The New Dealer

This fall, one in every six newsroom employees left Cleveland’s daily newspaper, taking advantage of a generous buyout offer. As the city’s stagnant economy sapped the paper’s revenue and radical changes in the news industry became impossible to ignore, The Plain Dealer, under new management, prepared itself to survive the 21st century.

The changes had been foreshadowed earlier in the year. After the paper’s publisher, Alex Machaskee, announced last January that he was stepping down, editor Doug Clifton gave some reporters a rare glimpse of The Plain Dealer’s finances.

Clifton told the reporters that The Plain Dealer’s profit margin was equal to “passbook savings account interest,” according to three people at the meeting — in other words, the low single digits, perhaps 2 percent or 3 percent.

Across the country, newspapers with far healthier bottom lines, around 20 percent, were slashing budgets and laying off reporters. The Plain Dealer would soon cut costs too. Yet Clifton also reassured his staff: They were fortunate to work for the Newhouse chain, a family-owned company that doesn’t trade its shares publicly and doesn’t have to answer to stockholders’ demand for short-term profits.

“You could run this place with half the staff, but it’s sure not going to happen,” Clifton tells Cleveland Magazine. “Our profit margin is miniscule compared to the 20 percent range of public companies.” The message: The meager profits must improve, but the company won’t hatchet its way to a better bottom line the way publicly traded media companies have.

“Newspapers are, as you know, dead. It’s over,” Egger says sarcastically in November at a lunch hosted by law firm Jones Day. “We know no one is reading the newspaper. If I said, raise your hands if you’ve read the newspaper in the last week—”

“But there’s still a lot of money we can compete for to keep our business running,” he said at the City Club in August. “We in Cleveland are blessed — blessed — that we are a privately owned newspaper, that we don’t face some of the public market pressures, so we can take a longer view.”

Egger started his job in May, and in August came his letter to the whole staff, offering the buyout. Employees age 50 and up with 20 years’ experience at the paper could leave with a generous 2 1/2 years’ salary and health care. Everyone else could get two weeks’ pay and benefits for every year they’d worked there. Since every Plain Dealer reporter with four years’ experience makes at least $58,000 a year, thanks to their union contract, those lump sums proved irresistible to some. About 64 news staffers — 17 percent of the newsroom —took the buyout and left between October and December.

Yet top editors insist readers won’t see much of a difference in 2007’s Plain Dealer. The newsroom had been amply staffed or overstaffed for years, they say, and the remaining employees can adjust. Reporters are more worried that coverage will suffer, that they’ll miss good stories or not do them justice. But even the pessimistic say they feel fortunate compared to peers in other cities.

“We feel more confident than most journalists, because we know we’re not going to get Beacon-ized,” says one. This August, The Akron Beacon Journal laid off one in four of its reporters and editors after its new owner, Black Press, balked at its shrinking profit margin.

So far, The Plain Dealer has been partially sheltered from the newspaper industry’s most drastic changes — and not just because of tolerant family ownership.

Clevelanders are unusually dedicated to their daily newspaper. About 44 percent of Greater Cleveland households get The Plain Dealer — the second-highest percentage among the country’s 20 biggest newspapers. (Yes, The Plain Dealer, with a circulation of 337,000, is the 17th largest newspaper in the country.) The paper’s circulation did plummet in the second and third quarters of 2005 by almost 16,000, or 4.5 percent. Yet in the same period of 2006, while The Los Angeles Times’ circulation tanked by 8 percent and The Boston Globe lost 6.7 percent, the PD’s ticked down only 0.6 percent. In today’s climate, that actually counts as a victory.

The revenue struggles and miniscule profits are the result of Cleveland’s struggling economy. Many more ad dollars are leaving the paper than readers.

Unlike people in Web-savvier cities, we’re not abandoning the newspaper for online news. We’ve even been patient with the PD’s Web site, Cleveland.com, which is mediocre compared to its peers and has only recently started to improve.

“I think we’re in a spot right now that peculiarly gives us a little more breathing room,” says Clifton. Clevelanders will eventually switch to online news in larger numbers, he says, but “we have a little bit more time to figure it out.”
A little bit more time. But not a lot.
 
SECTION B  > Local News

Editor Doug Clifton came to The Plain Dealer in 1999 from The Miami Herald, where he was executive editor. The former insurance investigator turned reporter quickly reinvigorated the PD, green-lighting more aggressive coverage of Mike White-era City Hall, fighting to keep public records open and attracting and retaining a new wave of talented reporters. He won Editor and Publisher’s editor of the year award in 2003.

