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 Following yesterday's leak to a local TV station that Hearst Corp. was planning to sell or close the Seattle Post Intelligencer, the parent company has confirmed that it is seeking a buyer for the daily, the paper itself reported. The unidentified source who tipped off KING-TV yesterday about Hearst's plans told the station that the company is pessimistic about finding a buyer in this dismal environment. Publicly, Hearst sees three possibilities for the Seattle P-I, which is one of only two of the city's daily papers: it will either be sold, turned into a web-only publication or shuttered.
Steven Swartz, president of the Hearst Corp.'s newspaper division, said the paper's losses have been escalating steadily for the past nine years. Hearst doesn't see a turnaround any time in the near future. Addressing the paper's newsroom on Friday, Swartz put it bluntly: "One thing is clear: at the end of the sale process, we do not see ourselves publishing in print." Hearst owns 16 daily papers across the country, including the San Francisco Chronicle, Houston Chronicle, and Albany Times Union. No word on whether Hearst is considering similar options for its other newspaper holdings.
In a release, Hearst said the Seattle P-I lost about $14 million in 2008 and its forecast anticipates a greater loss in 2009. The paper was founded in 1863 and it was acquired by Hearst in 1921. If Hearst does not find a buyer within 60 days, it will consider the two other options. It has retained investment bank Broadwater & Associates to search for a buyer.
Photo Credit: faeryboots
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 —Dow Jones freezes salaries: With all the media layoffs having hit the highest point since 2001, it's not surprising that Dow Jones (NYSE: NWS) is imposing a one-year wage freeze. In a memo, DJ CEO Les Hinton pleaded for understanding, saying that taking this action now would mitigate future job losses. DJ joins NYTCo (NYSE: NYT), which said last month there would be no raises this year.
—Sun-Times won't prolong battle against dissident investor: As its proxy war continues against dissident shareholder Davidson Kempner Capital Management, which has been trying to replace The Sun-Times Media Group's board, the Chicago publisher said it will ultimately accept shareholders' decision on the matter. The Chicago publisher calls Davidson Kempner's plan "ill-conceived" and has been trying to defend its own $50 million cost-cutting plan.
—Last minute reprieve for Bristol Press, Herald (via Romenesko): The Journal Register-owned Connecticut dailies were about two weeks away from stopping the presses for good, but Michael Schroeder, owner of Central Connecticut Communications, has stepped in with an offer to buy. The deal also gets Schroeder, a former Newsday exec, three weeklies as well: the Wethersfield Post, the Newington Town Crier and the Rocky Hill Post.
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Newspapers in general and cable company Liberty Media (NSDQ: LINTA) come out mostly negative in credit rating agency Fitch's Media & Entertainment Quarterly Report (PDF, free registration req.).
In addressing specific concerns about The McClatchy Company (NYSE: MNI), which saw its stock hit an all-time low in Q4, Fitch cites its "inability to deleverage even after repaying significant debt." In September,McClatchy renegotiated $1.175 billion of debt, which includes bank loans and available lines of credit, giving it a bit more flexibility. Its total debt was $2.07 billion at the end of Q3. Fitch expressed similar worries about Dallas-based Belo Corp. (NYSE: BLC), which the ratings agency attributed its negative outlook on the company's reduced liquidity after refinancing $350 million. As for The Tribune Company, which filed for bankruptcy last month, the outlook was listed as "not applicable."
In the case of cable company Liberty Media, which expects its proposed split-off of DirecTV (NYSE: DTV) and other assets to be completed by May, Fitch is worried about its business mix and overall capital structure. Looking at the rest of the industry's Q3, Fitch painted a largely stable credit picture. Even ad holding companies Interpublic Group and Omnicom were deemed "positive" and "stable," respectively, due to the "scalable cost structure and ample liquidity" for both, despite the exposure to auto companies' woes and the general pullback in spending from marketers and consumers.
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Their fortunes are poles apart and yet inseparable—one is hauling in buckets of advertising, the other losing it at an alarming rate. Google (NSDQ: GOOG) sympathizes with the newspaper business' predicament and continues to say it can help, but, sadly for NYT-Google acquisition speculators, CEO Eric Schmidt says he isn't about to buy or bail out any news publishers.
