In fact, Warren Buffett has said don’t buy newspaper stock at any price. The days of the monopoly newspapers huge readership and advertising revenue are long gone.
California has turned into a high-tax, socialist state where the working middle class has to support millions of illegals and highly paid government employees. The state income tax has now broke the 10 percent barrier. The number of people leaving has for the first time in 70 years outpaced the incoming number, (including illegals).
Nevada, Arizona, California and Florida had the nation’s top foreclosure rates. In Nevada, one in every 70 homes received a foreclosure filing, while the number was one every 147 in Arizona. Rounding out the top 10 were Idaho, Michigan, Illinois, Georgia, Oregon and Ohio.
Among metro areas, Las Vegas was first, with one in every 60 housing units receiving a foreclosure filing. It was followed by the Cape Coral-Fort Myers area in Florida and five California metropolitan areas: Stockton, Modesto, Merced, Riverside-San Bernardino and Bakersfield.
The Scobleizer has written a good blog post on the subject. Scoble is an IT and social media guru in Silicon Valley who often visits Texas. He interviewed the Texas governor, Rick Perry and they Twitter each other. Even after the real estate bubble burst in 2005-06, and homes fell in price by 20 percent each of the last three years, homes are still overpriced and only 10 percent of California households can afford median-priced homes. Nationally, 50 percent can afford the median-priced home.
The state of California has lost it’s glamorous image. I think of it now as a congested, welfare state with the highest taxes in the United States and the largest “public” workforce to support. Did you know that most of the government employees retire at full pay after 20 years of service?
Joel Kotkin of the SF Chronicle wrote this piece in 2007.
California has been losing ground in the new millennium. In 2004-05, it fell to 17th, behind not only fast-growing Arizona and Nevada but also Oregon, Washington and rival “nation-state” Texas.
Job creation has been even less impressive. In the Bay Area and Los Angeles, it can only be considered mediocre or worse. If not for the strong performance of the interior counties of the state — what Bill Frey and I call the “Third California” — the state already would be rightly considered a laggard when it comes to creating employment.
More disturbing, as California’s population has grown — largely from immigration — per-capita income growth has weakened. From the 1930s to as late as the 1980s, Californians generally got richer faster than other Americans. In 1946, Gunther reported, Californians enjoyed the highest living standards and the third-highest per-capita income in the country.
Today, California ranks 12th in per-capita income. And it’s losing ground: Between 1999 and 2004, California’s per-capita income growth ranked a miserable 40th among the states.
This slow growth reflects a gradually widening chasm between social classes. Although the rest of the country has also experienced this trend, the gap between rich and poor has expanded more rapidly in California than in the rest of the country.
Today, notes a recent study by the Public Policy Institute of California, California has the 15th-highest rate of poverty of all American states. When cost of living adjustments are made, only New York and the District of Columbia fare worse. Tragically, many of California’s poor are working. Somehow, this does not seem the best road to the governor’s dream of a “harmonious” society.
How did this happen to our golden state? There are many causes.
Certainly poverty has been greatly exacerbated by huge waves of immigration, particularly from Mexico and other developing countries. But other states — including Texas and Arizona — have also absorbed many immigrants, as well as people from the rest of this country, and have not experienced similarly strong jumps in their poverty rates.
Changes in the economy are clearly suspect. From the 1930s to the 1980s, California created a broad spectrum of opportunities for white- and blue-collar workers alike. Even the 1990s expansion, suggests Debbie Reed of the policy institute, helped reduce poverty by expanding a wide range of employment opportunities.
Today, economic growth in California — like that in much of the Northeast — seems tilted largely toward elites. Once a state known for its relative social democracy, the Golden State is becoming what Citigroup strategist Ajay Kapur has dubbed a plutonomy, dominated largely by a small wealthy class and their spending.
For example, despite all the hype about the renewed Internet boom in Silicon Valley, there has been only modest expansion of employment, even in the past year. Undoubtedly lavish takings by a relative handful of engineers, managers and investors are boosting high-end restaurateurs in San Francisco and revving up BMW sales, but benefits don’t seem to accrue as much to assemblers, midlevel managers and other high-tech workers.
