JimmyCsays: At the juncture of journalism and daily life in KC

News about the newspaper industry is swirling faster and choppier than ice cubes in a Waring Blender.

Let me give you the headlines…

:: The McClatchy Co., which owns The Star, is offering to buy out 450 staff members throughout its downward-spiraling, 29-paper “empire.”

Forman

:: At the same time, McClatchy CEO Craig Forman is getting an increase of $30,000 a month in his allowance for travel, housing, office and security. (Security, you say? Well, a guy who is getting raises while eliminating hundreds of jobs probably should be sleeping with one eye open.)

:: Gannett, the original strip-mining newspaper chain, has officially rejected the purchase offer tendered last month by another down-and-dirty chain, Media News Group (MNG), also known as Digital First Media. If Gannett and MNG end up together, God help the employees of each company.

Now, a closer look…

McClatchy buyouts

I only know two conditions of the buyouts: Employees must be at least 55, and applications must be submitted by Feb. 19.

Spreading the 450 across nearly 30 newspapers would mean an average of 15 employees. With The Kansas City Star as the chain’s flagship holding, however, I would think it could lose as many as 50 employees company wide. The Star has gone from more than 2,000 employees in 2006 to about 250 now. With these buyouts, The Star could end up with fewer than 200 employees bouncing off the walls of the sorry green giant at 1601 McGee.

I envision a stampede to submit the paperwork. Reporters who would likely qualify include Judy Thomas, Laura Bauer, Rick Montgomery, Mark Davis, Glenn Rice, Tony Rizzo, Eric Adler, Lynn Horsley, Mara Rose Williams, Mike Hendricks and Matt Campbell. (I apologize to any longtime reporters I overlooked.) Those are all familiar names, and they comprise the backbone of the reporting corps. If you think the paper is in bad shape now, wait ’til after this buyout. The cancellation rate of the print edition — which, I feel confident, continues to produce a majority of the revenue — will probably double.

Craig Forman’s pay

A story posted Tuesday on the Columbia Journalism Review’s website said Forman’s take-home pay in 2017 was $1.7 million, excluding restricted stock. The story goes on to say…

“His newest contract with the company, dated January 25, 2019, includes a base pay of $1 million, a bonus of $1 million, and an additional $35,000 monthly stipend…This monthly stipend alone, which is up from $5,000 in his previous contract, could fund several reporters’ salaries every year.”

Mary Ellen Klas

A gutsy McClatchy employee, Mary Ellen Klas, the Miami Herald’s Tallahassee bureau chief, was quoted in the story as saying, “These decisions about layoffs lead me to question: ‘What other choices do you have? What sacrifices are others making at the highest parts of the chain?’ “

I don’t know what former KC Star publisher Mark Zieman’s contract calls for this year, but for 2017 his total McClatchy compensation was $1,120,112, including a bonus of $218,781.

…Forman, Zieman and the handful of other McClatchy executives holed up in Sacramento should be ashamed of themselves. They should offer to take salary cuts and should offer to make their bonuses contingent on McClatchy’s financial performance: As long as company revenue and profits are falling, their compensation should follow suit. Of course, that’s not how it has gone in any industry the last decade or two.

…This company is more of a disaster every day. Those who are eligible for buyouts should take them, and young employees should start looking elsewhere as soon as they get a year or two of experience under their belts.

Gannett rejects MNG

Last month, MNG/Digital First offered $12 a share to purchase Gannett, which publishes USA Today, the Louisville Courier-Journal, The Tennessean and about 100 other daily papers. Gannett is vulnerable partly because it lost about 18 percent of its market value during 2018. It, too, has been trying to cut its way to profitability, and it will be going through a leadership change in the spring, when CEO Robert Dickey is stepping down.

MNG’s co-founder was a scrounger named William Dean Singleton, who gobbled up dozens of smaller papers in California in the 1980s and 1990s. Following the Gannett model, he proceeded to cut staffing and wring as much revenue as possible out of his papers. The company bought four McClatchy papers and the Denver Post before going into bankruptcy in 2010. After emerging from bankruptcy, a hedge fund named Alden Global Capital bought a major stake in MNG and maneuvered Singleton out of the picture. Alden now owns slightly more than 50 percent of the stock.

Alden is even more ruthless than Singleton. If MBG should succeed with a hostile takeover, the media landscape would be littered with even more bodies.

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Where will all this activity lead?

Four major newspaper companies are now in play for sale, consolidation or, possibly, bankruptcy. They are McClatchy, Gannett, MNG and Tribune Publishing, which owns the Chicago Tribune and several other large daily papers.

Any of those companies could end up combined…and not one combination looks good for the long-term viability of newspapers.

The best scenario, from my perspective, pertains to Tribune. A former hedge fund executive named Will Wyatt is leading a bid to take over Tribune with the aim of breaking up the chain and selling its parts.

If that happened, we could see some Tribune papers like the Orlando Sentinel, the South Florida Sun-Sentinel, the Baltimore Sun and the Hartford Courant up for grabs by local investors. It could prove to be a smart move by Wyatt because recent history has shown some investors have been willing to pay a premium for their hometown papers.

That, of course, is where I’d like to see McClatchy end up — broken apart, with some of its major pieces (particularly The Star) bought by local people who value the role of newspapers and believe that with proper nurturing they can be returned to local favor and profitability. It’s not out of the question; it’s just hard to pull into focus at this point.