Paper Chase

A year after The McClatchy Co. bought The Charlotte Observer, the paper’s future is still unclear. But staffers better get used to previously dirty words like “collaboration”

In early 2006, uncertainty reigned on the fifth floor of the drab, concrete bunker-style building that houses The Charlotte Observer

Parent company Knight Ridder, once revered for its commitment to good journalism, had become a shell of its former self, living and dying by its next quarterly earnings report. Management reduced the size of the newspaper’s pages and consolidated sections, saving money on paper and ink. Other Knight Ridder papers were cutting positions, and staffers worried the same could occur here, even though, financially, The Observer

was one of Knight Ridder’s top-performing papers.

And, of course, the company was for sale. An activist shareholder had forced Knight Ridder to put itself on the auction block. One might think this would be good news. But some of the suitors caused staffers to already miss Knight Ridder.

Flash forward to March 2007. New owner The McClatchy Company has a solid reputation for marrying good business to good journalism. From the coverage of the fall of Jim Black to the stories on the negotiations between Google and the town of Lenoir to an investigation into local aspects of the national subprime mortgage crash, reporters appeared to be out doing their jobs. All is well, right?

Not quite.

Since buying the thirty-two-paper Knight Ridder chain, McClatchy has incurred mounting losses, despite shedding a dozen of the financially weaker KR papers. There is a hiring freeze and rumors of layoffs in The Observer’s newsroom. Most curious of all, The O has found itself in a strange sibling relationship with former competitor—and McClatchy-owned—The News & Observer of Raleigh. All of the above has led some to wonder if The Observer could finally suffer the severe budget cuts it has so far been able to avoid. The Charlotte Observer used to be a really good paper. It won three Pulitzer prizes in the 1980s. But for several years, it’s just been good. McClatchy was thought to be its savior. But is there trouble down the road?

Late last year, Google promised to build a $600 million facility that will provide more than 200 jobs in Lenoir, a town that desperately needs new industry. The news was celebrated across the state. But strong reporting revealed that Google will receive unprecedented state-tax breaks, without so much as a signed agreement that it will make good on its promises. In fact, Google may have bullied Lenoir, and the town and the state may have given up the farm.

The first story that ran in The Observer carried the byline of News & Observer reporter Jonathan Cox. That made sense, because the article focused on the use of state tax incentives. The Observer quickly followed up, focusing on the negotiations between Lenoir and Google. Then came the interesting part. The longtime foes went to team coverage, with stories carrying multiple bylines from both papers.

This is not natural, and it brings up several questions. For one, journalists are bred to compete to be the first to break a story. No one ever got a job at The New York Times by being a good team player.

“I think from the readers’ standpoint, as separate as they can keep [the two papers] is better,” says Walker Lundy, who recently retired to the Lake Norman area after thirty-nine years in the newspaper business, including four years at The Observer and editor-in-chief stints at three former Knight Ridder papers. His last gig was with The Philadelphia Inquirer. It competed with fellow KR paper The Daily News. The two shared a building but not reporting. “I think the competition is good for the reader. . . . Competition usually makes for better journalism.”

Rick Thames, editor of The Observer, perhaps because he has no choice, considers that line of thinking to be outdated. “Competition just for the sake of it isn’t all that it’s made out to be. Sometimes, it makes a lot more sense to coordinate and collaborate so that you can actually focus your resources more effectively and get more done for readers.”

Thames says The O’s government editor talks regularly with his Raleigh counterpart. “What we are doing with Raleigh now is trying to play to each other’s strengths,” Thames says. “Really, both sets of readers benefited, because in combination, we were able to cover that [Google/Lenoir] story better than either of us probably could on our own. That’s been our approach with Raleigh—to think through how we can collaborate on ways that actually make the journalism stronger.”

Lundy says it can’t be easy.

“My hunch is it’ll be a bit of a challenge to get the two staffs to work smoothly together,” he says. “It’s a little bit like porcupines mating.”

In fact, The Observer has been in peak form the past few months, journalistically speaking. The Google/Lenoir coverage was excellent, and readers don’t really care who wrote the stories. The March investigation into the questionable lending practices of Beazer Homes USA has led to a federal review of the company. Stories on poor conditions at area VA hospitals likewise prompted closer looks from the feds.

Even Lundy, who wrote a guest editorial for The O asking that it “raise more hell,” agrees that the paper is on a hot streak.

“I’ve been watching it a lot more closely since I wrote the column,” he says, “and I really think they have done an exceptional job—maybe I’m just noticing it more—but they have raised a lot of hell over the last couple of months. I think things are on the upswing. They seem to be doing a better job.”

The big question: Can the good work continue, or is this an aberration?

Across the country, newspapers have been laying off reporters right and left. Perhaps because it’s so profitable (published estimates put the margin between 19 and 29 percent), The Observer has so far been spared. But Thames admits that McClatchy is still figuring what its new company is going to look like, and he hasn’t heard much yet from the corporate office. “McClatchy is very busy right now, obviously. They’re still trying to pull these two companies together and make it seamlessly one company, and they’re still in the process of that.”

Lundy says that’s a good thing. “Frankly, the longer it takes for [McClatchy] to figure it out, the better off the journalists are. Anytime you can keep corporate preoccupied on something else, you’re better off.”

Still, Thames doesn’t expect much to change, even when McClatchy finds its bearings. “McClatchy is the type of company that allows a newspaper to determine what it needs locally. It’s very much into local autonomy.”

The truth is, the newspaper business has become a tough one. McClatchy is a public company. Wall Street demands growth. And newspapers on the whole aren’t growing. In fact, a few months after McClatchy bought Knight Ridder, newspaper advertising revenues began to slump.

John Morton, a newspaper industry consultant and columnist for Editor & Publisher, characterizes the slump as “a system-wide decline in the newspaper business, and it’s affected McClatchy just as much as it’s affected everyone else.”

Collaboration is one thing. Fewer reporters covering the same—or more—beats is another. Since filling a few open positions soon after the sale, there has been a hiring freeze in The Observer newsroom. And as reporters leave, their jobs are not always replaced. If McClatchy continues to suffer, cuts here are an inevitability.

“McClatchy in the past has been known for not bulking up when times are fat so that they don’t have to slim down when times get a little thin,” says Morton. “But we’re entering a new era in the newspaper business, and no one can be sure what the outcome is going to be or how everybody is going to react to it.”

In other words, when thin times get thinner, McClatchy might have to slim down. The thing is, this matters. What’s at stake here isn’t just a newspaper’s performance on Wall Street—it’s also a matter of basic civics. As Morton puts it, “there’s no other way you’re going to find out that the county’s gonna put a dump two blocks down the road from your precious half-acre.”

So keep an eye out. When the county puts a dump down the street from your house and you don’t realize it until it’s built? Then you’ll know.

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