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From AJR,   April 1995  issue

Are Bean Counters Taking Over?   

While discouraging, recent cost cutting at newspapers is a rational response to a changing climate.

By John Morton
John Morton (mortoninc@msn.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.     

Have the bean counters taken over newspapering? At the risk of carrying water for newspaper publishers, my answer is a qualified no.

The issue was raised by the recent resignations of the nationally prominent editor of the Des Moines Register, Geneva Overholser, and the paper's managing editor, David Westphal. Although the two editors did not publicly attribute their resignations to frustrations over pressures to cut editorial costs, it was widely surmised such pressures played a role in their decisions.

Overholser had been outspoken about her unhappiness with the impact of business pressure – i.e., profit maximization – on newsgathering and improving journalistic quality. I had a conversation with her several weeks ago in which she sounded this theme, although she never specifically cited the Register or its owner, Gannett.

Criticism of bean counting has focused mainly on publicly owned newspaper companies and on the theory that these companies respond too vigorously to the desires of large institutional shareholders for steady profit growth.

Clearly these desires impose pressure, but it is a mistake to attribute all this to public ownership. Shareholders of private, family-controlled companies can be just as demanding, especially, as is usually the case, when family ownership is in its third or fourth generation and many family shareholders have no interest in the business beyond collecting dividend checks.

"A newspaper is a business and must be run like one" is a worn refrain frequently trotted out to defend cost-cutting that affects news budgets. I suspect that most editors and even many reporters would agree with its essential truth. It is in details that disagreements develop.

Now for some perspective. I have been reading newspapers seriously for more than 40 years, and I have been exposed more than most to the changes, good and ill, that have affected newspapers during those four decades. I think it is undeniable that newspapers in the 1990s are vastly improved over what was offered 40 or 30 or 20 years ago. Newspapers provide broader coverage now than before, are more responsible and certainly are more independent and better looking.

There are still newspapers that disappoint, especially in smaller towns, but on balance there have been vast improvements. This view may not be asserted as forcefully when comparing today's newspapers with those of the 1980s, however, because of some – how can I say it? – business imperatives.

I think the dour view now of many journalists about business pressures on editorial quality springs from three primary developments. The first, and the one that has bedeviled newspapers the longest of the three, is increased competition – for news from free publications and television in all its forms, and for advertising from these two as well as direct mail. Fighting for market share against these forces inevitably has put pressure on profit margins and this inevitably puts pressure on news and all other departments.

The other two factors are of more recent origin. Starting in 1990, the newspaper business was beset by the worst advertising performance since World War II because of a recession and changes in advertising strategy by major retailers. Newspapers responded to this by clamping down on all spending, including news budgets, and for the first time in recent memory there were actual layoffs for economic reasons.

Just as newspapers began to recover fully in 1994 from the recession, they were hit by extraordinary increases in newsprint costs (see "The Business of Journalism," March). Most newspapers had already made the easy spending cuts during the recession, and now they are having to resort to more painful ones, including reducing staff, shrinking news holes and cutting back on unprofitable circulation distant from home markets.

It is little wonder that after more than four years of management bearing down on costs, newspaper journalists feel besieged and discouraged. Yet most of the management decisions have been rational responses to a changing business environment – rational even for a business that has a unique public responsibility.

The responses become irrational, though, when limits on journalistic endeavor become so severe that the connections between newspapers and their readers – the connection that, after all, is the basic business franchise that drives profitability – are permanently damaged. There is no solid evidence that this has happened, and I hope none shows up during this bleak period that should end in a couple of years.

The well-run newspaper companies, even though they are now counting beans, recognize the long-run importance of journalism. Indeed, the top executives of several were themselves journalists in earlier years. We can all hope that this basic understanding will eventually tip the balance back to journalism. l