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Posts Tagged ‘St. Louis Post-Dispatch’

Very interesting, this E-tax situation. Not just the Kansas City situation but the combination of Kansas City and St. Louis.

Quite a contrast, actually. In both cities, voters overwhelmingly approved retention of the one-percent tax on salaries and business profits. But that’s where the similarities end.

Consider:

— In Kansas City, the opposition, led by eastern Missouri billionaire Rex Sinquefield spent about $600,000 trying to defeat the tax. In St. Louis, there was no organized opposition.

— In Kansas City, all indications are that it will be “business as usual” at City Hall and that a serious, extensive review of city taxes and finances is not likely to occur. In St. Louis, however, it appears that it’s almost a foregone conclusion that the E-tax will be eliminated before the next retention election, which would take place in five years.

So what’s the deal?

Well, it seems clear to me that, in St. Louis, Sinquefield and Mayor Francis Slay, a friend of Sinquefield, made a deal.

Here’s how the conversation that led to that gentleman’s agreement likely went…

Rex — “Uh, Francis, you know you’ve got to get rid of that E-tax; it’s killing job and business growth.”

Francis — “Yes, Rex, I realize that. But we can’t chop it off all at once, you know. How about this: If you don’t contest it on April 5, I promise you that we’ll get rid of it before it comes up for retention in five years, and we’ll come up with ways to replace the revenue.”

Rex — “You got it.”

How could such a clear-cut deal take place in one city, while, at the other end of the state the battle will be re-engaged every five years for the foreseeable future?

It’s the difference between a strong mayor form of government (St. Louis) and a council-manager form of government in Kansas City.

Slay can make that deal without having to worry about being undermined by the Board of Aldermen. In Kansas City, however, the mayor can’t promise anything, unless he’s got the signatures of six other council members, giving him a 7-6 majority, including himself.

Slay

To see the difference in the E-tax intentions of leaders in the two cities, one had only to read Slay’s comments in today’s St. Louis Post-Dispatch and Mayor-elect Sly James’ comments in The Kansas City Star.

James: “What a great victory. We now have confirmation that we’re going to have the earnings tax that we need so much.”

Slay: “What we saw here was a step, an important step toward what I believe to be a necessary and inevitable change in the way the city delivers services and the way the region is governed.”

The Post-Dispatch story went on to say that city officials already had begun talking about other ways of getting the revenue that the E-tax generates. “I don’t think there’s going to be another campaign on this earnings tax” in five years, Richard Callow, pro-earnings-tax campaign manager was quoted as saying.

That about says it all, doesn’t it? The wheels are in motion in St. Louis, and the E-tax is going away.

Now, if Kansas City leaders are paying attention, that should set off all kinds of alarms.

Two reasons:

1) The E-tax undoubtedly is hurting business and job growth in Kansas City. We’re already getting poached to death by the Kansas side, and now, with many Missouri-side suburbs growing, they, too, will pick up the cherry-picking pace.

2) After St. Louis gets rid of its E-tax, it will start competing more stoutly for businesses that are looking to relocate to Missouri. And when it lays out its package of incentives, it can say, “If you come to St. Louis, you won’t have to worry about an earnings tax, but if you go to Kansas City, you’ll be hit for one percent of your profits.”

Ouch!

Let me make this clear: I was not only for the E-tax, I was on the Save Kansas City Committee steering committee and made two presentations on behalf of the tax. At both appearances, however, I advocated for a thorough review of Kansas City finances.

And while I like the idea of forcing the “sundowners” — those who leave the city after work each day — to help pay for the amenities and facilities that bolster the urban core, I think this newfound focus on the E-tax is fostering a lot of unnecessary resentment among the sundowners.

You remember, don’t you, E-tax proponent Dan Cofran’s now-famous quote to a woman who was frustrated because she had to pay the tax even though she didn’t live in Kansas City? “Then, don’t work here,” he said.

Ouch…again.

The reply didn’t hurt the tax’s chances of passage at all, but it didn’t help relations between those of us who live in Kansas City and those who don’t. We shouldn’t allow the E-tax to drive the wedge even farther between us and them.

So, let’s see what we can do about getting rid of that E-tax, OK, Sly? OK, council members?

