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What's next for the Big "O"? 

Stifled Charlotte Observer staffers hope McClatchy brings back commitment to journalism

Word of a newspaper's sale often elicits strong reactions from the people who produce and read it. When an out-of-town company known for cutting costs, for example, purchased the family-owned Herald-Sun in Durham, some staffers lucky enough to dodge layoffs quit anyway, and readers expressed dismay at what had happened to their hometown paper. Don't expect similar fallout from the recent announcement that the McClatchy Company is buying the Charlotte Observer.

Many staffers are relieved to be rid of Knight Ridder in favor of McClatchy, a company known for combining journalistic success with financial acumen. One Observer reporter said he hadn't seen as much optimism in the newsroom since he arrived at the paper more than a half-dozen years ago. Other staffers were similarly thrilled.

"This was by light years the best thing that could happen," said Mark Johnson, who covers state politics from the Observer's Raleigh bureau.

"It's a great relief," editorial page editor Ed Williams said.

"It's been kind of like playing Russian roulette with five bullets in the chamber," said Ann Doss Helms, who covers area schools. "We didn't hope for a lot. We got the one good outcome."

It's a strange end (the sale isn't expected to be final until summer) to Knight Ridder's ownership of the Observer and 31 other dailies. The San Jose, California-based KR indicated in November it hoped to sell the company at the behest of investors dissatisfied with the chain's performance on Wall Street. Gannett, the only larger US newspaper chain and a company known for pursuing high profits at all costs, had emerged as a likely bidder. But the worst possibility, staffers said, was that a cadre of investors with no interest in journalism would buy KR, rack up a bunch of debt in the purchase and pay it off by further stripping resources from newsrooms that already had been cut to the core.

No one really feared that even the worst buyer would close the newspaper, Helms said, and most staffers thought chances were pretty good that they'd keep their jobs. "But there was just this sense that they weren't going to be jobs that you would want, or that the paper wouldn't survive in the form we'd be proud of," she said. "I think with McClatchy, there's a really good hope that it will at least survive and maybe get better -- get more staff and get more news hole (the space in the paper devoted to news) back and get more focus on journalism."

If Wall Street was dissatisfied with the company, it wasn't because Knight Ridder hadn't tried to meet profit demands. Recent years' budget cuts had reduced some KR properties from respected, Pulitzer Prize-winning community voices to mere shadows of their former selves. Locally, longtime Observer readers may have justly decried cuts in staffing and news hole, and writers at Creative Loafing have duly noted how the daily seemed at times to condescend to its readership. But the daily paper escaped some of the severe cuts that hampered other KR newspapers. In 2001, San Jose Mercury News publisher Jay Harris quit rather than institute the cuts KR demanded. Last September, the Philadelphia Inquirer and Philadelphia Daily News cut their news staffs by 15 percent and 19 percent, respectively. Knight Ridder CEO Tony Ridder was so reviled for his cost-cutting he earned the moniker "Darth Ridder," and was lampooned in a Carl Hiaasen book as "Race Maggad," a caricature of a profit-hungry executive with no taste for quality newspapers.

The Observer, unlike less-fortunate Knight Ridder properties, did not have layoffs, but budget strains left editors unable to fill needed jobs, the news hole shrank and morale suffered. (In the interest of full disclosure, Creative Loafing editor Mark Kemp jumped the KR ship last year after serving three years as the Observer's entertainment editor.) Staffers believe KR's focus on the bottom line kept them from trying new things or venturing into new areas. Said Williams: "We stopped cutting fat some time ago, and we were beginning to cut into our ability to do the job well."

Meanwhile, employees were asked to buy into silly corporate mandates with names like "Reach UP" and "The Seven Tenets," which simply codified reasonable journalistic expectations into a list: "Storytelling," "Trust," "Watchdog," "First & Only," "People Like Me," "Utility" and "Ease of Use." The tenets, Williams said, "sounded like something a Masonic lodge would have."

The symbolic low point for some staffers came in December, when in the midst of cutbacks, Knight Ridder's board of directors approved larger bonuses for top executives. "I think this was the point at which everybody felt really alienated," Helms said. "We were paying, the readers were paying and the executives were paying themselves."

