MEDIA

Hard times for news

Dailies fight for dwindling revenues

PATRICIA CHISHOLM June 29 1992
MEDIA

Hard times for news

Dailies fight for dwindling revenues

PATRICIA CHISHOLM June 29 1992

Hard times for news

MEDIA

Dailies fight for dwindling revenues

Bryan Crouch did not expect to end his working life driving a truck, but says that he was happy when he was hired as a driver for The Toronto Star. After 18 years as a cost estimator for a packaging company, Crouch lost his job in 1979 after the firm computerized its business. But he soon moved into his current position at the Star, which now pays him $46,200 a year. Confident that his long-term prospects were stable, he bought a threebedroom house in Oshawa, 60 km east of Toronto, in 1987 for $156,000. Last week, the 50-year-old Crouch, who was on strike along with 1,600 other Star employees, expressed concern about losing his home. For Crouch and the other striking workers at Canada’s biggest newspaper, the issue was job security, not money, because of the Star's plans to cut costs by laying off all of its drivers and replacing them with independent contractors. Although newspaper officials maintain that there would be some part-time work available, Crouch said it would be of little use to him. “I don’t have a part-time house,” he said, “or a part-

time family or part-time food on the table.” Across the country, employees at other large daily newspapers watched the rancorous dispute at the Star with trepidation. Like almost all other forms of news media, newspapers have suffered declines in advertising revenue over the past three years, and many are taking tough measures to reduce costs. Last week, officials at Montreal’s Gazette, which is owned by Toronto-based Southam Inc., announced the layoffs of 59 of its 825 employees. Earlier this month, the Winnipeg Free Press, which is owned by Toronto’s Thomson Corp., laid off 50 people, or about 10 per cent of the staff, while The Ottawa Citizen announced a wage freeze for senior executives. “The media are sitting in the shelter watching the bombs go off,” said Toronto communications consultant Leonard Kubas. “They are finally beginning to realize that advertisers just don’t have unlimited pots of money to throw at them.”

The hard times are all the more difficult because of the boom years that preceded them. In the midto late 1980s, companies that owned newspapers had healthy pretax profits, with the Thomson papers reporting operating profit of about 30 per cent, a 15-per-cent retufn at Southam’s papers in 1989 and more than 18 per cent in 1988 at Torstar Corp., which owns The Toronto Star.

But as the effects of the recession drag on, advertisers have continued to stay away. To make up the shortfall, many newspapers are investing in more efficient technology, cutting operating budgets and, in some cases, replacing staff with independent contractors. Newspaper owners maintain that such steps are essential to their survival. Douglas Creighton, chairman of both the Toronto Sun Publishing Corp. and The Financial Post, says that using contractors to deliver newspapers has become the norm at many publications, including his own. He added: “Our involvement with the newspaper ends at the loading dock. We made the drivers entrepreneurs.”

Creighton also said that the Sun had already boosted revenues by attracting advertisers from the Star during the strike. As one of the few North American cities with three daily general-interest newspapers, the Toronto market for ad dollars is a hotly competitive one. Few observers said that the Star was likely to fold because of advertising lost during the strike. But according to Fred Ross, communications director at the Star, officials at the paper were worried about a permanent loss of readers and advertisers. The paper was publishing only one edition a day, down from its usual four, and had reduced its Saturday edition to 72 pages from 200. Said Ross: “If the paper is brought to its knees by this strike, people who think we wili be able to keep a full complement of staff are not playing with a full deck.”

Peter Murdoch, a union representative for the striking Star workers, acknowledged that the union was worried about damaging the paper with a prolonged strike. But he added that the issue of contracting out was too important to ignore. “It’s spreading to other areas, including writing and editing,” he said. Papers would be stronger, Murdoch added, if they had made better use of their profits when times were good. “During their salad days, these companies grew by acquisition instead of creating exciting new products,” he said. “They are suffering now because of their laziness.”

But at least one paper seems to be winning the circulation and advertising war by investing heavily in itself. In Edmonton, The Edmonton Sun and The Edmonton Journal have been locked in a battle for readers since 1978. While the tabloid Sun is holding its own, the Journal has gained a significant number of readers since 1989, largely due to a costly overhaul that included expanded sports and entertainment coverage. As a result, Journal executives say that the paper is now a bright spot for beleaguered Southam. And, noted editor Murdoch Davis, “there will be nothing like the Montreal layoffs happening at the Journal.” But that was little comfort to either management or staff at the Star, where the two-weekold strike caused anxiety and resentment on both sides.

PATRICIA CHISHOLM with JOHN DALY in Toronto and JOHN HOWSE in Calgary

PATRICIA CHISHOLM

JOHN DALY

JOHN HOWSE