INSIDE THE CAVERNOUS Dorchester headquarters of the Boston Globe, word that the economic squeeze was about to go from bad to worse came in early April, in the form of a webcast over the New York Times Company’s corporate intranet. Starring in the live video feed were the Times Company’s top two officials, chairman Arthur Sulzberger Jr. and president Russell Lewis.

Sulzberger and Lewis’s message was unpleasant and to the point. Advertising revenue was down substantially. Newsprint prices were up. The economy was softening. And the Times Company’s newspapers — including the Globe, the Worcester Telegram & Gazette, and the Times itself — would soon be employing fewer people.

“They looked like they had proctologists bent over behind them giving them exams,” quips a staff member who was on hand for the viewing.

The goal, Sulzberger and Lewis said, was to reduce staff through voluntary buyouts — that is, financial incentives aimed at persuading veteran employees to retire early. But Globe publisher Richard Gilman refused to rule out layoffs if the staff-reduction targets couldn’t be met.

As the June 15 buyout deadline approaches, the worst-case scenario appears to be receding. Management sent offers to about 800 of the Globe’s more than 2000 employees — everyone with 10 or more years of experience, from editorial to the pressroom to the advertising department. Though the paper has not publicly announced how many employees need to take the buyout in order to avoid layoffs, Gilman — in two interviews with the Phoenix during the past week — said the 200 to 250 that’s being bandied about on the rumor mill is “way on the high side.” Both Gilman and editor Matt Storin say they now believe layoffs will not be necessary.

But though the incredible shrinking newsroom has led to more than the usual amount of hand-wringing and head-shaking at 135 Morrissey Boulevard, it is only a small part of some wrenching changes that are affecting not just the Globe, but the newspaper business as a whole.

The newspaper industry is a cyclical one. And there’s no doubt that, so far, it’s having a phenomenally bad year. At the Globe and the Telegram & Gazette (the Times Company reports those two papers’ financial results together, as the New England Newspaper Group), ad revenues were down 12.1 percent through April 30 when compared with the first four months of 2000 — and it’s been getting progressively worse, with April’s revenues in isolation down a heart-stopping 20.9 percent from last year.

The Globe’s numbers are not atypical of what’s going on nationally, says newspaper analyst John Morton, who calls the downturn “the sharpest decline in newspaper advertising in recent memory” — steeper, even, than the advertising recession of the early 1990s, though Morton is hopeful the current slump will not last as long. To make things worse, newsprint costs are up about 20 percent over last year.

But the problem isn’t that newspapers are losing money — far from it. Rather, the problem is that most of our largest and most important metropolitan newspapers are now owned by huge, publicly traded companies whose investors have become addicted to profit margins of 20 percent and more. Thus, the Globe, like every other publicly owned newspaper, is reducing its work force, shrinking its news hole, and slashing sections — not to avoid losing money, but to keep giving Times Company stockholders the high margins they demand.

“Wall Street is unsentimental about the newspaper business,” says Morton. “They only care about what happens this quarter or this year.” Thus, paper after paper (not to mention broadcast and cable news organizations, which have also been hit by the advertising drop-off) has embarked on downsizing crusades in the past few months. Indeed, to scan Jim Romenesko’s MediaNews.org site these days is to encounter one tale of woe after another, as layoffs and other cutbacks roil the industry.

New Yorker media writer Ken Auletta, a frequent chronicler of the Times Company, says cutbacks have to be made when ad revenues are declining — “otherwise you lose your shirt.” But, he adds, “the culture that’s increasingly infecting journalism is that we have to worry more about Wall Street than we do about journalism.”

Even the Times Company, whose voting stock is controlled by the Sulzberger family rather than outside investors, can’t risk pissing off Wall Street. Otherwise, its stock price will plummet and it won’t be able to raise the money it needs to invest in its own future.

