It’s hardly news that the newspaper industry isn’t faring well these days. The bottom is falling out of the real estate, auto and job markets, all of which are key sources of ad revenue.
According to a recent report from the Newspaper Association of America, newspapers eked out $8.9 billion in print sales in the three months ending September 30 — almost $2 billion less than during the same period in 2007.
Gannett’s revenues fell from $1.16 billion at the end of September 2007 to $977 million at the end of this September. That begs a question pondered by media observers and Free Press readers since Gannett bought the paper in 1971: “How profitable is the Freeps?” That’s always been a tightly held secret, kind of like the whereabouts of Vice President Dick Cheney.
Now, a popular blog that focuses exclusively on the media giant — GannettBlog — has let the cat out of the bag. The site, run by former USA Today reporter Jim Hopkins, recently posted Gannett’s 2007 financials and, according to his report, the Free Press turned a nice profit last year, while making plenty of money for the Gannett mothership in McLean, Virginia.
In fact, excluding Gannett papers in Guam and tiny Tulare, California, the Free Press ranks in the top five within the company’s Community Newspaper Division in terms of profit margin.
Here’s the skinny: According to the financials posted by Hopkins, the Free Press in the first three quarters of 2007 had ad revenue of $21.3 million and a profit margin of more than 36 percent. That translates into roughly $7.7 million in profit through the third quarter, and excludes the holiday ad spending frenzy reserved for the fourth quarter.
When presented with the numbers, which Hopkins maintains were received from a credible source, Publisher Brad Robertson urged “Fair Game” not to print them, claiming they aren’t for public consumption. “I am asking this to not show up in your column, as it is not something I would talk about publicly when it comes to our financials,” Robertson said in an email.
He also suggested we “consider the source” of the financial data, taking a page from Gannett’s corporate headquarters. The company frequently challenges Hopkins’ credibility and the veracity of the information posted on GannettBlog, a lot of which comes from Gannett employees around the country.
Robertson says that, even if the 2007 financials are “authentic,” they do not reflect the Free Press’ local expenses, i.e., “capital/depreciation, loans/debt, taxes, donations, stock dividends, and the list goes on and on.
“He is taking a report intended to do one thing and thinking it is telling him something else,” Robertson continued. “We are one large company with many local outlets with costs expensed locally, regionally, and at corporate. I know of no report that gets him the answer he is saying is the reflection of the local property.”
Gannett is now poised to lay off as many as 3000 people — roughly 10 percent of its newspaper division employees. And, despite its profitability, the Freeps is unlikely to be spared any of the pain.
In August, when Gannett axed 1000 newspaper workers, the paper laid off six of its more than 250 staffers, including columnist Ed Shamy. Then sports editor Ted Ryan retired.
In September, during a purge of several hundred of Gannett’s mid-level and senior managers, two Free Press managers retired and had their duties taken over by counterparts in Wilmington, Delaware.
The paper also raised its single-copy price a quarter, to 75 cents, and, to reduce costs, moved its circulation call center to Kentucky and outsourced some of its design work to India.
The axe could begin to fall again this week at some of Gannett’s dailies, but not, apparently, at the Free Press. Robertson told “Fair Game” that he’s not ready to announce “anything that relates to layoffs” at his shop.
Still, the financial data posted by Hopkins raise an important question: If the local outlets are doing as well as they appear to be doing, what’s with all the layoffs?
Parks & Wreck — It all started with a four-sentence email from Burlington’s Assistant Chief Administrative Officer Ben Pacy to a parks union leader, Bill Rasch.
The correspondence has taken on near-legendary status in the Queen City, instigating a months-long investigation of waterfront supervisor Adam Cate that cost city taxpayers more than $10,700.
Cate, who earns $55,000 a year, was kept on paid administrative leave during the probe. Last month, the city parks commission gave him his job back and put him on six months probation.
What was the email about? “Fair Game” was provided a brief glimpse of it, and all I can say is: “Really? That’s all you got?”
Here’s the gist: Pacy’s brief missive to Rasch, sent from his private email account, concerned an employee’s grievance being handled by Rasch. Pacy told Rasch he was sending the note from his personal account “in case you want to communicate off the grid.”
For some, this suggested that Pacy was trying to meet with Rasch about a proposed department reorganization. Their devious plot? To thwart it. Quash it. Or perhaps replace it with a plan of their own.
Rasch denies he and Pacy were engaged in a conspiracy. “It’s somebody’s pipe dream,” he told Seven Days.
In fact, Rasch had already made his opinions known about the reorganization proposed by parks Director Wayne Gross. He didn’t like it. Neither did more than a dozen other employees — all of whom Rasch said took their concerns to the mayor before the end of March. They also contacted the human resources department with their concerns.
