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Walpole Times ravaged by corporate owner

December 19, 2011

There was a time, not so very long ago, when The Walpole Times had its own photographer, a Sports Editor, a managing editor, an assistant editor, and a full news staff of three or four reporters.

All of that is gone now. Today, the newspaper’s photos are taken by a roving photographer who covers multiple towns at once. The Times would be lucky to have any in-depth story about local sporting events.  Editorials written by staff are rare because there’s just one editor. Only one reporter covers the community of 24,000 people.

Walpole’s only local newspaper is now a shell of its former self – a ravaged victim of the ongoing transformation of the news business into an industry controlled by major corporations that care more about shareholders than they do about the people in the small communities their newspapers are supposed to cover.

The town of Walpole is suffering from the continued decline of the Times thanks to its corporate owner.

GateHouse Media, the Rochester, N.Y.-based company that owns the Times and hundreds of other daily and weekly newspapers throughout New England and the country, currently owns more daily newspapers than any other company in the nation, according to The Pew Project for Excellence in Journalism. GateHouse owns most of the smaller community newspapers in Greater Boston – running virtually every one of the weekly and daily newspapers, with some notable exceptions, in cities and towns from Boston to the South Coast and all the way to Cape Cod.

The GateHouse empire, created from a series of massive acquisitions in the past five years, has come at a heavy cost. The company hasn’t seen a profitable year since going public in 2006. During the third quarter of 2011, the company reported $5 million in net losses, continuing a trend of continued losses in previous quarters.

That might not seem like a big deal, especially in light of the recession and the decline of the newspaper industry in general. But there is some other unsettling news that should have readers on edge: the company has a staggering $1.2 billion in debt, twice the value of GateHouse’s total reported assets.

Some analysts, along with both major credit ratings agencies, Moody’s and Standards & Poor’s, expect the company to go bankrupt within a few years. That’s a very disturbing prediction for those in Walpole, and other towns served by GateHouse, who depend on their local newspaper to keep current about area issues.

If GateHouse goes bankrupt, it would bring the Times, a successful paper on its own, down with it. Walpole will be left without anybody holding officials accountable, without any local sports coverage, and without any coverage of local events or news. As it is, the Times, in its current form, is barely doing much of this anyway. But every small town needs a newspaper.

Investors have been fleeing GateHouse in droves, as its stock price flounders near five cents per share, down from a high of $20 when they first went public on the New York Stock Exchange in 2006. Since 2008, when its stock price started to plunge, it has been suspended from the NYSE and now embarrassingly trades through over-the-counter markets as a penny stock.

When they first went public, GateHouse was popular among investors who wanted a dividend payout much higher than ordinary newspaper companies. Now that they are dropping like a rock, the company is probably starting to regret they treated their shareholders so well.

With red ink all over their balance sheets, the company has engaged in a massive restructuring effort in recent months. In a memo to GateHouse employees in September, CEO Michael Reed announced Project Apple, a “major transformational initiative” to turn the company around just like Silicon Valley’s Apple, Inc. did in the 1990s.

The company’s media properties across the nation, including the Times, are being forced to cut back on staff, and printing operations are being consolidated or downsized.

In September, in a loss to the community, the Times had to lay off its longtime legendary Sports Editor Keith Lewis. In November, GateHouse followed up by laying off Publisher Greg Reibman, who oversaw the company’s Metro Unit of 17 community newspapers in the Boston area, including the Times.

The company consolidated Reibman’s position at the helm of the Metro Unit with that of another publisher, Chuck Goodrich, and another editor-in-chief, Richard Lodge. Managing Editor Keith Ferguson, who oversees the Times on a day-to-day basis, remains in place, as does the rest of the Times staff, for now at least.

The irony in the removal of both Lewis and Reibman is that the Times and the Metro Unit as a whole are reported to be doing very well financially. According to Reibman’s LinkedIn profile, the Metro Unit advertising team “has exceeded revenue expectations for 24 consecutive months and counting and is projected to close 2011 more than $1 million above budget.” The Times, by all accounts, is profitable, as well.