The downsizing moves at the Globe have been startling — the most serious being the recent decision to fold the stand-alone Sunday Books section into Focus, slashing Books from four pages to three and Focus from five pages to two. Other moves have included the elimination of the Sunday New England and Home & Garden pages, and the pending disappearance — slated for later this month — of New Hampshire Weekly, a Sunday supplement of long standing.

State House bureau chief Frank Phillips, one of the Globe’s most respected reporters, accuses the Times Company of engaging in “Wall Street journalism” by squeezing profits out of the Globe even during an economic downturn. Phillips says that during bad times the Taylor family — who owned the Globe for more than 120 years before selling out in 1993 — would operate the paper at a lower profit margin, or even a loss, rather than let the Globe wither.

“There are a number of us who came into journalism in the ’70s and ’80s when the Globe was a great newspaper. And it makes us very sad to see the New York Times Company diminish the newspaper,” says Phillips.

And Phillips makes it clear where he believes the blame lies. Of Storin, he says, “Matt’s a real newsman, but I think it’s beyond his control. It’s New York. When you’re told by your boss that you’ve got to cut back, you’ve got to do it. It’s sad to see, and I think the New York Times Company and Mr. Gilman owe us an explanation.”

THE CROWD at the Harvard Faculty Club on May 16 was respectful to the point of reverence. The speaker that evening was Jay Harris, who, as publisher of the San Jose Mercury News, had been one of the highest-ranking African-Americans in the newspaper business. Had been, that is, until earlier this year, when he resigned rather than accede to Knight Ridder chairman Tony Ridder’s demands to cut the Mercury’s budget so drastically that, in Harris’s view, it would have seriously harmed his paper’s news-gathering mission.

“News and readers’ interests do not contract with declining advertising,” Harris told the Harvard crowd, guests of the Kennedy School’s Joan Shorenstein Center on the Press, Politics, and Public Policy. “Nor,” he added, “does our responsibility to the public get smaller as revenue declines or newsprint becomes more expensive. That is where the balancing act comes in. It is in times such as these, when tough choices are made, that a company’s core values and priorities are evident; and character, courage, and vision are required of leaders.”

For all Harris’s lofty rhetoric, his most specific proposal — a blue-ribbon commission, possibly to be chaired by former White House chief of staff Leon Panetta — was underwhelming. But that didn’t detract from the seriousness of his concerns.

Among those listening and applauding that evening were a handful of the Globe’s top editors, including Matt Storin, editorial-page editor Renée Loth, and deputy managing editor Ben Bradlee Jr. No doubt Harris’s speech gave them plenty to think about.

The New York Times Company’s ultimate intentions for the Globe have been the subject of intense speculation in Boston since 1993, when then–Globe publisher William Taylor announced the paper was being sold for a stunning $1.1 billion, half the Times Company’s market value. As part of the deal, Taylor was able to negotiate five-year contracts for the Globe’s top management, which postponed the day of reckoning. When Taylor retired and handed off the publisher’s reins to his second cousin Benjamin Taylor in 1997, it appeared that the Sulzbergers were comfortable with Taylor management well into the foreseeable future.

The foreseeable future ended in July 1999. Reportedly disturbed by Taylor’s indifferent management style during a difficult period of falling circulation and ad revenue, Times Company chairman Arthur Sulzberger Jr. summarily removed Taylor and replaced him with Richard Gilman, a veteran Times Company executive who had specialized in circulation and internal operations. It was a shocking move, with Times Company–watchers saying that Sulzberger’s father, the courtly Arthur “Punch” Sulzberger, never would have acted so coldly.

Then again, it was around the same time that Arthur Jr. dismissed his cousin and best friend, Dan Golden, as senior vice-president of advertising at the Times. Golden’s tenure had reportedly been a troubled one, and it’s not as if the Golden branch of the Times’ ruling family has been frozen out: another cousin, Michael Golden, serves as vice-chairman and senior vice-president of the Times Company. Still, the departure of Dan Golden sent a clear signal that this new breed of Sulzberger was not about to let perceived problems fester. In such an environment, Ben Taylor never had a chance. He lingered for a few months in the largely ceremonial position of Globe chairman before moving on.

