8A, Approve Contract with Eureka Recycling

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To understand the financial crises plaguing the industry, one need look no further than the Tucson Citizen's parent company, Gannett, which reduced its work force by 10 percent only to see advertising and profits continue to plummet. Things are no better at competitor McClatchy Co. The company eliminated 1,600 jobs companywide last week. McClatchy stock is trading for less than $1 a share compared with $70 a share five years ago. The industry's advertising revenue in 2008 was $38 billion, a staggering 23 percent drop from $49.5 billion the year before. Print media companies are failing to achieve market expectations each quarter, scaring away investors, venture capitalists and potential buyers in droves. Still, a few deals have been struck. This week, a private equity firm in California purchased the San Diego Union-Tribune -- where advertising revenue has fallen 40 percent since 2006 -- for an undisclosed price. "We think that the revenues from newspaper companies have been insufficient to cover their cost," explained Mike Simonton, an analyst at Fitch Ratings, who issued a negative outlook on the industry. "At that point they will need to tap into external financing to continue operations, and we believe external financing will be prohibitively expensive or not even available at all." Job cuts are keeping many newspapers on life support. Paul Gillin, a social media consultant, said such losses are to be expected for an industry that has failed to adapt to the influx of online publishing tools and social networking sites. "Information has become democratized today," said Gillin, who has predicted print newspapers will disappear by 2015. "You get a lot of advice from your friends, blogs and multiple media sources. Who reads just one newspaper?" Some of the biggest threats to newspaper profits have come from Web sites like Craigslist and Monster.com, online advertising venues that are chipping away at newspapers' classified ad sections. Newspaper classified ad expenditures tumbled nearly 17 percent in 2007, according to the Newspaper Association of America. The recession is affecting auto dealerships, real estate companies and other local businesses, accelerating the advertising downturn. Many newspaper experts expect national publications such as the Wall Street Journal, USA Today, The Washington Post and The New York Times to survive. They say the largest papers could even benefit from industry woes and grab market share because of their wide penetration. In the meantime, these papers are facing a harsh economy. At The Washington Post, owned by Washington Post Co., earnings plunged 77 percent in the fourth quarter of 2008. The newspaper was saved by the parent company's Kaplan educational division, which raked in more than half the company's revenue that year. The future offers the industry little comfort, with studies showing newspapers have lost a generation of young readers. A Pew Research Center report this month found only one-third of Americans polled say they would "miss" the newspaper a lot if it were no longer around.