But with the rest of the company apparently hemorrhaging, Walpole’s beloved sports editor had to take the fall. The Times sports section is now noticeably shorter, and sporting events are covered by an out-of-town reporter who covers five different communities at once. Most of the front page of the sports section is now a full schedule of upcoming games, because there aren’t enough actual stories to fill the space. In a town that has so much passion for sports, the significant, apparently permanent, reduction in quality in the Times’ sports section is very concerning.

When the Times was first purchased by GateHouse in 2007, their well-known photographer Christine Cochrane, a staple at town events for many years, left voluntarily but was not replaced. As the paper’s reporters left one by one, they have not been replaced, leading to the current void in the Walpole newsroom staff. Subscription sales and some production operations are now handled at a GateHouse office in another town, too.

A newspaper that is highly profitable and has no competition in a small community shouldn’t be experiencing substantial downsizing as is being seen at the Times.

Even more worrisome, however, is the strong indications that the reductions at the Times are only just beginning.

With some of their staff members already based outside of Walpole, it’s worth speculating that the Times itself may have to move its newsroom out of town as a cost-savings move. Many of the company’s other papers in the area have already done that.

In a press statement written by Reed after the company’s third quarter losses were announced in October, he specifically mentioned consolidations of operations as a cost-cutting move. “We continue to evaluate centralization and outsourcing opportunities to develop a more efficient operating model,” Reed wrote.

Right now, the Times and The Somerville Journal are the only two papers in the Metro Unit that maintain their own newsroom in the same town they cover. All of GateHouse’s papers in communities bordering Walpole – The Medfield Press, The Sharon Advocate, The Norwood Bulletin, The Westwood Press, and The Dover-Sherborn Press – operate out of a single consolidated office in Needham, almost 20 miles away.

Despite the speculation, Goodrich insists that the Times is here to stay. “We love our location in Walpole and have no plans to move our news operation elsewhere,” he told 180.

But with so many of the other GateHouse papers in the area already based in Needham, it’s genuinely difficult to understand why the company wouldn’t consider relocating the Times. The company is so deeply in debt that it’s hard to believe that there wouldn’t be a serious discussion about cutting the expense of their newsroom lease on West Street. Although Goodrich said there are “no plans” to move the paper, it’s important to note he didn’t specifically close the door on it in the future.

If the Times newsroom is indeed relocated, local news quality will undoubtedly suffer even more than it already has. That’s not to mention the fact that downtown Walpole would lose another iconic business.

It would take the paper’s lone reporter and lone editor more time to get to Walpole events. The caliber of coverage of town government meetings and other town events would definitely be reduced, and breaking news coverage on the Times website might also be more limited. Walk-in service for letters to the editor or advertising would be made much more inconvenient, if not non-existent, for Times customers.

Local politico James Taylor reportedly regularly uses walk-in service to deliver his letters to the editor, but if he has to go to Needham it’s hard to see how he’d be able to continue doing that. That would be a serious loss to the paper’s opinion page.

Ferguson declined to comment for this story, referring all questions to Goodrich.

While their company goes into the ditch, GateHouse executives have given themselves obscene raises during the past couple of years. According to SEC filings, five company executives, including Reed and President and Chief Operating Officer Kirk Davis, received bonuses totaling over $1 million this year. Reed alone earned $750,000 on top of his base salary.

At the same time, employees at GateHouse newspapers, including at the Times, haven’t seen pay raises in years. Employees are also working longer hours to make up for laid-off colleagues, and morale has been low.

Last month, James Craven, a columnist who was laid off from the Gatehouse-owned Norwich Bulletin in Norwich, Connecticut, wrote that GateHouse had decided to “cannibalize the newspaper.” In a fiery opinion piece entitled “Goodbye Norwich” that was later taken off the Bulletin website, Craven slammed his now-former employer. (Craven’s column has been preserved online here.)

“I say cannibalize because The Bulletin is reported to be a profitable member of [GateHouse],” Craven wrote. “Those portions of the company on the lean side, decided to devour those doing better,” he exclaimed.

Noting that the latest layoffs at the company have reduced the Bulletin’s news staff by about 20 percent, Craven lambasted the executive bonuses being handed out at the top. “[The layoffs] will, of course, allow the president of Gatehouse Media to follow up on his $750,000 bonus to himself with an equally staggering and incongruous gratuity this year. Merry Christmas Mr. President,” Craven wrote.

