Continuation of Editor Inc.   

6. Number Crunchers

I still have a November 1994 memo from the newsroom administrator, the fellow who did our basic newsroom budget calculations at the Des Moines Register. It reads: "There are times when our budget is finalized that I feel like I've taken out its heart and soul. This time I took out a lot of other giblets as well. The 1995 budget is not just tight, it squeaks."

The budget process for that year had begun with a memo from Gary Watson, Gannett newspaper division president, saying:

"1995 will be a difficult year because of the increases in newsprint pricing. Thus, you and your team must plan accordingly. Often, we see comments such as these in the Publisher's Letter: 'Without the increase in newsprint prices, NIBT (net income before taxes) would be up X percent...' Don't allow yourself or your team to be lulled into some false sense of reality by thinking you can plan for 1995 as if the newsprint price increase didn't exist. Newsprint prices will be going up, and we still have the responsibility to produce a return for our shareholders."

The controller of the Register, Susan Smith, put it more candidly: "Despite the significant increase in newsprint cost in 1995, we are expected to grow our bottom line over 1994."

Thus, having already removed heart, soul and giblets, we cut some more--another $63,000 in newsroom spending. Very shortly thereafter, by January, we learned that during the months we were engaged in these hope-withering negotiations, Gannett earnings were up 22 percent over the previous year's fourth quarter.

The Register's plan for 1995, the year newsprint prices were soaring, was for a 23.4 percent profit margin before taxes--compared to the previous year's 21-plus percent with low newsprint prices. I don't know if they made it. I had happily departed the world of advertising shortfalls, newsprint price increases and contingency plans. Just before I left, Watson had sent another memo, describing yet another challenge ahead: Interest rates were rising, he noted; expense controls required an especially watchful eye.

Now consider another of Gene Patterson's anecdotes:

"Jack Knight loved to quote his Washington bureau chief, Ed Lahey, an old, tough Washington reporter. He was talking to Lahey one night and Lahey said, 'You know sum'n, Knight? You're a publisher and I'm a reporter and there's only one thing I expect of you.' Jack asked, 'What's that, Ed?' And he said, 'I just want you to stay solvent.' You see, staying solvent is kind of a complex undertaking in the newsroom. But Ed Lahey just left all that to Jack: You stay solvent and I'll cover the news."

These days "solvency" starts at home, in the newsroom. For many editors, the brave new world of budget controls came to be symbolized by an innocent-sounding acronym, the FTE. The FTE, which stands for full-time equivalent, is a bean-counter's dream. Whereas editors once used to keep track of old-fashioned human beings--reporters, photographers, copy editors, librarians, clerks--and their individual salaries, the FTE is a formula that encompasses all the hours it takes to put out a paper: the employee hours, yes, but often overtime worked and, in some companies, stringer contributions, correspondents' hours and the like. Thus, a paper may have 100 newsroom employees, but 120 newsroom FTEs.

FTE accounting, common in other businesses, began showing up at newspaper companies in the '70s, and by now some variation is employed at most major chains. Because the FTE formula flattens the highs and lows of a department's salaries into an average figure, because FTEs don't take vacations or get sick, and because they are computer friendly, this accounting technique enabled companies to track actual costs much more rigorously--on a month-to-month, week-to-week, even day-to-day basis.

Used more aggressively, however, FTE accounting sharply limits the flexibility editors traditionally have had to juggle positions while staying in the budget--that is, it's another outside restriction on newsroom management. If you've got a huge story to cover one week and you sail past your FTE allotment to do it, you may have to suck up the difference next week by eliminating overtime or forgoing certain stories you otherwise would cover.

Or consider this example: In many large companies FTEs have a first cousin called "dark time," known elsewhere as "churn." These terms refer to the fact that in a newsroom of any size, over the course of the year X number of hours will go unfilled because of temporary job vacancies. It's the editor's job to manage that churn. But he can get cuffed no matter which way he goes. If there's too little churn, he'll exceed his FTE budget and get a pounding. If there's too much churn, he'll run under his FTE budget and invite someone from corporate HQ to say: Well, if you don't really need all those resources, we'll take them away next year. And often they do.

