The Strib and KARE Cut, KTLK Adds.

Here I am in full nerd mode, clearing off my schedule for tonight's season finale of "Lost", (a.k.a. the only network drama I actually watch with fan-like enthusiasm), and there's news seeping out all over town.

Here's a rapid-fire breakdown:

THE STRIB TO CUT $30 MILLION

As I write this (11:30 am), Strib editor Nancy Barnes is breaking the bad news to her staff that that a $30 million budget cut figure is closer to ugly reality than not. The paper's Guild has been anticipating the worst as it begins negotiations for a new contract, and by "worst" they were whispering, "$10 million to $20 million" out of operating expenses.My arch-rival David Brauer breaks down details here.

As has already been discussed, the Strib's owners, Avista Capital Partners have struck quicksand in Minneapolis. The slam-dunk real estate deal they apparently foresaw with Vikings owner Zygi Wilf has gone South faster than a six month and a day tax dodger, and by all appearances Wilf will be able to take the Strib's five-block chunk next to the Metrodome off their hands for a hell of a lot less than either he or they ever imagined. (There could also be a different buyer.)

Then there's the revenue woes of the entire "old media" industry. It's bad, and we've been saying it's bad for so long, when a daily paper anywhere "only" loses 5% circulation we think that's good.

But then there's the miseries Avista has brought entirely on itself -- with its over-leveraged, quick-flip purchase of the paper. This is NOT the same thing as the bad business climate, even though Avista's irregular mouthpieces would like us all to think so. We are hoping that someone asks Barnes ... to ask Harte ... to ask Avista's actual partners ... if they feel any obligation at all to their employees in Minneapolis and the Twin Cities community for how badly they have amplified the sorry state of the newspaper industry with their stunning lack of due diligence with the Strib? Sans Avista's fiasco, the shift in the Strib's current condition might only be the difference between bad and miserable, but considering the mess this crowd has made here, who at the Strib or among its customers won't take "bad"?

Obviously talk of "obligations", moral responsibility and ethics is Pollyanna-ish in the extreme when talking about a publicly held company and science fiction with a private equity creature like Avista. But I'd love to hear Harte or someone's response, or at least register their, "no comment."

(The Guild has apparently broached the subject of Avista using plentiful assets from its other "groups", none of which are even remotely as bad off as the Strib, to stabilize their Minnesota newspaper. In the compartmentalized worlds of private equity finance, that I'm told, was a non-starter.)

[1:42 p.m.] -- The takeaway from Ms. Barnes' presentation this morning were her repeated pleas -- to a roomful of journalists, whose professional ethics encourage transparency without fear or favor --  not to repeat any  of what she was about to say beyond the room. At one point she reportedly even admonished one  ... reporter ... to stop taking notes. Her concern, she explained, was that "lenders" and advertisers might hear of the paper's sorry financial plight.

Do you think?

Anyway, the picture she eventually painted was grim, with $3 million in cuts needed from the newsroom, which means roughly $2.5 million beyond the $500k she can account for by not filling open positions. The scenario is beginning to sound very Northwest-like, with "givebacks" i.e. compensation cuts, maybe in the 10% range, or failing that, lay-offs. Where Avista gets $27 million out of the rest of the paper is anyone's guess.

KARE CUTS 8, OUT-SOURCES MASTER CONTROL AND GRAPHICS

Gannett-owned KARE, ch. 11, quietly announced yesterday that it is whacking five employees from its master control operations here in Minnesota and three from its graphics unit. I've contacted KARE GM John Remes for explanations and he said he'd "try to get back today". Generally reliable sources tell me that the graphics faction will now be out-sourced to Gannett's facility in Denver while some or all -- I'm not sure yet -- of the master control functions will be handled out of Florida.

