Admittedly, I'm not much of a fan of the editorial page at New York Times' (NYSE: NYT ) namesake paper, but the news department is top-notch. I sometimes feel that the heavy hand of the editorial staff seeps into the pages of the Gray Lady, but the depth and clarity of its reporting has not dimmed with time. Yet the news that the Times continues to fall on hard times, and will be cutting the news staff by 7.5%, reminds me of a story about a toll collector on a bridge.
As the story goes, a town needed revenue, so it decided to build a toll bridge and hire a collector to watch the gate. However, the toll collector needed a supervisor, so one was hired, and eventually a vast bureaucratic apparatus developed around the bridge. But the bridge was losing money, and in an effort to cut expenses, the toll collector was fired.
News Corp. (NYSE: NWS ) just took over the Times' crosstown rival, The Wall Street Journal, and expects to beef up its staff of 750 to compete with the Gray Lady. Yet the Times is taking cues from Tribune (NYSE: TXA ) , which announced the day before that it will cut as many as 150 people from the Los Angeles Times, and 100 at the Chicago Tribune Media Group.
It's true that the Times has the largest newsroom staff of any paper in the country, with more than 1,300 individuals. According to a report in the paper itself, no other print outlet has a staff larger than 900 or so. But it would also seem that a company with the reach and stature of this journalistic institution ought to have the personnel to support it.
Two hedge funds that recently bought a collective 10% of Times stock have been agitating for the paper to shake things up and improve its bottom line. Ad revenue in the industry fell roughly 7% last year, and at $3.2 billion, total revenue at the Times was about 3% less than the year before.
Staff cuts seem to be the way of the world now, as ad revenue continues to suffer. McClatchy (NYSE: MNI ) , Belo (NYSE: BLC ) , and Journal Communications (NYSE: JRN ) all reported declines in advertising revenues last quarter.
Although the Times may still be the place to run all the news that's fit to print, it seems there will now be less of that news to run.
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