FTEs are used throughout the paper, not just in the newsroom, and their manipulation can reach almost comic proportions. Robert O'Sullivan, now vice president for circulation at the Record in Bergen County, New Jersey, recalls the days of very tight FTEs a decade ago when he was with the Philadelphia Inquirer. "What I remember about how Knight Ridder did those calculations was that if you had independent truckers doing your trucking, they converted that into FTEs," he says. In fact, at one point the Inquirer shipped some 1,500 newspapers a day by bus, which was cheaper and faster than mail. But because buses counted as truck-driver hours, and thus as FTEs, the paper started mailing them instead, which was slower and more expensive, and drove away readers. Thus did FTEs exercise their power.

The fact is that most editors I spoke with don't consider FTEs a particular nuisance today, at least at their own papers. But at franchises under financial pressure, vast amounts of time and energy can go into FTE reporting and management. In Philadelphia, for example, Max King found the FTE count too important to leave to anyone else. "If I was over on FTEs at all, that was a big concern," he says. "By the same token, I didn't want to be under on FTEs because then I was wasting a resource."

King says it used to be that he'd have time to check the records when corporate officials called about his FTE count. Then, as computer linkages became more sophisticated, the nature of the calls changed. Knight Ridder already knew what was happening. "They'd ask, 'Why are you running 2 or 3 percent over on X category?' They knew where we were and often they knew that we hadn't looked it up. And then you thought, 'Oh God, I should have known that,' and then you thought, 'Do I have to know? Is that what I should be doing, parsing these numbers at 9 o'clock in the morning instead of trying to figure out what the stories are?' "

Our checks with corporate offices show wide variation in the degree of specificity required in reporting FTEs. But as King described, the most detailed use is generally identified with Knight Ridder. "Let's cut to the chase here," says Gil Thelen. "Someone once said, in corporate, [Knight Ridder CEO] Tony Ridder knows whenever an FTE moves in this whole company. Clearly, FTEs are an important issue to Tony. And what's an important issue to the CEO becomes an important issue to everybody else in the company. So yes, there is a lot more focus put on FTEs."

Replies Jay Harris, who worked with Ridder in Miami for five years, "That's bullshit. I mean, if somebody chooses to call Tony and tell him every little thing they do, that's their business. [At San Jose] I make changes all the time. I have an overall obligation for a budget. I deal with it."

Regardless, FTEs were--are--part of a wave of business initiatives that impose control on editorial. The ultimate in this sort of thing, now abandoned, occurred at the Winston-Salem Journal. Consultants there developed a system dictating the amount of time and space various stories should require: "An A1 story should be six inches or less. A reporter should use a press release and/or one or two 'cooperative sources.' He or she should take 0.9 hours to do each story and should be able to produce 40 of these in a week."

Ostensibly such initiatives are intended to improve overall efficiency. But because of the time involved, they have the practical effect of changing the shape of the editor's job. In making these reporting requirements, corporate officers are insisting that editors spend much more of their time on personnel and budgetary management, much less on the news.

The impact was obvious in the informal survey the Project on the State of the American Newspaper conducted to help assess how editors' roles have evolved. Questionnaires about job satisfaction and compensation were sent to 200 top editors around the country, representing papers of every size and ownership; 77 responded. One question asked how much of the typical workday involves "budgeting, business or marketing matters, and non-news administration." Fourteen percent of the editors said they spent more than half their time on matters other than news; another 35 percent said between one-third and one-half their time. In other words, half the editors were spending a third or more of their day on matters other than journalism. Even more striking, almost 90 percent said this percentage had risen in the last five years--risen "somewhat" for 58 percent, "dramatically" for 30 percent.

For a different perspective on this subject I ring up an old friend, George Gill, longtime editor and then publisher of the Courier-Journal in Louisville, now retired and living in nearby Peewee Valley. He says today's reality of an editor poring over newsprint usage and FTE spreadsheets is an inevitable result of public newspaper ownership.

"I don't know how you can avoid that," he says. "When you look ownership in the eye every day and it's local, and you've worked for them forever, you can argue and probably win the day. But now--what is it?--86 percent are owned by corporations. It is a fact of the marketplace that profitability drives everything. It's too bad, but I don't know what you can do about it. And in the meantime," says Gill, neatly signaling the interview to a close, "I've gotta go cut five acres of grass."

Having been privy to something of the complex transition Gill made, from the gentle hands of the Bingham family to the corporate dictates of Gannett, I tease him now about being exceptionally diplomatic.

