Something happened at The Spokesman-Review last week, something that is said to have never happened before in the paper's history: people got laid off in the newsroom. Though some already knew they were leaving prior to the Fourth of July, many were notified in the days immediately following the holiday.
The paper terminated the equivalent of 20 full-time equivalent positions (FTEs), affecting not only the newsroom but also the advertising, circulation and operations departments. The newsroom took the hardest cut, however, losing 11 FTEs.
"The layoffs hit everyone, from an intern right out of college to a 28-year newsroom veteran, and some management positions," says Karen Dorn Steele, president of the Spokane Editorial Society (SES), the bargaining unit that represents 110 Spokesman-Review employees. "The layoffs were a complete surprise. It has never happened in the newsroom before, and I guess that's what astonished us. We didn't even have a methodology in our contracts that said how this should be done."
In the weeks leading up to the final pink slips, the pressure in the newsroom has been described as unbearable, because no one felt safe. Dorn Steele says some of the tension was caused by older reporters arguing that the layoffs should go by seniority, something the newsroom's newest members didn't always agree with.
"The younger ones were saying, 'Wait a minute, we are the hard workers, we shouldn't be cut first,' " says Dorn Steele. "It has definitely caused some hard feelings; I'd say it's changed the culture of this place completely. In the end, what happened was management just used its discretion."
Just about 18 months ago, the SES negotiated its latest contract with management, but strike provisions or layoff methodology wasn't included in the new contract.
"Back then, we were told that advertising revenue wasn't going to go up, so we got a modest salary increase," says Dorn Steele, who has worked for The Spokesman-Review for 19 years. "Then this spring we were told that the revenue projections were basically going into the basement."
At that time, rumors started floating around about cutbacks and firings. A hiring freeze was maintained and limits were put on travel budgets and spending. All of a sudden, some of the tools that helped make The Spokesman-Review one of the top 25 newspapers in the country last year, according to the Columbia Journalism Review, weren't readily available anymore.
"[The newsroom staff] has always been told that the paper would spend more money on travel and training as some of the things that help add to our content, to maintain an above average publication," says Dorn Steele. "Then, suddenly, it's being used against us, when management is saying that our newsroom staff is too large for a paper our size and we are spending too much. All of a sudden, doing the things that made us achieve a higher quality is bad."
There are as many guesses to exactly why The Spokesman-Review is cutting back now as there are newspaper boxes on the streets of Spokane. In a long news release, the paper's management team blamed the cutbacks on "a nationwide slump in newspaper advertising [sales], abnormally high newsprint prices and declining consumer confidence in the economy."
But Dorn Steele says employees heard about another reason as well.
"We are being told that the publisher wants a 15 percent profit rate. That's a high profit for a newspaper," she says. "One frustration we are dealing with is not having access to [The Spokesman-Review's] books. It's a privately held company, owned solely by the Cowles family. If it was publicly held, we would have access to the books. This way we can't check up on the numbers." She says SES members question whether the layoffs would even be necessary if the publisher wasn't insisting on such a high profit rate.
Publisher William Stacey Cowles was not available for comment, but Director of Sales and Marketing Shaun Higgins was. He had this to say about the paper's profit margin: "We don't verify what our profit numbers are. The minimum any daily newspaper should be operating at is a net operating profit of 15 percent. Now this is not an after tax profit, this is before taxes, and I think there has been some confusion as to that issue in people's mind."
Higgins adds that the average daily newspaper operates at a profit of about 26 percent before taxes.
"And no, we do not operate at that level," he says.
According to 1997 documents recently made public, some Gannett Company newspapers operate at pretax profit margins of more than 45 percent, including the Idaho Statesman in Boise -- a figure certain to make other newspaper owners jealous. But Higgins says Gannett is not who The Spokesman-Review is trying to emulate. "We don't want to run our newspaper like that."
Some are guessing there may be a connection between the Cowles family's desire for a higher profit and the fact that significantly more money has gone to the same family's development of River Park Square. The downtown shopping center, with the infamous attached parking garage, has been significantly more expensive to get off the ground than first expected. So is there a connection?
"Absolutely not," says Higgins. "And let me elaborate on that. [The Cowles'] different business divisions perform on their own, as if there was no other operation. They have to keep themselves operating independently."
Higgins maintains that the layoffs are based solely on economic factors, some of which are beyond The Spokesman-Review's control. "I have been in this business for 30 years, starting with 18 years in the newsroom, and speaking from an industry standpoint, I have never seen such weak conditions," he says. "Knight Ridder, one of the nation's largest newspaper chains, has laid off 1,700 people. Other papers -- even prestigious and old ones -- have cut payroll with 5 or 10 percent."
True, even the hallowed New York Times recently finished cutting about 9 percent from its payroll. And the Seattle Times, fresh off its nasty fight with its employee union last year, is threatening to move out of downtown Seattle, ostensibly as a cost-cutting measure. For most papers, including The Spokesman-Review, the loss of advertising revenue has been at the heart of the problem. It's a problem that is hurting the broadcast industry, too, but not as badly as it is hitting newspapers.
"Unemployment is up a little bit, and that puts a damper on recruitment advertising," says Higgins. "But the main culprit we are facing is declining retail advertising. Montgomery Wards went out of business, for instance; they were easily one of our 50 biggest clients. Things like that hurt."
