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What's left of — and what's next for — The Charlotte Observer

The "Great Recession" of the last few years hit the newspaper industry particularly hard. Which makes it rather ironic that the Queen City's own daily paper — The Charlotte Observer — has more readers (more than one million each week) and is publishing more stories, more times a day than ever before.

But the largest newspaper in the Carolinas is frighteningly thin these days, as you've surely noticed on newsstands or if it's home-delivered to you.

The problem has been that while the Observer has grown its readership and content through the Web (roughly 25 percent of its readership is online), advertisers haven't followed. Print editions still account for about 85 percent of a typical newspaper's total revenue — advertisements, subscriptions, and newsstand sales — but that revenue has dropped dramatically over the last two-and-a half years. The multiple full-page ads that were routinely purchased by auto dealerships and real estate firms, for example, are now a fraction of what they once were. Meanwhile, many businesses have begun using less-expensive means of advertising, such as social media and online coupon sites.

The McClatchy Company, the Observer's parent company, posted double-digit declines in advertising revenue in each quarter in 2008 and 2009, some quarters as high as a 28-percent drop. As the third-largest newspaper company in the U.S., McClatchy owns 30 daily newspapers, including the News & Observer in Raleigh and The State in Columbia, S.C., and 43 non-dailies.

In 2008 and 2009, the Observer was akin to the Titanic. But rather than see the sinking play out during a three-hour movie, we watched it happen over two years. When management announced in May 2008 that it would begin offering voluntary buyouts to employees to reduce its nearly 1,200-person workforce by less than 5 percent, that was just the tip of the iceberg. The most recent layoffs took place in January 2010; the Observer's current staff size is estimated to be at around 700 people, the result of six rounds of staff cuts.

"We suffered most in the last two years not because of the transition to online, but because of the economic crisis that's going on in the United States," said Ann Caulkins, publisher of the Observer since 2006, arriving here after holding the same post at The State. "We in the print business, in the newspaper business, had been looking at a very long-term transition of our cost structure to move to online and that transition could've been more gradual over many, many years. Because of the economic reality, that transition of our cost structure had to happen over about a two-and-a-half-year period."

Now, with a much smaller staff than it had two years ago, the Observer is still cranking out news stories. Meanwhile, predictions abound about where the newspaper industry as a whole is headed — some see daylight, others see darkness — and there are even more assertions as to what needs to be done to save it. If it can be saved.

Down a rocky road

"It's often been said that ... newspapers almost always feel a downturn before the rest of the economy feels it," said Rick Thames, the Observer's editor for the last six years. "And it was in December 2007 when they marked the beginning of the recession, as I recall, but they marked this after the fact. At the time, no one knew the recession was beginning. And we saw our business just — it was like the air just went out of the room — and nobody could quite understand it. It was like, 'What happened here?' Suddenly advertisers were skittish and worried, so we sensed it. But we didn't know that what we were seeing was the start of this Great Recession."

In 2008, layoffs and buyout offers came in May, June and September, creating a very uncertain environment for the Observer staff. The company had hoped to stave off reducing the workforce in the newsroom, fearing that it would hurt their core product, but no department was spared. Staff reductions came in news, operations, advertising, finance, circulation, information technology, administration, human resources and marketing. The company even made a slight decrease in the width of the newspaper to save on printing costs.

Despite the company's cost-saving measures, layoffs and buyout offers continued in 2009, occurring in March and October of that year and then again in January of this year.

Understandably, it was the layoffs in the newsroom that had the most significant impact, devastating a tight-knit group of colleagues, many of whom had worked together for several years.

"You can imagine, it's never fun during a time like that," said Glenn Burkins, the Observer's former deputy managing editor, who accepted a buyout in November 2008. "You have people who are concerned about their jobs, older people who've been around for a while who start to wonder if they will be able to retire at the company they love. You have younger people who worry that maybe they've chosen the wrong career. It's not fun. It's like layoffs anywhere. It was a time of tremendous stress and uncertainty."

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