Now, Clifton and his editors are busy reorganizing the paper’s beat system for the new, leaner era. He says the paper can adjust “without seriously jeopardizing our ability to do any one thing.” In fact, his top deputy, managing editor Tom O’Hara, says, “My goal is the reader won’t notice any difference.”

Clifton says The Plain Dealer was slightly overstaffed before the buyouts and is still healthy now. A much-debated rule of thumb suggests newspapers should have one news staffer per 1,000 circulation, he says, and the 337,000-circulation Plain Dealer just went from a newsroom of 372 to 308. Seventy reporters still cover local news on the metro desk, with about 70 more between business, sports and features. High school sports coverage will see the biggest cuts, O’Hara says, and suburban coverage needs reorganizing.

Writers who left this fall include restaurant critic John Long, dance critic Wilma Salisbury, sports columnist Roger Brown and travel editor David Molyneaux. But key beat reporters — the young and middle-aged newsroom stars who often break the biggest stories — are sticking around. “I haven’t heard anyone say, ‘Oh, Jesus Christ, that ruins us,’ ” says columnist Dick Feagler.

Some reporters aren’t so sure the cuts didn’t scrape bone. “A lot of people who left, it’s probably good that they left,” says one reporter. “They weren’t contributing as much as other people. But a lot of other people are stretched pretty thin.”

Others are optimistic the paper will transform and stay fundamentally strong. Editors have encouraged them to think of the buyouts as a time for reinvention, calling meetings to talk about the staff’s ideas for improving the paper, even asking them to describe their dream beats.

“I think people are more excited about it than scared,” says one reporter. “At least management made it seem like they’re interested in doing some new, innovative things.”

“There’s no disarray — it’s all opportunity,” politics reporter Mark Naymik says. “Others are looking at stepping up.”

“I think our paper, like all newspapers everywhere, is going to have to take great care in trying to find stories that are unique to [it], rather than reporting as much so-called commodity news,” says Clifton. “ ‘The Iraqi insurgency yesterday kidnapped five Iraqi educators’ — we knew that yesterday. We were told that in countless different ways on the Internet, cable TV, your pager. For us to be reporting those kinds of stories as fresh and new, as if telling it for the first time, is senseless.”

So on Nov. 6, the PD’s front page presumed readers already knew that Saddam Hussein had been found guilty of war crimes and sentenced to death the day before. “What does Saddam’s verdict mean to Iraq, U.S.?” read its headline, above a quick bullet-point news analysis.

The Plain Dealer is transforming its front page. “Far more local stories are played far more dramatically today,” O’Hara told a City Club audience in November. “That’s something local newspapers can provide that nobody else can.” Consider the four headlines on page 1A on Dec. 3: “Ares I boosts NASA Glenn,” “Gaps persist in [Ohio] teacher salaries,” “Immigrant enforcement stuns Cleveland families,” and “Ohio popcorn plant workers say flavoring hurts lungs.”

It’s a smart bet, since readers pick up the PD to connect with Cleveland, while Clevelanders who’d rather just read national and world news are probably going online. The local focus can skew the paper’s view of what’s important, though: On Oct. 31, an article on Westlake’s Crocker Park took up five times as much space as a story about the British government’s prediction that global warming could damage the world’s economy as much as either world war.

The PD — encouraged by reporter’s suggestions as well as editors’, Clifton says — will also aim to cover every aspect of people’s lives, not just public debates and institutions. Beats will be built around themes such as child care or suburban life. Clifton points to the lead story on Nov. 16 — “which probably 10 years ago we wouldn’t have thought to put on the front page” — about whether the state will publish an online database rating child-care centers.

Whenever a newspaper loses staff, reporters worry the most labor-intensive journalism will suffer. In October, Washington Post media writer Howard Kurtz noted with alarm the cuts at The Plain Dealer and papers in Dallas and Philadelphia. “[It] means fewer bodies to pore over records at City Hall, the statehouse or federal agencies,” he wrote.

Less clear is the future of narrative journalism — long-form storytelling. It’s been a PD strength: Connie Schultz’s 2002 series on Michael Green, a man imprisoned for a rape he did not commit, was so powerfully written it convinced the actual rapist to turn himself in, and was also a finalist for the Pulitzer Prize. “Narrative is simply one approach to storytelling,” says Clifton. “It has its place. It’s not a universal place.”

