Second Wave of newspaper cutbacks under way

Why, newspaper industry? Why?

In visiting with a wide range of North American and European newspaper executives in recent weeks, I’m sensing a Second Wave of cutbacks entering 2010. I’m trying to make sense of it.

First, there are companies that – inexplicably – held off cutbacks earlier this year gambling on better times ahead. All of these companies have reached their tipping points and are cutting now – especially editorial-heavy “quality” dailies.

Second, there are “moving parts” cutbacks. That is, CEOs that leave and the entire foundation upon which their companies operate collapse with their departures.

Third, there are production cutbacks that will continue through the next decade as technology evolves and centralisation and outsourcing become the norm.

Fourth – and the most devastating – cutbacks in areas like CRM, market intelligence, understanding consumers and advertisers, and knowledge-based strategic decision-making. The progressive companies bravely kept them in the bad times, but don’t have the stomach for them as sales languish.

The back story here is about drama in the board rooms and ownership structures. Last year’s patience in the face of danger is being replaced, in some cases, by panic in the face of a tepid recovery. Untouchable business units are being packaged for sale. Owners happy to lose a little money in the good years aren’t willing to lose a lot of money in the bad years – or at least multiple bad years.

If there is frustration and dismay at really good companies doing really bad things, it is somewhat balanced by some really smart companies that used the danger of the recession to get some good things done (Scripps in the United States and Fairfax in Australia come to mind).

Earlier this week, INMA held its final conference of the year in Rio de Janeiro. It was fascinating to see how Brazilian newspaper executives view what is happening in North America and Europe. They live in a world in which a large working class can’t consume enough newsprint, yet their high-end demographics are needing multi-media now. And they’re trying like hell to avoid the vertigo-like experiences of their counterparts in the northern hemisphere.

Good things are happening in our industry, but they aren't about patience so much as the proper timing of cutbacks relative to today's recession. And you have to look across a broad global canvass to see them.