own copy and benefit from it in a way they can’t online.Why don’t we abolish print books too while we are at it?Why don’t we treat books like software and just graba copies online and read it on a computer on PDAs.Baloney!There is research that shows that information sticks better to the brain when it is read physically rather than on a screen.Maybe that’s why a lot of our kids today and their GenX and Y parents are such ditzes.N.
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