"Well, my dear, that comes with age," he replies. "It comes with age and a good pension check."

7. Pragmatists

There are days Wayne Poston feels like he's been at it forever. Enthusiastic at times, discouraged at others, the veteran editor of Florida's Bradenton Herald has been determined not to be bothered by the growing number of business demands from his corporate seers at Knight Ridder.

FTEs? Just numbers--punch 'em into a computer.

News hole? Knows it better than anyone in the building.

Circulation? Get the paper in the door, he'll make it stick.

Even so, Poston spends--at most, he says--30 percent of his time on journalism. The job of being an editor "is just a lot harder than it used to be. Corporations are cyclical, and we're at a high point of publisher influence. There are a lot of people who think anybody can do content. And it's not gonna work."

These days, however, Poston is sanguine. Come January and his 55th birthday, he's going to retire.

"I have a good mind, and I want to be able to use it," he says, adding, "I'll sleep like a baby."

8. Nouveaux Riches

People don't like to talk about their salaries, and editors are no exception. Still, editor pay is so much higher today that, as Poynter Institute President and former Philadelphia Inquirer Executive Editor Jim Naughton told me, "it ought to be the product of embarrassment. If I were the top official of the local public utility company, we'd be writing about it."

The story would go like this:

Fueled in large measure by incentive bonuses, editors' compensation for decades has been rising much faster than wages in the overall economy, and much faster than the paychecks of their newsroom colleagues. Over the last 10 years, editors' total compensation has shot up 50 percent, to an average $106,124, according to a 1998 survey by the Inland Press Association. By comparison, consumer prices during the same period went up 38 percent.

What's interesting is that among the 314 editors who reported their compensation, base wages rose roughly at the same rate as inflation. But incentive pay shot up 70 percent to an average $16,500 per editor.

The big beneficiaries are editors at larger newspapers. According to the survey, total compensation for editors in the 250,000 to 500,000 circulation category topped $250,000 this year, up 77 percent during the last decade. Bonuses doubled over 10 years, reaching an average $56,470. By contrast, incentive pay went up only 25 percent for editors in the 75,000 to 100,000 category.

While the mode of payment--various incentive packages, most tied to profitability--has varied in recent years, the trend toward rapidly increasing editor salaries has been building for a long time. Compensation packages have skyrocketed over the last 30 years, growing at more than twice the rate of inflation and considerably faster than wages in the newsroom. Take, for example, editors in the 100,000 to 250,000 circulation category, again looking at Inland data. In 1968, the average editor was making $17,500 a year; today's editors in the same circulation category average a little more than $157,000, a nearly 900 percent increase. Consumer prices during the same time went up about 470 percent.

Why has this occurred and what is the impact--besides a lot of editors with tax problems? An obvious answer would be that American publishers have concluded that editors need to be paid as top executives so that, even though they're not direct revenue-producers, they don't have to take a backseat to advertising directors and circulation directors (who are really bringing in the big bucks). Still, there is some unease with this situation, and Baltimore's John Carroll is among the uneasy.

"One thing that's crossed my mind more than once," he says, "is that I never expected to make this kind of money when I came into the business as a reporter on $75 a week. It's my job to think up stories and pass judgment on stories that reflect things that are important to the people of this community. And I can't really say that my problems are the same problems as the people in this community. You know, I don't really have any financial problems, which puts me in a very privileged situation. So I think just in terms of the things that weigh on one's mind, they are not those of the common man."

The MBO, or management by objective, was envisioned in the early 1950s by management guru Peter F. Drucker. The idea was this: By setting goals and attaching rewards to their achievement, a company can get the most out of its managers and coordinate their efforts at the same time. Editors generally work with others in the newsroom to draft the coming year's editorial plans, which are presented to the publisher and ultimately redrawn as the editor's personal goals. At performance review time, the publisher decides to what degree the goals have been achieved.

The vast majority of top editors now have MBOs, though there are exceptions: Newhouse editors, for example, still receive straight salaries, no portion of which is tied to corporate performance. Of the editors responding to the Project's questionnaire, 71 percent said their company employs MBOs. Of those, 60 percent said MBOs were limited to the top editor and managing editor. Those who do have MBOs can thank them for a goodly proportion of their compensation--half the editors responding said they get 20 to 50 percent of their pay from MBOs. And the majority of these editors said that more than half their bonus is tied to their paper's financial performance.

