Continuation: The Dallas Mourning News   

The phone and e-mail chatter around the building that day was frenzied. The layoffs came too fast for anyone to keep track of them all. McGonigle tried, because he needed to know who would be getting money from his fund. Since management had refused to give him a list, he'd sent out memos to the staff asking for help, and now, as the layoffs proceeded, he sat at his terminal transmitting and receiving messages. As he did this, a curious mass of onlookers surrounded him, hungry for information, reading over his shoulder. People would swing by occasionally and feed him a new name they'd heard through the grapevine.

Another way to keep up was by watching what happened on E-pop, the newsroom's internal messaging system. When you call up a list of staffers' names on that system, those who are currently signed on have green icons next to their names. When a person signs off, the icon turns red. And since the company was cutting people's E-pop access as they were laid off, staffers could sit at their terminals that morning and watch the icons popping from green to red.

Although some Morning News officials confirm that they laid off a total of 65 newsroom staffers, the list of those employees' names remains a company secret. Also secret are the ethnic and gender compositions and other such demographic breakdowns.

However, a pattern became apparent to those who showed up at the job-search workshops sponsored by the company soon after the layoffs. Quite a few took advantage of the workshops and found them to be educational in more ways than one. Most of those laid off went home on October 27 having little idea who else had gotten canned elsewhere in the building. So at the job-search workshops, people would run into one another, do a double take and say, "Oh, I can't believe you were laid off too!" Then there would be hugging and crying all over again. Some of those sessions were almost like group therapy.

But then, sitting around the table, people would notice that they were almost all of a certain age--in their upper 40s or 50s or beyond. "Look at us, look at our ages," they would say. Out of 11 former employees in one workshop, I was told, 10 were older than 40 and most were over 50.

Which proves nothing by itself. But other such partial surveys seemed to show a similar pattern. Of the 13 people laid off in features, someone calculated, only two were under 40. Layoff victims and survivors alike maintain that the bulk of the victims were relatively old, which is to say, they had larger salaries, escalating pension costs and higher potential health care costs for the company.

"That's what it's all about," says Paula Watson, an assistant features editor who was laid off after 35 years at the paper. "As Deep Throat said, 'Follow the money.' "

On the other hand, the newsroom trended relatively old anyway. Until last year the Morning News had prided itself on being a "destination paper," where established people could come and work for the rest of their careers. "Few people left, and openings came mostly with death," Chapman says. "We were an older newsroom." Nonetheless, she agrees with those who think that older employees were disproportionately targeted. Belo management refused to comment on this issue.

Another sore point among the staff is the managers' claim that decisions on whom to fire were based not on personalities but on which jobs the paper could do without. Moroney said this in his September meeting with the staff. And the materials handed out at firing school instructed supervisors to say things like "Your position is one of those being eliminated" or "Your position no longer exists."

People were taken aback, therefore, when Chapman was laid off as book editor and a new book editor was immediately appointed in her place.

Quite a few people also point with suspicion to the layoffs on the editorial board (see "Smokey Places," April/May 2005.) Right after five people lost their jobs in that department, a religion editor and an assistant city editor were transferred upstairs from the metro desk to fill two of the vacancies. Keven Ann Willey, who runs the editorial board, maintains that the two new people were not direct replacements for any of those laid off. "We reconfigured several positions and merged pieces of other jobs together," she says.

Mong, the top editor, says the goal throughout the paper had been to reconfigure jobs in the way Willey describes. They were trying to make choices that would make the paper more resilient, more responsive to changing circumstances, he says.

Some of those laid off had health problems--carpal tunnel, back trouble, arthritis, diabetes, hepatitis. Jeff Mahurin, a graphic artist, had back surgery about two weeks before the layoffs. He had a herniated disc that had grown progressively worse over the past year or two. "It finally got to the point where I couldn't sit," he says, "and I was lying on the floor while working. And it just went out--I can't stand, I can't bend over, I can't lie down--and the doctors had me on some pretty heavy prescription drugs."

Until the day of his operation Mahurin was working from home an hour or two a day. The day before surgery, he says, he was up until 5:30 in the morning working on a weather page.