The last thing we want, other than that wedge being driven deeper, is the sight of St. Louis steaming by us as we cling to a tax that only about 20 percent of the largest cities in the U.S. are holding on to.

Sinquefield

Also, this looks like a case where the big dog, Sinquefield, isn’t going away. He’ll be back in five years — assuming he’s still alive — and he and his minions will dump several hundred thousand more dollars into that campaign, and he’ll make our business community shell out another $1 million or so to try to beat him.

To me, he looks an awful lot like Local 42 of the International Association of Fire Fighters: He won’t quit until he gets what he wants.

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I hate to say this, but I am losing confidence in Mark Zieman as publisher — and ultimate leader — at The Kansas City Star. 

My colleague John Landsberg of Bottom Line Communications reported yesterday that there will be another round of layoffs at The Star. I can’t keep track of how many rounds there have been in the last few years, but I think this will be at least the fifth.

This latest news is particularly maddening and frustrating not because The Star’s staff apparently will get even thinner, but because of Zieman’s optimistic tone when he announced the previous round of layoffs last September.

Back then he said The Star was approaching the end of the year “financially strong” and that the industry was at a “turning point.”

To me, that not only was irresponsible, it was misleading and showed Zieman was indulging in wishful thinking. While such words might buoy employee morale temporarily, the words make it all that much harder for employees to swallow another round of layoffs. The real danger of statements like that is that they spread a sense of false hope and paint the publisher as someone trying to buy time before something even worse happens.

Employees of every organization like to hear words of encouragement and hope from their leaders, but, more important, they want a candid assessment of where things stand. Zieman has failed miserably on that front, not just in September but with unrealistically optimistic words with each round of layoffs.

So, now, unfortunately, it’s like the boy yelling fire in the theater. Except it’s the reverse because there is a fire and Zieman keeps trying to convince his troops it’s just about extinguished, when it’s obviously out of control. 

I mentioned that something big could happen. Like what? Well, how about a decision to drop the print edition several days a week. That seems like the next likely step to me.

Zieman probably won’t admit it until it happens, because he’s obviously reluctant to take off the rose-colored glasses. But it could easily happen, and it wouldn’t surprise me to see one or two weekday papers — maybe Monday and Tuesday — dropped within a year or two.

Several papers around the country have already dropped some or all print editions, and the St. Louis Post-Dispatch took a step in that direction last year, when it dropped single-copy sales — in boxes and convenience stores — of the Saturday paper. It still puts out a Saturday paper, but it goes only to subscribers.

In reporting the story last October, the Riverfront Times, the St. Louis alternative paper, asked Editor Arnie Robbins how long it would be before the Post-Dispatch would cease putting out a print publication altogether.

“I’m not feeling particularly clairvoyant this morning,” Robbins replied. “But I think in the next 10 years you could see the elimination of the weekday paper, with the Sunday still coming out in print. The rest of the week would be online or delivered through niche products and phone and e-reader apps. We’re working on a few of those projects right now that we’re excited about.'”

Well, let’s credit Robbins with some degree of candor. Ten years very likely is an overestimation of how much longer the daily P-D will survive, but at least he doesn’t have blinders on.

Now, compare that statement with what Zieman told employees in the September memo announcing that round of layoffs:

 “I know that weathering this recession has been exceptionally hard for each of you. But we will begin next year with a steadily improving revenue trend. We are posting record online traffic and revenue, we remain the dominant media company in our region, our presses and readership metrics are among the best in the country and our news products are recognized nationally for their journalistic excellence. The Star won’t die, but this recession will.”

Metrics. Journalistic excellence. The Star won’t die. Uh huh.

This is really a desperate situation in my view. I think The Star’s owner, McClatchy Co., is headed for bankruptcy.

As I reported in June, Morningstar, the independent investment and stock research company, had a grim outlook for the company. An article in Morningstar StockInvestor, a periodical available to Morningstar members by subscription, said this:

“Our fair value estimate on McClatchy shares is $0.”

Are you listening, Mark? That’s zero. Nothing. Worthless shares for the stockholders.

At the time, McClatchy’s stock was selling at $4.28 a share. The stock closed Friday at $4.89 a share, but that’s no indication of a significant upswing. Sprint, as difficult as its situation is, has a much better chance of surviving than McClatchy does.