The Spokesman-Review is not alone in feeling such pain. According to research conducted by the Newspaper Association of America (NAA), newspaper advertising expenditures declined with 4.3 percent in the first quarter of 2001. This decline comes on the heels of a banner year in 2000.
"It would be hard to match the incredible gains of last year, particularly in national [advertising], which registered an 18.7 percent gain in the first quarter alone," says John F. Sturm, NAA president and CEO in a written statement. "The slowing economy affected our business in the first quarter. From what we've seen, the slowdown in spending isn't a big surprise." Nationally, recruitment advertising was down by 16.9 percent, with retail advertising showing the smallest decline at 0.4 percent.
Though they've seen a decline in recruitment advertising, it's retail advertising that's hurting The Spokesman-Review the most, says Higgins.
"There are some 33 percent fewer national retailers here than in other markets of our size," he adds. "It's slowly getting better, with some new retailers moving in."
Though circulation numbers have held pretty steady through the early part of this year, they have gone down over the past five years, says Higgins.
"We're at about 105,000 daily, 135,000 on Sundays and 128,000 on Saturdays," he says. "Nationwide newspaper readership has dropped by about 10 percent."
According to surveys conducted by the NAA, only 53.5 percent of adults in major markets read a daily paper yesterday -- a sad fact that seems to contribute to people being less informed about their community than their parents' generation. The Spokesman has seen a steady decline in its circulation since the 1980s, when it shuttered the evening Spokane Daily Chronicle. Even an expensive foray into Idaho with a separate edition hasn't turned things around. Higgins says The Spokesman-Review's loss of circulation can also be attributed to limited circulation in far-flung places.
"We used to have circulation in Butte and Missoula, even beyond Ellensburg," he says, "and in southern Canada and northern Oregon. We don't have that anymore."
Another persistent rumor has been that The Spokesman-Review is being "streamlined" to be put up for sale, but Higgins denies that's the case.
"That's an interesting perspective. If the paper really was for sale, we'd probably prefer to let the new owner deal with the layoffs," he says. "But no, the paper is not for sale. Some of us have asked ownership, several times over the years, and the answer has always been a resounding no."
What should concern readers the most, however, is how the layoffs are going to affect the quality of paper they purchase. It's an argument that has been made in newsrooms across the nation, as layoffs have hit the industry. Editors are arguing that there is a public trust issue involved in journalism that makes the trade different than simply manufacturing widgets -- although owners and Wall Street investors may not always appreciate the distinction. Most famously, Jay Harris, the publisher of the San Jose Mercury News, resigned when proposed budget cuts earlier this year seemed to draconian to him.
In a speech to the Association of Newspaper Editors, Harris said: "The first statement of company values issued during my years with Knight Ridder contained these words: 'Our enterprise is both a business and a public trust.' As I said in my letter of resignation, I worried that in Knight Ridder, greater priority was increasingly given to business aspects of the enterprise than was given to fulfilling our 'public trust.' "
Management maintains that The Spokesman-Review will remain one of the country's top papers of its size -- and if you look at Gannett papers in markets this size, there's no comparison between the resources that chain devotes, and what The Spokesman-Review funds here. Although The Review's owners have had a hand in local politics over the years, keeping some important stories on the back burner, local ownership has given Spokane a much better newspaper than it would have with an absentee owner.
Higgins says there are no more layoffs planned, and Editor Chris Peck had this to say in the official press release: "While this is a difficult process, The Spokesman-Review will continue to maintain a margin of editorial excellence. We will have a 150-person newsroom and dedicate more resources than most newspapers of our size to gathering the news."
Dorn Steele says there's a series of newsroom meetings scheduled in the upcoming months about how the paper will operate with a reduced staff.
"What happens when you let some of the people go who have a long history with the paper is that you can destroy the institutional memory," she says.
Julie Titone, who was laid off after working for the paper for 17 years, agrees: "I think the community should be concerned. I mean, all layoffs are sad, but we are after all not making lawn chairs down there; we are telling people what's going on," Titone says from her Post Falls home. "Take for instance an issue such as the clean up of the Coeur d'Alene basin. The reporter who used to cover this extremely complicated issue left for another job and wasn't replaced. I was one of the few people with the knowledge about this, and now I'm not there any longer."
She predicts the public will be getting less than they deserve when they look for coverage of longstanding, complex issues like that.
"The reporter who took over my beat is covering many other things at the same time. And my beat alone was enough to keep me extremely busy every day," says Titone.
She says William H. Cowles 3rd-- current publisher Stacey Cowles' father -- had a clear goal of making The Spokesman-Review one of the best papers in the nation.
"That wasn't just some fad, he really meant it, and we were doing it," says Titone. "But every since Stacey took over as publisher, all we heard was that our staff was too large and we were spending too much money."
She says she wishes management would stop now and take a closer look at the older Cowles' goals before they make any more changes. Still, Titone doesn't seem to harbor hard feelings against her former employer.
"Yes, it's been hard," she says. "But life goes on, and I'll find another job. The sad thing is another job will probably take me out of this area -- there are only so many games in town, you know."