(Earlier this year, Bill Taylor, through a spokeswoman, declined a written request for an interview to talk about the way the Times Company has managed the Globe. Ben Taylor did not respond to a telephone request for an interview. And there’s no question that, despite relinquishing the reins of power, the Taylors have enjoyed an enriching relationship with the Sulzbergers. The sale made Bill Taylor, Ben Taylor, and other family members major Times Company stockholders. As late as 2000, Ben Taylor was listed as controlling 5.1 percent of Times Company shares on behalf of the “Globe Voting Trust.” Taylor’s name does not appear in the 2001 proxy statement, which means the trust has sold enough shares that it no longer controls at least 5 percent of the outstanding stock.)

Gilman’s style has been decidedly low-key. He quietly signaled that he would keep Storin as his editor. Unlike Ben Taylor — a newsman who rose to become the Globe’s executive editor before moving over to the business side — Gilman is not a regular presence in the newsroom. Changes were introduced in the paper, but not of the dramatic or sexy sort. The West Weekly Sunday supplement was re-christened Globe West, beefed up with a new cadre of reporters who make less money than regular staffers, and published on Thursdays as well as Sundays. (The other regional weeklies — Northwest, North, South, and City — are supposed to undergo the same metamorphosis at some point, a goal Gilman says he hasn’t abandoned despite the recent downsizing.) Coverage of technology and biotechnology was increased, reflecting Gilman’s belief that the Globe should “excel where Boston excels.” The At Home section was replaced with the expanded, advertiser-friendly Life at Home. The drop-off in help-wanted ads was addressed through the introduction of the BostonWorks section and the BostonWorks.com Web site. In response to the rise in newsprint prices, Gilman — following the lead of most papers nationally, though not the Times itself — trimmed an inch off the Globe’s width. A redesign was introduced, criticized by some as too suburban-looking, but to my eyes, at least, a more readable improvement.

But being publisher is a lot easier when times are good than when things go sour. The downturn started last fall. A few newsroom positions were cut through a limited buyout program, the most prominent departee being Gerard O’Neill, the long-time editor of the Spotlight Team. Changes were made in the front office as well. Executive vice-president Stephen Taylor, the last member of his family to work at the paper, left. President William Huff departed to pursue the proverbial “other opportunities and interests,” and was replaced by veteran Globe executive Richard Daniels, a local product who’s a graduate of Boston Latin School, Northeastern, and Boston University. And the economy kept getting worse.

“It’s like A Tale of Two Cities,” says a newsroom source who’s sympathetic to Gilman. “The first year was great. The second year everything’s in the shitter.”

OF THE cuts that have been made so far, the most egregious have been the Focus/Books amalgamation and the elimination of New Hampshire Weekly. Focus — a Sunday compilation of analysis, opinion, and review — was the Globe’s equivalent of the Times’ Week in Review section, or the Washington Post’s Outlook. Focus may not have kicked ass every week (guess what: Week in Review doesn’t kick ass every week), but there was a level of seriousness and importance to it that the Globe shouldn’t have diminished, especially in an intellectual and cultural center such as Boston.

“I was really kind of shocked to see that,” says Atlantic Monthly senior editor Jack Beatty. “That had always been a pretty classy part of the paper, I thought.” Bill Fowler, director of the Massachusetts Historical Society, says he was impressed by Gilman when he met him in person, finding him to be engaged and a good listener. But Fowler says he was stunned by the downsizing of Focus and Books, commenting, “It’s the intellectual heart of the newspaper. It’s kind of the Herald-ization of the Globe, I guess.”

If Focus/Books represents a diminishment of the high end, then the pending elimination of New Hampshire Weekly is a retreat from the very sort of on-the-ground local reporting that newspaper-industry surveys show readers most want.

Political columnist David Nyhan, who’s already accepted the buyout and will be leaving, was an editor at the Globe when the decision was made to increase the paper’s commitment to New Hampshire — driven, he says, by New Hampshire opinion leaders who despaired over the dominance of the reactionary Manchester Union Leader.

