First of all, let me couch this by saying that I’m speaking only for myself, and that I continue to appreciate the fact I work for a company that allows and encourages employees to think for themselves, speak their minds and debate company strategy in public view. That makes us stronger and helps us avoid mistakes that can be made in an insular culture.
Journal Register Company, which owns the New Haven Register, Middletown Press and Register Citizen, filed for bankruptcy on Thursday in an effort to shed “legacy obligations” that include significant debt, pension liabilities and expensive long-term leases on buildings we no longer use.
What does this mean for the newsrooms that I lead as editor of JRC’s newspapers in Connecticut?
Bottom line: It’s a big, pain-in-the-ass distraction in the short-term – due to misunderstanding about what bankruptcy means and why we’re doing it – but a huge long-term benefit that aims to keep our local news operations in business for years to come.
Twitter, Facebook and comments on Jim Romenesko’s blog about the media industry (my original post referred only to “Jim Romenesko’s blog” … I meant comments, not that Jim had written anything inaccurate) were full yesterday with misconceptions about this announcement. Let me tackle a few of them:
Myth #1 – Journal Register is filing for bankruptcy because a “digital first” approach hasn’t worked.
JRC’s print advertising revenue has declined at almost exactly the same rate as the rest of the newspaper industry over the past two years, while its digital advertising grew much faster than the rest of the industry. Through its focus on the web, video and mobile, the company did a better job than the rest of the industry in replacing print losses with digital growth. It remains very profitable on an operating basis. The issue is not results compared to the rest of the industry, but the big structural issues of a business that committed to major debt, lease obligations and a pension system that was based on a much bigger company built on a print advertising base that doesn’t exist anymore. There are numerous other newspaper companies faced with the same – or worse – issues. Some of them could take the same step JRC took yesterday at any time. I expect some will sooner rather than later. I feel a lot better about the strength of JRC after this process than I would working at a company that hasn’t confronted the pension time bomb and debt, or a company whose ownership situation is still in doubt. (For example, Tribune, which owns the Hartford Courant, is still in bankruptcy, four years and $231 million on bankruptcy lawyer fees after filing.)
Myth #2 – Journal Register has cut newsroom budgets.
In the days before John Paton took over as CEO, absolutely, JRC made significant cuts to newsroom budgets. We cut newsrooms even when times were (in hindsight) very good. But since Paton took over two and a half years ago, newsroom spending has remained flat. That’s a remarkable achievement in the environment and economy of today, and I’d challenge you to find another major newspaper company that hasn’t cut newsroom spending over that time period. It should be noted that at some individual JRC newspapers, newsroom staffing might be down compared to two years ago, but overall across the company, it’s flat. And as recently as last week in Connecticut, we announced an expansion of newsroom staff in Middletown and Torrington with the addition of a full-time investigative reporting position focused on use of the Freedom of Information Act.
Myth #3 – Journal Register employees will lose their pensions.
Again, this is just me talking, but the Pension Benefit Guarantee Corp. covers the past and present JRC employees who have pensions, regardless of what happens in the bankruptcy process. No one’s retirement is at risk.
Myth #4 – The bankruptcy filing represents a change in ownership and/or change in strategy.
While the Chapter 11 “auction” process calls for soliciting bids for the purchase of the company, a new “affiliate” of Alden Global Capital, the current owner of JRC and the holder of its debt, has submitted a “stalking horse bid” with the intention and hope of emerging as the owner after a process expected to take about 90 days. Speaking just for me (can’t say that enough), do the math, and-or talk to industry analysts and you’ll realize that the chances of anyone else making a serious bid for the company, although possible, are very unlikely. So, in theory, JRC would emerge from bankruptcy with the same ownership and same leadership, minus the huge structural legacy obligations that endanger the long-term health of our newspapers. And in theory, it would continue to be full steam ahead on the “digital first” strategy. Why? Because it has gotten better results than the rest of the industry. (See above.)
I have worked for Journal Register Company for nine years now, as a local editor, a corporate director of news, a publisher and now as group editor of our Connecticut newspapers and northeast regional editor for JRC and Digital First Media newspapers in Connecticut, New York, Massachusetts and Vermont.
I was there for “the old JRC,” focused 100 percent on print and practically 0% on journalism. I was there when help wanted classified revenue dropped 75 percent in a single year at the height of the economic downturn when I was publisher in Torrington. I was there through the “first” JRC bankruptcy, prior to John Paton’s arrival. And I’ve been here for the Paton era.
Never in my history with JRC has more attention and focus been placed (right from the top of the company) on improving local journalism, and never has editorial investment been so strong in relation to the overall economic picture of the company and the industry.
As Joshua Benton of Nieman Lab explains in this excellent analysis of yesterday’s filing, the JRC bankruptcy maneuver could be the newspaper industry’s first true chance at emerging out from under the print legacy millstone that has led to continual newsroom cuts at other companies, has made them too inflexible to compete in a digital age and endangers the future of local news reporting in many communities across the country.