So much for Rasch and Pacy working behind Gross’ back — or anyone else’s, for that matter.
Mayor Bob Kiss said he put the kibosh on the plan before the Cate investigation, once he heard the workers’ complaints.
“I said we should put it on hold and take it up again after the busy summer season,” Kiss told Seven Days. “I don’t think there was any effort to come up with a different plan.”
Rasch was fielding complaints from employees who feared parks managers, including Cate, were reading their emails when he found out his correspondence with Pacy had been shared with the mayor. Concerned that his email account had been compromised, he dashed off a letter to Kiss on April 18, asking City Hall to look into the breach.
That sucked waterfront employee Erin Moreau into the picture. She told city officials that Cate boasted about having access to Pacy’s city email account.
In last week’s column, “Fair Game” implied that Moreau was the first to go to city officials. It was actually Rasch. Our apologies to Moreau, who testified about her “terribly hard” ordeal before city council Monday night.
“I never want to have any other employee to go through what I did,” she said.
Her father, Tom Moreau, who was at her side, said the day Cate was suspended from his job he asked Erin Moreau to take the contents of the waterfront safe and put it “in her car.” He added that those “who seek political gain” from the situation should reconsider.
His plea fell on deaf ears. The council approved by a 10-4 margin a resolution forcing the mayor to answer additional questions about the Cate affair at its December 15 meeting.
Kiss said the council already knows the details of the investigation because they were briefed in executive session in October.
“It included a pretty long discussion with the city attorney and parks and recreation director as well as questions and answers from members of the council,” Kiss told “Fair Game.” “It was not just a dry report.”
Kiss said as much to councilors during a spirited debate about the resolution. Councilor Ed Adrian (D-Ward 1) asked five pointed questions about Kiss’ role in the investigation, largely focusing on Pacy’s “alleged interference” with the parks department and what the mayor did about it.
“The belligerence of the question is telling,” Kiss shot back. He said he found no such interference by Pacy, adding that his contact with the mayor was legitimate.
Councilor Tim Ashe (P-Ward 3) questioned the motives of his colleagues, saying they were simply “stoking the flames of the mayoral campaign.”
Indeed, City Councilor Kurt Wright (R-Ward 4), who is mulling a run for mayor next year, crafted the resolution. It was supported by City Councilor Andy Montroll (D-Ward 6), who has announced his intention to challenge Kiss’ expected bid for a second term.
Off to the Races— Speaking of mayoral politics, Independent Dan Smith launched his bid Tuesday with a daytime speech and an after-hours kickoff party at Red Square.
Meanwhile, Montroll will be crowned at the Democratic Party’s city caucus Wednesday night. And on Saturday, House Democrats will pick new leaders, including House Speaker.
Technically, the race is a three-way contest among Majority Leader Carolyn Partridge of Windham, Rep. Mark Larson of Burlington and Rep. Shap Smith of Morristown.
But, in reality, it’s between Larson and Smith.
At press time, Smith seems to be edging out Larson by a few votes. Smith wouldn’t confirm his head count, but told “Fair Game” he is “cautiously optimistic” about Saturday’s vote. Larson, too, is keeping info tight to the vest. “If I become Speaker, I am going to need to buy a new suit,” he joked.
Lucy Leriche of Hardwick is running unopposed for Assistant Majority Leader after Jason Lorber of Burlington dropped out.
The race for majority leader between current Assistant Majority Leader Floyd Nease of Johnson and Janet Ancel of Calais is too close to call. One option is to have co-majority leaders, according to rumor.
Those Democrats — it’s always share, share, share.
Let the Woodchips Fall Where They May — The appointment of longtime gubernatorial communicator Jason Gibbs to run the Department of Forest, Parks and Recreation is being met with skepticism by at least one key senator.
Ginny Lyons (D-Chittenden), who chairs the Senate Natural Resources Committee, told “Fair Game” that she has questions about Gibbs, who has no degree or working background in the field he will presumably oversee. Gibbs is an Eagle Scout with a political science degree, but has never run a department.
“Why shouldn’t we have someone with an advanced degree or combination of experience and degree in that position?” Lyons asked. “It makes absolute sense and requires some special knowledge of understanding of environmental interrelationships.” In one of his many roles in Douglas’ inner circle, Gibbs did serve as the governor’s liaison to the Agency of Natural Resources, where his department is housed.
Lyons is less critical of Jonathan Wood, who has been named to replace George Crombie as the head of the Agency of Natural Resources.
“He’s a good listener, and he’s experienced. He has been involved in logging for a number of years and has a working knowledge,” Lyons said. “I can’t say I can see the same level of engagement for the Gibbs appointment.”
Sounds like a rough trail ahead, Mr. Gibbs, but I’m sure you’ll come prepared.
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