Schmidt tells Fortune: "The good news is we could purchase them (newspapers). We have the cash. But I don't think our purchasing a newspaper would solve the business problems. I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I've been using is 'merge without merging'. The web allows you to do that, where you can get the web systems of both organizations fairly well integrated, and you don't have to do it on an exclusive basis."
Schmidt also rules out investing in newspapers and, though he's concerned enough about "companies that are in a terrible business situation who support an important public good" to advocate models like Sandler Foundation-funded ProPublica, there'll be no parachute payments through anything like the benevolent Google.org fund: "We didn't want to co-mingle philanthropy with business. We are in the advertising business."
Google is tip-toeing on precarious ground. Having built a successful business of its own, it has no real obligation to help out ailing newspapers, but the chasm between their contrasting fortunes, and the suggestion that Google is making some of its money from the very content news publishers generate, is prompting some to wonder if Google doesn't have some kind of moral duty to help. Schmidt, though, is advocating the same kind of relationship that Google has operated to date ("We'd like to help them better monetize their customer base, we have tools that make that easier"). But Belgian newspapers have already taken Google to court and won over indexing of their stories. If the gulf between the two widens further in lieu of additional support from Google, some publishers may yet wonder if they're really getting sufficient upside.
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 Gannett (NYSE: GCI) is going live with its local/national web hybrid ContentOne this morning, says Jim Hopkins on his Gannett Blog. The program was introduced by execs speaking at the UBS Media Week conference last month. At the time, Craig Dubow, Gannett's chairman, president and CEO, said ContentOne would serve as an exchange between its 85 local papers' websites and USA Today's site on the national level. He also described the idea behind ContentOne as "local content on a national level," adding that it will use the regionally focused MomsLikeMe social net and Metromix web guide as the foundation. ContentOne would operate as a single site and serve as an easy access point for advertisers targeting readers both local and national level.
In a memo obtained by Hopkins, Gannett execs said that USAT will generate most of the items for ContentOne. The items will then be passed along to local papers' sites, who are instructed to make the content look like their own by adding their respective logos and local ads. Gannett is telling ContentOne marketers that their ads could reach 50 million monthly uniques through this program—which is quite a boast, since, as Hopkins points out, Gannett's combined uniques in September was a little more than half that target: 25.4 million, according to the third-quarter earnings statement.
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The Sun-Times Media Group has struck an alliance with Monster.com on forming a series of online recruitment services and co-branded job sites across the publisher's 70 newspapers. The deal comes over six months after Chicago-based Sun-Times joined the Yahoo (NSDQ: YHOO) Newspaper Consortium, which includes access to Yahoo's Hot Jobs site. More recently, newspapers and online recruiters have seen help wanted ads decline precipitously as the economy worsens and unemployment ticks higher. The deal could help Sun-Times generate some more incremental revenue and attract more readers to its classifieds. For Monster, it represents the growth of a media alliance that includes 250 newspapers and their sites, such as the NYTimes.com, and over 100 local TV outlets. Release.
The AIM Group's Classified Intelligence blog notes that in joining Monster, the Sun-Times has jettisoned its partnership with CareerSite and away from the ChicagoJobs.com network, which have lost a number of its affiliates to the larger alliances run by Monster and HotJobs.
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 —CBS makes NYT's front page (in an ad): Trying to stave of further ad revenue declines, the NYT has accepted its first display ad on the front page of the print edition from CBS (NYSE: CBS). The ad, which is two-and-a-half inches high, runs below the fold across the bottom of the page. The NYT did not disclose rates for ads on the front page. The decision to open up the front page to ads was paved last year, when NYTimes.com began running ads on the home page.
—Despite default dangers, Lee maintains healthy op profit: The Davenport, Iowa publisher may have just ended '08 with an $879 million net income loss, but Alan D. Mutter says Lee "still produces a larger operating profit, percentage-wise, than Exxon." While Lee remains "reasonably robust," it's not as strong as it used to be and it might not be strong enough to pay the $142.5 million debt payment due this spring.
—Cincinnati Enq. cuts back on classifieds: Facing the difficult reality of less and less help wanteds, real estate and auto ads, the Gannett (NYSE: GCI) paper will cease publishing print classifieds on Mondays and Wednesdays. And as an additional way to reduce newsprint and ink costs, The Cincinnati Enquirer will shrink its page format and condense some of it sections. The moves follow a second round of layoffs at the paper this month and the word that Gannett's Detroit Free Press and its partner, The Detroit News, are scaling back on home delivery.