His pain subsided after the operation, he says, but it soon returned, "and now I've got numbness in both feet on top of the other issues." When I spoke with him in early January, he was without a paycheck, his medical coverage was ending, and he was still responsible for child support payments.

"My end of this is pretty frightening," he said. "I've been told until I'm put on unemployment or find another position I have to continue to pay what I'm paying in child support, and that's just not going to allow ends to be met." He said lawyers had told him it would cost about $2,000 in legal fees to go to court, explain that he was disabled and unemployed, and try to get the child support payments reduced.

Contacted again in March, Mahurin said his troubles had not abated. "I have had to move to another state about 900 miles away from my two children just to find work that would pay me comparable," he wrote in an e-mail.

Stories of economic hardship are common. One reporter had assumed custody of a sister's three children after the sister died. The reporter had just bought a larger house to accommodate the children, and then, suddenly, no job.

Another reporter was responsible for two elderly parents, both of whom have had health problems. She was also experiencing a problem of her own, was on medication and was having dizzy spells, she said. The day I spoke with her, she was preparing for a weekend yard sale. She said her severance pay was already gone and she was mainly living on unemployment, which didn't cover the bills.

Paula Watson also has two elderly parents to look after, one of whom has Alzheimer's. "A layoff doesn't affect just one person," she observes, "it affects a whole family."

So why was all this trauma necessary? In a February conference call with Wall Street analysts, Robert W. Decherd, the company's chairman, president and CEO, said that Belo had experienced "strong overall financial performance" in 2004. Things were good enough, he said, that the company paid stockholders 12 percent more in dividends than in the previous year. "Fifteen of Belo's 25 operating companies achieved record revenue levels in 2004 and five others came very close to achieving the same." Revenues from Belo's 19 television stations were 9 percent higher than in 2003. The company's Newspaper Group revenues (Belo owns four daily papers) only rose by about 1 percent, but that was partly due to some special problems at the Dallas Morning News.

The biggest of those problems--and a serious drain on profits--was a circulation scandal that broke last summer. It was similar to recent circulation scandals at Newsday and the Chicago Sun-Times. The Morning News, through an internal investigation, discovered that it had been overstating its circulation. The paper said its true circulation for the six months ending last September 30 was about 5 percent less daily and about 12 percent less on Sundays than the numbers it reported for the same period a year earlier. According to company statements, it was difficult to separate the falsified numbers from "normal business trends," but most of the year-to-year circulation decline seemed to be "related to overstatements."

Belo announced the resignation of Barry Peckham, the newspaper's executive vice president for operations, who oversaw circulation. And some top executives gave up their bonuses and raises. Belo hired a law firm to make a thorough investigation. That all took place in August. In September, the law firm concluded that the overstatements likely stemmed from a policy change instituted in 1999, under which the Morning News no longer gave credit for unsold newspapers to independent contractors who supplied the newspaper to news boxes and retail outlets. It said the overstatements probably grew gradually due to a company incentives program.

Decherd immediately moved to fix the problem. Since advertising rates are tied to circulation, the paper launched a program to compensate advertisers, both with cash payments and with credits on future ads.

The company initially said the cost of the reimbursement program plus the investigation would total about $26 million for 2004, for which Belo took a third-quarter charge against earnings. (It later revised the loss figure to $23 million.) The company predicted an additional $4.5 million in revenue losses for the first quarter of 2005, as advertisers continued to draw down their ad credits. Belo is also fighting a related shareholder lawsuit, which could become an added expense.

It was in a conference call with stock analysts on September 29 that Decherd announced details of the law firm's investigation of the circulation problem. In that same conference call, he announced that the company was ending three local cable news joint ventures with Time Warner, which had cost Belo about $10 million a year. And then, in practically the next breath, Decherd told the analysts that Belo would cut its work force by about 250 people, mostly from the Morning News.

Decherd said the layoffs would save Belo an estimated $16 million a year in salaries and benefits. He made a point of saying that the layoffs had nothing to do with losses from the circulation fraud. The layoffs had been planned all along and "would have been made regardless of recent events related to circulation."

