The Biscayne Times

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Dec 14th
Farewell, My Lovely Miami Herald PDF Print E-mail
Written by Erik Bojnansky -- BT Senior Writer   
April 2013

Our once-great daily newspaper is abandoning its namesake city and heading for an uncertain future

GCoverStory_1oing to the Miami Herald’s alumni gathering on March 20 was a heartwarming experience for former El Nuevo Herald executive editor Barbara Gutierrez.

“It was very much like a high school reunion,” says Gutierrez, who worked on and off at the Miami Herald and the Spanish-language El Nuevo Herald between 1980 and 2001. Pictures of Herald employees hung on the walls of the front lobby at 1 Herald Plaza, “many of them, like myself, who weren’t there anymore,” she says. But most of all, there were lots of enthusiastic embraces from old friends and colleagues who hadn’t seen each other for years.

“To us it was our home for many, many years,” says Gutierrez, now a media relations officer for the University of Miami. “It wasn’t that it was a beautiful building…. To me it had memories…. In every corner of that building there is a memory.”

When the event was proposed a few months ago on the Herald’s Alumni Facebook page, some former employees predicted that three people would attend. The reunion was scheduled for the middle of a weekday. Yet close to 1000 Heraldites showed up, many of whom flew in from other parts of the country, including former executive editors Tom Fiedler and Doug Clifton.

Tim Chapman worked at the Miami Herald as a reporter and photographer for 40 years, until he retired this past December. But he wasn’t willing to make the commute for the reunion from his new home in the Keys. To him, 1 Herald Plaza represents what the Herald once was: a competitive, award-winning newspaper that served as a watchdog for the public interest.

Now, Chapman says, the paper is a shadow of its former self and he has vowed never to set foot near the building again, except to see it razed. “I hope they have fun,” Chapman says of his fellow alumni just prior to the reunion. “The only fun I’ll have is when they bulldoze the son of a bitch.”

CoverStory_2_KnightBros.The Miami Herald has called 1 Herald Plaza home since 1963. It’s where the paper won 19 of its 20 Pulitzer Prizes. It’s where activists, developers, and politicians journeyed to sway public opinion. It’s where policy was influenced, scandals were unearthed, memorable features crafted, and history made.

That ends in May. The Genting Group bought 1 Herald Plaza, the nearby Boulevard Shops, and 14 acres of land from the McClatchy Company, the Herald’s latest owner, for $236 million in 2011, and the developer’s plans for the bayfront don’t include retaining the building.

As Herald business writer Elaine Walker reported March 14: “By the end of this year, the bayfront site where The Miami Herald now stands will be reduced to vacant land ready for redevelopment. The demolition of the Herald headquarters is the first step in the Genting Group’s plans to turn the site into a luxury hotel with up to 500 rooms and several hundred luxury condos edged by a pedestrian bay walk.”

If the Malaysian-based company has its way, the project will also include a casino, just like the five other resort projects the conglomerate has built around the world. Ironically, the Herald’s editorials once railed against casino gambling. Now it’s the state’s legislative leaders who seem reluctant to expand gambling in Florida, and Genting’s gaming hopes remain in limbo.

CoverStory_3_tim_chapmanThe Miami Herald, El Nuevo Herald, as well as a studio for radio station WLRN will take up residence in Doral, in a 158,000-square-foot building formerly occupied by the U.S. Army’s Southern Command, 2 miles west of 1 Herald Plaza.

Once the move is completed, probably in late May, the Herald will be located outside Miami’s city limits for the first time in its 110-year history. It will also trade its view of Biscayne Bay, the Miami skyline, and close proximity to restaurants and stores, the Adrienne Arsht Center, the American Airlines Arena, and Museum Park for neighbors that include a branch of the Federal Reserve Bank, the U.S. Southern Command (which moved to a nearby site), Luminaire corporate offices, warehouses, and a cow pasture.

