Journal Sentinel becomes chain newspaper

Timothy Stautberg – New Journal CEO

Timothy Stautberg – New Journal CEO

There are plenty of underlying factors in the breakup and merger of Journal Communications that won’t make its news reports.

First and foremost, it is great for the community and state that the newspaper company, Journal Media Group, will be based in Milwaukee. It is a great blessing to have a locally owned paper, whether you agree or disagree with its editorial policies. Local publishers tend to care about what happens in their home town and states.

That stands in stark contrast to newspaper chains, which own most of the other daily newspapers in the state. The publishers and editors in the chain operations come and go with regularity and spend some of their mind share on their next gigs at bigger papers in the organization. They are hired guns.

Still, it won’t be quite the same here. The merger of the Journal Sentinel with 13 E.W Scripps dailies, including Knoxville
and Memphis, will bring some of the-chain mechanics to the Milwaukee headquarters.

CEO Timothy Stautberg will move here and begin immediately to look for “synergies.” Some top executives will go in the merged operation. You don’t need two CFOs or CIOs, for example.

Journal CEO Steve Smith is in effect retiring, so there won’t be a need to reduce a CEO position. (Note that these kinds of mergers are much more likely to happen when a CEO nears retirement. It’s a final grand stroke, and a juicy departing paycheck for change of control generally accompanies the deal.)

The merger offers the possibility of sharing stories, editorial resources and printing presses. Hopefully, that doesn’t lead to the reduction of more journalists in the local newsroom. Those ranks are already less that half of what they were combined in the hay day of the Journal and Sentinel as separate papers.

That reduction in staff has led to a change of editorial strategy toward in-depth news as a substitute for the breadth of news. Statewide coverage has lessened, though J/S does a fine job of covering the Capitol. Suburban coverage of the other six counties in the metro area is almost extinct. The occasional big story will draw a reporter for a couple of days. There simply aren’t enough reporters left to do the daily job.

That leaves a wide-open news and advertising market for other local papers to exploit. Those small dailies and weeklies are picking up some of the slack.

The in-depth news strategy has led to some fine journalism, such as Dan Egan’s recent four-part series on the grievous challenges posed by invasive species to the Great Lakes and beyond. The strategy also leads to an obsession with journalism prizes, which warm the cockles of the often-cynical hearts of often-smug editors. Only Hollywood is more self-congratulatory as an industry.

In one sense, winning prizes is a new metric that takes the place of the old metrics, like winning subscribers and making big margins. Subscriber erosion continues, with J/S circulation at less than half of the combined circulation of the two papers in the 1980s. Operating margins used to push 40%, and now publishers would settle for 10%.

That kind of top and bottom line decline is, of course, the driving dynamic for consolidations in mature industries like printing, papermaking and publishing. Mergers allow reductions of stubborn overhead costs that would be hard to cut any other way.

The tough prospects for newspapers, even with heroic attempts to be viable on line and through social media, which are hard to monetize in a big way, make the future for the new Milwaukee-based operation murky.

That outlook explains why Scripps and Journal Communication spun off the merged publishing company with a clean balance sheet and $10 million in cash. A company in a troubled marketplace can’t carry a lot of leverage.

Smith must have learned his lesson in the Great Recession when his company’s highly leveraged balance sheet from broadcast acquisitions brought Journal Communications to its knees.

For one, I’m hoping that Mr. Stautberg can figure out a business model that prevents further shrinkage of the Journal Sentinel’s journalistic muscle.

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  • Tom_Figel

    John, in this essay, as in all your writing, you bring clarity to the subject. I appreciate the way you assess things, and without the warp of your own biases. From Chicago, I subscribe to the electronic version of the Milwaukee Journal-Sentinel, which gives me a chance to admire the reporting of Dan Egan and others. A flaw of modern newspaper publishing, one not mentioned in your essay, is the great tolerance for first person narrative. It is rife in all publishing today, so much so that what used to be reporting is now ruminating as writers reflect on the same subject peers are speculating about in their own prominently by-lined work. Thanks, John.

  • Michael Drescher

    John, truly interesting as you have such knowledge in the category. Having attended the newspaper conference in march (NAA ) there are hopefully many tools on the horizon that can assist in stabilizing these entities in the digital world as in almost every market they are far and away the leader in traffic, unique visitors. As is JS here in Milwaukee, @ times 7-10X their nearest as far as traffic. Monetizing that traffic through local digital “marketplaces” and the like will be key. Okanjo www, aspires to, and is having success in that role. I too, wish Mr. Stautberg insightful wisdom to lead Journal Media into the next era. As you point out, very important for Milwaukee.
    Thank you again for your always enlightening POV.

  • John

    Ever think,of,being a bit less biased and perhaps you will regain and retain subscribers? WSJ and USA Today seem to have the formula.

    • JohnTorinus

      80% of the people populating news rooms, maybe more, have an anti-establishment bias, but they fight hard in general to be “objective.” It’s hard, though, to fight one’s genetic make-up. It’s ironic, of course, because they are part of thoroughly commercial, thoroughly establishment enterprises. Their conflicts abound.
      The newsrooms are supposed to be independent of the business side of the papers, but it doesn’t always work that way. Editors trim their sails when it comes to messing with key stakeholders of the publishing company. That’s just life.
      Bless them, though, most reporters do stick up for the little guy — as much as observers of the parade of life from the cheap seats can do.

  • Marc Eisen

    John: Nice job, as usual. Maybe I’m too far away from the last time I researched a newspaper story, but I don’t understand the logic of severing print from broadcast. For me, there’s a powerful dynamic for having a large consolidated newsroom that simultaneously produces stories for print, online, radio, TV/video, and podcasting. In the long run, that strikes me as the most sensible approach for creating an economically sustainable newsroom operation.

    What am I missing? Why is the industry headed in exactly the opposite direction?

    I know there may be anti-trust objections, but does anyone seriously believe that the old case for anti-trust enforcement has any relevance in the digital age?

    I also know, in the case of Journal Communications, that the deeply entrenched traditions of the Journal Sentinel and WTMJ TV and radio make any notion of a merged newsroom laughable and seemingly inconceivable.

    But I would argue that view reflects a lack of vision and resolve, not the illogic of a consolidated newsroom creating stories for multiple platforms.

    Your thoughts? Marc

    • JohnTorinus

      There was a little synergy between the news organizations when I was an editor at The Sentinel in mid-80s, but not much. I was on WTMJ radio for personal finance for couple of years. But not mot much real reporting gets done at broadcast properties. That’s my print bias showing through.
      Stock analysts like pure investment plays, so a mixture of low-profit print properties and good-profit broadcast properties drags down the value of the broadcast side. Cutting loose the newspapers to destiny uncertain un-muddies the waters for the broadcast side. Prices of Scripps and Journal Communications bother went up after announcement.