Later, in an interview, Decherd said the leaders of the company had been engaged in a broad review of their operations since last spring. "We have had challenges in this market with respect to revenues, particularly in our classified business," he said. And they finally concluded that they "could not expect revenues to grow at a rate that would justify the existing cost structure." It was in September, he said, that they finally decided to go through with a series of cost cuts, including the layoffs.

When Moroney, at his meeting with the newspaper staff, was asked about the reasons for the layoffs, he too denied any connection with losses from the circulation scandal.

Down in the trenches, people at the Morning News find this hard to swallow. One hears the complaint that high-ranking executives, who are supposed to be responsible for overseeing circulation, got off easy while scores of innocent journalists paid with their jobs. "This was a mess not of our making," one reporter says.

A commonly voiced theory is that after the circulation problem, plus the money-losing ventures with Time Warner and some other economic setbacks, the company wanted to make a reassuring gesture toward Wall Street. It wanted to show that it was getting its profit picture back in shape. In other words, as another reporter put it, "We're taking the rap for things we had nothing to do with."

The top executives adamantly refuse to discuss the specifics of how various layoff choices were made. I interviewed Decherd, Moroney and Mong simultaneously, all of us sitting around a large conference table on the 16th floor of Belo's corporate headquarters. When I tried to delve deeper into the decision-making processes, Decherd put his foot down, insisting that the company's executives could not discuss such matters. Belo is publicly held, the CEO explained, and "we cannot disclose to a third party something we haven't disclosed to Wall Street."

When I noted that people inside the paper were concerned and puzzled as to how and why all these decisions were made, Decherd grew animated. "I don't agree with that. Who's puzzled?"

I said there was widespread concern as to what the layoff criteria had been.

"And who have you talked to?" he asked. "What's widespread?"

"I've talked to a good many people," I replied.

"How many?"

"Dozens."

"Dozens? You've spoken to dozens of people in our news department or throughout the Dallas Morning News?"

"Yeah."

"Dozens. Fine. That's the way it is," he said, closing the topic to further discussion.

The point here is not that anyone can prove bad faith or conspiracy on the part of the company or any individuals about anything. The point is that bad faith is so widely assumed, or believed, or at least suspected. It's a very big part of the morale problem.

During the time I was in Dallas in January, Jim Moroney and Bob Mong were meeting with groups of newsroom people, trying to restore trust and confidence. "It's a huge public relations issue out there," Mong said. In effect, he said, they were "re-recruiting the staff. We have to do that. It's incredibly important, because there are people all over the country trying to recruit our people right now."

Moroney said he thought most of the staff members "do believe in this institution, the Dallas Morning News.... Maybe some of them have suspended this belief for a period of time, and Bob and I are trying to say, 'There's every reason for you to continue to believe in this newspaper the way you used to believe in it...that we're going to do great journalism.' "

Decherd finally said: "This is not a happy time at the Dallas Morning News. We know that. We acknowledge that. What we're saying is, let's take a step back together and understand what it is we have created as an organization...and put back together the commitment, the loyalty, the belief that will carry us forward."

The interview with these three executives lasted for about two hours. During that time, and later as I reviewed the tapes, I heard many words about going forward with a positive attitude. What I did not hear (and I listened hard for it) was anything resembling true regret, or a true comprehension of the pain that these men have inflicted. It sounded like salesmanship to me--good salesmanship, and persuasive in its way, but missing something vital.

Out in the newsroom, it's impossible to measure the ultimate impact of October 27. Dennis Fulton, the deputy business editor, says he thinks some people will never get over the layoffs, but that others seem unaffected. "There are still major concerns about those laid off," he says. "A large number haven't found work. That's disconcerting." Reporter Gretel Kovach says she thinks the paper is recovering pretty well. "It's been several months now," she says, "and I think people have really moved on."

So Robert Decherd may be right about winning back a sense of commitment to the cause. These people are journalists, after all. But regaining their loyalty--that is something else again.

Senior writer Charles Layton wrote about lobbying by media companies in AJR's October/November issue.

Research for this article was supported by a grant from the Fund for Investigative Journalism.