“To have fought for and established that beachhead and then to cede it, to back out — to me, I didn’t understand it,” says Nyhan. “I know what it cost in blood and treasure and journalistic endeavor to get in there. To me, it was always like Pork Chop Hill, and I don’t like backing up.”

Nyhan also raises what is perhaps the ultimate question — even if there’s no way of knowing the answer. “The thing I worry about,” he says, “is whether the New York Times Company has the same high standards for the Boston Globe that it does for the Mother Ship. I think that remains to be seen.”

Nyhan is far from alone in asking that question. For instance, Robert Phelps, a former Times editor and former executive editor of the Globe, who retired as editor of Nieman Reports, is not at all sanguine about what he sees. “It seems to me that the Times is trying to pump as much money as it can” out of the Globe, says Phelps. “The standards of journalism seem to be coming in second rather than first.” This coming from a man who said he felt “elated” when the Times Company bought the Globe.

Retired Globe editor Tom Winship declines to criticize Times Company management of the Globe. But his critique of Wall Street journalism echoes the concerns voiced by Frank Phillips, Dave Nyhan, and Bob Phelps. “Too many chain publications are using their newspapers as cash cows, and as such they are sapping them of their spirit and energy,” Winship says. “They are depersonalizing their papers. And it saddens me greatly.”

Even knowledgeable observers who are not critical either of the Times Company or of Richard Gilman say there’s no question that the company values the Times above all else — with the Globe, the T&G, its chain of 14 small dailies in the South, and its other media properties occupying a place of considerably less importance.

Take, for instance, John Ellis, a Fast Company columnist, business consultant, and former Globe columnist who, if anything, believes the Times Company hasn’t moved aggressively enough in, say, paring back on the Globe’s Washington, national, and foreign bureaus and substituting Times coverage. “New York doesn’t view the Globe so much as a journalistic property as it does a cash machine,” Ellis says. “You could go into the Times lunchroom, and you couldn’t possibly strike up a conservation about the Boston Globe, because nobody is interested.”

Or take Alex Jones, co-author of The Trust: The Private and Powerful Family Behind the New York Times (Little, Brown, 1999) and director of the Kennedy School’s Shorenstein Center. Jones interviewed Gilman for The Trust and says, “I like him.” But Jones says there’s “a very big difference” between the way the company views the Times and all its other properties — including the Globe. “Do I think the New York Times would want to be perceived as gutting the news operation of the Boston Globe? Absolutely not,” says Jones. But, he adds, “they don’t treat them the same. They want to have a quality newspaper that they can be proud of, but it’s not a holy thing.”

TRIM, BESPECTACLED, with salt-and-pepper hair, Richard Gilman is a picture of serenity. It’s mid afternoon May 30; the next morning, he’ll fly to New York, where he’ll hook up with Matt Storin and watch Globe book critic Gail Caldwell receive the Pulitzer Prize for criticism. Gilman speaks slowly and thoughtfully. If he’s uncomfortable with a particular line of inquiry, he’ll deflect it rather than answering it directly. (Because my tape recorder went on the fritz, I conducted a follow-up interview with Gilman by telephone June 4. Direct quotes are from the second interview.)

When I ask him to comment on Jay Harris’s critique of corporate newspapering and to evaluate how that applies to the Globe, he responds that he can’t compare his situation to Harris’s. When I ask him about Frank Phillips’s contention that the Taylors would have ridden out the storm rather than downsize the paper, he says he can’t possibly know how the Taylors would have handled it.

There are, though, certain talking points he wants to get across. Significantly, he goes out of his way to assert that he sees at least some of the recent cuts as temporary — short-term cuts in the midst of long-term expansion that will resume when the economy recovers. Already in the works, he says, are an expansion of the Sunday Arts section and a revitalized Travel section. He’s also on board, he says, with Storin’s plans to restore Books to its own stand-alone section, and to expand Focus into what has tentatively been called Ideas — something Storin has said he’d like to do as soon as next spring.