The new building reportedly features state-of-the-art technology, backup generators, bullet-proof glass, and a gym. But when Tim Chapman heard there won’t be a dedicated police desk with a scanner, he decided the time had come to retire. He even canceled his subscription. “The Herald used to cover the news,” Chapman says. “Now they just pretend to do it.”

CoverStory_4_DorschnerJohn Dorschner, another longtime writer at the Herald, disagrees with Chapman’s views on the newspaper’s decline. For decades Dorschner was the star feature writer at Tropic magazine. When Tropic folded in 1998, he moved to the business section. His last beat was covering the Jackson Health System.

“The people who are here are still doing very good journalism,” Dorschner says. “There are fewer of them and it’s a challenge. But I think, especially when compared to other papers, they’re still doing some serious journalism.”

Dorschner also decided not to head to the Doral office. His last day was February 27. “I’m 68 and I worked here 42 years,” he tells the BT during a brief interview, “so I figured it’s my time to go.” A Miami Shores resident, Dorschner admits that the commute to Doral was “kind of a part of my decision to retire.”

Several other editorial staffers have either left or declared their intention to leave within the past year. They include investigative reporter Scott Hiaasen, who is reportedly seeking a career in law; roving correspondent Frances Robles, who left in November to join the New York Times; school board specialist Laura Isensee, now working for Houston public radio; features and obituary writer Elinor Brecher (who will retire in the fall); Broward courts reporter Diana Moskowitz, who left to become a freelance writer in Los Angeles; and investigative editor and Pulitzer Prize-winner Michael Sallah, now with the Washington Post.

CoverStory_5_RoblesBut this latest exodus is nothing compared to the number of layoffs and buyouts that occurred at the paper between 2008 and 2011, when nearly 600 jobs were eliminated, about 100 of them in the newsroom.

Few full-time journalists have been hired since, according to a Herald reporter. Instead, reporting duties are increasingly handled by part-time journalists and interns. Remaining Herald employees are also required to take an unpaid furlough week every six months.

“All of this comes from corporate,” says the same reporter, who has asked that he not be identified. “If I wanted to do a story on the Herald, it would be how corporate in Sacramento has set up what I call the death spiral. It’s inexorably leading to the Herald’s demise.”

By Sacramento, the reporter means Sacramento, California, which is the corporate base of the McClatchy Company, a newspaper group founded in 1857. In June 2006, the McClatchy chain, which owned 12 daily papers at the time, bought Knight Ridder, a chain with 32 newspapers across the country, including the Herald, for $4.5 billion and the assumption of $2 billion of Knight Ridder’s debt. “McClatchy is a dolphin swallowing a small whale,” a media financial analyst commented to the New York Times at the time.

By March 2008, McClatchy was hemorrhaging. It was $2.4 billion in debt, and its stock, once as high as $70 a share, was trading below $1. In December 2008, the New York Times reported that McClatchy was interested in selling not just the Herald’s land and building, but the newspaper operation itself.

“They overpaid for Knight Ridder, and now [McClatchy] is too far in debt,” says Jim DeFede, a reporter for CBS4 and a former Miami Herald columnist. “The Herald is a profitable newspaper in and of itself. The problem is that it’s not profitable enough to meet the company’s needs.”

CoverStory_6_SallahThe sale of the 1 Herald Plaza property did help McClatchy’s bottom line. Of the $236 million McClatchy received from Genting, $165 million went to fund the company’s pension liabilities, while $65 million was used to pay off bond holders, according to Herald reports. The rest, $6 million, will be used to fund the move to Doral.

The Miami Herald Media Company (MHMC) is investing another $12 million toward the newspaper’s new home at 3511 NW 91st Ave. The new offices will be leased by MHMC for the next 15 years from GPA-I, a Memphis-based company. MHMC also bought six acres of adjacent land from GPA-I for $3 million for its printing presses, which, according to workers on site, performed a successful test run on March 19. Phased moves from 1 Herald Plaza to Doral reportedly could begin April 26.

