After buying spree, Black Press's new owners cut 25% of its Washington State staff

The new corporate owners of the Fraser Valley’s community newspapers have embarked on a buying spree in recent months, as its leaders emphasized the importance of journalism and the renewed promise of print news.

But this week Carpenter Media Group moved to cut one-quarter of employees at its newly purchased papers in Washington State. The cuts triggered criticism from workers and journalists. They also highlight questions about whether the company can live up to its rhetoric—and whether the 20th Century’s newspaper-conglomeration strategy can work in an online world.

You can read our initial, in-depth coverage about the decisions and factors that drove Black Press into bankruptcy here. You can read about the subsequent auction of the company here.

The new company

When BC community news goliath Black Press announced in January that it was seeking creditor protection, it revealed that a preliminary deal had been struck to sell itself to two Canadian investment firms and a little-known US publishercalled Carpenter Media Group.

At the time, just six months ago, Carpenter was largely unknown outside of the American south, where it had stakes in a couple dozen modestly sized papers. For more than a decade, it had jointly operated many of those papers with another family-based media company called Boone Newsmedia. But last October, Carpenter and Boone had the two companies announced they were separating, leaving Carpenter to go its own way.

As it broke away from Boone, Carpenter had no online corporate presence and was a minnow compared to Black Press, which owned 150 publications, including a major daily paper in Hawaii, dozens of publications in Alaska and Hawaii, and more than 80 community papers across Western Canada. Those included all of the Fraser Valley’s English-language papers.

With most of the funds in the deal coming from two Canadian investment firms that had loaned Black Press money, Carpenter was seemingly brought into the purchase to manage the expanded operation and provide a fresh perspective on how to make the large chain profitable over the long-term.

But Carpenter has set its sights even higher. Since closing the Black Press deal in April, the company has scooped up dozens of American papers.

In April, days after closing the Black Press acquisition, Carpenter announced the purchase of a daily paper in Louisiana.

A month later, it bought 10 more papers in Alabama, Georgia and Mississippi. In early June, it acquired the largest publisher of papers in the Portland, Ore., area. And around the same time, the company announced it had bought outright six papers it had previously jointly managed with Boone.

Carpenter, which started the year with around 30 papers, now boasts more than 160 publications—about half come from the Black Press purchase.

(It’s unclear if Carpenter has also partnered with the Canadian investors on the American deals and, if so, which partners are behind the ambitious strategy. The company’s leaders have not answered repeated requests for an interview.)

Several of the recent acquisitions have come as aging owners or their families looked to exit the news industry.

David Black’s retirement was announced on the same day Black Press declared creditor protection. (Black hadn’t been heavily involved in the company’s decisions for several years.)

The owner of the Oregon papers was 82 years old and wrote in a statement that, “due to age and health reasons, it made sense to pass the company on to someone else who will carry on the tradition of balanced journalism, the old-fashioned way.”

And the Boone acquisitions, followed the death of that company’s founder last February.

Most of the transfers were also facilitated by a single media-merger company: Dirks, Van Essen and April. The company specializes in helping newspaper owners sell their publications

There’s nothing new about media companies trying to find economic advantages by collecting multiple publications that can share resources and find economies of scale.

Black Press itself was built on the idea that it’s more efficient and profitable to own many newspapers rather than just one or two. By owning multiple papers, small publications can share overhead costs, printing facilities can be co-ordinated, and salespeople can sell ads in multiple publications.

The internet, however, has dramatically reduced ad revenue, forcing papers to cut costs and making the acquisition of large numbers of papers far less attractive. The financial woes of many newspapers means acquiring a new publication can mean taking on a liability, rather than an asset.

Carpenter’s buying spree suggests its leaders are optimistic that there’s still money to be made in buying as many community papers as possible. Its chairperson, Todd Carpenter, has suggested as much online.

In a long “Chairperson’s Message” posted on his company’s new website, Carpenter strikes a passionate and positive note about journalism and community publications.

“With technology, digital marketing and journalism, and the stabilization of print, ours is again a growing industry, full of promise and possibilities,” Carpenter writes, saying that the company’s mission is to serve communities. “Without local journalism, communities decline, become divisive and stagnate. With good local journalism, they are equipped to communicate, work together, grow and thrive.”

