Why the Journal Sentinel Won’t Die

Back in the fall of 2015, when the purchase of the Milwaukee Journal Sentinel by the Gannett chain was announced, I predicted significant cuts for the newspaper under the new ownership. Looking at the staff count at other Gannett papers, and adjusting for market size, I predicted the Journal Sentinel would lose 35 to 40 editorial staff.

I was wrong. Back then the Journal Sentinel had 117 editorial staff (editors, writers, photo, design and online people). Today that’s down to 88 staff, a loss of 29 staff, not quite as bad as I predicted. That may be because the JS has always rated near the top among newspapers in market penetration — the percent of residents subscribing to the newspaper — which makes it a slightly larger readership than its metro population might suggest. 

Still, that was a 25 percent reduction in staff, which is huge, and there is every reason to believe more cuts are to come. That’s because Gannett is having financial problems which may force more cuts, and because it could be absorbed by GateHouse Media (under a merger plan where GateHouse would get slightly more stock — just over 50 percent — and thus control the new company). And GateHouse has a reputation for slashing staff even more aggressively than Gannett has.

But that deal may not go through, because MNG Enterprises, the owner of Digital First Media, has just purchased 9 percent of the stock of the parent company of GateHouse Media, with the apparent aim of trying to kill the merger with Gannett. Why? Perhaps because Digital First has also had its eye on Gannett, but back in February Gannett’s board of directors rejected the buyout bid from the hedge fund that owns Digital First Media. 

If Digital First ever got its hands on Gannett that would be disastrous. As L.A. Times reporter Matt Pearce tweeted back when it was bidding for Gannett: “Digital First Media’s hedge fund owner slashes local newsrooms to the bone, soaks them for profits and then spends money on things that aren’t journalism. If they’re knocking on the door, you should lock the deadbolt.”

With luck Gannett will avoid a buyout that ugly. But it is difficult to see any scenario — even if Gannett continues on its own — under which the JS doesn’t continue to bleed staff. Yet I don’t expect the JS to go out of business. From a market perspective there is sufficient reason to keep the paper going, yet little reason to resist more cuts in staff.

A newspaper like the Journal Sentinel has little market power in the digital ad world, which is dominated by Google, which makes nearly as much from advertising as the entire media industry. And that doesn’t take into account Facebook’s massive impact on where advertising dollars go.

Gannett’s strategy has been to build readership, market power and the ability to negotiate for better ad rates by buying up local newspapers, in essence trying to consolidate a declining industry. The company owns at least 104 local newspapers and more than 1,000 weeklies. Gannett’s goal is to gain as many local markets as possible to wrap some local coverage around its national USA Today stories, which can be republished at little cost in all of its local newspapers and weeklies. 

It also consolidates costs by centralizing printing, circulation and copy editing for its newspaper chain. The JS newsroom is managed by the Gannett corporate office in Virginia. The JS website is also managed from the central office based not on the importance of a particular story, but on algorithms measuring traffic and then highlighting the most popular stories. 

In short, there won’t be any sleepless nights at Gannett if a key story in city or county government is missed by the Journal Sentinel. First, because Gannet’s management doesn’t live in Wisconsin. Second, because the most popular stories at the Journal Sentinel are sports stories, typically seven to eight of the top 10 most popular stories on any given day. And third because covering city and county government is labor intensive and you can get as much (and probably more) readership at jsonline.com by simply republishing lifestyle or sports stories from USA Today or any of its 100-plus daily newspapers.  

When local and state news stories are published at jsonline, the algorithms take over: they might get buried by the website in half a day. The goal is to direct readers to the most popular stories and that’s typically sports and lifestyle, particularly dining, weather reports and then the national stories done by USA Today. It may also mean grabbing a story from another of its papers that did well and giving it prominence on the JS website. 

The recent decision by the Journal Sentinel to put up a harder pay wall for most local and state stories has blocked all the free riders, reducing the readership even more for those stories, compared to those republished from other Gannett papers that have no pay wall.

So if you’re Gannett, from an online traffic perspective, whether it’s city, suburban or county coverage or education coverage, none of it matters much. The JS hasn’t had a full-time county reporter since Steve Schultze took a buyout some four years ago. And it barely covers City Hall any more. When future cuts come the 34 staff listed under News and Investigations will likely be the most vulnerable. 

The staff you need to protect are sports reporters and the dining writer, because those stories get way more readership than news. The most important news beat is the state Capitol, because you have more potential readers impacted by state government, and there the newspaper has maintained two reporters. So far. Meanwhile there are 17 staff handling sports for the newspaper.

All of which I’m sure is killing Journal Sentinel editor George Stanley, who truly cares about covering the news, as well as the paper’s news staff. But when it’s not a priority for the owners, and when a reporter’s important but not-so-sexy story is soon buried on the website, it begins to seem silly to go to all that effort.

Meanwhile, Gannett is doing all it can to push readers to drop print subscriptions and switch to digital readership. When everything is centralized and nationalized, an ever-thinner local print edition is not really a priority. Moreover print advertising is dying: the Sunday paper still looks fat, but that’s mostly adverting supplements prepared by businesses who simply pay an insert fee to be stuffed into the paper, which generates much less revenue than a display ad published by the newspaper. 

While I have been describing the approach of Gannett, anyone who takes over that chain will operate similarly because of the brutal dynamics of the online ad market. The media is now competing with the massive international scale of monopoly companies like Google and Facebook, who can deliver ads to huge numbers of people, targeted to exactly the audience you want, say a young urban female interested in rock music. Which means news publications need the most online readership they can get, to give them more market power when competing for advertisers. 

So Gannett or whoever buys the company has every incentive to keep every local newspaper going in those 100-plus cities. GateHouse does look to combine papers in nearby cities, and should it take over Gannett would probably do some consolation of the latter company’s three newspapers in Wisconsin’s Fox Valley. But Milwaukee is far too large a market and too far from any nearby city to consolidate with another newspaper. Better to keep the JS going and simply trim its staff as needed. 

All of which means the Journal Sentinel won’t go out of business, but will never again be what it once was. The paper is likely to continue losing staff and importance to readers who care about the news.

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