Last year MHMC president and Herald publisher David Landsberg told readers that McClatchy’s investment in the Doral location was a positive sign. “McClatchy fully believes in us, and they obviously understand the opportunity that exists in this marketplace,” he said in a January 2012 Herald column. “Let’s thank McClatchy for the investment and faith they have shown in us.”

McClatchy’s financial situation appears to have improved. Its bonded debt is down slightly to $1.7 billion, while its stock price hovers around $3 a share. Last month McClatchy acquired Tru Measure, a Colorado-based company that tracks the effectiveness of Internet ad campaigns, including that of McClatchy’s online marketing tool impressLocal.

McClatchy also launched a pay wall called Subscriber Plus last year. Subscribers pay $69.95 a year in exchange for unlimited access to the Miami Herald’s website. During a conference call with investors on February 7, Pat Talamantes, McClatchy’s CEO, predicted that Subscriber Plus will earn $20 million a year for the company.

CoverStory_7_DeFedeHowever, overall revenue for the fourth quarter of 2012 was down five percent compared to 2011’s fourth quarter. In an effort to become more profitable and pay down the debt, Talamantes said the company will become more cost-efficient and alluded to such ideas as “regional centralization” and exploring “additional outsourcing opportunities.”

Biscayne Times recently contacted McClatchy for more details on those ideas and the company’s plans for its Miami holdings, but Peter Tira, McClatchy’s communications director, referred media inquiries back to the Herald. “We’re a decentralized company and we’ve been that way for 150 years,” he said. “All those kinds of questions are best answered by the Miami Herald.”

However, the Miami Herald declined numerous requests for comment. “We are really not doing any media until we get closer to our move,” explained publisher Landsberg in an e-mail to the BT. “We would be happy to reach out to you then.”

In spite of the cuts, the Herald remains the primary source of news for Miami-Dade County, notes University of Miami journalism professor Joseph Treaster, who was a Herald reporter briefly in the early 1960s before embarking on a 30-year career with the New York Times. “It’s still a terrific newspaper,” he says. “There’s no news organization that comes close to it in Miami.”

The  Herald has fans among the pillars of the community too. “They’re an important institution and they are the major newspaper of the community,” says Norman Braman, CEO of Braman Enterprises. “They wield a lot of influence in the community and they have the ability of causing a lot of things to happen.” For example, Braman credits the Herald’s reporting for preventing the re-election of then-Congressman David Rivera, who is now under federal criminal investigation.

Braman also praises the Herald for its scrutiny of former Hialeah Mayor Julio Robaina’s financial ties to convicted Ponzi schemer Luis Felipe Perez.

 

CoverStory_9_Landsberg CoverStory_11_Treaster

 

CoverStory_8_DoralThe Herald certainly enjoys a solid reputation for its reporting from the Caribbean and Latin America. “You can’t get the coverage about Cuba that the Herald does [anywhere else],” Treaster says. “Jim Wyss is sending in great stuff from Latin America, and [the Herald] has very, very good coverage from Haiti.” He also cites El Nuevo Herald’s Juan Tamayo, who reports from Cuba and elsewhere and worked at the Herald for years; and Carol Rosenberg, who has been covering the Guantanamo Bay terrorist detention camp since the first prisoner arrived in 2002.

Martin Merzer, a Miami Herald reporter from 1979 to 2008, maintains that the paper still puts out good stories and has a staff of fine writers, photographers, and editorial cartoonists. Running down a list of a dozen names in an e-mail sent from his home in Tallahassee, he says, “Any newspaper in this nation would be delighted to have those people and others like them who still work in the Herald newsroom.”

Unfortunately, the newsroom can’t do nearly as much as it once did, Merzer writes. “What’s left of the staff seems heavily weighted toward interns, and much of the daily report seems thinly reported and/or misplayed. Also, the Herald has been getting badly beaten on some sports scandals and other stories lately.”