KARE, to remind everyone, has enjoyed  status in these towns for years as the fattest calf in the  feedlot, returning  ransom-like  profits to Gannett headquarters in Virginia. Put simply, if you're in business to make ridiculously easy  profits -- and who among us hasn't dreamed of that? - few endeavors  can match the  20 year run KARE has had here in Minnesota. And by every indication they will continue  delivering  staggering amounts of dough back to the main office. The only difference is that now, like WCCO-TV before them and every newspaper in the country, KARE has reached the point where they must cut staff, i.e. make their middle-class employees suffer, in order to achieve the return on investment to which the parent company has grown accustomed. (Gannett owns USA Today and a lot of smaller papers all feeling that pressure.)

One former employee argues that Remes, who is a Minnesota native, has managed to resist both lay-offs and salary freezes longer than most of his fellow Gannett GMs.

As I say, I'm still a little cloudy on how this out-sourcing business is supposed to work,  although  apparently it isn't all that difficult technically. More if I hear back from Remes.

RON ROSENBAUM SHIFTS TO KTLK, GETS SATURDAY SHOW

Attorney and long time talk host Ron Rosenbaum has not only parted ways -- completely -- with Hubbard Broadcasting, he's setting up shop at KTLK, Clear Channel's largely under-performing  FM  talk station. Rosenbaum did eight and a half years at Hubbard's AM 1500 before, uh, failing to secure a renewal a couple years ago.  He  was also a regular presence on KSTP-TV, ch. 5. (After losing the regular radio gig, Rosenbaum, who has represented dozens of Twin Cities media types in their contract negotiations, worked out a deal to lend Hubbard's various stations his legal thinking, but was little used in recent months.)

In a city that at times seems populated by the same 12 people Rosenbaum will now regularly  appear as a guest on the show of one of his star clients, Dan Barreiro. (His first visit will be Friday, tomorrow, at 5:20). That's on KFAN, Barreiro's weekday home. But then on Saturdays Barreiro and Rosenbaum will go back-to-back. Barreiro -- who obviously isn't into that staying home with the Mrs. planting tulips thing -- is already doing a 10-am to noon Saturday gig on KTLK. (Does the guy have things to say, or what?) Now, starting this Saturday, Rosenbaum will punch in from noon to 2 p.m., overlapping with Barreiro for a few minutes as they hand off the KTLK mike.

I of course can only speculate here, but it does seem possible that Rosenbaum's representation of Barreiro in the latter's heavily publicized, pricey and ultimately successful bidding war between Clear Channel and Hubbard last fall may have compounded long-festering issues with certain Hubbard managers. Whatever the reason, Rosenbaum, a bona fide character with no shortage of well-informed opinions, (and thankfully few out of the Sean Hannity, Glenn Beck 5-watt bulb echo chamber), seems pleased to have relocated.

"I am really looking forward to working with Barreiro. It's such a pleasure to be able to interact with someone who knows what they're talking about and understands radio." Rosenbaum has hopes of drawing in his old pal, attorney Joe Friedberg, and maybe WCCO's Pat Kessler and Mark Rosen for bits on his Saturday  show.

Barreiro denies the conspiracy theory that says the Rosenbaum-to-Clear Channel move was built into last fall's deal. "No, no, no. That's funny. But it's not true."

For his part, he says the Saturday KTLK bit, (for which he gave up his Sunday KFAN show), is, "just a chance to do something a little different, and even then it probably won't sound a lot different.  On The Fan  I feel obligated to  a base-line  50-50 approach to sports. On K-Talk it'll be, I don't know, maybe 95-5, something else to sports. With Rosenbaum, we haven't been on the air much together, but he obviously knows his stuff. I think it'll be good."

But has he ever tried to cut off Ron Rosenbaum? Not any easy thing to do.  "Yeah, I know what you're saying. Be careful what you wish for."

Whatever reason AM1500 had for dropping Rosenbaum two years ago, it wasn't good. A naturally combative personality, Rosenbaum works best in a kind of free fire zone, with cronies he regards as his intellectual peers. (Very few rate that high, but that's part of the shtick.) More to the point, in a radio universe that isn't exactly overflowing with brain power or imagination -- and is forever convincing itself that no audience exists for sophisticated discussion -- Rosenbaum brought/brings a helping of both.

