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Media Watch

Gannett to Close 'Citizen' in March if No Buyer Appears

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The inevitable has finally happened: Barring a surprise purchase, the Tucson Citizen, the state's longest continually operated daily newspaper, will cease operations on March 21.

Robert Dickey, president of Gannett U.S. Community Publishing, made the announcement personally to Citizen management and the newsroom on the afternoon of Friday, Jan. 16.

"The Tucson Citizen has been part of Gannett since 1976, and we deeply regret having to take this step," Dickey said in a statement. "But dramatic changes in our industry combined with the difficult economy mean it is no longer viable for our partnership with Lee Enterprises to produce two daily newspapers in Tucson."

Gannett and Lee--the financially strapped Davenport, Iowa, firm that owns and operates the Arizona Daily Star--are linked through a joint operating agreement that runs through 2015. It's that very contract that gave the Citizen a chance for survival, as the two companies shared profits through Tucson Newspapers Inc.

Even though the Citizen has been bleeding circulation for more than a decade--its subscription numbers have slipped from a mark of 45,000 in the mid-'90s to about 17,000 today--Gannett was still turning a profit in Tucson by virtue of the JOA. Gannett garnered about $13 million from the arrangement in 2007, but officials say the 2008 profits split will be significantly less, although they're staying close to the vest in terms of actual numbers.

Given Gannett's national woes--including two major layoff cycles and a decision last week to furlough employees for a week without pay--the move can hardly be considered a big surprise. However, that doesn't make the blow any less devastating for the 65 full-time employees and three part-timers likely to be unemployed 60 days from now. The only small consolation is that employees who stick around through March 21 will get a severance package: a week for each year of employment, up to 26 weeks.

"The last six months have been (tough)," said senior editor Jennifer Boice, who in July replaced editor-publisher Michael Chihak after he jumped ship to become executive director of the Communications Leadership Institute in San Francisco. "We've been through two layoffs, and now this. I don't think it gets much worse than that in any working environment."

The Citizen has been in a tough spot for some time. The afternoon model has been taking a hit for well more than a decade, claiming a litany of established dailies in major cities. Add to that the Citizen's dwindling circulation, the Internet's erosion of ad revenues and Gannett's significant financial woes, and the long-term prognosis was not strong.

Those factors make it highly unlikely that a buyer will swoop in and save the day. And if that were to happen, a sale may have to be approved by Gannett, Lee and the Justice Department, thanks to the JOA.

"I don't know exactly what they're selling and what price they're demanding. When people asked Bob (Dickey), there was little information," said Boice.

Gannett is being vague, saying it is selling the name, the Web site, the URL and lists of contacts, advertisers, contracts and subscribers. Dickey has also refused to divulge a possible selling price.

Boice did not hold out much hope for a sale.

"Papers are struggling across the country right now: the (Seattle) Post-Intelligencer, the Rocky Mountain News (in Denver), both are the lesser newspapers in town, and they aren't being snatched up by anyone."

Boice has been with the Citizen for 25 years; her husband, associate editor and editorial page editor Mark Kimble, is in his 34th year. They've seen the good times, but now, Boice and Kimble are being forced to endure the impact of a business facing major uncertainties.

"There are a lot of problems in the industry, and a lot of that has to do with debt. That's the problem with Lee," said Boice.

Lee, which owns the Star, has had to refinance with creditors due to the slumping economy and the price tag it forked over for Pulitzer Inc. 's properties, including the Star, in 2005. Some economists believe Lee may not survive the year, and there is speculation that Lee could sell the Star to Gannett, thus giving Gannett control of the two largest newspapers in the state (the Star and The Arizona Republic).

"They (Lee) took on a lot of debt at a time when their margins were huge," Boice said. "Now their margins are less, and they can't pay off the debt. But when you get down to the product itself, we are still selling newspapers. We are still selling advertising. It can be profitable. Will we ever see 25- to 30-percent margins again? No. The model has to change. Whether people accept that and move on, I don't know. But newspapers are still viable.

"People read news on the Internet, and we have yet to do a good job selling on the Internet, but that's because it's been a secondary sell. Frankly, we've never concentrated on selling advertisers on the Internet in a way that could be profitable, giving them the tools so they can build their own ads and upload new information, (and making) the advertising on the Web as interactive as the news is on the Web. Advertising is way behind, but it will catch up, and I think advertisers will catch on--but you'll never see the margins you had."

Once March 22 arrives, Tucson will likely be a one-daily town, and how that affects story coverage remains to be seen.

"I think having two newspapers in a town makes both newspapers better. Competition is good in that respect," said Boice. "You go to one-newspaper towns, and if a story is breaking or happening, they go, 'Eh, we'll get it tomorrow.' Here, we don't do that. You get good news; you get better news; you don't just get one side of the story, one reporter's view of the story, and frankly, I think that's good.

"I look at the reporting and the news-gathering and editing team that we have at the Citizen, and there are some very, very good journalists there, people I respect and hold in awe. We couldn't be doing what we're doing without them, and I really feel badly about some of their situations."

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