Other sections may see big changes. The business section was especially hard-hit by the buyouts. But Egger says he hopes to see business coverage improve, a sign that it may be one of the few sections allowed to do much hiring in 2007.
The sports section, which lost six writers, will cut down on some of its low-profile coverage, while its stories of pro sports will likely grow livelier. “We’re trying to inject more personality,” says one staffer. Beat writers’ game reports will sound more like columns, with more analysis and storytelling — reflecting the idea that most fans now know a big game’s score and highlights by morning.

The features department, already vivid and strong-voiced, will get quicker and punchier, says Kim Crow, editor of the fashion section and Sunday’s cheeky PDQ section. “People always say they want funny, lighter things. I think we’re going to try to give it to them.” That’s also a way to cope after dramatic cuts in the freelance budget, which forced the Friday entertainment magazine and PDQ to drop some younger outside writers with strong voices. Some designers took the buyout, which will make it harder to create the features’ splashy section fronts, built around clever illustrations.

But Crow is optimistic. She’s relying more on funnyman John Campanelli, PDQ’s lead writer. Talented staffers have been reassigned to feature writing. “I really think we’re moving in the right direction,” she says.
 
SECTION C  > Business

Terry Egger is dressed in a casual black pullover and black pants for an interview with Cleveland Magazine. He’s 49, youthful for an executive at his level. Reporters have been pleasantly shocked to see him in the newsroom and the cafeteria, dressed in shirtsleeves and no tie. That’s because they’re used to the imperial demeanor of former publisher Alex Machaskee, whom they say they never saw in the newsroom, just watched as his driver dropped him off at the door.

Egger, who grew up in a housing project near Moline, Ill., comes off as friendly and humble. Columnist Regina Brett remembers seeing him “with his legs crossed, and a little hole in one shoe.” He left the publisher’s job at the St. Louis Post-Dispatch with a $1.4 million severance package, according to a Securities and Exchange Commission filing, “but he’s still getting mileage out of those shoes,” she says.

Egger’s hiring as publisher was a clear sign that Advance Publications, the New-house publishing empire, wants to improve the paper’s numbers. A newspaper has “journalistic, civic and business responsibilities,” Egger says. “The business side of ours is not where it needs to be.”

Newhouse, a privately held company, keeps its finances closely guarded. Advertising analyst TNS Media Intelligence estimated a shocking drop in the PD’s ad revenue in a recent Crain’s Cleveland Business article, from $150 million in the first half of 2005 to about $125 million in the first half of 2006, based on the paper’s ad pages and rate cards — but that doesn’t account for deals the paper cuts. “We’re healthier than that,” Egger says. “A decline of that magnitude would be inaccurate.”

Still, the paper’s ad revenue is struggling, Egger says. Department stores, traditionally huge newspaper advertisers, are cutting back after recent mergers. Kaufmann’s, which used to advertise heavily in the PD, recently became Macy’s, which advertises less. “That has cost us millions of dollars,” Egger said at Jones Day. Also, auto sales have slumped, so car dealers have cut back on ads. “That’ll turn back around,” Egger predicts.

To improve revenue, Egger hired Matt Kraner as the PD’s first chief marketing officer. Kraner worked with Egger in St. Louis as general manager, and improved revenue there and as vice-president of advertising at the Kansas City Star, Egger says. (The PD’s previous sales director resigned rather than accept what amounted to a demotion.)

The PD is more than doubling its staff of ad salespeople, “from the low 30s well into the 70s,” says Kraner. “Historically, The Plain Dealer has been dramatically understaffed in its sales division” compared to other metro newspapers. The paper has also changed how sales reps are paid, relying less on salary and more on sales commissions. One sure way to “un-motivate people in sales,” says Egger, is to “guarantee ’em a lot of money whether they sell or not.”

Ad reps are working more closely with Cleveland.com, to get customers to market themselves on the Web site as well as in print ads, says Eliza Wing, CEO of Cleveland.com. The number of advertisers doing both is rising significantly, Wing says. Kraner says PD ad reps will also start offering package ad buys that include the suburban Sun newspapers, also a Newhouse property, by mid-2007. That’ll make it easier to attract businesses of every size, Kraner says, because salespeople will use the Sun papers, the Web site and any one of the two to four regional editions of The Plain Dealer to zero in on businesses’ target audiences.

Kraner is optimistic sales will improve. Revenue for all three companies was up in November 2006 compared to November 2005, he says.

Egger’s vows to turn the PD’s finances around and the sweeping changes he brought to the sales department suggest that the paper’s business side had slipped dangerously in the past few years. Cleveland’s economic struggles are a reason for that, but responsibility also naturally rests with Egger’s predecessor, Alex Machaskee, who ran the PD’s business operations for 16 years.