“As I said when I arrived here, I have two jobs,” Gilman says. “One is to work with the newspaper to produce great journalism, and the second is to run a well-managed business. We believe that good journalism produces good financial results, and good financial results produce good journalism.”

Nor does Gilman wait to see if I’m going to ask him whether Globe profits are being used to subsidize the Times. Absolutely untrue, he says. Yet the Times Company’s own data suggest that the Globe’s profit margins are higher than the Times’: though the company’s annual report does not break down profit margins separately, the 1998 annual report contained narratives stating that the Times’ profit margin is in the low 20s, the Globe’s in the mid 20s, and the regional papers’ in the high 20s. (A Globe source says the paper’s profit margin today is in the range of 22 to 23 percent.) Doesn’t that suggest that the Times Company is more willing to pay for journalism at the Times than at the Globe?

Gilman responds that the Times’ financial performance is the envy of the company’s other properties, and that the Globe must stand or fall on its own performance. (In 2000, the Times reported $1.9 billion in revenue, up 9.7 percent over the previous year; the Globe reported $664 million, an increase of 7.4 percent. Ad revenues at the Times are down 9.8 percent through April of this year, as opposed to 12.1 percent at the Globe/T&G.)

“It’s just absolutely, unequivocally untrue,” Gilman says of assertions that Globe profits are helping to prop up the Times. “The profit margins of the Times and the Globe were probably just about the same last year. Each of the newspapers and other properties of the company need to stand on their own two feet. And what we’re doing in Boston is driven by our circumstances here. Meanwhile, the Times is doing whatever it has to do in response to its own situation. This is simply not a case of one place subsidizing another. I don’t know how else to tell you that.”

Gilman is relentlessly upbeat when discussing the Globe’s future. The “bulldog edition” — an early edition of the Sunday Globe that comes out on Saturday morning — has attracted only about 22,000 to 23,000 readers since its introduction a couple of years ago, about 10,000 to 20,000 below what Gilman would have liked. But he says that research shows it’s developed a devoted following among young readers, and that bulldog customers actually spend more time with the paper than regular Sunday customers.

When I ask Gilman about competing with Boston Herald publisher Pat Purcell, whose acquisition of more than 100 suburban newspapers from Fidelity earlier this year may revitalize the Globe-Herald competition, Gilman responds that what he believes is the Globe’s superior product will win out in the long run. He says that the introduction of Globe West has resulted in an increased circulation of 14,000 on Thursdays, as well as an increase of more than 100 new advertisers. He adds that he sees no big difference in competing with one entity as opposed to the two that existed before. “There really isn’t anything new in this combination except that it’s under one roof,” he says.

Perhaps most surprising, when I ask him how long he expects to stay before moving up in the Times Company, he responds, “I’m here for the duration.” Until retirement? “That’s absolutely possible,” he replies. “I was sent here to be the publisher of the Globe. I’m fully consumed by it. This to me is one of the great newspaper assignments in the entire country.”

FOR ALL the angst over the downsizing of the Globe, it would be hard to make the case that it’s not still a very good newspaper. Recent investigative projects — a Spotlight Team series on a dubious home contractor, a three-parter on troubles in the Suffolk County sheriff’s office, and its ongoing reports on corruption involving Indian casino operations — are all examples of the kind of in-depth, expensive reporting that many newspapers have walked away from.

There have been zero cuts in the staffing of foreign bureaus, Washington, and various national outposts — the very kinds of things, in other words, that a more rapacious owner might consider unnecessary luxuries. The local-news and business operations, in particular, have ramped up their staffing in the past few years. And the Globe’s sports pages remain world-class. The Globe will continue to be New England’s dominant media institution, with a newsroom staff that’s approximately double that of Pat Purcell’s privately owned Herald.

Matt Storin makes no secret of his distaste for the cuts he’s had to implement this year. “I feel frustration and occasionally strong emotions about what we’re being asked to do,” he says in an interview in his office. But, he adds, “We have been badly hit by this downturn. Though I might not agree with everything they do or say, I have basic faith in the New York Times Company.”

