If we’re going to be a one-newspaper town, lots of smart media-watchers speculate it will happen through a Joint Operating Agreement. We’d still have a Pioneer Press and a Star Tribune with separate newsrooms, but their owners (Media News and whoever) would share a single, less-costly business operation.
Don’t hold your breath. And don’t take my word for it.
Alan Mutter, an ex-newspaperman turned investor who writes “Reflections of a Newsosaur,” pretty much demolishes the JOA scenario here. There’s simply not enough revenue; JOAs — an artifact of the ’70s, which turned out to be happier times — have or will fail in Albuquerque, Cincinnati, Denver, Seattle and Tucson.
Mutter spun this theory Friday when I called him for his prediction on our market’s future. Now he’s written his forecast for all to see: it will be two weak players waiting for the other to fall. They can’t afford to buy each other out, at least until a forced liquidation; both papers remain more valuable — and thus too pricey — as going concerns, especially if costs come down.
Media News owner “Lean” Dean Singleton said as much in Saturday’s Pioneer Press:
When asked if he was interested in buying the Star Tribune, Singleton replied, “I don’t think there are any buyers for newspapers today.”
In any case, what happens at the Star Tribune will have an impact beyond that paper.
“All newspapers and their employees are going to have to face (the) reality of a lower cost structure,” Singleton said. “When it’s time for us to sit down and look at contracts again we’ll have to face that reality. … To an extent, what happens at the Star Tribune on the cost side will (have) an influence on where we end up long-term in costs, although I can say from experience that the unions at the Pioneer Press have been very realistic and cooperative and understanding of the problems we face.”
Although he doesn’t predict who will survive, Mutter speculates bankruptcy could give the Strib the initial cost advantage, if it drives labor costs way down. I’m more skeptical, because the PiPress has long been the lower-cost performer; its talented newsroom is already threadbare, staffing-wise. The Strib’s isn’t there yet.
The Strib has an advantage because of its bigger, wealthier circulation area; the PiPress because its owner, Media News, is a far bigger national media company.
But here’s a critical thing to remember: Even though we’re all focused on the Strib’s business affairs at the moment, we really don’t know much about the PiPress’. Media News is private, and it’s also highly leveraged — one bad sign is that it renegotiated lending deals last year so it wouldn’t have to publicly report its finances.
Before this terrible winter, the talk was that the PiPress was among the most profitable in the Media News chain. I have no idea if that’s still true; the paper currently has a hiring freeze, and is asking employees to take voluntary unpaid leaves, often (but not always) a prelude to layoffs.
A few contrarians predict both papers will survive; a lower-cost, lower-debt Strib, in print or online-only, in most of the Twin Cities; while the ragtag rebels hold out in their loyal east metro redoubts where household penetration numbers are still pretty high. (And where the Strib just stopped publishing a weekly east metro section.)
While two-newspaper towns may be dead, ours is the rare market that’s survived without a JOA. So perhaps we have more time on the clock than we think. I’ll admit, that sounds way too optimistic, but more possible than a JOA.
