An email from publisher Mark Zieman went on to say that “…The worst days of this economic downturn are behind us.”
Hold it right there…
That may well be, but the implication that the newspaper can pack up all its cares and woes and march into a bright future is naive.
If the economy does rebound it will have a positive effect on the Star’s revenues along with everyone else in Depressionville hanging on for dear life.
But there’s more to the equation.
Namely that newspapers and print pubs are a dying breed. And while doubtless they will survive in some form on the Web, nobody has come close to finding a way to replicate print profits online. Meaning that down the road, far more efficiencies – including in staffing – will be required.
Case in point:
In 2001 when the Dot Com Bubble burst and the country was in a full-blown recession, the Star’s Help-Wanted and Classified ad revenues fell off a cliff.
There followed huge and unprecedented layoffs at the Star in which 120 people lost their jobs. Does the name Rich Hood ring a bell?
The prevailing thinking then: that when the economy came back things would vastly improve. They did.
“But the reality was that the help-wanteds never came back because it shifted over the the Internet,” says a source. “And a lot of people are concerned that the same thing could happen now with real estate and autos. The point is that when these businesses cut back because of a recession, they explore other lower cost alternatives. And when the economy comes back they are likley to put more of their money into those newer areas. That’s what happened in 2001.”
The flip side of that coin is evidenced by the rise of the Star parent company’s stock from 40 cents to $5.
“On the optimistic side, the expenses of the newspaper have been cut so drastically that any uptick in the economy is going to translate into significant profits,” the source adds. “You know, they skinnied down for the long, hard winter, so if the spring ever comes back…”
That however addresses the short term – not long term – outlook.