Newspaper editors purged MBAs from management years ago

Newspapers have not been blessed with the best and the brightest managers. Why? The executive editors sabotage real management and have purged MBAs from their ranks. Kill off the competition.

This is from the WSJ Deal Journal column, a Q&A with Mr. Knee, a highly respected  investment consultant

DJ: What would be your advice to newspaper owners?
Knee: You have seen people outsource everything from printing to editorial and indeed, any kind of journalism where your scale in the local community does not provide you with an advantage should be gotten elsewhere. If you find out how many people the large papers sent to the national conventions, you would wonder whether that’s economically justified. You have to focus on your competitive advantage, which is local. When the smoke clears, the local newspaper, which may not be the sexiest part of the newspaper industry but is overwhelmingly the largest and most profitable part of the industry, will be a smaller and more-focused enterprise whose activities will be directed to those areas where their local presence gives them competitive advantage and they will continue to generate as a result better profits than the supersexy businesses in the media industry asking for government or nonprofit help like movies and music.

The newspaper industry has not been blessed with the best managers, and generations of monopoly profits do dull the senses. On the journalism side, I think many managers would rather have avoided a fight with journalists than actually force them to think harder about what their readers want, rather than what they want their readers to want. In the economic environment we’re in, newspapers can’t afford to do every six-part investigative series they could have done before.

Meanwhile, the rank and file newspaper reporters who were busy covering their beats, don’t make much compared to the executive editors. 

Moma don’t let you’re kids grow up to be newspaper reporters. Have them study business, engineering, law or sales, even bar tending would earn them a better living. The executive editors who scratched their way to the top make big bucks for a while, until the host dies from bad management anyway. 

Ever wonder what kind of money the nation’s top newspapers pay their best journalsits? The top rung of the latter is set by the Newspaper Guild. Once you’ve lasted five or six years after about four years at a small daily and tuition of at least $20,000 a year at a respected J-school, this is it.

New York Times pays the most, $1,675.28 a week after two years. But that’s where it stays fixed until the next Guild negotiations. Of course, New York City has the highest cost of living expenses in the U.S.

Reuters pays $1,587.93 a week after six years.

The San Francisco Chronicle pays $1202.24 a week for six years of journalist experience. I know that is top for the Guild scale, but many of the hard workers, who put in more than 38 hours a week get additional pay above scale.

Consumer Reports takes the No. 1 position with $1,80410 a week scale after four years of experience. The union-biased “non-profit” magazine pays more that the New York Times or San Francisco Chronicle for their pro-union advertorial reports on products.

Can new online newspapers chage for its content? Jeff Jarvis of the LA Times says “No!” And he explains himself very well:

How’s that for a direct answer? Every rule has its exceptions — this one only a few: The Wall Street Journal (paid by expense accounts), Consumer Reports (which serves reviews, not news), iTunes (we may play a unique performance over and over, but I don’t read even my articles more than once) and porn (which is suffering the same problem newspapers are thanks to free competition from, uh, amateurs). But the rule of the new, post-scarcity economy is clear: Charging for news online is dangerous folly. Why? Let me count the reasons if not the dollars:

Once news is known, that knowledge is a commodity and it doesn’t matter who first reported it. There’s no fencing off information, especially today, when the conversation that spreads it moves at the speed of links.

There will be no limit to competitors. Readers, like water, will follow the path of least inconvenience. It’s impossible to compete against free. Have papers learned nothing from Craigslist?

In the old-content economy, one could make much money selling many copies of a product. In today’s link economy online, we need only one copy, and it is the links to it that give it value. So rather than complaining that Google should pay them for aggregating their headlines, news organizations should be grateful that Google does not charge for the links it gives and the readers it sends. Indeed, we should be spending our effort figuring out how to get more links to original reporting to support it.

Putting your content behind a wall cuts it off from the conversation and robs it of influence. Just ask New York Times columnists how much they disliked the pay wall the paper finally demolished.

