Eye of the Media Storm

On the block, the 'Statesman' fiddles while the industry burns

Eye of the Media Storm
Illustration by Craig Staggs

From his office atop the Bat Cave, the Austin American-Statesman's lakefront headquarters, new Publisher Michael Vivio sees the dark clouds swirling around his industry. Every day there's more bad news: newspapers closing, filing for bankruptcy, dumping employees. He's only been on the job for five months, and the paper has been for sale the entire time, leaving the staff in limbo while they wait for new owners and the start of what will surely be a turbulent era.

Hanging over it all, Vivio has to confront the sense of impending doom surrounding the industry: the idea that newspapers are toast, dinosaurs, a flawed business, what Vivio calls the "cloud of survivability."

"It's pretty damn annoying," Vivio said. "Survivability" is (locally at least) a nonissue – the Statesman remains profitable and is still the most widely read source of news in Austin, he says. "We feel it would be foolish business to start messing with that and experiment and float New Coke out there."

Yet, some of the doomsayers are probably right, he acknowledges. Some newspapers will fail. And he knows the Statesman, which continues to downsize, is unlikely to emerge unscathed from the carnage gripping the industry. "If the economy continues to get worse, we'll have to adjust like any other business," Vivio said. "It's rough out there."


Save the Dinosaurs

The challenge facing all newspaper companies is to develop a profitable newspaper for the next generation, to retool and reshape a dead-tree product into a lively, relevant part of the modern media world. Skeptics doubt they can pull it off.

"I don't so much mind that newspapers are dying – it's watching them commit suicide that pisses me off," the late Molly Ivins wrote, capturing the frustration of many people who love newspapers and don't believe their demise is an inevitable consequence of history.

Blaming that darn Internet and the recent economic crisis for the industry's woes ignores 20 years of bonehead decisions by newspaper companies – failed initiatives, stupid acquisitions, and a criminally slow response to changing times, to list just a few. After a wave of closures and consolidations, papers such as the Statesman were left as virtual monopolies, fat and happy, unchallenged and uninspired.

As the market crumbles, critics wonder if newspaper managers are equipped to handle the modern competition. "[P]rint is killing print," Advertising Age columnist Simon Dumen­co wrote recently. "More specifically, a handful of half-wit overlords at many – if not most – big print-media companies are killing print." The newspaper industry is "not only filled with f--k-ups, it coddles them."

All agree that the industry's situation is dire. In the third quarter of 2008, print-advertising revenues fell 19% from a year earlier, according to the Newspaper Association of America. The Los Angeles Times and The Atlanta Journal-Constitution, flagship of Statesman owner Cox Enterprises, saw double-digit circulation declines over the last two years. The Tribune Co. (owner of the L.A. Times and Chicago Tribune), Minneapolis' StarTribune, The Philadelphia Inquirer, and the Philadelphia Daily News have filed for bankruptcy protection in recent weeks; dozens of other papers teeter on the brink. Last week, Denver's 150-year-old Rocky Mountain News closed its doors.

Cox executives insist the Statesman is better positioned than most papers to weather the storm. Circulation has slid but not plummeted – the average Monday-through-Friday paid circulation dropped from 169,864 in September 2006 to 151,520 in September 2008, a 10.8% decline over two years, according to the Audit Bureau of Circulations. And beyond the newspaper, the Statesman offers several appealing attributes to potential buyers, including its websites – Statesman.com and Austin360.com – a thriving commercial press operation (which prints the Chronicle, among other publications), and the company's roster of steady local community newspapers, as well as 19 acres of prime lakefront land, home to the company's headquarters.

At this point, the paper has been able to avoid the wholesale layoffs imposed by many companies, in favor of allowing the staff to slowly dwindle through attrition, losing about 10% of staff in the last two years. In February, the paper offered a voluntary retirement package to employees 55 and older, hoping to eliminate more positions.

Beyond whittling down the staff, the States­man, like most papers around the country, has responded to the crisis by shrinking the newspaper, cutting features and pages, offering readers less and less and hoping they won't notice. The amount of space allowed for news has shrunk, while advertisers can now buy almost any location on any page – including portions of the front page, once sacrosanct territory. Newspaper managers around the country crow that newsrooms will "just have to learn to do more with less," but they've offered few initiatives to maintain interest in newspapers, no corresponding new features to woo readers.

"All we're seeing in the business that is overleveraged is people throwing everything out of the balloon as fast as they can to get over the mountain," said Alan Mutter, a former top editor at the Chicago Sun-Times and San Francisco Chronicle, who now writes a widely read industry blog, Reflections of a Newsosaur. "They've come up with no new ideas."


To Boldly Go ...