Some corporate types react to queries on this matter as if they're being asked to expose national security secrets. In calling a dozen human resources and public affairs offices to inquire about the use of MBOs, we got a few answers like this (at Donrey): "I can't discuss that; we are very private." Or (at Hollinger): "I'm not the person to ask and I don't know who would be!"

Indeed, editor bonuses are one of the newsroom's enduring mysteries. Most everyone in journalism knows about MBOs, but unless you've ever had one, chances are you've never seen one. No doubt that's one reason why these same rank-and-file are a tad cynical about them: Are their bosses manacled, for better or worse, to corporate goals?

Jim Naughton contends that the MBO has become an "insidious process" that makes editors "unduly conscious or even subconscious of their own potential gain at the risk of something that they might otherwise want to do in the newsgathering process.

"I don't think people sit there and pull out their MBO charts and say, in October, 'How many things do I need to kill to make a bigger bonus?' But I do think the existence of that process in a newsroom setting, where historically we have prided ourselves on being separate from profit-makers, has changed the perception among editors. And it has spread throughout the newsroom, to department heads, which may be draining their enthusiasm to bust the budget when they oughta by God bust the budget because the news is important." (About 40 percent of editors who responded to our questionnaire said their newspapers also awarded MBOs to assistant managing editors, or department heads, or both.)

Some editors agree that increased linkage of MBOs to financial performance is raising doubts in the newsroom about their own motivations: Would the editor have bucked this hiring freeze a little harder if his year-end $10,000 bonus wasn't at stake? What an unsettling appearance problem--especially if the staff sees the boss as being increasingly scarce, more often in business-side meetings than the daily news huddle.

Deborah Howell, who now runs the Washington bureau for Newhouse, was executive editor of Knight Ridder's St. Paul Pioneer Press and recalls with some anguish the pressures. "I sometimes felt that I was doing things for MBOs and not for the right reasons," she says. "And I wasn't the only one. It's not just the bonus that can multiply the distance between editors and their newsrooms. It's also the fact that editors aren't providing nearly the same level of pay increases for their staffs."

The Inland survey again is instructive. Thirty years ago, city editors in the 100,000 to 250,000 circulation category made $11,500 a year; their editors earned about 50 percent more. But if those overworked city editors thought that pay gap was too big, think how they feel today. City editors' average salaries are up to $61,750, but their editors are making two-and-a-half times as much.

"Newspaper editors make a lot more money than they used to," Howell says. "I've heard editors say they've been amazed at what they've made--tons of money. Does it make them more careful about holding onto their jobs? The golden handcuffs? The velvet coffin? It's making it more difficult for editors to fight back. Because of stock options and bonuses, your family's security is tied to your staying in the job. I walked away from tons of stock options."

In the end, she says, profit-based MBOs create doubts about integrity. "Editors are often looked on as sellouts," says Howell. "And that's one thing an editor does not ever want to be."

There are those, of course, who say the picture of an editor being bought off, or selling out to live the good life, is either flat wrong or at least vastly overdrawn. Indeed, some newsroom executives point out that at a paper where MBOs are the rule, if the editor declined one he would be at a disadvantage dealing with his business-side counterparts: They could complain that he had nothing at stake when strategic decisions needed to be made, leaving him with less leverage than ever.

Other editors say it's about time they were decently paid. "I cannot complain about how my company has treated me," says Dave Zweifel in Madison. "I think through the years as the job has become perhaps a little more complicated and tougher, the company has recognized that." Zweifel's paper, locally owned, pays him a bonus based in part on circulation and profit performance.

And then there are those few who see MBOs and high pay as but a ball and chain.

Irene Nolan is the former managing editor of Louisville's Courier-Journal. After several years adjusting to the contrasting ownership styles of the Binghams and Gannett, Nolan quit in 1991. She lives now in a considerably more blissful setting along an inlet on North Carolina's Outer Banks, and from time to time has contemplated why more people weren't leaving high-profile editing jobs about which they complained bitterly. "They make a lot of money, and of course the higher-up editors are getting stock options," Nolan says, "and I think that's why they stay.

"Plus," at Gannett, "they get rings."