Not all newspapers are going bankrupt. Many, in small monopoly markets are among the most profitable businesses in America with profit margins much higher than oil companies, Apple, EBay, Cisco, Sprint, AT&T, Google or Microsoft.  Gannett has the lion’s share of these markets. And also the highest ratio of MBAs in the media business. 

6 thoughts on “Newspaper editors purged MBAs from management years ago

  1. Pingback: UpComingCamera.Info » Blog Archive » How much do top journalisits make? Ah, not so much.

  2. Steve,

    Look at this memo to the already low-pay East Bay employees, it will help you get the picture.

    From: Armstrong, John
    Sent: Friday, June 27, 2008 2:59 PM
    To: &EB All


    As you all know, we are not immune to the financial challenges facing the economy in the East Bay and the newspaper business in general.

    We have just completed work on our budget for the fiscal year beginning July 1. We are forecasting a 10% drop in revenue over the next 12 months, which comes on the heels of a 17% revenue decline in this fiscal year. In my nearly five decades in this business, I’ve never experienced a downturn so deep and so broad.

    Given this continued erosion of our revenue base – coupled with a more than 20% jump in the price of our most expensive commodity, newsprint – we found we had no choice but to take additional steps to sharply reduce our operating costs.

    Consequently, I write to let you know we have started a significant restructuring of our operations, including employee layoffs from the management and staff ranks in all divisions and other changes to bring our overhead in line with lower revenue.

    The employees subject to layoffs today were notified individually. Also, we sent a letter to the Media Workers Guild requesting a meeting to discuss our intention to lay off, on July 11, approximately 29 newsroom employees.

    You will recall we achieved a reduction in our workforce in March through a buyout program. At the time we hoped that our revenue base would stabilize and additional job cuts could be handled through natural attrition.

    Unfortunately, the decline in revenue accelerated in April, May and June, spurred by the prolonged real estate slump, its ripple effects on virtually all segments of the East Bay economy and the continuing migration of ad dollars to the Internet. When it became obvious that another reduction in workforce was unavoidable, we concluded we could not utilize buyouts this time because we needed to move quickly and we could no longer accommodate the randomness of buyouts.

  3. I’m certainly not against MBAs being in the journalism business, Mick, just let’s not take on those retiring from AIG to spend more time with their defense attorneys.

    But let’s be serious a moment. I know you promote citizen journalism over the mainstream media but think a moment. Where would we be without real live reporters?

    We’ve already seen a dramatic decline in recent years, due to cost-cutting, of international journalism in the US. At the very time when we need to be more aware of the economic, political and military challenges posed by the rest of the world, we have less information from many newspapers and wire services that formerly ran foreign bureaus. Is that a good thing?

    We’re also seeing a dramatic decline in competitive US newspaper markets. Let’s face facts. Newspapers set the tone for coverage in their markets. TV and especially radio spend a lot of time reporting on what they read in newspapers. Newspapers lead, electronic media follow. The fact that we have moved to single-paper markets in most US cities is a cause for concern to me. Competition is a tool sharpener. When more than one newspaper competes with another in a market, it makes both papers better. It also leads to competing voices and a vigorous debate, which is good for our society.

    As a former newspaper reporter, I value the discipline of journalism. As someone who als0 values citizen journalism, I also value its contributions to the debate. Yet without reporters on the scene telling us the facts, what are citizen journalists going to talk about? Citizen journalism is mostly opinion, after all. We have thoughts on the news and what is happening in society. Those thoughts are important, but so are the facts reported to us by those who report.

    Let’s do this quick test. Your blog celebrates citizen journalism, which is fine. But when did you last leave your computer to actually cover a story? When did you personally interview an expert to gather their thoughts? When did you last do a public records search to ascertain the facts instead of reporting what government told you? When did you last report an original fact you discovered instead of commenting on the fact a reporter uncovered?

    Give me real reporters every day of the week.

  4. Join Joe Grimm and Colleen Eddy, director of Poynter’s Career Center, for a live chat about job salaries on Tuesday, March 24, at 1 p.m. During the chat, Grimm and Eddy will address this topic and answer related questions from participants.

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