Craven also provided a cautious warning for readers: “The thing about reduced community coverage is that you do not notice it while it is happening. It is, if I may be so bold, like a cancer. It works below the surface, until one day when suddenly it becomes all too apparent. There will be referendums that may not be covered as fully. Some school functions – that first grade play that in the past featured your son or daughter – will be bypassed. On holidays, like Veterans Day, decisions will be made to forfeit coverage in some communities because there just is not an extra reporter.”

Craven’s feelings represent the sentiments of a lot of GateHouse employees and readers right now.

Although the company hasn’t been generating profits overall, GateHouse has seen its digital advertising revenue increase recently. In October, Reed said in a press release that the company is “embarking on a strategic initiative to reevaluate our traditional business model and transform the company into a truly digital media enterprise.” He indicated that GateHouse wants “stabilization of print revenues,” but offered no details as to what he meant by making the company “truly digital.”

In his September email to employees announcing their turnaround plans, Reed implied the company wanted to put less focus on printed news. “We need to become more than a newspaper company — we must become a content company. That is what will drive the changes in the coming months,” Reed wrote.

Reed’s vague statements don’t give any insight into what exactly the company is looking to do with technology. Does the company intend to shut down its printing plants and take the Times completely online? It might seem radical – but with the company nearly bankrupt, it wouldn’t be surprising if that happened.

The company recently shut down some of its own printing plants in the state, outsourcing to other private firms. The Times, which prints out of a GateHouse plant in Framingham, hasn’t been affected.

The company’s New England news operation already operates a very successful network of local news websites, at WickedLocal.com. The Times has a wide readership online at WickedLocalWalpole.com, on which they post a significant amount of content from their print edition and breaking news.

But Goodrich emphasized that the company still “believe(s) strongly in print.”

Goodrich noted, however, that the internet presents new opportunities. “Thanks to the Internet, our overall audience has never been greater, and we’re now able to cover breaking stories as they happen on our website,” he said. “We’re adapting to the Internet, just as we’ve adapted to the changing needs of our readers and advertisers throughout our long history,” he said.

Again, no specifics and only vague comments. That doesn’t exactly qualify as a decisive statement that the Times will remain in print for years to come.

Goodrich expressed optimism about the future of the Times and GateHouse, and even suggested that being owned by a larger company may actually be beneficial for the Times. “Being part of a larger group has enabled us to gain efficiencies and innovate during this challenging period while maintaining a strong commitment to local news and advertising,” he said.

But with more red ink on the balance sheets for many months to come and a possible bankruptcy looming, it’s clear continued changes for the worse are probably inevitable at the Times. None of that would occur if the paper was still independently-owned. Without GateHouse, Lewis would still be employed, and Cochrane might be too. The news staff would be much larger than it is currently.

After all, the Times has a wide circulation in the community, has no competition, and generates a tremendous amount of advertising and circulation revenue.

Goodrich said the company wants to see the Times succeed. “The Times is an important part of our publishing group,” he said.

But if GateHouse actually valued local newspapers and the communities they serve, they wouldn’t dismantle profitable papers like the Times while handing out executive bonuses. The company should be fixing its less profitable subsidiaries, instead of destroying its more profitable ones.

“We’re committed to building on our position as the leading source of local information and advertising for Walpole,” he said. “We appreciate the support of our readers and advertisers in making that possible.”

(Full Disclosure: I currently write an occasional column for The Walpole Times. However, I am not on the Times payroll, nor do I have any financial interest whatsoever in their operation.)

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One Comment leave one →
  1. Killah permalink
    February 8, 2012 7:37 PM

    Goodrich is merely drinking the kool-aid, parroting as Davis and Reed instruct. He’ll likely find himself on the outside looking in soon enough. That day is coming and not far off, interview him then. Gatehouse has no interest in the print products. The sooner they can shut down the presses, the happier they will be. Newsprint, delivery and that pesky news gathering is expensive and useless in a digital world. When the eventual of bankruptcy does emerge, the high ranking corporate execs will have a digital company at fire sale prices. The 400 something print products be damned and good luck

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