The nation's economic slowdown has highlighted many papers' growing reliance on classified advertising revenue, which according to the Editor & Publisher increased from 28.5 percent to 40 percent of overall advertising income during the 20-year period after 1980. Recent spending contractions and growing competition from online sources have crushed the classified business at many newspapers (despite a potential increase in job-seeking readers resulting from recent layoffs). The New York Times noted the disturbing trend that many papers, to pump up classified ad revenue, run paid obituaries alongside news-driven stories without any format distinction.
How does this affect The Daily Tar Heel? Many readers might not be aware that the paper is a self-sustaining financial enterprise largely dependent on ad sales. The DTH receives "absolutely no funding from the University," says Janet Gallagher-Cassel, director and general manager of the DTH. The paper broke away about 10 years ago, Gallagher-Cassel recalls, after a dispute with Student Congress, which allocates funds for campus groups.
Thus, Gallagher-Cassel must make sure a several hundred thousand dollar printing contract is paid, payroll is met (the paper employs a professional staff of six), sports desk travel costs are covered and other expense items are handled. The DTH does not pay rent for its Student Union space, Gallagher-Cassel admits, but has been threatened in the past by Student Congress in the wake of editorial disagreements.
Incorporated as a nonprofit entity, DTH Publishing Corp. reinvests any earnings, so it is spared the pressure put on publicly owned papers of producing ever-increasing returns for shareholders and Wall Street analysts. Gallagher-Cassel and the company's board of directors oversee the budgeting process. The paper was prudently managed during more profitable years, she explains, so the board expects to ride out these tougher times. Still, the cold reality remains: "Advertising dictates how much space they get," Gallagher-Cassel says with regard to the paper's writers. From a revenue standpoint, "things were chugging along until Sept. 11," she recalls. With the ad market now plummeting, "'I'm praying the van and the copier hold up. The day before Thanksgiving, we did our first six-page paper since the early 1990s."
With national advertising revenue at the DTH expected to be down about one-third from budget for this academic year and local ad revenue off 15 percent, many challenges remain. In line with its mission to educate and train student journalists, the DTH seeks to devote 55 percent of its copy to news, with 45 percent reserved for ads (in contrast with the standard industry split of 35 percent news and 65 percent ads). As in the for-profit publishing world, many items that cannot make the printed version are placed on the paper's Web site.
Everyone from students to campus cleanup crews to a graduate school official has complained about the periodic advertising inserts, but they are unlikely to be abandoned in this economy. What about resorting to booze, beer and cigarette ads to support expanded coverage? Gallagher-Cassel and her staff have actively pursued those companies but cannot entice them to advertise in the DTH. "As long as it's legal, we'll take it," she says. (NBC's decision to begin broadcasting alcohol advertisements on television has caught Congress' eye and will likely be one of this year's biggest media stories.) Economic issues are important to readers when they affect the quality and breadth of a paper's coverage. Cost and quality concerns also confront widget manufacturers, but few industries operate in such plain view as newspapers. And few are traditionally regarded as a public trust. Jay T. Harris, who resigned last year as publisher of the San Jose Mercury News rather than implement management-mandated budget cuts, told a University audience in October that the quest for higher profit margins by publicly owned newspaper companies was fatally compromising their ability to produce a quality product.
The DTH's editors and staff constantly struggle with how to use shrinking space and resources. Front-page photos and graphics may end up in black and white because the day's entire color capacity has been sold to advertisers. This occurred on Jan.16, forcing the lead photo of Provost Robert Shelton at a tuition task force meeting to run in black and white. The full page of photos titled "Meet the Candidates" showing the students running for prominent campus posts was included on Jan. 23 but only after extended discussion about the cost ramifications. A page from last Thursday's Diversions section was dropped to cover that evening's Duke game because the day's ad sales could not support both items. The impact of Wall Street-driven cost controls on newspaper quality will likely be one of this year's biggest industry headlines.
Despite operating in a much different context, the DTH is not immune from the effects of this ongoing story.
