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.