—Hoy New York goes web-only: Print troubles aren't limited to the general market newspapers. Free Spanish-language daily Hoy New York is going web-only just before the end of 2008. The shuttering of the print version resulted in 16 layoffs. Hoy was sold by Tribune Company to ImpreMedia in Feb. 2007.
—Web overtakes print as news source: But TV is still way ahead of both mediums when it comes to news consumption, according to a report (PDF) from the Pew Research Center for The People and The Press. About 40 percent of 1,013 people surveyed by Pew late last month said they get most of their national and international news from the internet, up from just 24 percent in September 2007. For the first time in a Pew survey, more people say they relied more on the web for news than newspapers (35%), while TV remains way ahead at 70 percent. While Pew refers to "newspapers" in its survey, it's clear that respondents are talking about print, but it doesn't mean that "online newspapers" are losing ground against other formats.
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Ed's Note: This is an opinion piece based on UK's newspaper market.  Optimistic newspaper proprietors like Sly Bailey and Tim Bowdler blame the business' current malaise (we've covered over 1,000 newspaper job losses in UK since October alone) on an advertising downturn that's merely "cyclical". In reality, 2009 is more likely to bring more layoffs, further consolidation and the death of certain long-running titles than it is a cyclical upturn in fortunes, as publishers grapple with the truth that their businesses have changed fundamentally and forever.
In 2008, every newspaper group either cut regional budgets, closed offices, shut titles or cut staff - in some cases, all of the above. In one way, this is nothing new - cutbacks are part of life for most newspapers and magazines nowadays. But there's a strong case for saying 2009 will mark a shift from seasonal, sensible belt-tightening to the long-term shrinking of the newspaper industry in Britain. Here's why…more on PCUK.
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 Although newspaper publisher Lee Enterprises (NYSE: LEE) missed its self-imposed Dec. 29 deadline to release its annual report, the company did get it in before the year was out. Lee, the struggling parent of the St. Louis Post-Dispatch, had good reason to wait until the last minute, posting a $879 million net income loss and over $1 million in impairment charges. Also, operating revenues were down 9.1 percent to $1 million from $1.2 million in 2007.
Earlier this month, Lee said that it faced several potential default triggers on its debt. The company notified the SEC that it would delay filing its annual report until on or before Dec. 29, because it needed more time to sort out the amount of non-cash charges it is taking to reduce the carrying value of goodwill and "other intangible assets." Like many of its newspaper publisher rivals, Lee is carrying a large amount of debt related to acquisitions over the past few years. Lee borrowed roughly $1.5 billion to purchase Pulitzer Inc. three years ago. And so, to keep itself from defaulting on its debt, Lee is trying to get its creditors to waive potential violations of its lending terms. It also wants to extend or refinance $306 million of senior Pulitizer notes that are due next year. Without the waivers, Lee would face default, as the repayment schedule could be accelerated. The portion of Lee's debt considered current was $456 million as of June 29. Lee had about $149.5 million in cash and equivalents as of Sept. 28 and has $168 million in borrowing room on its credit facility.
Other details from the annual report included:
—Online revenue slipped 1.7 percent to $55 million. The decline was attributed to falling online classified ad sales, which where partially offset by a 19 percent rise in retail advertising on Lee's newspaper sites.
—Total advertising dollars fell 9.4 percent $783 million.
—Total classified was down 17 percent $234 million, led by autos, which declined 24 percent, and help wanteds, which dropped 22.3 percent.
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With a $400 million revolving credit line expiring in May, the New York Times Company (NYSE: NYT) continues to put its fund-raising ducks in a row. The latest: an SEC filing setting the stage to secure debt or raise equity. The terms in the prospectus are as vague as possible—an unspecified amount, indeterminate price—and meant to allow the company to move fast should it go this route. Times spokeswoman Catherine Mathis explains: 'In these difficult markets, the company wants to ensure that it has maximum flexibility and, accordingly, is filing a shelf that would permit it to offer both debt and equity." The Washington Post Company (NYSE: WPO) filed a similar prospectus in November for possible debt securities.
