Business Examiner's B2B Blog

Again this month, as the death watch winds down for Seattle's Post Intelligencer, the owner of Tacoma's News Tribune and Olympia's Olympian newspapers announced another round of layoffs and cost-cutting is underway. McClatchy corporate headquarters in Sacramento said it will play to stockholders by slashing 1,600 jobs in search of $30 million is savings. And there will be salary reductions for many employees who do not lose their jobs, including those in the executive suite.

A recent article in the trade journal Advertising Age quoted veteran publishing analyst John Morton saying, "Not a lot of newspapers are operating at a loss." In fact, publicly-owned papers (McClatchy's TNT and daily O are such) averaged an operating profit of 10.8% in the first three quarters of 2008, he said. While not the margin that they used to have when they were monopolies, it's not nothing either.

And AA claimed that McClatchy's underlying newspaper portfolio just delivered a 21.5% operating profit margin. While never giving specifics, TNT Publisher David Zeeck has often told local audiences -- and written in his column -- that the Tacoma newspaper continues to operate profitably.

Newspaper ownerships groups, on the other hand, many of which like McClatchy grabbed huge gobs of debt to finance their growth, are finding it very challenging just to meet their debt service from components' operating profits, much less show a return to shareholders.