A "come to Jesus" moment, for executives of The Miami Herald? by gimleteye

The Miami Herald is cutting 250 positions. “McClatchy Chief Executive Gary Pruitt said The Herald's cut was larger than most of the group's other newspapers, because 'The Miami Herald's performance has been worse than most, if not all, of the newspapers…' Landsberg (Miami Herald publisher) said The Herald's decline 'has been very much linked to the [local] real estate market,' which is suffering a severe down(turn).”

You don't have to read between the lines: revenue from real estate advertising, accruing mainly to the benefit of executives compensated on the basis of profitability, dictated the balance of news coverage of local development politics. Sensational news, yes. But peeling back the layers of the onion to the rotten core of development politics? No. No. And no.

Yes, The Herald ran a Pulitzer-prize winning series on corruption in the Miami Dade Housing Agency, "The House of Lies". But as enlightening as it was to read and understand how second-tier scavengers from the lobbying class cannibalized the interests of poor people, there was a much richer House of Lies that Herald reporters certainly knew about but could not publish: it has to do with filling wetlands under pretense of protective laws and regulations, the damning of Everglades restoration by powerful lobbyists and politicians who swear their commitment to do what's right, all tied to the politics of suburban sprawl; wrapping up water resources and infrastructure, the political fortunes of top campaign donors, lobbyists, land speculators in South and West Dade.

It is the same story in every urbanized region of Florida, and the reason the citizen's movement to change the Florida constitution by petition drive and ballot referendum, Florida Hometown Democracy, is so powerful. (see our archive feature, Florida Hometown Democracy.)

The Miami story has to do with big corporations like Lennar and small ones like Caribe Homes and other members of the Latin Builders and South Florida Builders Association, with land aggregators; and with speculators claiming to be property-rights loving farmers who wanted to turn row crops into condominiums and platted subdivisions in Homestead and Florida City and the Redland. Is a post-mortem due?

Very definitely, yes. A thousand times, yes.

The Miami Herald and other newspapers are far too important to the survival of community and our representative democracy, such as it is, to be buried because they bet their farm on real estate advertisers.

In this context, last night as I dozed off, I recalled the following quote from a New York Times article I cited in yesterday's blog, "After a Rough Year, Nearly Half of Wall Street Bank Profits Are Gone." It is applicable to the newspaper business.

A financial services analyst said of investment banks, "They are going to have to build a new business model. I do not believe those businesses have the ability to generate the kind of profit they did in recent years without all the leverage."

Think about it for a moment: the real estate boom only existed as a function of leverage, and newspapers like The Miami Herald that depended on real estate advertising depended on the leverage, too. The people who profited are those who cashed out before the business model failed. But there is no doubt: the business model dependent on the corruption of leverage is done.

But there are stories galore to be told, if The Herald executives are willing now to just do the reporting without bias in a community dialogue that has always put the speculators and production homebuilders out of reach and failed to report with any kind of balance just what the opposition was fighting for.

Consider one such story that could be told: who are the partners of Krome Gold, Inc.? Where did they make their money during the building boom, what are their networks and who are their bankers, how much cash they are burning through now to support the monthly carrying costs for land outside the UDB purchased at massive speculative prices, and what is the long-term plan for their "new" business model: rock mining.

Here is a story for the Herald that wraps up the corruption of leverage: Krome Gold wants to build a 170 acre rock mine and is trying to push through its plan at the local community council where it begged, last week, for another chance on July 8th to convince skeptical council members who wonder what is the real purpose of putting a massive rock mine in a residential, rural area?

Where will the fill go? To Parkland, the major DRI on a thousand acres outside the UDB? Fill, for Sergio Pino and his investors at US Century Bank? Who needs another rock mine in South Dade? How many have already been permitted, in the past two years? And what is the business model Krome Gold and its lobbyists are trying to sell? $1.5 to $2.5 million ranchettes miles from no where, on a dead lake which all rock mines become-- and a conduit for salt water intrusion?

That is a story I want to read in The Miami Herald. I strongly hope Herald executives will allow ones like this to be written because the leverage in unsustainable development the Herald was defending is finished: it is over and done.