Even when the downsizing is over, Storin says, the newsroom will be bigger than it was eight years ago. In January 1993 — just a few months before he moved up from executive editor to editor — there were 353 journalists in the newsroom. By January 2001, that number had risen to 437. Though Storin refuses to divulge the numerical goal for newsroom reductions (“If you put a number out, maybe it will be set in stone”), he says the newsroom contingent will be “a few dozen above” the ’93 level after the buyouts have been completed.

Who, precisely, will take the buyouts remains to be seen. In addition to David Nyhan, Living/Arts writers Michael Blowen and Diane White are leaving, and sports columnist Will McDonough has said he’d like to take the buyout if he could keep writing for the Globe as a freelancer. Numerous other names are in play, but there could be a lot of minds changing before the last week of June, when the process will be completed.

As for the endless rumors that Storin himself is leaving, he smiles and says, “I will still be standing when the buyout period ends.” As one staffer put it recently, someday Storin will leave, and whoever was the last person to predict his departure will look like a genius.

Storin says he’s not particularly concerned about the downsizing of Focus, which he insists will be temporary. “I think that Focus did need a rehab anyway,” he says. “The inside pages are not a great loss.” He’s more upset about the Books section. But when I press him on diminishing the seriousness of the Sunday paper at a time when the Globe is desperately trying to keep Sunday circulation above 700,000 (it was well over 800,000 a decade ago), Storin responds: “The general thesis that we sacrificed some appeal and some quality would have to be acknowledged. The alternative would be to cut our news-gathering ability. And we have not done that. It is very easy to sound intellectually snobby about Focus and Books. But the heart of this newspaper is what we can dig up and report.”

As for how hard Storin fought against the cuts — a matter of some speculation in the newsroom — he says he made his concerns and objections known both to Gilman and to Times Company management. “I feel that they listened,” he says. “I feel that they also are in a tough situation. It’s true that the requirements of the Wall Street economy can be a lot more difficult.”

Indeed. A forthcoming book by Thomas Kunkel and Gene Roberts, Leaving Readers Behind: The Age of Corporate Journalism (University of Arkansas Press), excerpted in the American Journalism Review, argues that media consolidation and Wall Street–driven profit expectations are ruining the newspaper industry — “a $60-billion-a-year, diversified colossus with profit margins triple the norm for U.S. industry as a whole.” The cost of these unreasonably high profit expectations, “in the form of diluted and less serious, less substantive news, could be high for a nation whose democracy literally depends on an informed citizenry.” And Roberts, in particular, knows whereof he speaks: he quit as executive editor of the Philadelphia Inquirer 10 years ago rather than implement cuts ordered by Knight Ridder, later serving a stint as managing editor of the New York Times.

Geneva Overholser, a syndicated columnist who quit as editor of the Des Moines Register in 1995 because of Gannett-ordered downsizing, has been speaking out since Jay Harris’s resignation from the San Jose Mercury News. Overholser argues that what’s really needed is for the newspapers to report aggressively on their own cutbacks so that the public understands what’s happening on the journalistic end as clearly as Wall Street understands what’s happening on the financial end.

“Wall Street has no hesitation in demanding what it wants, but the public doesn’t know what’s going on,” Overholser says, adding that the media “collude” with Wall Street by failing to report fully on the downsizing of their industry. “The worst thing we can do,” she says, “is protect the public from the full brunt of the knowledge.”

Take a look at the Boston Globe today and you’ll see a snapshot of what’s going on in the newspaper business. A year from now the economy could be bouncing back, and the Globe, the Mercury News, and other papers could be adding staff and beefing up coverage. And worries about Wall Street journalism will seem like a passing fad.

Or today’s cuts could portend a more worrisome trend: permanently downsized papers, ever higher profit margins — and a complacent public that doesn’t complain because it doesn’t quite know what it’s missing.

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

Issue Date: June 7-14, 2001