Similarly, the governor’s entertainment industry friends, as well as art and developer elites close to Mayors Antonio Villaraigosa and Gavin Newsom, may feel these are the best of times. But Los Angeles and San Francisco, along with Monterey, now suffer a poverty rate of more than 20 percent, among the highest level in the country.
Parallel to these developments, California is losing its once broad middle class, the traditional source of its political balance and much of its entrepreneurial genius. Outmigration from the state is growing and, contrary to the notions of some sophisticates, it’s not just the rubes and roughhouses who are leaving.
Indeed, an analysis of the most recent migration numbers shows a disturbing trend: an increasing out-migration of educated people from California’s largest metropolitan areas. Back in the 1990s, this was mostly a Los Angeles phenomena, but since 2000, the Bay Area appears to be suffering a high per-capita outflow of educated people.
This middle class flight is likely driven by two things: greater opportunities outside the state and the cost of housing in-state. Over the past 50 years, housing prices in coastal California in particular have grown much faster than elsewhere; the Bay Area’s rate of housing inflation over the past 50 years has been twice the national average.
Given the shrinking per-capita income advantage for being in California, moving elsewhere increasingly makes sense, particularly for those who do not already own homes and don’t have wealthy parents. In some parts of the state, barely 10 percent of households can now afford a median-price home; in the rest of the country that number is roughly 50 percent.
These trends suggest that California could be devolving toward an unappealing model of class stratification. As educated white-collar and skilled blue-collar workers leave, businesses in the state will be forced to truncate their operations — perhaps having an elite research lab, design office or marketing arm in California but shunting most midlevel jobs elsewhere.
Joe Mahoney © The Rocky
Share Your Thoughts
What do you think about Scripps’ decision to close the Rocky? We want to hear your thoughts. You can talk live with Mark Wolf by clicking here, or send a letter to the editor at email@example.com
The Rocky Mountain News publishes its last paper today (Friday).
Rich Boehne, chief executive officer of Rocky-owner Scripps, broke the news to the staff at noon today, ending nearly three months of speculation over the paper’s future.
“People are in grief,” Editor John Temple said a noon news conference.
But he was intent on making sure the Rocky’s final edition, which would include a 52-page wraparound section, was as special as the paper itself.
“This is our last shot at this,” Temple said at a second afternoon gathering at the newsroom. “This morning (someone) said it’s like playing music at your own funeral. It’s an opportunity to make really sweet sounds or blow it. I’d like to go out really proud.”
Boehne told staffers that the Rocky was the victim of a terrible economy and an upheaval in the newspaper industry.
“Denver can’t support two newspapers any longer,” Boehne told staffers, some of whom cried at the news. “It’s certainly not good news for you, and it’s certainly not good news for Denver.”
Tensions were higher at the second staff meeting, held to update additional employees who couldn¹t attend the hastily called noon press conference.
Several employees wanted to know about severance packages, or even if they could buy at discount their computers.
Others were critical of Scripps for not seeking wage concessions first or going online only.
But Mark Contreras, vice president of newspapers for Scripps, said the math simply didn’t work.
“If you cut both newsrooms in half, fired half the people in each newsroom, you’d be down to where other market newsrooms are today. And they’re struggling,” he said.
As for online revenues, he said if they were to grow 40 percent a year for the next five years, they still would be equal to the cost of one newsroom today.
“We’re sick that we’re here,” Contreras said. “We want you to know it’s not your fault. There’s no paper in Scripps that we hold dearer.”
But Boehne said Scripps intended to keep its other media, both print and in broadcast, running.
“Scripps has been around for 130 years. We intend to be around another 130 years,” Boehne said. “If you can’t make hard decisions, you won’t make it.”
After Friday, the Denver Post will be the only newspaper in town.
Asked if pubilsher Dean Singleton now walks away with the whole pie, Boehne was blunt.
“He walks away with an unprofitable paper, $130 million in debt and revenues that are down 15-20 percent every year,” Boehne said.
Asked if Singleton would have to pay for the presses now, Boehne added, “We had to kill a newspaper. He can pay for the presses.”
Reaction came from across the nation and around the block.
“The Rocky Mountain News has chronicled the storied, and at times tumultuous, history of Colorado for nearly 150 years. I am deeply saddened by this news, and my heart goes out to all the talented men and women at the Rocky,” U.S. Sen. Michael Bennet said in a statement. “I am grateful for their hard work and dedication to not only their profession, but the people of Colorado as well.”
