A community needs a strong newspaper

Demographics catch up with many organizations these days.  The modified, scaled back, or eliminated organization and the services that it provides can have a detrimental effect well beyond the institution involved.

This all comes to mind as one considers what is happening to Western New York’s primary source of news, the Buffalo News.  A recent round of job cuts – reported to include three reporters, an editor, and five design editors, is just the latest hit on the institution.  The results inevitably affect the delivered product.

Jim Heaney recently reported at Investigative Post that “to put the cuts in perspective, newsroom employment peaked at The News somewhere north of 200 back in the 1980s. When I left in 2011, it was down to about 145.  Today, the newsroom staff is 66 full-timers, including 11 in management, plus five part-timers. Come June, the FTE count will be 63.5.”

I am not writing here about the reporters, editors, pressmen, delivery drivers and others who do their jobs every day.  The issue is reduced resources to do that job.  The issue concerns the owner of the News, Lee Enterprises.

The previous owner, Berkshire Hathaway, bought the paper in its heyday when revenues approached a million dollars per week.  They sold it when the advertising and subscriptions were falling and the business was no longer a cash cow.

The current owner, Lee Enterprises, bought the News along with some other smaller papers that Berkshire owned.  The 77 daily papers and hundreds of weeklies in the Lee empire are mostly small papers scattered throughout the country.  The St. Louis Post-Dispatch is the only paper larger than the News in the group in terms of circulation.

Lee Enterprises describes itself as “a digital-first subscription platform.”  Digital represents a third of their operating revenues and 55 percent of their total advertising revenues.  They report that their digital-only subscriptions in a recent period were up 46 percent.  That probably includes some in Buffalo, where the paper pitches a six-month digital subscription for $1.

Lee operates a Software as a Service division which manages their digital activities.  The service provider has gone under the name TownNews, but they are re-branding it as BLOX Digital.  If you subscribe to the Buffalo News you may have come in contact with TownNews whether you know it or not.  Think of them when you are frequently asked to re-enter your email address and password to access a story online.  It seems to come up at least every three or four days.

News subscribers are also what is referred in the business world as “customers.”  Most businesses work hard, as Simon & Garfunkel sang, “just trying to keep my customers satisfied.  Satisfied.”  Not so for Lee Enterprises or TownNews.

Here’s just an example.  I was recently stopped from reading an article and required to re-enter my email and password information.  Which I dutifully did.  Which, I was informed, was not recognized.  Same result on a second and third try.

It was then suggested to me that a reset my password (why???).  I was referred to a News “Help Center.”  I received a 404-error message.  I was given a phone number to call.  Upon calling I was informed that I can only call between 6 A.M. and 1 P.M. daily, but it was already 3 P.M.  I called the next day.  After a 20 minute wait I got through to speak to someone to explain my dilemma.  The person walked me through the process which led to entering a new password.  I choose the same password I had originally, and presto, I had access to the digital paper until the next time I need to re-enter my data.

I want to re-emphasize that I am not directing this criticism at the hard-working folks who strive, with limited resources, to put out the paper every day.  I am sure they hear about such complaints.  The main culprit is Lee Enterprises.

Here are some facts to help explain why Lee Enterprises performs as they do:

  • Publicly traded companies, like Lee Enterprises, are required to file what is known as a Form 10-k as their annual report to the Securities and Exchange Commission.  The form gives investors a detailed picture of a company’s financial situation and can also highlight future risks.
  • Lee’s fiscal year ended on September 25, 2022.  They were expected to file the new Form 10-k by December 27, 2022, which they failed to do.  They were given until February 27, 2023, to get the report in.
  • As of last week the 10-k was still not filed.  Market Screener reported on February 6th that “management and the Audit Committee of the Board of Directors concluded the Company’s internal control over financial reporting was not effective for the fiscal year ended September 25, 2022, due to material weaknesses in the company’s internal control over financial reporting.  Company requires additional time in order to file its Annual Report on Form 10-k.”
  • Failure to file the Form 10-k could result in Lee Enterprise stock being delisted on Nasdaq.
  • Lee Enterprises is in debt to the tune of $482.6 million, some of which relates to acquisitions including the Buffalo News and related papers.  The average interest rate on the debt is nine percent.
  • Lee last year beat back the effort of a newspaper-eating company, Alden, which was offering Lee stockholders (there are approximately 5,200) $24 per share to purchase Lee Enterprises.  At the close of business on February 13th the stock was selling at $18.81 per share; it was at $35.50 one year ago.

Lee Enterprises has some serious problems.

There are also, however, some serious consequences that go beyond Lee’s actions.  As they sell off their property at what was once One News Plaza and continually cut employees they end up short of the staff properly needed to put out the Buffalo News.  Besides the staffing issues, the men and women working there have seen changes in such things as their pensions.

The result of the staff cuts is evident in the daily paper.  For those paying attention, the only local governments getting regular coverage are Erie County government and the City of Buffalo.  Local reporting about suburban and rural governments or outlying counties is pretty much non-existent.

Educational systems are critical to this area, but for the most part the only school system you are likely to read about is Buffalo.  Coverage of other districts is mostly not there, except for such things as the yearly summary of new budgets that voters vote on.

A community without a healthy and vibrant newspaper covering all such things means that taxpayers and voters are less informed about what is happening.  Hopefully nothing bad is happening.  This all contributes to lower voter turnout, which by itself is not a healthy development.

There are no simple solutions to these problems because a newspaper, after all, is a business.  Sometimes businesses are hurt by things outside of their control.  Sometimes it’s their own fault.  Either way, none of this is good news.

Twitter @kenkruly