Report, please, how the public commons have been damaged and the purposes of government deformed to protect privileged insiders using public policy to delay being dragged under by the power of the credit crisis they helped unleash. Report, please, how they are still using leverage to turn Miami-Dade into the Rustbelt of Florida.


Posted on Tue, Jun. 17, 2008
Miami Herald staff to shrink by 17 percent
BY JOHN DORSCHNER
Hammered by the financial problems facing newspapers across the country, The Miami Herald Media Co. announced plans to reduce its workforce by 250 employees -- 17 percent of its staff.
''This is a painful but necessary step,'' Publisher David Landsberg wrote in an e-mail to employees. Because of a dramatic reduction in revenue, ``we're operating in a time of great change and challenge for our operations.''
The reductions will come from a combination of eliminating open positions, voluntary buyouts and layoffs. Affected employees will receive severance packages.
The cuts are part of a restructuring by Herald owner, The McClatchy Co., which announced Monday the elimination of 1,400 full-time employees -- 10 percent of the company's workforce.
McClatchy Chief Executive Gary Pruitt said The Herald's cut was larger than most of the group's other newspapers, because ``The Miami Herald's performance has been worse than most, if not all, of the newspapers, and . . . there were some opportunities for greater efficiencies.''
Pruitt said he was committed to continuing to offer readers quality products. ''There's no doubt that we will have somewhat fewer resources,'' he said, ``but we will remain the largest news operation in each of our markets, and we will be able to produce quality news reports.''
The Miami Herald newsroom is expected to lose about 60 positions, although the actual number of people losing their jobs is only about 40, since some of those positions are current vacancies or will be moved to other divisions. And, some operations will be outsourced to workers in India. Those include production of the company's International edition, which circulates in Latin America and the Caribbean.
The firm is also exploring transferring its radio operations to a third-party company, but the services to public radio station WLRN will remain the same, a Herald manager said.
ALREADY SHRUNK
McClatchy has historically avoided broad layoffs and reduced through attrition and outsourcing. The company already shrank 13 percent between the end of 2006 and April 2008. But executives said these moves were not enough after the company lost $849,000 in the first quarter of 2008.
While the audience for McClatchy's websites grew 25 percent in 2007 and 41 percent in first quarter 2008, the company said, ad revenue has not kept pace. McClatchy reported a 15 percent drop in ad revenue for the first quarter compared to the previous year. In May, ad revenue fell 16.6 percent compared with the same month last year.
Pruitt said The Herald and McClatchy had been hit by a ''double-barreled change,'' in which newspapers face more competition from the Internet while the economy is in a downturn. Real estate, employment and automotive advertising -- three mainstays of newspapers -- have all dropped sharply.
The moves by McClatchy are expected to save the firm $95 million to $100 million over the next four quarters.
FLORIDA OPERATIONS
McClatchy does not release specific performance figures for individual newspapers, but its quarterly report showed that Florida operations -- which consist of The Miami Herald, El Nuevo Herald and the much smaller Bradenton Herald -- saw total ad revenue decline 20.4 percent.
Florida print-only revenue dropped 23 percent, from $23.3 million for the first quarter in 2007 to $17.9 million in 2008, while online Florida ad revenue increased 6.9 percent to $6.2 million.
Landsberg said The Herald's decline ''has been very much linked to the [local] real estate market,'' which is suffering a severe downtown. But he assumed the bulk of The Herald's revenue drop stems from long-lasting structural changes in the industry, as ads such as listings for jobs and cars migrate permanently to the Web.
Landsberg said the company is merging some departments, outsourcing some functions and reducing the number of smaller, niche publications it produces.
The publisher said there are some ''very good signs'' that the company will eventually turn around. Herald websites -- including Miami.com -- saw viewership climb 35 percent in the past six months. He said El Nuevo's circulation also showed ``very good growth.''
MILLION READERS
Even with the reductions, Landsberg said The Herald is ''still by far the largest news gathering and editing operation in South Florida.'' On Sundays, The Herald has 1 million readers -- four times the highest viewership for a television show in the area.
For the past year, newspapers throughout the country, including The New York Times and Washington Post, have been shrinking staff because of severe financial problems.
Asked if he sensed the newspaper decline had reached the bottom, Pruitt said, ``I'm hopeful that it doesn't get worse, but I can't say for sure.''



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