It wasn't that Knight Ridder, or the Observer, didn't make money. Publisher Peter Ridder declined to specify what the paper's most recent profit margin was, but he said it was "in the 20s." A Morgan Stanley report in November put the margin at about 20.5 percent before corporate expenses. For most industries, that would be a windfall. But investors always wanted more -- even as the industry overall was suffering setbacks.

"There's always some tension between the profit motives that drive the business end and the journalistic goals that got most of us in the newsroom," Helms said. "That gap between the profit motivation and the journalism, I think, was getting wider."

McClatchy, whose newspapers include the News & Observer in Raleigh and the Rock Hill Herald, Beaufort Gazette and Island Packet in South Carolina, has been more successful at maintaining or growing circulation. It's also become known for investing in the editorial side and focusing on growing markets. (Executives cited that focus as the reason why McClatchy will sell 12 Knight Ridder newspapers; the State in Columbia and the Observer are among those that will remain.) With a two-tiered stock system that gives McClatchy family members the bulk of voting power, the company is also insulated somewhat from investor pressure.

"My sense is that they treat people very, very well, and I think that will continue," said Observer publisher Peter Ridder, who last year delayed his retirement when Knight Ridder was put on the market. Both Ridder and executive editor Rick Thames said they believe McClatchy shares values and goals similar to Knight Ridder.

Of course, values and goals don't always translate into deeds. Tony Ridder, Peter Ridder's brother, spoke of a "precious legacy" in a letter to Knight Ridder employees. "We have believed in strong journalism and also in fairness and opportunity for all our employees, in service to our communities, readers and advertisers."

But to some newsroom employees, the rhetoric fell short of reality. "Tony Ridder talked a big game about giving a damn about journalism, but nobody ever believed him, at least not in the newsroom," said one reporter, speaking on the condition of anonymity. "And they're all kind of chuckling at the legacy he's going to leave."

How does all this affect the average reader? For one thing, better staffing means more aspects of the Charlotte area get covered. That means more public scrutiny of public officials and public money. McClatchy and Knight Ridder now have areas of overlapping coverage -- state government, sports and, in Rock Hill, the Rock Herald competes with the Observer's York County bureau. Raleigh News & Observer executive editor Melanie Sill said she doesn't know how coverage of overlapping areas may be handled. "Everything's basically just speculation right now," she said. But state government reporter Mark Johnson said he was reassured that the paper will still have a need to cover the state capital from a Charlotte perspective, which Thames seconded.

After McClatchy bought the News & Observer 11 years ago, ending more than a century of family ownership, some Raleigh-area readers worried about changes the company would bring, said Sill. "I think it didn't take long for people to see that the paper would continue to be run locally," she said. "Part of McClatchy is they believe in local publishers and editors making decisions about how the paper operates."

The N&O has grappled with industry downturns, as well, Sill said: staffing and news hole has ebbed somewhat but remained fairly stable. Ryan Teague Beckwith, an N&O reporter, said he's never felt hindered by concerns about the bottom line. "I've never had the feeling, 'Oh, Sacramento wouldn't like that,'" he said, referring to the McClatchy headquarters in California.

McClatchy CEO Gary Pruitt, a former First Amendment attorney, told investors in a conference call March 13 the company plans no "across-the-board layoffs or Draconian cuts." Knight Ridder corporate jobs could be cut, however. One Observer reporter wasn't too heartbroken about that. "Nobody's really shedding a tear about those people getting fired either, considering they were the ones that came up with those asinine Seven Tenets," the reporter said.

Thames said it's too early to tell what changes are ahead for the Charlotte Observer's news pages. "I can't point to any one thing that we don't have now that I hope we have then," he said, citing as good work recent stories indicating some public defenders may be overbilling taxpayers. Helms, who credits the newspaper with continuing to keep two reporters on the education beat, said she's realistic. "They're not going to come in like Santa Claus tomorrow and drop staff and money on us," she said. "But there's at least hope."

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