At the Statehouse, Rep. Joe Rice (D-Littleton), said the paper would be missed.
“The Rocky Mountain News has been a valued institution in Denver,” he said.
“It’s a sad, sad day.”
Long-time Denver real estate agent Edie Marks called the Rocky a voice of reason, moderation and common sense.
“I think that it was the fairest newspaper, the most diverse, and am important part of my daily life,” she said. “I’m going to miss it tremendously.”
On Dec. 4, Boehne announced that Scripps was looking for a buyer for the Rocky and its 50 percent interest in the Denver Newspaper Agency, the company that handles business matters for the papers. The move came because of financial losses in Denver, including $16 million in 2008.
“This moment is nothing like any experience any of us have had,” Boehne said. “The industry is in serious, serious trouble.”
Didn’t Obama sign the trillion dollar stimulous bill in Denver? What did that do for the Rocky?
The San Francisco Chronicle ready for some major “right sizing.”
After some more streamlining in addition to a new printing process off site, the largest newspaper in Northern California should begin to be profitable again.
In a posted statement, Hearst said if the savings cannot be accomplished “quickly” the company will seek a buyer, and if none comes forward, it will close the Chronicle. The Chronicle lost more than $50 million in 2008 and is on a pace to lose more than that this year, Hearst said.
Frank J. Vega, chairman and publisher of the Chronicle, said, “It’s just a fact of life that we need to live within our means as a newspaper – and we have not for years.”
Vega said plans remain on track for the June 29 transition to new presses owned and operated by Canadian-based Transcontinental Inc., which will give the Chronicle industry-leading color reproduction. That move will save a few million annually due to the reduction of highly paid pressmen.
If the reductions can be accomplished, Vega said, “We are optimistic that we can emerge from this tough cycle with a healthy and vibrant Chronicle.”
The company did not specify the size of the staff reductions or the nature of the other cost-savings measures it has in mind. The company said it will immediately seek discussions with the Northern California Media Workers Guild, Local 39521, and the International Brotherhood of Teamsters, Local 853, which represent the majority of workers at the Chronicle.
“Because of the sea change newspapers everywhere are undergoing and these dire economic times, it is essential that our management and the local union leadership work together to implement the changes necessary to bring the cost of producing the Chronicle into line with available revenue,” Frank A. Bennack, Jr., Hearst vice chairman and chief executive, and Steven R. Swartz, president of Hearst Newspapers, said in a joint statement.
From the Newsosaur:
SF Chron cost-cut target equals 47% of staff
That’s the magnitude of the challenge facing the managers and union representatives who were tasked today by Hearst Corp. to find a way to cut the paper’s mushrooming deficit – or else.
After losing more than $1 billion without seeing a dime of profit since purchasing the paper in 2000, the Hearst Corp. today threatened to sell or close the Chronicle if sufficient savings were not identified to staunch operating losses surpassing $1 million a week. Without significant cost reductions, the losses would accelerate this year as a result of the ailing economy, said Michael Keith, a spokesman for the paper.
To wipe out a $50 million loss, let alone make a profit, the paper would have to eliminate 47% of its entire staff
Meanwhile, on the East Coast:
The latest Hartford Courant (former Times-Mirror newspaper) layoffs were announced last night – political reporter Mark Pazniokas is among those cut from the newspaper. We’ve been told these names as well – please correct us if we have anything wrong: Jesse Hamilton of the Washington bureau, Religion Reporter Elizabeth Hamilton, Business Reporter Robin Stansbury, Environment Reporter David Funkhouser, reporters Steve Grant and Anna Marie Somma, sportswriter Matt Eagan, itowns editor Loretta Waldman, itowns reporter Nancy Lastrina, administrative assistant Judy Prato, Marge Ruschau, Features copy editors Adele Angle and David Wakefield, and library staffer & researcher Owen Walker.
We’re told that editor/reporter Kate Farrish resigned earlier this week as did editor John Ferraro.
Denis Horgan is calling it the Mardi Gras Massacre.
Paul Bass has more in the New Haven Independent.