Machaskee’s legacy includes constructing the paper’s huge, $200 million Brooklyn printing plant and its $38 million new downtown headquarters, and expanding the reporting staff and the space for news in the paper. He sat on an astonishing number of nonprofit boards, from the local United Way to the Severance Hall renovation — so many that he became known for spending too much energy on civic causes and wielding clout and not enough on the company’s business. In 2005, he had The Plain Dealer donate $1 million to the Cleveland Clinic’s new heart center — an astonishing sum for a company whose annual profit may not be reaching eight figures.

“Alex was as actively involved as any publisher I know in America. He is very passionate about Cleveland. I can’t begin to say that I can match that,” Egger says. “My primary focus early is [to] try to get the business side of the house in a stronger position, to support [our] civic and journalistic missions.”

Egger often suggests he won’t sacrifice quality for profit. “We don’t have a history of laying folks off,” he says, explaining the buyout offer. “We’ll stay consistent with our culture.”

At Jones Day in November, Egger marveled at Wall Street’s “insatiable” demand for profits of 20 or 30 percent from newspaper companies such as Tribune Co., owner of the Chicago Tribune and Los Angeles Times, and the now-dismantled Knight-Ridder chain, The Akron Beacon Journal’s former owner. “We won’t have 30 percent margins, we won’t have 20 percent margins, and that’s OK,” Egger told the crowd. The fact that The Plain Dealer is privately owned “is a very big plus for the folks of Northeast Ohio,” he added. In other words, Cleveland gets a better newspaper than cities where the news is slashed for profit.

Egger also squelches speculation around town that Newhouse hired him to prepare The Plain Dealer for sale. The Post-Dispatch was sold while Egger was publisher, the rumor notes — but Egger says the circumstances are “totally different.” The Pulitzer chain sold all its papers, not just the Post-Dispatch, because the Pulitzer family had no heirs to keep the company going, he says.

“Nothing the Newhouse family has done would suggest they’re trying to exit the newspaper business,” says Lauren Rich Fine, a Merrill Lynch analyst based in Shaker Heights. “They haven’t sold any newspapers. They were considered one of the final bidders on the Akron paper” — a sign that Newhouse wants to stay in Northeast Ohio for the long term.
 
SECTION D  > The Web site

A huge flatscreen appeared this fall in The Plain Dealer newsroom, showing Cleveland.com at all times. It flicks from page to page, showing a different one each time a reporter walks by. It’s a symbol of the PD’s new, belated commitment to delivering news online.

“We don’t do enough with the Internet,” says one reporter. “It’s almost a consensus at the paper.”

In 2006, top editors decided they agreed. “Up until about a year ago, I tried to ignore the whole thing,” managing editor Tom O’Hara said at November’s City Club forum, “The Future of News: Media Newly Delivered.” “I used to tell people, ‘I run a newspaper. Leave me alone with this other stuff.’ I woke up one morning and decided that was a foolish approach to take. So now I’m a zealot on this online stuff.”

Last year, the PD made a big push to improve the news on Cleveland.com. It debuted Open, a blog about state politics, and breaking-news blogs for almost all sections of the paper. It began publishing stories as soon as they were written and edited, instead of waiting until the print edition rolled out overnight. A year ago, not much but wire-service copy went online during the day. Now, about 30 to 40 PD-produced stories a day appear on the breaking news blogs, says Wing.

E-mails to reporters list the day’s most-read online stories, a reminder of Cleveland’s preoccupations. Sports “dwarfs everything else,” reports Jean Dubail, the new assistant managing editor for online news. Sports stories generate about a third of all Cleveland.com traffic and often make up the entire daily top-10 list.

Traffic spikes at the start and end of the workday and at lunch, when tens of thousands of office workers Web-surf at their desks. So a PD reporter and editor now come in at 6 a.m. and spend three hours posting news that broke overnight. On Nov. 27, sportscaster Casey Coleman died at 6 a.m., and Cleveland.com had the news up by 6:30. At any moment during the day, Dubail guesses, about a half-dozen reporters are getting something ready for the Web.

Almost a million different readers — “unique users,” the Web term goes — visit Cleveland.com each month, says Cleveland.com CEO Wing. Daily readers range from 120,000 to 140,000, depending on the news.

Younger reporters at the PD are impatient to do still more with online news. “I think it’s funny they’re treating the Internet like a new invention,” one says. “ ‘Ooh, we need to put breaking news on the Internet!’ Where were you six years ago?”