At the same time, the chatter continues about a sale of the NYTCo's 17.5 percent stake in New England Sports Ventures, including the Boston Red Sox, and the possibility of a mix that would include the Boston Globe. The latest: denials by Boston Herald publisher Patrick Purcell and Boston ad exec Jack Connors of scenarios laid out in an FT report. The FT said NYTCo began discussions with Connors two weeks ago. Connors is now telling the Globe: "There's nothing to it,'' Connor, who was part of a 2006 effort by former GE chairman Jack Welch: "I'm not buying the Boston Globe. I'm not buying anything that the New York Times owns.' 'The Herald variation involved the Ottaway chain and reducing Boston to a one-paper town; Purcell, who owns the Herald, is joining News Corp (NYSE: NWS) to head the chain. He called the report ""completely unfounded and not rooted in reality."
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Gannett (NYSE: GCI) flagship USA Today is the latest paper to be sold through Amazon's Kindle. The top-selling U.S. paper has yet to show up in the Kindle Store but Amazon told Kindle subscribers on Christmas morning that they'll be able to download the Dec. 26 edition for free. USA Today, which doesn't publish on holidays, only offers weekday editions so the first issue for sale will be Dec. 29. We're checking on the subscription and single-issue prices. Single Kindle copies tend to go for 75 cents while monthly costs vary: the New York Times, published daily, is $13.99 a month, while the Wall Street Journal (six days) and the Washington Post (daily) run $9.99. Publishers get the bulk of the revenue share with Amazon (NSDQ: AMZN).
Often requested by Kindle users, USAT is only the 21st U.S. paper and the 28th paper overall to show up in the device store. Some publishers, including the NYT, have talked about their surprise at the service's success but it's hard to gauge just how meaningful that it. Amazon also has received considerable publicity from the likes of Martha Stewart raving about reading the Wall Street Journal on her Kindle (no ink to rub off) and others who talk about substituting print editions for Kindle subscriptions. (I don't subscribe to any Kindle newspaper editions, preferring to keep my print subscriptions and download single issues while traveling.)
Kindle launched in November 2007 in time for the holidays but what should have been a breakout season for sales this year has been hampered by recurring supply problems credited, in part, to a popularity boost from an endorsement by Oprah Winfrey and a discount through her show. New models at $359 are currently out of stock at Amazon, with shipping estimated in 8-10 weeks; refurbished models are available sporadically. Amazon is encouraging would-be owners to sign up now to get a place in line when delivery resumes. The company doesn't release the actual number of units sold or the volume of Kindle content sales.
Top five newspapers on Kindle sorted by bestselling: NYT, WSJ, WaPo, Financial Times, Chicago Tribune.
Disclosure: paidContent.org has been available through the Kindle Store since launch.
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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Another sign of how newspapers and other media outlets are trying to change models in tough times ... In one of the highest-profile examples of news sharing between major media, the Baltimore Sun and the Washington Post have agreed to share some sports and Maryland coverage. Both papers have been trimming staff to cut costs as revenues drop; the Sun is under the extra financial pressure of being owned by the bankrupt Tribune Co. The agreement leaves room for each paper to retain its exclusives and for dual coverage. Articles in areas where the two consider themselves direct competitors—Maryland state government, for instance—also are carved out. But the two will no longer block use of national, international or feature articles carried by the Los Angeles Times-Washington Post (NYSE: WPO) News Service in the competing paper. The Post outnumbers Sun subscribers roughly 3 to 1 (622,714 to 218,923) with some overlap. Release.
On the digital side, according to the AP, the agreement allows online sharing but only after articles appear in print in the originating paper.
WaPo: The arrangement starts Jan. 1. "Robert J. McCartney, the Post's assistant managing editor for Metro news, said his staff would coordinate with Sun editors on stories in some areas of Maryland. 'So, if a story broke on Eastern Shore or in Western Maryland, then we'd talk with the Sun and figure out who was in a better position to send a reporter, and both papers would use that reporter's story. ... Of course, both papers can send their own reporters if they choose.'"