The company paid too much for KnightRidder in 2006 and bought the KR papers at precisely the wrong time.

Do you remember when Payless Cashways senior managers, led by then-chief executive officer David Stanley (fondly known to some as Minnesota Dave because he flew back to his home in Minneapolis every weekend) took the company private in 1988? They paid too much ($900 million); the company muddled along for about 10 years and then rolled over and died.  

McClatchy, too, is going to roll over and die, I believe…or get bought out for a song. I can hear the late “Dandy” Don Meredith singing from heaven, “Turn out the lights; the party’s over.”   

And what will happen with the papers McClatchy owns? I don’t know. But it isn’t a bright picture, and I hope Zieman doesn’t weigh in with more irrationally optimistic statements when he officially announces the newest round of layoffs.

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For the first time in the modern newspaper era, The Kansas City Star’s Sunday circulation has fallen below 300,000.

In all probability, Sunday circulation has not been below 300,000 since it crested that number, perhaps around 1950 or earlier.

According to the most recent report, issued Monday, by the Audit Bureau of Circulations, The Star’s Sunday circulation fell to 290,302 for the April-September reporting period.

That represented a 5.7 percent dip from the previous year (when Sunday circulation stood at 307,974) and a 10.6 percent drop from 2008.

The Star has been battling desperately to prop up Sunday circulation. In recent years, for example, the company has been providing Sunday papers to subscribers of The Olathe News, which The Star bought several years ago. More recently — and more surprisingly — it  began providing Sunday papers to subscribers of a competitor, The Examiner, which distributes in Independence and the fast-growing suburbs of Blue Springs and Grain Valley.

This coming Sunday, The Star is starting a special promotion — featuring 3-D images in parts of the paper. Each copy will contain special glasses. 

The Star has good company in falling circulation, of course. The Audit Bureau showed that average weekday circulation at 635 newspapers declined 5 percent compared with 2009.

The St. Louis Post-Dispatch was another major paper to fall beneath a long-time Sunday benchmark — 400,000. Its Sunday circulation fell 8.9 percent, from 401,425 to 365,589.

If there’s any good news in the overall report, it’s that circulation is not falling as fast as it was a few years ago.

The “decreasing decrease” in circulation mimics the trend in advertising, which also fell off a cliff a few years ago and is still trending downward, but not as sharply. 

The Newspaper Association of America, a trade group, reported recently that newspaper advertising revenues were on track this year to hit a 25-year low of about $26.5 billion. That would be less than half the revenue ($49.4 billion) that newspaper advertising generated as recently as 2005.

The only truly hopeful sign for publishers is that online advertising has climbed almost 50 percent, to $1.5 billion, during the last five years. 

Circulation, of course, is the horse that pulls the advertising cart. When circulation falls, it puts downward pressure on ad rates.

The fact that circulation and advertising losses are diminishing — and that online advertising is increasing — offer the only light at the end of what has turned into an extremely long tunnel for newspapers. Had circulation and advertising continued to drop the way they were a few years ago, a lot more newspaper companies would not be publishing print editions at this point.  

Regarding The Star’s situation, I sent K.C. Star publisher Mark Zieman an e-mail Wednesday morning, seeking a comment, but I got no response.

A former Star executive told me a year or so ago that Zieman sees his overriding mission as saving the The Star’s print edition. If that is the case, his relative youth — he’s about 50 — could work against him. 

The Star’s weekday and Saturday circulation also fell. Daily circulation was down 4.5 percent — to 206,441 — and Saturday circulation was off a whopping 7.8 percent.

As recently as 2000, The Star mounted a marketing campaign designed to propel weekday circulation above 300,000. My, how aspirations have changed in the last decade.

The ABC figures include electronic, as well as print, subscriptions. Electronic subscriptions now comprise 12 percent of The Star’s total weekday circulation.

According to ABC, a trade group, The Wall Street Journal has the highest average daily circulation, with slightly more than 2 million papers sold daily. USA Today is second, at 1.8 million, and The New York Times is third at 876,638.

Rounding out the top five were The Los Angeles Times (600,449) and The Washington Post (545,345).

The New York Times has the highest Sunday circulation, at 1.3 million. The Wall Street Journal and USA Today do not publish on Sunday.

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