One problem is that Cleveland.com is not user-friendly. “In my opinion, the Web site sucks,” the reporter says. “It’s terrible.” Its blocky format is difficult to navigate. Not only is it far behind industry trendsetters such as washingtonpost.com or the New York Times’ nytimes.com in design and news innovations, it’s not on par with sites of other papers the PD’s size — the Detroit Free Press, for example.

Potentially popular stories, such as opinion columns, are hard to find. “I couldn’t even find my own column on the Web site,” Regina Brett says.

It’s not the fault of anyone in Cleveland. Advance Publications’ Internet company insists that all of its sites use the same design. The sites of Portland’s Oregonian, New Orleans’ Times-Picayune and the company’s chain of Michigan papers look a lot like Cleveland.com. That saves Advance a lot of money, but at the cost of local distinctiveness — and quality.
 
Wing says Advance is improving the site. “It’s a lot friendlier than it used to be.” A new, better search engine, which debuted late in 2006, should make it much easier to get around Cleveland.com, she says. In 2007, the company will roll out several new page templates for local designers to choose from.

Another peculiar part of Newhouse’s Web strategy is that The Plain Dealer does not own Cleveland.com. It’s a separate company with offices in The Flats, across downtown from the paper’s headquarters at Superior Avenue and East 18th Street. Dubail, the PD’s online editor, isn’t in charge of the site — he’s the paper’s liaison to it. “All the younger reporters think it’s ridiculous,” says one PD staffer.

Dubail and Cleveland.com executives say the paper and site have developed a much closer partnership in the past year. “I don’t think our corporate structure is holding us back too much,” Dubail says.

The divide has inhibited some radical innovations in newsgathering popular on progressive newspaper Web sites, such as photo galleries, video streaming, interactive graphics and audio-video slideshows. PD reporters and photographers can do some of that — their slideshows are impressive and exciting — but work rules limit them. Their assignments for the paper may generate online by-products, but they can’t do work aimed directly at the Web. (Even parts of reporters’ blogs often appear in print as well.)

Scott Stephens, the PD’s Guild rep, says he’s talked with labor-relations executives at the PD “about trying to work out an agreement where our folks can seamlessly do the dot-com stuff.” The talks are going more slowly than he would like.
 
Still, Dubail says the paper has found ways to do most of what it needs to do online.

In 2007, Cleveland.com plans one potentially radical innovation in newsgathering. The site will recruit citizen-journalists to start blogs about their suburb or city neighborhood, “reporting, talking about an event, posting photos,” says Wing. PD editors are interested in taking the best of the citizen journalism and getting it into print, she says.

O’Hara, the managing editor, says he hopes the suburban pages on Cleve-land.com will “yield a steady diet of stories” for PD reporters — in other words, help them shore up a weak spot left by the newsroom buyouts.
 
SECTION E  > Opinions

When Regina Brett asked her column’s readers how to reinvent The Plain Dealer, she wrote, conservatives shouted “so loudly I can’t hear out of my right ear.” Her Nov. 8 column included 19 complaints from conservative readers about the paper’s reporting, Iraq war coverage and columnists. “I hate to admit it,” Brett wrote, “but if I had a dollar for every conservative in the newsroom, I could buy lunch, but not dinner.”

“I thought that column never should have run,” says editor Doug Clifton, “because obviously, you’re going to hear more from a group that feels strongly that it’s being put upon. The column itself was unbalanced.” Of course conservatives responded to Brett more than liberals: “They’re feeling more beleaguered in Northeast Ohio — they’re a minority,” he argues. “They tend to have the paranoia of a minority group.”

Brett’s column came a few months after a loud internal debate about bias at the PD. This summer, a memo Clifton sent on the subject set off a near-uprising.

Clifton regularly reviews summaries of cancellation notices. One week, he says, “It seemed there were a few more people saying they quit because they thought we were too liberal.” His memo mentioned the calculations and reminded the staff to take extra pains to be neutral.

Many reporters read it as an accusation of liberal bias. So the union arranged a lunch meeting with Clifton and interested reporters. There, one reporter says, “He said we were blowing it out of proportion, that’s not what he intended to say.”

One reason, says Brett, is that questioning authority is part of a newspaper’s job. “Liberals tend to be people who question authority, versus people who respect authority.”

Kevin O’Brien, the PD’s lone conservative columnist, says journalism’s hunger to catch public officials at misdeeds, while valuable, appeals more to libera