Now, back to Texas:
Memo from San Antonio Express-News’ editor
From: Rivard, Robert
Sent: Wednesday, February 25, 2009 10:44 AM
To: SAEN Editorial
Subject: We are canceling this morning’s news meeting for obvious reasons.
By now you have read Tom Stephenson’s message to all employees. Every division of the Express-News will be affected, including every department in the newsroom. Incremental staff and budget cuts, we are sorry to say, have proven inadequate amid changing social and market forces now compounded by this deepening recession.
It is not lost on us as journalists in this difficult moment that we have built an audience of readers, in print and online, that is larger and more diverse than at any time in our century and half of publishing. We have done that at the Express-News through a commitment to excellence and public service. Now we must find ways to maintain these high levels of journalistic distinction even as valued colleagues depart. It is an unfortunate but undeniable fact that declining advertising revenues are insufficient to support our operations at current levels. At the same time, more and more people have become accustomed to reading us at no cost on the Internet. As a result, we are reducing the newsroom staff by some 75 positions, counting layoffs and open positions we are eliminating.
As a first step to securing our future and continuing to serve the community, we are undergoing a fundamental and painful restructuring of the newsroom staff. We will have fewer departments and fewer managers, and yes, fewer of every class of journalist. After we reorganize and consolidate additional operations with the Houston Chronicle, we will then turn to finding new ways to create and present the journalism we know is vital to the city and the region. There is every indication the community we serve recognizes our importance and wants the Express-News to succeed.
The newsroom leadership team will begin now to meet with individuals whose jobs are being eliminated. Brett Thacker and I are working with these editors to carry out such notifications as swiftly and humanely as possible. No one is being asked to leave the Express-News today unless you so choose. March 20 will be the final day for those whose jobs are being cut, at which time they will then receive involuntary separation packages that include two weeks’ pay for each year of service up to one year’s pay, along with other benefits. Some production journalists involved in the consolidation project with the Houston Chronicle will be asked to stay on until that project is completed in the coming months. Those who do stay until the completion will receive their separation packages at that time.
We have worked to preserve the size and depth of our newsroom in every imaginable way these past months and years, but events beyond our control have overwhelmed those efforts. Newsrooms become like families, but companies in every industry reach a point where they face fundamental, sometimes harsh change in order to preserve their viability. We are at that point. Most of you read yesterday’s news regarding the San Francisco Chronicle and recently became aware of pending staff cuts at the Houston Chronicle. Our intention is to get through these difficult days and work to remain an indispensible source of news and information through the recession and beyond.
Hearst purchased the Chronicle in 2000, but soon afterward felt the impact of an economic downturn in the dot.com sector as well as the loss of classified advertising to Craigslist and other online sites. The problems have been exacerbated by the current recession.
In the news release, the privately-held, New York-based company said that the Chronicle has had “major losses” since 2001.
Back on the West Coast, there is no safe haven.
Woe is us, McClatchy warns
Sacramento Bee employees should expect a serious wave of layoffs in early March, as well as other cost-cutting measures now being considered, including wage cuts and mandatory furloughs as McClatchy Newspapers’ financial crisis worsens, company representatives told the Guild’s bargaining committee in a 90-minute session Thursday.
Mercury Bargaining Bulletin 9
Mercury News negotiators said Tuesday they need to find $1.5 million by cutting wages and benefits paid to Guild members annually in the face of the economic woes facing the company. The company’s announcement came at a bargaining session Tuesday that kicked off an effort by management and the Guild to expedite the process of reaching a new contract to replace the one that expired October 31.
“Given the losses the Chronicle continues to sustain, the time to implement these changes cannot be long. These changes are designed to give the Chronicle the best possible chance to survive this economic downturn and continue to serve the people of the Bay Area with distinction, as it has since 1865,” Bennack and Swartz said in their statement.
“Survival is the outcome we all want to achieve,” they added. “But without specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle, and, should a buyer not be found, to shut down the newspaper.”
The Hearst statement further said that cost reductions are part of a broader effort to restore the Chronicle to financial health. At the beginning of the year, the Chronicle raised its prices for home delivery and single-copy purchases.
Hearst owns 15 other newspapers including the Houston Chronicle, San Antonio News-Express and the Albany Times-Union in New York . Hearst announced Jan. 9 that in March that if a buyer is not found it will close Seattle Post-Intelligencer, which has lost money since 2000.