Michael Vivio
Michael Vivio (Photo by John Anderson)

In many ways, the Statesman has changed little since the LBJ era. It is undoubtedly a better-looking paper, with big color photos and catchy graphics, but there have been few changes in the basic format – the mix of sections devoted to news, Business, and Sports and Life & Arts, which still teeters dangerously close to the "ladies pages" of old, filled with recipes, "Dear Abby," horoscopes, fitness advice, and fashion coverage.

"What newspapers have done is largely play defense," said industry analyst Ken Doctor of Outsell, a consulting firm.

The Statesman's bold editorial moves in recent years fall into the throwing-and-catching category of newspapering – for example, adding a society column and a consumer-advocate feature, "Statesman Watch" – the types of features other papers have offered for years. The bulk of the new editorial initiatives have been advertiser-driven – most noticeably expanded Home, Car, and religion sections.

If the goal is to compete for the attention of readers, many of the Statesman's recent changes are a little bizarre. On Mondays the paper now devotes space on p.1 – p.1! – to a calendar of upcoming events. The editors' big move to jazz up the Business section was to devote a half-page, once a week, to commercial real estate news briefs.

Beneath the timidity is an entrenched conservatism, a clear unwillingness to stir up the paper's core audience. If it often seems that the Statesman shows little interest in younger readers, it's no accident. The paper's strategy is to focus on the 40-59 age group, Vivio says. It's "the sweet spot" of the paper's readership, a group that has already shown a willingness to pay for the paper. "It's easier to grow that 60 percent [of readers] to 68 percent than it is to grow the smaller number of younger readers," Vivio said. Statesman studies have found that 90.9% of its subscribers have been with the paper for more than a year. "As an industry, we're getting more appreciative of people we have," Vivio said.

To critics, newspapers like the Statesman appear to be withdrawing into their shells, often going to ridiculous lengths not to offend. The Statesman is willing to do battle with the Pedernales Electric Cooperative on the news pages, but a few years ago, in a famous incident, it wouldn't run a Doonesbury strip with the word "turd" in it.

Last year, in a rare burst of newspaper-related controversy, Editor Fred Zipp took the unusual step of apologizing to readers for the front-page placement of a fairly mild satirical column written by staff writer Patrick Beach about the liberal Netroots Nation convention in Austin. In re­sponse, industry observer Nancy Nall Derringer wrote that Zipp's genuflecting was further evidence of the "wussification" of newspapers.


The Daily Menu

Creeping "wussification," coupled with an unwillingness to make big changes, helps explain why daily newspapers are struggling, critics charge. "The problem is too many editors are trying to preserve the front-page era," said Mutter. "Newspapers don't want it to change. That's why they're dying."

The Statesman's philosophy is not to be too "disruptive" of its core readership, Zipp said. Redesigns in Chicago; Tampa Bay, Fla.; and elsewhere have resulted in a sharp backlash from readers, he noted. "Any marked deviation produces huge outrage," said Zipp, who was promoted to editor last year after Rich Oppel retired. (Oppel is now part of a group trying to buy the paper.) Few resources are spent trying to attract new readers, Zipp acknowledges. "We're focusing on people who we know are still receptive to a full-service newspaper," he said. "They have a fairly fixed idea of what [the newspaper] is."

There's no doubt Zipp has a clear vision of the Statesman's historical format – he's worked for the paper for 15 years, starting as a Sports copy editor. (Soon after his promotion, Zipp picked as his No. 2 Debbie Hiott, who has been with the Statesman her entire career.) Behind the scenes, there has been a definite shift in the paper's mission, Zipp says. "It wasn't too long ago that we embraced being the paper of record," he said. "I don't think we feel that is part of our mission anymore." Gone are the days when the paper might track a story for several days, writing previews and follow-up stories – what Zipp calls the "incremental turn of the screw" stories. "We just don't do that anymore," he said.

Outside the front page of the two news sections, there's simply no room for that type of commitment to a story. Using the old formula, the inside pages are filled with wire stories covering state, national, and international news. Once you get past the press conferences, fires, court cases, pages of paid obituaries, and press-release rewrites, there's not much room left for anything else.

Zipp says, in the future, the paper will focus more on enterprise, in-depth, and "nuanced" stories to appeal to its core audience. But many of the paper's changes seem in direct conflict with that goal. For example, the Business section, which might appeal to hardworking suburbanites, is razor-thin these days and often tucked into the back of the Metro section. And the paper now uses the second page of each section – historically prime real estate – for brief news items, making it that much easier for readers to toss aside the paper after a quick scan.

Many observers believe newspapers have to rethink their core mission, to move away from the "buffet" approach of offering something for everybody. Zipp agrees – but only to a degree. "The buffet will have fewer choices as time goes on," he said. "But the buffet will still be the model, because that's what a full-service newspaper is."

