Layoffs and Record Stock Lows Aside, Montana’s Newspaper Publishers Are Optimistic

By Robert Struckman, 9-16-08

You might think, as the stock of Lee Enterprises (NYSE: LEE) fell to a record low of $2.35 and the nation’s largest newspaper conglomerate Gannet (NYSE: GCI) declined to $16.32 per share, that Montana’s daily newspaper publishers would feel a bit downtrodden. Maybe pessimistic.

After all, newsprint has gone up about 30 percent this year, and it was already high. Ink, too, has gotten outrageous. Both are driven up largely by fuel prices. Every publisher in the state has significantly cut staff this year. In all cases, the cuts have extended to the newsroom, although some of the positions have been trimmed with buyouts and by attrition. In the last three weeks, Montana’s Lee newspapers (which include the Missoulian, the Billings Gazette, the Helena Independent Record, the Montana Standard in Butte, and the five-day-a-week Ravalli Republic in Hamilton) have slashed staff to cut costs. I’ve written about each of those layoffs recently, except the Montana Standard, which laid off seven employees last week, none in the newsroom.

Here’s how it works at Lee. You get the news, and a few minutes later you’re out of the building. Sunday news packages remain unfinished. Fellow reporters see a suddenly empty desk where a coworker used to be. It’s pretty weird. Lee employees are at-will, which means the company holds all the rights. As one reporter (who didn’t get laid off) told me, “I feel like I’ve been punched in the gut.” From what I hear, morale at the papers is terribly low.

So… it’s time for some real soul-searching in the corner office about the future of news, right?

Not necessarily. Pat Schlauch, publisher of the Helena Independent Record, told me last week that he feels lucky to be a newspaper publisher in Montana. He didn’t make light of the layoffs. On the contrary, he said the day of calling people aside to give them the news last week was one of the worst of his career. He hopes to find a way to replace the positions that have been cut. But he remained bullish about the future of the Independent Record, citing its strong Web site and five years of sustained circulation growth, which is almost unheard of in the industry these days.

Another Lee publisher told me she has a plan to revitalize her newspaper, by hooking readers as young as 10 and 11. Others said they could see a stronger bottom line if fuel prices dipped and housing and auto ads returned, which might happen if the national economy goes back into growth mode.

Most news industry analysts disagree, saying the newspaper industry is fundamentally changing. But I’ll bet none of them study Montana, or other regions of small markets and relatively isolated daily newspapers. Areas like Montana are less sexy than New York City and Los Angeles, but Lee Enterprises and Gannett built extremely profitable companies here. Gannett owns the venerable but troubled Great Falls Tribune.

Something makes me think Montana’s publishers may be at least partly right. After all, newspaper profits always plunge in hard economic times, although not as deeply as this year. And although many newspapers operate in a much more competitive field than in the past, they still hold an enviable place in every city and town across the nation. They’re certainly not going to simply go away, and these two companies built their franchises on making money in small markets. It’s a core proficiency that shouldn’t be scoffed at.

How they can innovate or isolate themselves into a new era of profitability is an open question, but it’s not out of the question. 

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