Bellingham Herald thoughts
Bellingham Herald thoughts
Since January, the Herald coverage of local news has dropped off. This continues a downward trend of the past two years. Now even the infrastructure is declining. What is the future for our daily newspaper? Probably not good.
McClatchy, the actual owner of the Herald, is nearing bankruptcy with its stock tanking. Gannett bought the Herald from local owners in the 1980s and swapped the Herald to Knight Ridder in 2005 who then sold it to McClatchy in 2006. In the spring of 2005, McClatchy stock was at $72 a share for a market value of 6 billion dollars. In July 2006, it was down to $42, July 2007 to $25 and now in July 2008 it is below $6 - for a current value of about 400 million dollars. As I write this, it is at $5.08 a share, down 7% from yesterday.
But that is not the worst news. The hard part is they still have over 2 billion dollars in debt from that Knight Ridder purchase. With revenues falling - about 15% compared to months in 2007 - and net income losses in 2007 and so far this year, they are severely pinched. They continue to pay their 18 cents per share dividend each quarter - a $14 million dollar annual drain. If they stop that then the stock will have even more trouble.
This is the outfit that pays the Herald staff - that makes the corporate decisions for what happens at our daily newspaper. When President Pruitt says cut 10% of your staff, the Herald managers do just that and will lay off 13 people this year. No arguing. We will see 4 reporters cut in the next few months. And we will probably see more layoffs after printing is moved to Skagit county next winter.
One option that McClatchy has is to end Monday publication. This may be the most expensive paper of the week because of Sunday staffing. Another choice is to combine the Saturday and Sunday papers into one. However, once they drop a single day then our morning reading habit will be broken - and they know that. Herald management told me they have no plans to cut any days. We shall see.
We may also see the Herald move from its building into rented offices somewhere else in town. Once printing is shifted to Skagit County later this year, there will be no reason for them to stay. And the building may be sold. There is at least one local developer who wants to renovate the Herald Building - and it is in serious need of renovation. Indeed, the building is dilapidated now and may not meet city codes.
Meanwhile, circulation continues to be flat even with our rising population. Herald articles give ambiguous explanations of circulation, mixing in the Internet and its new group of magazines to fudge circulation and readership numbers. I personally know more than one family that has notified the Herald to discontinue their home delivery and the Herald continues to deliver the paper every day - without payment. Are these desperate attempts to fake the numbers? If so, it could violate agreements McClatchy has with circulation reporting agencies.
Is the daily newspaper business dead? Probably. The news business is viable, but the big profits for newspapers are gone. The business was based on an efficient delivery system for advertisements. The profit margins for daily newspapers were 20% to 40% - way higher than most corporations. Those days are now over and the dailies refused to see this coming. Thus McClatchy made some optimistic decisions that have proved wrong. And we in our far Northwest corner are feeling the impact.
Next: the Cascadia Weekly - and why it is not the answer.



10 Comments