Unfortunately, offering readers fewer choices is not exactly a winning growth strategy, and it's also one reason investors are fleeing newspaper companies. And continually dumping veteran reporters and editors will make it even harder to create compelling products, both online and in print. More than 20,000 journalists lost their jobs in the last two years, according to industry estimates. Locally, in response to the recent voluntary retirement offer, the Statesman lost veteran reporters Laylan Copelin and Bob Banta, editorial writers Bruce Hight and David Lowery, as well as TV writer Diane Holloway and her spouse, legendary editorial cartoonist Ben Sargent.

Fred Zipp
Fred Zipp

"You can't do journalism without the foot soldiers with some level of expertise and institutional knowledge," said Bill Minutaglio, a longtime Texas journalist and clinical professor in the University of Texas School of Journalism. "It is tantamount to suicide to keep cutting and cutting."


Looking for Answers

Vivio says he gets it. "Newspapers are changing, absolutely," he said. "Will they look like they do now 10 years from now? No." He understands that standing pat is not a winning strategy for newspapers. "You have to put your bets on the table," he said.

When he was publisher of the Waco Tribune-Herald, Vivio attracted national attention by leading a redesign of the newsstand edition to emphasize one big, dramatic story with an attention-getting headline. Newsstand sales jumped 7%, "a startling improvement that has continued," the American Journalism Review reported in January 2008.

Vivio believes the immediate future for the Statesman is to develop "niche" products, using the capabilities of the paper's new press technology to target publications to specific groups. For example, there are plans to revive the weekly TV guide section, which was dropped from the paper last year, and send it only to subscribers willing to pay an extra 25 cents a week. Future products may focus on expanded sports coverage, political opinion, and games and puzzles, Vivio says. "Reaching Austin, Texas, is going to mean more than one product that will do it all."

"Customization" is a popular word for Vivio these days. Subscribers may pay different rates for different editions of the paper. Or maybe they'll pay one rate to have the paper delivered to their doorsteps and another to have it dropped off on the corner.

But the newspaper's challenges go far beyond the editorial product. Costs for newsprint, gas, and ink make newspapers a high-overhead business in a low-cost digital world. At the same time, online Craigslist has virtually destroyed the classified advertising business – and papers have thus far been unable to develop a response, either in print or online.

One of Vivio's first moves was to reorganize the Statesman's ad department, switching from geographic territories to beats centered on different sectors of the business community. "Sales reps in the newspaper industry used to take a fax request, set a price, and that was the selling," Vivio said. "They have to be more sophisticated than they used to be." Newspaper companies are now "selling an audience," he says, which includes both the online and print readership.

Growing the Web audience is clearly priority No. 1 for the Statesman, as it is for many newspapers. The Statesman was one of the first newspapers in the country to exploit a new Yahoo! sales program, and its Twitter activity ranks among the top newspaper sites in the country. The company's biggest mass media campaign last year focused on Statesman.com, not the newspaper.

Yet, many newspapers are already starting to see online revenues flatten. Alternative news sources, from The Huffington Post to Yahoo!, which offer free articles from all over the Web, are emerging to grab online news junkies. Although newspaper companies have successfully migrated their newspaper content to the Web, they completely missed the MySpace/Facebook social-networking phenomenon, the growth of YouTube viral video, and the music-download business, among other online developments.

Even with steady growth in recent years, websites typically generate less than 10% of a newspaper company's advertising revenue, according to industry analysts. (Vivio says the Statesman's websites generate more than 10%, although he declined to be specific.) The Statesman boasts one of the largest online audiences of any newspaper in the country, but Statesman.com is still read by only 21% of Austin adults, compared to 62% who read the printed newspaper, according to Scarborough Research.

There is a growing belief that newspapers need to find a way to charge for online content – that was the conclusion of a recent Time magazine cover story headlined "How to Save Your Newspaper." But charging for stories online has failed miserably in the past, resulting in sharp declines in traffic.

Ultimately, a new model may be the only way to make newspapers viable, some industry executives believe. Nonprofit groups, for example, may be better suited to run newspapers in the public interest, removing the market pressures. The Columbia Journalism Review recently suggested that Sweden might have had the right idea in setting up public subsidies to help papers, recognizing their importance in a free society – an issue often lost in the debate about the future of newspapers.


The Other Shoe ...

None of the industry's moves up until now has convinced investors that newspapers are ready to take their place in the future media landscape. "There is no quantifiable evidence that anyone in the industry has taken any real path to recovery," said Mike Simonton, an analyst with Fitch Ratings.

For the Statesman, on the market and subject to the whims of the market, it's something of a moot point. The potential sale is a wild card. Several newspapers were thriving until they were purchased by buyers thereupon saddled with huge amounts of debt. No one really knows what the future holds for the Statesman, until the ownership issue is settled.

"We haven't spent a lot of time thinking past 2009," Zipp said. "It doesn't seem like a constructive way to spend our time."

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KEYWORDS FOR THIS STORY

Austin American-Statesman, Michael Vivio, Fred Zipp, Rich Oppel, Cox Enterprises, Ben Sargent

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