"My goal," Rosenbaum reiterates, "is to de-mystify things we lawyers make out to be a lot more complicated than they really are."

Winter '08 Radio Ratings

Allow me to break away a moment here from the "Strib Death Watch" to drop in the most recent local radio ratings, released last week.

The "big news" was B96 "beating" KDWB in the main twelve-and-older category and several others. Frankly, we suspect this might have a lot more to do with some not-all-that-unusual ratings diary distribution—the old "three drunks in a trailer court" joke—than a breakthrough for visionary playlists at The Beat. (The "three drunks" joke refers to the Arbitron ratings system which could, by chance, drop diaries into the hands of some station's sobriety-free relatives, thereby temporarily skewing the data.)

But the B96 story is mainly about kids, and we wish them well. Among adults twenty-five to fifty-four, where most stations are trying to make their money, the rankings look like this, comparing Fall '07 to Winter '08, Monday through Sunday.

Rank   STATION  F/07   W/08
1.......KQRS......12.1.....11.5
2.......K102........6.7......6.9
3.......KS95........6.8......5.6
4.......Cities97....5.8......5.2
5.......B96..........2.7.....4.9
6.......KNOW........NA......4.7
7.......Jack.........3.4.....4.7
8.......KOOL108....3.4.....4.6
9.......WLTE........6.5.....4.4
10......KDWB........4.4.....4.1
11......93X..........4.4.....3.9
12......KFAN........4.4.....3.7
13......AM1500.....3.1.....3.1
14......KTLK........2.1......2.8
15......WCCO......3.4......2.7
16......KSJN.........NA.......2.5
17......LOVE.......1.8.......2.0
18......FM107.....1.4.......1.4
19......Current.....NA........1.3
20......Patriot.....1.2.......1.1

And for the hell of it, how about a comparison of afternoon drive numbers for men and women, twenty-five to fifty-four? Here are the top ten for each. (I have no figures for any MPR station.)  3 p.m.-7 p.m. Monday-Friday.

WOMEN:

Rank   Station  F/07    W/08

1.......KS95......12.0.....11.5
2.......K102.......9.0.......9.3
3.......Cities97....8.6......8.5
4.......WLTE.......9.3......6.4
5.......KOOL108...4.1......4.8
6.......KDWB.......4.3......4.5
7.......FM107......3.9......4.2
7.......Jack.........3.6......4.2
9.......KQRS........3.6......3.9
10......B96..........2.8......3.8

And, MEN:

Rank      Station   F/07......W/08

1.........KQRS......10.3.....9.7
2.........KFAN......10.0.....8.6
3.........AM1500....7.5.....7.7
4.........K102........7.3.....5.9
5.........KTLK........3.0.....5.4
5.........B96..........3.0.....5.4
7.........93X..........7.0.....4.9
8.........Jack.........3.4.....4.5
9.........KOOL108....2.9.....4.3
10........WCCO.......4.3.....3.7

Patrick Reusse: The Old Fart's Last Stand?

I'm not sure what to take away from Patrick Reusse's Thursday column. This was the one where the old silverback reminisced about his early days at the Pi Press, where cigar chomping sports guys insulted him to his face and rookie copy editors took turns trying to patch holes in Don Riley pieces and then went on to a defense of his profession in the face of the Internet. (The stories about Riley, the Pi Press's legendary imbiber/sports writer truly are hilarious, mainly in contrast—stark contrast—to the stitched up, oh-so sober, and bloodless "professional demeanor" required of reporters by today's HR-driven management.)

