The Parent Company
The News & Record is owned by Landmark Communications of Norfolk, VA, a privately-held company.
According to Forbes, Landmark had 2005 revenues of $1.72 billion and well over 11,000 employees. In addition to the N&R, Landmark owns daily papers in Hampton Roads and Roanoke, VA, and more than 50 community papers in 15 states. In recent years, it hit a gusher with The Weather Channel, a very successful cable television venture, and related businesses.
Frank Batten Sr, head of the company's founding family (his son, Frank Jr, is now chairman and CEO) is listed on the Forbes 400 with net worth of $1.4 billion; he has reportedly given away some $220 million to educational institutions, including a recent gift of $100 million to UVA to found a public policy school with his name on it.
According to the S&P Register of Corporations, the News & Record had sales of $62 million for the latest year recorded, which year is not specified in the report.
The business operations of the News & Record, like any typical publishing operations, are run by the publisher -- NOT the editor. The publisher of the N&R is Robin Saul, who came to Greensboro in 2004 after serving in a similar role at one of Landmark's community papers in Maryland. He's a company man, sent by headquarters to run a local operation; the local operation seems to have enjoyed considerable autonomy over the years, as long as it continued sending rail-cars full of cash to Virginia on a regular basis, and there's the rub.
The newspaper business is under enormous pressure. The problems facing the N&R are not unique -- this is not about indviduals or editorial content and decision-making -- and until this week the N&R had seemed healthier in recent years than many of its peers across the country, in terms of employment and circulation.
Yet even with the very real challenges to the business model, newspaper industry profit margins have remained healthy when compared to margins for American businesses in general, which have averaged about 8.3% over the last quarter-century, with somewhat higher returns in the last couple of years.
MarketWatch reported in early 2006, "Newspapers have profit margins that average between 20% and 30%." Broadcasting & Cable reported in April that Tribune Co. papers have profit margins in the 20% range. Columbia Journalism Review writes, "In 2006, supposedly a disastrous year for newspapers, the average profit margins for the newspaper divisions of publicly traded publishing companies was 17.8 percent, according to the Merrill Lynch media analyst Lauren Rich Fine."
What to Do
It appears* that Landmark has chosen to chase its historic profit margins rather than investing in its Greensboro business for sustained product quality and long-term growth. That would seem to be a business decision made in Norfolk, and executed by Robin Saul according to Landmark strategy.
I think it's a poor choice, and not just because I am pro-Greensboro and pro-quality journalism. As I wrote in late 2005 in the column linked above, "[I]f papers keep responding by cutting their newsroom staffs in an attempt to preserve profit margins from another era, it will be grim. What they need to do instead is invest in improving their product, online and off."
A similar argument is made here: "Twenty years of research have taught me that good journalism is good business, at least in the long run, and that a company can produce good journalism while still producing profit margins much higher than 10%. Perhaps the real myth is that public companies will continue to make 20% to 25% profit margins 25 years from now. But the current managers won't be running the companies in 25 years, which might affect which myths they cling to and which they dismiss."
The decision from Norfolk seems consistent with long-term policy. In my view, the local paper has made two strategic business mistakes in recent years that haunt it today. One, it ceded the free-weekly market to the Rhinoceros Times, starving its own low-budget Triad Style for several years before folding it into the big paper as a listings supplement.
And two, it underinvested in new media and product quality as the market began to change. Yes, it has been smart and forward-looking with blogs, and it made early attempts at becoming an online platform, but I haven't seen the kind of game-changing investments that show long-term emphasis and a deep understanding of the ways the business will continue to be transformed. Where's the meaningful local answer to Google and Craigslist? Where's the local online ad market, and the new-media counterattack on TV and radio?
If the N&R earns at the very low end of industry averages [update: JR says they don't make public-company margins, but I think this math still holds], and that $62 million revenue figure is close to accurate, Greensboro is sending somewhere north of $6 million a year to Norfolk. It would make no huge difference in Landmark's overall numbers to cut profit margins for a while to merely solid rates of return, and to reinvest a few million bucks per year in product and product development, but it would make a huge difference to the News & Record, and Greensboro, and the future of local journalism.
Too bad that ain't happening.
*I have contributed an opinion column to the N&R for a decade, but have never been an employee, and can count the number of times I've been in the building. I have no inside knowledge of its business. I have no real financial stake in these decisions -- I'm grateful for the space they allot my opinion column, and it's done great things for me as a writer, but beyond any intangible benefits I lose money on it.