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Newspaper joint operating agreements are fading
Published January 22, 2009 at 12:05 a.m.
Photo by Marcus R. Donner / Associated Press
Newspaper boxes hold papers for sale in Seattle recently. Hearst Corp. has put the Seattle Post-Intelligencer up for sale.
The newspaper industry may not be dead, but joint operating agreements, designed to preserve two-newspaper towns, are failing.
"I think they're fading pretty fast," Rick Edmonds, media business analyst at the Poynter Institute.
What's happened in the past two weeks is proof of that.
On Dec. 4, E.W. Scripps put the Rocky Mountain News up for sale, with shutting down the paper a likely possibility. Scripps is in a 50-50 joint operating agreement with MediaNews Group, which publishes The Denver Post.
Since then, The Hearst Corp., a JOA partner with the Seattle Times, put the Seattle Post-Intelligencer up for sale.
And Gannett Co. announced it would close the Tucson Citizen unless it could find a buyer by March 21. Gannett is a 50-50 partner in Tucson with Lee Enterprises, which publishes the Arizona Daily Star.
In another JOA, in Detroit, the Detroit News and the Detroit Free Press announced plans to stop home delivery except for the Thursday, Friday and Sunday editions.
Edmonds wrote about the topic last week for Poynter, the nonprofit journalism think tank, in an online column titled "Newspaper JOAs Reach End of the Line." His comments appeared before the announcement in Tucson.
The structure of joint operating agreements - in which two newspapers share the cost of business, advertising and circulation operations - was authorized by Congress in 1970 with the Newspaper Preservation Act.
At one time, 28 JOAs were scattered across the country. Now only nine remain, according to Edmonds, and that includes Denver, Detroit, Seattle and Tucson.
"JOAs work until they no longer work," said Mark Fitzgerald, editor-at-large of the newspaper trade publication Editor & Publisher.
"In the past, it was a slow deterioration of the weaker paper," he added. "They were willing to keep the smaller paper open because cash flow was increasing reliably. The drain wasn't the same as today. What you have now is cash flow shrinking, revenue not reliably growing and debt service on top of that."
Stephen Lacy, journalism professor at Michigan State University, said there's some evidence that local communities were better off when there were two newspapers providing coverage. But JOAs, he said, were never destined to survive in the long run.
That's in part, he said, because they generally don't eliminate the basic problem of one newspaper gaining the upper hand in circulation and, hence, advertising revenue.
While not applicable to Denver, Lacy likes to cite the example of the Washington Star, which closed in the early 1980s.
The Star had 40 percent of the circulation, he said, compared with the Washington Post's 60 percent. But the Star could get only 25 percent of the advertising lineage "because the Post was a much better buy on a cost-per- thousand basis," Lacy said.
In recent years, of course, the Internet has thrown an even- more-dramatic wrench into the equation.
Classified advertising has migrated to Internet sites like craigslist.org while traditional retail advertisers such as real-estate brokers, department stores and car dealers can advertise via their own Web sites.
In Tucson, the Star, the morning paper, has a circulation of 117,000, but the afternoon Citizen sells only about 20,000 copies. The morning-afternoon dichotomy comes into play in the decision of the Citizen to find a buyer or close.
Edmonds said he supposes JOAs were a "modestly good thing" if one sees them as helping address the death of the afternoon paper in the U.S.
But it also "sort of postponed the inevitable in ways that might have ended up weakening whichever paper does survive," Edmonds said.
Edmonds cited the arguments made by The Seattle Times that the Post-Intelligencer was a money drain.
The Seattle Times sought to end that JOA in 2003, saying it no longer worked financially. Hearst, owner of the Seattle Post-Intelligencer, sued, eventually agreeing to pay The Seattle Times $25 million to keep the agreement going until 2016.
After Hearst recently put the Post-Intelligencer up for sale, Seattle Times publisher Frank Blethen stated the JOA structure had contributed to the big losses of both papers.
Denver Post publisher Dean Singleton made a similar argument in Denver after Scripps put the Rocky up for sale.
In a memo to Post staffers, Singleton called the Rocky a "drain" on the Post. He maintained that the broadsheet Post contributed two-thirds of the advertising revenue of the Denver Newspaper Agency, the joint-operating entity - and the tabloid Rocky only a third.
"I can tell you flat-out that is not true," Scripps CEO Rich Boehne responded at the time. "The paper and the (advertising) space are sold together. It is designed to be a 50-50 partnership."
EXTRA! EXTRA!
* Dec. 4: E.W. Scripps puts the Rocky Mountain News and its 50 percent share of a joint operating agreement in the Denver Newspaper Agency up for sale.
* Dec. 9: Tribune Co., which publishes the Chicago Tribune and Los Angeles Times, files for bankruptcy reorganization.
* Dec. 16: Detroit News and the Detroit Free Press announce plans to stop home delivery except for the Thursday, Friday and Sunday editions. A condensed newspaper will be sold in newspaper boxes on other weekdays.
* Jan. 9: The Hearst Corp. puts the Seattle Post-Intelligencer up for sale. If a buyer isn't found in 60 days, Hearst said it will either publish an Internet-only edition or shut down operations.
* Jan. 16: Minneapolis Star-Tribune files for bankruptcy reorganization less than two years after being bought by a private equity group.
* Jan. 16: Gannett Co. tells Tucson Citizen staff that it will close the newspaper if a buyer isn't found by March 21.
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