My guess is that Patrick caught wind of (former Pi Presser) Buzz Bissinger blasting away at that Deadspin blogger on Bob Costas's show last week. If not, it's a hell of a coincidence. Two gnarly newspaper vets, stained past their elbows in ink and saddle sore from years of schlepping through airports and arenas, carping about the herds of smirky little blogger bastards pecking away in their mother's basement, calling athletes nasty names, and taking cheap shots at pros such as Bissinger and Reusse for being "too close" to the action.

Although my sympathies in the fight over "Who do you need more? Newspaper pros or bloggers?" are generally with Bissinger and Reusse (for the simple reason that you learn something important when you are negotiating the tricky political game of working and keeping sources with teams while simultaneously balancing credibility with readers, editors, and management), I've accepted that this game, too—sports reporting and commentary—is changing forever and that the glory days are waning for daily newspaper sports sections.

(Ex-Timberwolves beat writer Steve Aschburner, writing for MinnPost, takes his shot here.)

My basic view has been and continues to be this: As bad as things are for a paper such as the Strib, if you think of it as a diesel barge that has just rammed a bridge, the sports section will be the last thing sucking air as the props disappear below the waterline. When sports goes under, the game is over. Sports are that vital to what is left of the daily newspaper business. Papers continue to pour a disproportionate share of their diminishing resources into sports coverage because they believe if the average guy is honest in focus groups, he'll admit that the sports section is the only reason he still subscribes to the damn thing. TV gives him all the nauseating crime stories he needs to know about. Politics are on the the Internet and cable twenty-four/seven. He doesn't read the "chick stuff", and he doesn't need the paper's classifieds anymore to find a new boat trailer.

As someone who listened to endless newsroom carping about the "misplaced priorities" of sending four or five sports guys off to cover a Masters Tournament with no Minnesota golfers, an NFL playoff game without the Vikings, or—the Godzilla of misplaced priorities—the Olympics halfway around the globe, even with a handful of Minnesotans no one has ever heard of before or ever will again, I can tell you this stuff rankled every department outside sports. While news stories were covered via phone from a newsroom desk, the sports department would burn in a week at the U.S. Open what the entire A&E department would spend in a year. And that was then. Now, with traumatic "restructuring" in the wind, the cost to a local paper providing its sports writers access to any event anywhere is, as Patrick seems to be suggesting, about one short summer away from being an artifact of a bygone era, like the gin bottles in Don Riley's desk drawers.

The stressed and depleted modern newsroom is a schadenfreude-rich environment. No one thinks they're getting the resources they need to do their job the best they know how (and they're not). So they are OK-to -delighted with the thought that the sports department will soon be clipping coupons just like common folk. That's human nature.

As I say, this diminishment of sports is inevitable. The Internet competition for sports coverage and commentary is overwhelming, from ESPN alone, and then you get to the Deadspins of the world. Sports are massively over-covered, there's no question about it. But it's no coincidence that so much of the best writing in any paper comes out of the sports department. And all that pricey first-person "I am there" access has a lot to do with that.

To repeat something I say a lot, the average newspaper—and that describes the two local publications—might be a lot better off financially, by virtue of being more appealing to a younger generation of readers, if they encouraged all of their reporters to use the freedom of expression sports departments allow their writers. The irreverent, informal, humorous, theatrical—human—copy routinely produced by sports writers, such as Reusse, a bona fide old fart, is in much closer step with the modern Internet sensibility than the rest of the paper. But all the writers in the other departments are working with a lot less material.

And please, "local, local—hyper-local" coverage of high school football isn't even close to registering on the same vicarious and authoritative level as a by-ined story from Augusta, the Staples Center, or Beijing. What celebrity gossip is to women, sports are to men, and there's a huge gulf between first and third hand.

By taking the "big league feel" out of sports coverage, by taking hometown reporters and columnists off the road, by removing them from the rich loop of colleagues from other cities—whose cues and gossip are far more vital to good sports writing than a few lines of first-person cliches from the quarterback standing in a rank smelling locker room—, newspaper management is signing its own death warrant. 

