Yes, it’s something big to worry about. This week’s announcement of the imminent bankruptcies of the Chicago Tribune and the Los Angeles Times, not to mention other papers owned by super-capitalist Sam Zell, is giving newspaper fans everywhere a lot to think about. Even here.
Now, some of Sam’s problems are of his own making. When he “bought” these papers, he borrowed bigtime against his holdings and employee stock funds, and now that advertising sales are off he hasn’t got enough revenue to pay off these creditors. His press release invoked the trendy image of the perfect storm, but it was partly a storm he created.
“A precipitous decline in revenue and a tough economy have coupled with a credit crisis, making it extremely difficult to support our debt. All of our major advertising categories have been dramatically impacted,” he said. What he meant is that he ignored the weather forecasts, went out without an umbrella, and now affects surprise that he’s been drenched.
Still, he’s right that newspaper revenues are way, way down, and it would be foolish not to notice this. It’s even true here at the Planet.
When we “bought” the assets (some old computers, some steelcase desks, two months remaining on a lease and a pretty good name) of this paper, six years ago this week, we had fond hopes of eventually breaking even on our investment. We knew enough about the declining newspaper market, even then, not to hope unrealistically to make a profit, or to sell the business for an inflated price. (Oh, we’d love to say that Sam Zell and Rupert Murdoch and Dean Singleton have been engaged in a bidding war to buy the Planet and borrow vast sums against it, and that we heroically refused to sell on behalf of the good burghers of Berkeley, but no one would believe that.)
The paper has become a critical success, winning a loyal core of readers and many prizes. We took this job on because we believed that for a democracy to function effectively people need to know what’s going on, and now we’re even more convinced that ordinary papers-for-profit can no longer do the job of telling them.
A radio story yesterday featured some journalism prof at USC calling the L.A. Times “the only public forum that Los Angeles has”—it’s certainly true that if citizens can’t engage in rational civil discourse in print, all that’s left is shouting at one another over the radio. Some have high hopes for the Internet, but a quick glance at the quality of the reader comments on sfgate.com will disabuse you of that fantasy.
We’ve recently been engaged in a thorough review of the numbers around here. We’re not borrowers by nature, so we haven’t borrowed any money, just spent what we could afford after selling a profitable software company. That has added up to an annual subsidy which has remained surprisingly consistent over the time we’ve been here.
Advertising revenues were up for a while, but so were expenses in that same period. We managed to cut expenses as we experienced the same “precipitous decline in revenues” that swamped Sam Zell, but that just kept our net subsidy the same.
We haven’t laid anyone off, but we haven’t filled vacancies as they arose. No one’s had a raise for a long time now. We’ve expanded our Web presence, though the same amount of reporting time is needed to produce news stories online. We’ve cut back to one print issue a week—that saved just a bit of money, but a lot of wear and tear on the executive editor and the publisher.
The wear and tear factor is a major reason that we’ve been reviewing the situation recently. We’re hale and hearty now, but no one’s immortal. If this paper is to continue to serve this community, it’s long past time for us to think about how to make it self-sustaining without our own contributed labor or even our financial subsidy. We’re by no means fabulously rich, and we’ve spent enough money by now that prudence and the larger economy require us to significantly reduce our contribution.
What are the alternatives?
It all depends on whether the people of Berkeley really want to have an independent newspaper. We’ve already asked those who do to subscribe, though it’s an odd notion for a free paper, and we’ve had a pretty good response in the $10/month category.
Now, however, we’re thinking that we ought to move toward the kind of model familiar from public broadcasting and arts organizations—that we ought to look not only for subscribers, but for supporters who are willing to give larger sums, and for sponsorships from commercial and non-commercial organizations that go beyond ordinary advertising.
Getting there will take some work. The Berkeley Daily Planet is currently a limited liability corporation, not a non-profit, so donors can’t get a tax deduction for their contribution. We could sell shares in the not-really-for-any-profit LLC to people who want tax losses, in theory, but that’s legally complicated.
As far as we’re aware, there’s no newspaper now in a community like Berkeley which is supported by its readers rather than by advertising. Subscriptions have long since stopped paying for newspapers. Even the New York Times has been forced to raise cash by taking a loan on its headquarters building.
We could, with effort, develop a model for a sustainable community newspaper which could be replicated elsewhere, at least in cities like this with a high proportion of educated and engaged residents. Papers in Palo Alto and Santa Cruz are experiencing similar problems. It might be possible to get grants to work on a pilot project of this nature.
Among other ideas, we’d like to expand our public presence in the community beyond its current footprint, showcasing to full advantage the benefits of having a real community news source.
The debate between Berkeley’s mayoral candidates which the Planet sponsored was a big standing-room-only success. We learned then that people are hungry for live interaction of all kinds. After the first of the year we plan to invite the mayor and the councilmembers to “Question Time” forums, modeled on the debates of the same name in the British Parliament.
We also think that the East Bay needs more interesting public lectures and author talks to fill the void left by Cody’s demise. We can leverage our reputation among our readers and our excellent access to print publicity, but organizing such events will also take plenty of volunteer public participation. We’d like to tap the creative energy which abounds in this area.
As a first step, we’re hoping to put together a group of advisors, wise people respected in the community, who can help us make the right decisions about how to get to a sustainable publically-supported business model as soon as possible. Let us know if you’d like to be part of all this excitement.