Journal Entry #2 February 1, 2009

Gannett to explore dividend cut to conserve cash

In Smith’s chapter on The Business of News, he discusses how many large companies own large quantities of newspapers. During these tough economic times, not even the large publishing company Gannett is safe. “Gannett Co. said Friday that its board would explore a dividend cut next month as the nation’s largest newspaper publisher looks to conserve cash.” This desperate attempt to conserve cash for basic operations shows not only what a horrible economy we are in but also how bad the newspaper industry has become. Smith talked about how “These institutional investors owned more than half the shares in media companies such as Gannett…many of these investors had no interest in whether the newspapers were performing their public-service responsibilities. They were interested only in profits” (334) If these companies were so profit focused, how could they have lost money?

Quality of the news being covered could be a large factor—if they are suffering enough that they had to “laid off thousands of employees late last year and imposed a one-week unpaid furlough during the current quarter.” I doubt that the quality of their papers is what it used to be. If Gannett was not producing quality news, why would anyone wish to purchase their papers? This seems like a dangerous cycle to be in; cut funding, quality suffers, papers don’t sell, which in turn starts the cycle all over again. “In understaffed newsrooms, news desks may struggle to fill the paper by deadline and may trade ethical concerns for expediency.” (346) With compromised ethics and an obvious rush to fill a newspaper using less money and fewer staff, how much longer will the print journalism industry survive?

Gannett is not the only publisher suffering, as “Other newspaper publishers already have slashed their dividend rates in recent months.” I feel that this is the last straw for the newspaper industry. I doubt it will survive another 5 years at this rate. I know that my parents have canceled their subscription to The Burlington Free Press because the quality has gone down, and it seems like its all advertising and AP stories, with little local content. I have little doubt that other Gannett owned newspapers are faring any better than The Burlington Free Press.

Also referenced: Groping for Ethics in Journalism by Ron F. Smith