The Strib: A Flipper's Nightmare Come True

One of the curiosities of Sunday's New York Post story about the Star Tribune being "on the brink of bankruptcy" was that the Strib's owners, Avista Capital Partners, were in no way proactive about the Blackstone "restructuring" team (damn, I love flagrant euphemisms) being "hired" on to . . . you know . . . clean things up.

After a very long year with this crack investment team, we all understand that that "communications thing" really isn't their game. But you would have thought the paper's current publisher, Chris Harte, a.k.a. Avista's "newspaper guy," would have understood that "hiring" heavyweights such as Blackstone might be news, and, therefore, maybe it would probably be a good idea to get ahead of the curve and do the fancy dance, reassuring skeptics that this is simply good, old-fashioned, contingency business stuff, nothing urgent, nothing overly serious. It would, I'm saying, be better than, mmmm, letting someone slide a rumor of bankruptcy to a tabloid that then goes ricocheting around the Internet, making you look like a colossal basket case.

Frankly, I'm torn between believing that Harte and Avista are just so clueless about how this media thingie works that they never considered a leak a possibility and wondering if they planted the whole thing as an elaborate ploy to shock the Guild into caving early and easily in the contract negotiations that begin this week. Over at City Pages, Jeff Shaw speculates on that theory. Meanwhile, my hard news zealot pal, David Brauer, is hearing a lot like what I'm hearing from lowly Guild types.

As sympathetic as I am to the Guild's cause, I find it hard to believe that Avista would bother ginning up a semi-bogus story in the Post just to get a little leverage on the Strib unions. I mean, what more do they need? The leverage they already have is kind of like a gang of rum-crazed pirates with pitchforks and boiling oil pushing the hapless seamen off the end of the plank.

Anyway, a friend who has worked both at local TV stations and newspapers got in on an e-mail conversation about the Strib and all old media's troubles. He had some suggestions for survival:

"Here are some revolutionary ideas that could help the paper without having to cut worker wages: Cut executive pay. Cut executive jobs. Cut executive perks. Lower profit expectations in line with the new realities of the business. Increase demand by improving the product. "I think we can all give an example of a business that went swirling into the great [bleeper] of oblivion because short-term-thinkers would rather degrade the quality of the product rather than adjust expectations. The solutions news organizations prefer is cutting bodies. "Here's how it works:  A lower-quality-product, which means a smaller audience which means less revenue which leads to ... A lower-quality-product, which means a smaller audience which means less revenue which leads to ... A lower-quality-product, which means a smaller audience which means less revenue which leads to ... A lower-quality-product, which means a smaller audience which means less revenue which leads to ...  (repeat until someone turns out the lights.) "I watched Montgomery Wards cheap itself out of existence. True story to illustrate -- I had a district manager in my store reaming me because the shelves were empty in the drapery department and there were three pages of the next Sunday's ad dedicated to the department. He insisted I call the buying office. The buyer said -- "The cost of the merchandise you need to fill your shelves is double what they gave me to buy for the whole chain." Oh, and I didn't get a bonus because I failed to meet my sales budget. "Then there is TV land. When I started at [local station] eight years ago every show had at least two writers, often a third or fourth person would float between shows. When I left, a second writer was a rare treat. The producers were given additional duties -- creating their own graphics, their own administrative tasks, editing some of their own video, and fewer reporters to provide content for the show. I'd guess that the typical producer is now doing the work of at least three people, often four. The product suffers, but heck, fewer people are watching -- so there will be more cuts.  "Remember when 3M got a new CEO who said the company was spending too much on R&D? "Now newspapers. The cuts came from the top, so there's a great big gap in institutional knowledge.  At least half the reporters I talk to say they don't know how to write a headline. I had to explain subject-verb agreement to one editor last week. The paper gets thinner, and fewer people read -- so the paper gets thinner, and fewer people read. Yes, much of this has to do with the switch to online -- but news is still news and there is a business."