Vega said readers and advertisers will see no difference in the Chronicle during the discussions with the unions.
“Even with the reduction in workforce, our goal will be to retain our essential and well-read content,” Vega said. “We will continue to produce the very best newspaper for our readers and preserve one of San Francisco ‘s oldest and most important institutions.”
The Chronicle, the Bay Area’s largest and oldest newspaper, is read by more than 1.6 million people weekly. It also operates SFGate, among the nation’s 10 largest news Web sites. SFGate depends on the Chronicle’s print news staff for much its content.
The San Francisco Bay Area is home to 21 daily newspapers covering an 11-county area.
The Chronicle’s news staff of about 275, even after a series of reductions in recent years, is the largest of any newspaper in the Bay Area.
“While the reductions are an unfortunate sign of the times, the news staff has always been resilient in San Francisco ,” said Ward Bushee, editor and executive vice president. “We remain fully dedicated toward serving our readers with an outstanding newspaper. We are playing to win.”
The area’s other leading newspapers – the Bay Area Media News Group that includes the San Jose Mercury News, Contra Costa Times and Oakland Tribune – also have seen revenues decline sharply and cut staff.
These problems are a reflection of those faced by newspapers across America as they experience fundamental changes in their business model brought on by rapid growth in readership on free internet sites, a decline in paid circulation, the erosion of advertising and rising costs.
Advertising traditionally has offset the cost of producing and delivering a newspaper, which allowed publishers to charge readers substantially less than the actual cost of doing business. The loss of advertising has undermined that pricing model.
In the case of the Chronicle, Vega said the expense of producing and delivering the newspaper to a seven-day subscriber is more than double the $7.75 weekly cost to subscribe.
At the beginning of the year, in an effort to evolve its business model and offset its substantial losses, the Chronicle raised its subscription and newsstand prices, taking a cue from European papers that charge far more than their American counterparts.
“We know that people in this community care deeply about the Chronicle,” Vega said. “In today’s world, the Chronicle is still very inexpensive. This is a critical time and we deeply hope our readers will stick with us.”
The challenge the Chronicle faces, Vega said, is to bring its revenues from advertising and circulation into balance with its expenses so that the newspaper can at least break even financially.
“We are asking our unions to work with us as partners in making these difficult cost-cutting decisions and reduction in force to ensure the newspaper survives,” Vega said.
Michael Savage will have some candid comments on the layoffs. What about the content of the Chronicle’s “news?”
The union reps “negotiate” their fate:
Cost-Cutting Talks Begin –
Guild leaders met with representatives from The Chronicle and Hearst Corp. this morning to discuss the company’s cost-cutting proposal.
We opened the meeting by underscoring our commitment to our membership and the community to do all we can to reach an agreement that will keep The Chronicle open and return it to profitability.
The company seeks a combination of wide-ranging contractual concessions in addition to layoffs, the exact number of which the company said it did not yet have. For Guild-covered positions, the company did say the job cuts would at least number 50. Other proposals include removal of some advertising sales people from Guild coverage and protection, the right to outsource — specifically mentioning Ad Production — voluntary buyouts, layoffs and wage freezes.
We plan to closely analyze this proposal over the next few days and explore every possible alternative. Meetings will be held to discuss details with members of the bargaining unit. An informational membership meeting will be held from 5-7 p.m.tonight (Tuesday Feb. 25) at the Guild office, 3rd floor conference room.
Management reiterated its commitment to keeping The Chronicle open and to working with the Guild to secure a viable future. Despite the difficult economic environment, we are confident that by working together we can find solutions to any problems that confront us.
If you have any questions or suggestions, contact your shop steward or e-mail Unit Chair Michelle Devera, Local President Mike Cabanatuan or Unit Secretary Alissa Van Cleave.
Michelle Devera, Chronicle Unit chair, firstname.lastname@example.org
Michael Cabanatuan, Local President, email@example.com
Alissa Van Cleave, Chronicle Unit secretary, firstname.lastname@example.org
Wally Greenwell, Chronicle Unit vice chair
Gloria La Riva, president, Typographical Sector
Carl Hall, Local Representative