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The Don't Quote Me archive

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Reality bites

The layoffs have begun at Community Newspaper Company. But Fidelity's not greedy, just overextended.

by Dan Kennedy

During the half-dozen years that Fidelity Capital has been gobbling up newspapers in Greater Boston, it's become customary to paint the company as the Darth Vader of community journalism, squeezing out independent publishers to fatten its bottom line and to advance its own agenda.

Thus it's easy to see Fidelity's recent announcement that one of its publishers had resigned and 37 employees had been laid off as further evidence of corporate perfidy.

Easy, but wrong. Because the truth is that Fidelity has lost millions of dollars trying to keep its unwieldy, 119-paper Community Newspaper Company (CNC) intact, preserving jobs that otherwise would have been eliminated.

Understandably, Fidelity's willingness to lose money isn't as deep as its legendary pockets. Thus, it's widely anticipated that the layoffs are just the opening round of a serious, painful downsizing effort. The likely battleground: the western suburbs, where many communities are served -- overserved, some might say -- by two different CNC weeklies and a daily.

Throughout the 1990s, Fidelity has kept alive papers that are uniformly good (though too thinly staffed to be great), establishing itself as a reliable steward of the kind of grassroots journalism -- municipal news, births, deaths, school-lunch menus, and the like -- that's rarely exciting, but that's essential to the life of a community.

And though some may feel nostalgic for the yeoman publishers of yore, it certainly wasn't Fidelity that put them out of business. Fidelity bought most of its papers from large, out-of-state media companies, such as Capital Cities/ABC and Harte-Hanks, and from local investors who found themselves in over their heads during the recession of the late 1980s and early '90s.

CNC spokeswoman Karen Ernst insists that CNC president Michael Veitch has nothing dramatic to announce in the wake of this month's layoffs. But though that may be true for the moment, Veitch, a former vice-president at the Chicago Sun-Times who took the helm at CNC last summer, and who's described by insiders as smart and energetic, has got to be struck by the illogic of publishing papers that compete with one another for news and advertising dollars. Especially when his company is widely believed to be losing well over $1 million a year.

This competitive absurdity is on display from Cambridge (where CNC offers both the Cambridge Chronicle and the Cambridge Tab) to Sudbury (the Sudbury Town Crier and the Sudbury Tab). Many of these two-weekly west-suburban towns are also served by a CNC daily such as the Framingham-based Middlesex News and the Waltham News Tribune.

Current and former CNC employees, from reporters to senior managers, have long expected most of these competing papers to merge. Indeed, CEO William Elfers himself told the Phoenix nearly two years ago that about half of CNC's papers couldn't survive on their own -- although he insisted his goal was to grow, rather than shrink, to profitability.

It now appears that shrinking is inevitable.

"It's hard for anybody to justify overlap. You can't sustain the economics of it," says Boston-area newspaper consultant Jack Authelet, who's studied CNC's operations.

The agent of downsizing, if it is to come, is likely to be Central group publisher Kirk Davis, who replaced Asa Cole as publisher of the West group earlier this month. Davis is widely described as the star among CNC's five regional publishers, and was reportedly the only one to have met his advertising goal for 1996. In his new job, Davis will have responsibility for all the west-suburban papers. Cole will run the South group, replacing Margaret Smoragiewicz, who resigned. Sources say top management was looking to put its own person in charge; CNC inherited Smoragiewicz when it bought a group of South Shore newspapers.

Fidelity-watching is a favorite pastime within local media and political circles. For years, rumors have had it that Fidelity's eventual goal was to buy the Boston Herald (never mind that Pat Purcell's not selling), or that Fidelity Investments chairman Ned Johnson wanted an editorial weapon that he could use to cross swords with the Globe's Taylor family.

To be sure, there have been occasions when such fears have had some basis in reality. Last year, for example, the Tab papers -- reportedly on orders from the top -- editorialized in favor of a sweet tax break for Fidelity, even though they had opposed a similar tax break for Raytheon.

But Bill Elfers and company have with rare exceptions concentrated on business matters, showing little desire to mold public opinion.

The truth, it would appear, is that Elfers is trying to do exactly what he's said: build a profitable company for the benefit of Fidelity Capital's investors.

And he's finding it a hell of a lot harder than he'd ever expected.

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The Don't Quote Me archive

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Dan Kennedy's work can also be accessed from his Web site: http://www1.shore.net/~dkennedy/

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Dan Kennedy can be reached at dkennedy[a]phx.com

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