The pursuit of profits, Carpenter suggests, is needed to ensure stability. But he writes that “much group ownership of local media is now publicly traded or controlled by private investors,” and that “history has shown us these institutions cannot survive under the control of owners with financial motives as the highest priority. Earnings per share and return on equity as primary goals wreck newspapers, plain and simple.”

The challenge is that Carpenter and his eponymous company aren’t actually fully in control of the papers they own. Instead, they bought only a 25% share in the Black Press papers, with two investment firms holding majority control. And investment firms tend to want to make as much money as possible. (The plan outlined during the creditor protection process suggested Carpenter would own a one-quarter stake in the Black Press papers and the company’s lenders would expect a 10% annual return on their investment.)

Carpenter has declined to give interviews to reporters. The Current has asked for an interview with Carpenter or CEO Tim Prince but has not received a reply; Carpenter’s leaders have also ducked interview requests from Seattle Times media reporter Brier Dudley.

This week, the company made deep cuts that critics say will hurt journalism in dozens of local communities.

On Tuesday, the Seattle Times reported that Carpenter was laying off 62 people at the Washington State newspapers it had bought from Black Press earlier in the year. The company’s Washington and Alaska division had 234 employees as of last year, meaning Carpenter has moved to lay off one-quarter of the division’s entire workforce.

Dudley reported that those layoffs include “more than half the unionized newsroom employees” at Everett’s Daily Herald, the largest of the company’s Washington’s papers. Several unionized editors have also been told they are out of a job. (The union is the only one at the Washington papers and the vast majority of laid-off workers across the chain are non-unionized.)

The Daily Herald had been in negotiations with the journalists’ union since last year, according to documents released during the creditor protection process. The union, which formed only recently, tweeted that the wages that had eventually been offered had been insulting. Some reporters made as little as $18 an hour, and one recently left to take a better-paid job scooping ice cream.

When Carpenter and its investor partners bought Black Press, they had to submit a plan describing how they would turn around the business. That plan suggested a vague combination of revenue-increasing projects and cost-cutting.

But employees had been told little about what, exactly, that will look like.

So far, in British Columbia, Carpenter has yet to make large-scale changes. A half-dozen senior Black Press leaders have been appointed to vice-president positions at Carpenter Media (the company has 10 VPs.) The company has also made changes to how and where some papers are printed. So far, there have been no widespread layoffs of journalists. At least three editors have been laid off, but the company has also continued to hire journalists, including several at Fraser Valley papers.

Carpenter Media Group can now legitimately claim to be one of North America’s fastest-growing newspaper companies. If it can make newspaper empires profitable again, it will be solving one of the biggest challenges in journalism. But the company has never explained, to outsiders or even its own workers, how it will find success where so many predecessors have struggled—and how it will do so without the drastic cuts that are common in media organizations, but which would seem to run contrary to its chairperson’s rhetoric.

For Caleb Hutton, the Everett Herald’s local news editor, there are more immediate concerns. Ever since the paper’s sale, Hutton said workers had feared cuts could hit the paper.

On Tuesday, the journalists’ union was told cuts were coming. On Wednesday morning, the newsroom got a text from their executive editor saying he had been laid off. And by mid-day, journalists—both unionized reporters and editors—were called into the publisher’s office one by one to be told they were out of a job.

“We’ve lost count of the number of reporters who had to go have that conversation with the publisher,” he told The Current Wednesday afternoon, just hours after being told he was laid off.

Hutton said he hadn’t expected the axe would fall on him until he heard his name called.

Hutton sat in his publisher’s office, he thought about his future and the future of journalism in his region. But his mind also immediately went to the job. So he told his boss: “We are planning to do a story about this.”

As he spoke to The Current Wednesday afternoon, Hutton said his publisher stated: “I’m not going to tell you not to, but I’m probably not going to have much to say.”

The next morning that story appeared.

“Moving forward, operations are not going to change much,” the paper’s publisher was quoted as saying. “The readers won’t notice.”

It said the journalist’s union had been told Carpenter cited its “‘operating principles’ to justify the layoffs.”

Within hours, the company had ordered the story to be removed from the paper’s website.

(You can read it here, thanks to the Internet Archive. An edited version or the original was eventually re-posted to the Herald’s site.)