This friend reminds me of the Strib's Mike Meyers in both girth and wit. So I called Meyers to get his thinking on the Avista-planting-the-rumor theory. He wasn't buying: "You're right. They've got all the leverage they need. I think that's a little egocentric on our part." But Meyers, who has been pretty astute on Northwest's connivery throughout the years, says, "I suspect bankruptcy is on the table. But I think if Avista planted it [with the Post], it's to bring in new investors, fast."

Which leads to one of the parlor/barroom games of the moment here in Minnesota. What is the Strib worth right now?

Since Avista is private, Meyers whips up the recent numbers on McClatchy's thirty-paper empire. Current market capitalization, he says, is listed at approximately $808 million, with the average value per paper at $31 million. Projecting out at ten times the average value, the flagship Miami Herald [with slightly less circulation than the Strib] might then be worth $310 million. So, give Avista a generous twelve times average for the former McClatchy property Star Tribune, and we're talking $360 million, or $70 million less than the "mortgage" (forget the $100 million in real money they'll never see again) . . . and still slipping.

So is the market hard on flippers such as Avista, or are flippers such as Avista hard on the market?

NY Post: Star Tribune "On the brink of bankruptcy"

The New York Post, always a "consider the source" font of news, has a solid-sounding story in which it declares that Avista Capital Partners, the private equity crowd that bought the Star Tribune for roughly forty cents on the dollar from McClatchy barely a year ago "stands to lose its entire investment" as the Strib teeters "on the brink of bankruptcy."

Says the Post:

"One of the nation's top dailies, "The Strib," as it is known to readers in the Twin Cities, recently hired the Wall Street powerhouse Blackstone Group to restructure its balance sheet after failing to meet its debt obligations, according to people familiar with the company.

The broadsheet is unlikely to shutter its doors, but its creditors, including the banking giant Credit Suisse Group, figure to eventually end up controlling the paper. Down the road, the creditor group could then sell it after dramatically cutting costs."

That last line, "after dramatically cutting costs," is ominous news for anyone employed by Avista at the Strib and the Twin Cities community in general, which arguably needs a fully staffed, fully functioning  newsroom somewhere in the cities now more than ever.

A couple hours ago (Sunday night), the Strib put up a story by Matt McKinney with a response from publisher Chris Harte.

In what has to be regarded as a classic non-denial denial, Harte said, among other slippery things:

"We recently hired the Blackstone Group to help us evaluate alternatives to our current capital structure, but that hardly merits a conclusion that we are near bankruptcy. In fact, Blackstone has substantial expertise in balance sheet restructurings through means other than statutory proceedings like bankruptcy."

A less generous fellow than me MIGHT take that to mean, "Yes, a new über-echelon of suits are coming in. We have little choice but to submit to whatever chainsawing they deem necessary to make good on our loans to Credit Suisse. In the best-case scenario, we'll only lose our $100 million and consent to some ludicrous fire sale to whoever wants to pick through the rubble."

Whether it is coincidence that Avista was to begin contract negotiation with the paper's reporters this week, I can't say. But conversations I had with Guild representatives last week found them in a glum, if determined, mood. Rumors then were that Avista was looking for a minimum of $10 million in new cost reductions—slashing staff and reducing content being its only means of producing the cash flow necessary for servicing the $400 million-plus in debt it took on when it took over from McClatchy.

The rumored range of cuts actually went from a low of $10 million to a high of $20 million. Either number is draconian since not so long ago, the paper's annual editorial operating budget was in the $10–$12 million range. (When I joked that $10 million represents roughly what Avista squandered defending disgraced publisher Par Ridder, one Stribber replied, "Yeah, and we intend to remind [Avista] of that several times a day."

If the Post is anywhere close to accurate, another fire sale with new owners gutting the paper would seem to raise the specter of Media News's Dean Singleton bottom-feeding for the Strib much sooner than even I imagined—and making his nut by combining the decimated Strib with what little is left of the Pioneer Press.