My Take? Lee-Berkshire Announcement Not Great for News

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November 6, 2017
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Sad news today with the announcement Lee Enterprises inked a five-year deal to manage the Omaha World-Herald and most of Berkshire Hathaway’s other newspaper and digital operations.

This one hits home. I worked at the Journal Star and then Lee Enterprises for 13 years as a reporter, editor and one of its first online managers. I came close to jumping ship twice for the World-Herald, which prior to Berkshire’s purchase was the largest employee-owned newspaper in the U.S.

I still know great people at both companies. Some will tell you, publicly, at least, it’s a good thing. Lee will most assuredly bring its cost-cutting and regionalization strategies to Omaha and the other BH Media Group Inc. properties.

In the short term, readers can expect more money flowing to both bottom lines. Lee gets a fixed fee of $5 million per year.  Plus it can also earn significant bonuses for “profits over benchmarks.”

Many changes will go unnoticed. Lee is an innovator in terms of regionalizing and consolidating back office functions like accounting, circulation, page design and customer service. Buffet and Co. likely tightened those budgets, but no one is better at squeezing beyond the pain point than the good folks at Lee.

(Lee buddies, I say that with the utmost respect. We both know it’s true!)

So what will readers notice? Here are my predictions:

  • OWH Publisher Terry Kroeger is stepping down to “pursue his next adventure.” Spin it however you want, but many other prominent and not-so infamous newsroom, advertising, circulation and back office managers will quickly be, ahem, adventurous.
  • Anyone want to start an over-under pool on how long it takes before the Lincoln paper is printed in Omaha? If you’re thinking Dec. 31, 2018, sign me up for the under.
  • Sports staffs just got smaller. Husker and prep writers will be consolidated. Lincoln readers will get more Creighton news than ever before. Ditto for coverage of the Legislature. No need for two bureaus, (oops, excuse the 1990s’ reference) , I mean two reporters.
  • In the short term, familiar faces will remain. Trimming your favorite columnists makes all the cost cutting just a little too visible. Look for Tom Shatel to get some ink in Lincoln, while Steven M. Sipple’s longish byline makes more appearances in Omaha. But if you are a reporter or a page editor who isn’t a household name, well, get ready for “an adventure.”

My hard-core business buddies will give me a solid “so what” when reading my take on the announcement. It reflects the new world order for the news business, they’ll say. Maybe it keeps a printed newspaper on fewer doorsteps for a longer period of time. Maybe it gives Lee stockholders new hope.

Perhaps my old Journal Star co-worker, Lee CEO Kevin Mowbray, will become the “Louie the Liquidator” of the newspaper business and go on to strike similar deals with Gannett and America’s other once-proud newspaper chains. In the short term, it’s a valid business model. Just ask the folks currently liquidating Toys R Us, Younkers and other retailers.

My hard-core journalism friends will worry about further consolidation of the news business. Fewer jobs. Fewer journalists to soldier on. Fewer good fights with ever-shrinking resources and management support. Everyone focused on whoring re-tweets to keep fewer jobs. Less time spent on the less glamorous work of digging into real news.

At the end of the day, it’s the entrepreneur in me who is saddened most. Warren Buffett, arguably the world’s greatest capitalist, threw up his hands today. He admitted he can’t figure it out.

Instead, he has chosen to outsource the future of his news organizations to a company that has always been more focused on consolidation than innovation.

Maybe the only way forward for all traditional news operations is to cut well past the bone until nothing is left. Maybe the initial “five- year term” will allow the companies to eek out a little more profit until it is finally time to shut down that last  remaining press.

But if cost cutting until it’s over is the only way forward, there is no denying this is a sad day.

There will be less innovation as a result of this paper merger … only lots more pressure to meet shareholder expectations.

That might be good for business, but I can’t accept that it is good for the future of news.

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