Economy Hits Alt-Weekly Bottom Lines

Classifieds carry the load

The current economic climate is putting the same strain on alternative weeklies that it has on the rest of the publishing business, with only classified advertising providing a reliable cushion against the ravages of war and recession.

As in other sectors of the economy, lower revenues, especially in national advertising, are pushing marginal operations to the brink and forcing layoffs and other cutbacks even at some of the bulwarks of the alternative newsweekly industry. Hiring and salary freezes along with salary cuts are among the tactics being used to address the decline.

For example, at San Francisco Bay-area Metro Newspapers, initial layoffs and managerial pay cuts were followed by a memo asking employees to consider a pay cut across the board rather than additional layoffs.

“We understand this is a sacrifice, however, it appears to be the only way to keep our publications appropriately staffed and preserve as many jobs as possible,” Metro President Dan Pulcrano writes in a company memo leaked to Jim Romenesko’s MediaNews Web site.

“There is no plan that can completely eliminate the possibility of future layoffs. The pay cut, however, will significantly reduce the chances of that.”

Similarly, New Times has reduced its editorial staff company wide by 12 people, says Michele Laven, New Times president and COO. Five of those were offered positions at New Times papers in other cities, and four accepted the offers, she says.

“When I took over the COO position in May of last year the company was not in shape to be competitive operationally, in what I would consider a declining advertising revenue environment,” Laven says.

Laven began to retool New Times six months ago through a complete reorganization of sales and operations that has included reductions through attrition and layoffs, and new publishers in Miami (Michael Cohen), Cleveland (Ramon Larkin), and Dallas (Alison Draper).

A year ago, New Times projected 24-32 page-per-week growth for its larger properties, but that growth hasn’t been realized.

“So, the reality of the editorial layoffs are simply a reflection of fewer pages,” Laven says.

The Sept. 11 terrorist attacks on Washington and New York, and subsequent shocks to the nation’s consumer and travel industries, has hastened the economic decline.

Boise Weekly, for instance, although far from the scene of the actual events, is still reeling from the wrench thrown in its spokes. Under new ownership, the weekly has let go four staffers, drawing from every area of the company.

“Our layoffs are partly due to the economic downturn,” says Bingo Barnes, editor, publisher and art director of Boise Weekly. “The thing that affected us the most was we had a big push planned to launch literally on Sept. 11. … We were going to roll out a new rate card and grandfather rate packages for everybody and that [the terrorist attacks] just put a big brick wall in front of us.”

On the revenue side, papers across the country report declines in personals, recruitment and national advertising.

“The big hit we’ve taken is music,” says Albie Del Favero, executive vice president and group publisher for four Village Voice Media papers, including the Nashville Scene. “The record labels are cutting back; the record industry is hurting.”

With national down, cultivating local sales will be vital for future survival, Laven says. “I think that it’s going to be really important that we make sure that we don’t price any of these smaller retailers out of our books,” she says. “Papers are going to have to be careful with how they raise rates.”

Alongside local retail, papers report increased reliance on classified sales.

“Fortunately we are doing very well in local display and classified and insert income,” says John Weiss, publisher of the Colorado Springs Independent. “Overall, we are up 10 percent and crossing our fingers.”

That sentiment rings throughout the industry as classifieds help carry quite a few papers through the stormy waters.

“Classified is up double digits in Chicago,” says Jane Levine, publisher of the Chicago Reader, which also owns Washington City Paper. “In D.C. it’s up double digits when adult advertising is removed from the comparison.”

To survive these hard times, AAN members focus on efficiency and streamlining costs.

“We are concentrating on the sales basics: fewer special sections and more attention to every week contracts and profit centers, like size and color,” says Betsy Abeles-Kravitz, co-associate publisher at Worcester Magazine.

Worcester has recently gone through a cover and logo redesign and switched its publication day from Wednesday to Thursday, “all in order to give both our customers and readers more of a reason to pick us up each week,” Abeles-Kravitz says.

General housecleaning has become paramount for cutting costs without cutting quality.

“We’ve tried to cut back in all the relatively painless ways all businesses have—overnight mail, credit card fees, comp subscriptions, renegotiating our long-distance service,” Chicago Reader’s Levine says.

Cutting $100 from 20 different places is a savings that won’t necessarily hurt the paper, Levine adds.

Some papers are doing well despite the times and are increasing their advertising departments to capitalize on the lean economy and the relative weakness at daily papers.

While the decline in recruitment advertising is being felt throughout the industry, Ben Eason, president of Creative Loafing Inc., which owns five alternative weeklies in the Southeast, estimates the dailies are feeling that pinch even more as companies increasingly use online job boards.

“I’m just figuring that those dailies are sucking it in right now,” he says. “I think those guys are underestimating the power of the Internet and these alternatives.”

Real estate classified is another area where the weekly may be benefiting from the dailies’ higher prices, experts say. Nearly all papers contacted report increases in real estate advertising perhaps due to a soft rental market that means ads stay in the paper longer.

Alternative weeklies can offer deals to customers that dailies cannot, both in display and classified sales, Eason says. Following the merger of Creative Loafing with the Weekly Planet papers in mid-2000, the company began to increase advertising staff at its papers. Those efforts are paying off now with improved business, Eason says. But, like other papers, Creative Loafing is pushing classified sales and specials.

“This recession has been a good time to be in an expansion mode,” Eason says.

Jumping on the same trend, even Boise Weekly has hired a new classified manager “to put a little muscle in there,” Barnes says.

Other positive stories are turning up even in this negative economy.

“Gross revenue is up over 15 percent year-to-date from last year, partly due to a good economy here and partly due to some of those revenues coming back to Salt Lake City Weekly after we closed (our other paper),” says Salt Lake City Weekly Publisher John Saltas.

Saltas attributes an increase in clients for local display advertising to good performance on sales initiatives, and, following a slow start, classifieds are beginning to grow.

“Eight weeks ago we had about $10 in auto (classifieds), now we have six pages,” Saltas says. “We hit real estate next. In both departments we have better sales people than a year ago, too.”

Seth Wharton is a freelance business writer based in Knoxville, Tenn.

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