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
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Yesterday we reported that GateHouse Media filed suit against The New York Times Company (NYSE: NYT) for copyright infringement. GateHouse claims that NYTCo's Boston Globe violated copyright laws when it lifted headlines and story ledes from GateHouse's publications—even though The Boston Globe cited and linked back to the GateHouse pubs. The full complaint is after the jump. Gatehouse Complaint
Gatehouse 2
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Reading through some clips in the wake of the news that Jim Brady is leaving WashingtonPost.com, I was struck by the rapid shift from separate but cooperating news operations to Russian nesting dolls following Katharine Weymouth's promotion to Washington Post (NYSE: WPO) publisher and CEO of the Media Group:
Feb. 7, 2008: From the Washington Post: "Washington Post Media is designed to forge a closer relationship between the business functions of The Post newspaper and washingtonpost.com, while maintaining separate newsrooms and editorial decision-making."
Feb. 7: From an interview with paidContent: "Integration: I speculated earlier today that this could be a move toward integrating the business sides of the paper and the site while continuing to keep editorial separate. Weymouth: "I have no secret plans that go into place tomorrow." Instead, she says, "My approach is going to be to talk to as many people as I can at both and get a feel from there what works well separately, what doesn't. ... We're pretty confident that there are areas that really make sense to be separate." They want to be able to "be nimble and react quickly." But when I asked if it would remain separate no matter what, she replied: "I won't say 'no matter what' to anything… you never know."
Apr. 11: Weymouth via memo: "I am taking this opportunity to move washingtonpost.com and The Washington Post closer to a true Washington Post Media organization – rather than a newspaper company and an Internet company."
July 7: Jim Brady, executive editor of washingtonpost.com, and Phil Bennett, managing editor of the newspaper and the top internal candidate for the job, will report to Brauchli, who is expected to move closer towards integrating the two operations.
Dec. 22: WaPo: "Brauchli, who started in September, took over editorial control of the Web site and newspaper. Weymouth and Brauchli are now studying ways to integrate the newsroom of the newspaper, which is based in downtown Washington, with the newsroom of the Web site, which is based in Arlington." Later, this was supplanted by: "Earlier this year, executives and editors concluded that bringing the units together would foster closer collaboration between the newspaper and the Web site. The units were merged into Washington Post Media, which is run by new publisher Katharine Weymouth. Weymouth tapped former Wall Street Journal editor Marcus Brauchli as executive editor of the Post, with responsibility for the Web site and newspaper. That put a layer of editorial control above Brady. Questions remain about how else the newsrooms will merge apart from the most senior positions."
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The New York York Times Company is being suited for copyright infringement over its Boston Globe local sites linking with headlines and ledes to another publisher's articles. GateHouse Media, which publishes 125 community papers in Massachusetts, filed suit in U.S. District Court there Monday. The company claims that the Globe sites lifted headlines and ledes word-for-word and therefore infringed its copyright, even though the items were credited to and linked back to the Gatehouse pubs, according to Boston.com, which is owned by NYTCo (NYSE: NYT).
—No link love lost: In the complaint, Gatehouse says it wants NYTCo to shutter Your Town Newton, one of Boston.com's new local sites, reports GateHouse's Newton TAB. GateHouse says that Boston.com's month-old Newton site used content belonging to The TAB's online counterpart—called WickedLocalNewton.com—and its sister pubs. Specifically, GateHouse charges that Boston.com both through advertising and its direct aggregation is confusing readers about where the articles actually originated. And even though Boston.com does link back to GateHouse sites, the publisher is frustrated that the links do an end-run around the ads on its homepage. In addition to Your Town Newton, Boston.com launched two other hyperlocal outlets last week for the towns Needham and Waltham. Back in May, Boston.com created BoMoms, a social net and local guide aimed at young mothers. Boston.com execs have planned to roll out about 100 other hyperlocal sites.
—Aggravation over aggregation: It's been a while since sites threatened legal action related to aggregated content. The GateHouse-NYTCo suit comes a few days after Huffington Post's Chicago-based site was called on the carpet of using parts of Chicago Reader's concert reviews without permission. Also, the suit is being brought at a time when local and regional papers are feeling crushed by the economy and the general state of the newspaper business. NYTCo rep Catherine Mathis tells Boston.com that the its hyperlocal sites aren't doing anything different from what blogs have been doing all along. Mathis: "Far from being illegal or improper, this practice of linking to sites is common and is familiar to anyone who has searched the Web."
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