By Terrence McCoy
By Allie Conti
By Terrence McCoy
By Scott Fishman
By Deirdra Funcheon
By Allie Conti
By New Times Staff
By Ryan Pfeffer
But of course, such extravagances were possible largely because the Post was swimming in cash from South Florida's housing boom. Rose says that the illusion, long cherished by some reporters, that their employers would always go to any length to get a good story was never realistic. That's why, when bad times struck, "everybody was just in shock. Like, 'What? We have to make money?' "
With the growth of the internet over the past decade, newspaper circulation declined and revenue streams began to dry up. Around the country and the world, car companies, department stores, and job recruiters stopped relying on daily papers to promote their products. Craigslist made classified ads essentially obsolete. Without the steady income from advertising, profits plunged.
According to figures compiled by the Newspaper Association of America, a nonprofit industry group, this trend hit with full force in 2007. Until then, revenue from print ads at papers across the country was still growing, albeit slightly, during normal economic times. But in 2007, revenue dropped by 9.4 percent, then by 17.7 percent in 2008.
The ad implosion coincided with the collapse of the real estate bubble, which hit South Florida especially hard. Real estate ads — for homes and brokers — had been a cash cow for newspapers. In South Florida, where the building boom was more dramatic than in other parts of the country, the bubble had insulated newspapers from some of the hardships faced by their colleagues in, say, Philadelphia or Cleveland.
"The real estate boom created a kind of fool's paradise," says Rick Edmonds, media business analyst for the Poynter Institute, a nonprofit teaching and research school for journalists in St. Petersburg.
Rose remembers annual corporate meetings in Atlanta at which CEO Kennedy would say that there were problems but that he had patience. While papers nationwide were doing what Rose describes as "Machiavellian things" to cope with plummeting ad revenue, the Post was making record profits.
Then sometime in 2007 — Rose is unsure of the date — Kennedy announced: "My patience is running out." Rose remembers, "All of a sudden, seemingly overnight, the bottom fell out."
Since Cox Enterprise is a private company and its spokesman declined to comment for this article, it's tough to verify Rose's version of events. But this much is clear: The Palm Beach Post buyouts were announced in June 2008, shaving 22 percent of the entire newsroom, advertising, and production staff of 1,350 at the paper. Two months later, Cox said that it was selling some of its papers and that 80 percent of its revenue would now come from the company's websites, car auctions, and auto publications rather than traditional media such as newspapers, radio, and television.
Meanwhile, over at the Sentinel, the outlook was even worse. In 2007, real estate mogul Sam Zell bought the Tribune Co. — which owns the Sun-Sentinel and WSFL-TV (CW), along with the Los Angeles Times, Chicago Tribune, two dozen TV stations, and, until recently, the Chicago Cubs — and made an infamously ill-advised deal to take the company private. To finance the $8.2 billion "deal from hell," as Zell now calls it, he borrowed heavily against the future of Tribune employee pension plans.
Staggering under the ballooning $13 billion debt from the deal, Tribune couldn't handle the sharp drop in advertising revenue that soon hit all newspapers. Tribune declared bankruptcy in December 2008. About 2,000 employees at the Tribune's papers lost their jobs in 2008, including at least 167 at the Sentinel. Yet the company, which recently sold the Cubs for $740 million, still has some cash on hand. In October, Tribune execs were in federal bankruptcy court proposing to give $66 million in bonuses to the company's top 700 managers.
Gregory Lewis, a Sentinel reporter, gives an understated sense of how insulting this felt for the rank and file. "We think it would be really nice if those managers who got bonuses would share it with people who helped them get their bonuses," Lewis says. "It's like a Jerry Maguire movie: Show me the money."
At the Herald, some measure of chaos had been brewing for years. McClatchy Co., a small California-based publishing chain that owned a dozen dailies, including the Sacramento Bee, bought the Herald when it swallowed all 32 of Knight Ridder's papers in 2006. But the height of the real estate boom was a terrible time to buy papers in the housing-bubble states of California and Florida. McClatchy's stock price fell from a high of $63 in March 2005 to 49 cents in February of this year. Buried under $2 billion in debt, McClatchy is now trying to sell the Herald's ten-acre parking lot, which looks out on Biscayne Bay. But a deal has yet to close.
All three of South Florida's daily papers have watched their circulation numbers nose-dive and even trimmed them intentionally to save money. This September, the esteemed Herald's Sunday circulation fell to 238,600, down from 353,000 in 2006. The Sun-Sentinel's Sunday circulation, at 239,200, is now higher than the Herald's but still down from 304,800 three years ago. The Post's Sunday circulation is just 143,600, down from 184,440 in 2006. As an alternative-weekly paper, New Times is not immune to the financial troubles affecting the industry. In recent years, its newsroom staff has been cut from 17 to 13, and its print circulation has fallen from around 80,000 to 54,500.