CoverStory_10_Talamantes

Merzer notes that as the paper’s editing ranks thinned, “the paper’s technical quality has diminished, with frequent typos, grammatical and punctuation errors, erroneous geographical references.”

Arnold Markowitz, a Herald reporter from 1967 until 2001, notes that the paper no longer has enough staff “to cover Miami effectively from any place, unless you define Miami as only inside the city limits. Last I heard the city desk was down to ten reporters. There may be fewer now. When management isn’t allowed to replace people who leave, and those remaining have to take two-week unpaid furloughs, what can you expect?”

The Herald’s online stories attract decent readership; according to the industry sources, 6.8 million unique browsers visited the website in 2012, while El Nuevo Herald received 1.3 million unique visitors. But despite this, there is ample evidence that the Herald for many years has been steadily losing readers of the print edition.

In July 1989, the authoritative Audit Bureau of Circulations (now the nonprofit Alliance for Audited Media) measured the Herald’s weekday paid circulation at 424,563. By late September 1998, that figured had slipped 20 percent to 331,199.

By 2008 the weekday paid circulation was down to 240,223. As of September 30, 2012, it had dropped to 135,532.

That’s a circulation plunge of 290,000 over 23 years, a period during which the population of Miami-Dade County increased by some 660,000 people. One humiliating result was that the paper had to remove a boastful slogan that ran across its masthead each day: “The Foremost Daily Newspaper of Florida.” (The St. Petersburg Times topped the Herald’s circulation and market penetration in the late 1990s.)

David Lawrence, the Herald’s publisher from 1989 to 1999, stresses that the paper’s management has done a remarkable job under difficult circumstances. “I’m particularly impressed with David Landsberg, [Herald executive editor] Mindy Marques, and [editorial board editor] Myriam Marquez,” he says. “They’ve learned to do the best they can with diminished resources.”

Lawrence admits that the thought of 1 Herald Plaza being demolished is “bothersome to me,” but he’s confident that the Herald can put out as good a paper in Doral as it did in Miami. “I’m optimistic about all of this,” he says. “The Herald is still making money. It’s not as though it’s losing money…. The Herald will still employ 700 people or so, and put out a paper seven days a week.” (Still, back in 1998, the Herald employed 2000 people.)


TCoverStory_14_Markowitzhe Miami Herald definitely has seen better days, but at least it has a pulse. The same can’t be said for the 12 daily newspapers that have been shuttered since March 2007, according to NewspaperDeathwatch.com, a website run by Paul Gillin, a senior fellow of the California-based Society for New Communications Research. The fallen include the 126-year-old Cincinnati Post, the 138-year-old Tucson Citizen, and the 150-year-old Rocky Mountain News.

Nearly 20 more have either gone completely online or no longer publish daily, according to the website. The Christian Science Monitor became a print weekly in March 2009 and is transitioning toward an online-only platform. The Detroit News and Detroit Free Press home-deliver print editions, but not daily, and are transitioning into daily online news sites. The New Orleans Times-Picayune publishes print editions just three times a week. The Seattle Post-Intelligencer is now published online only.

According to the website Paper Cuts (newspaperlayoffs.com) run by former St. Louis Post-Dispatch reporter Erica Smith, approximately 200 newspapers (including dailies and weeklies) across the country have either ceased operations or no longer produce print editions since 2007. Local publications on the list include the Boca Raton News, the Coral Gables Gazette, and the South Florida Blade.

 

CoverStory_13_Merzer CoverStory_15_Lawrence

 

Among other dire news for the newspaper industry, “between 2008 and early 2010, eight major newspaper chains declared bankruptcy,” according to a report by the Congressional Research Service. Among them was the Tribune Company, owner of Chicago Tribune, the Sun-Sentinel in Broward, the Los Angeles Times, 12 other newspapers, and ten television and radio stations. Investor Sam Zell ran up $13 billion in debt a year or so after he bought the Tribune Company in 2008. As part of its reorganization plan, the company plans to sell off its newspapers.

CoverStory_16_McGuireAlso within the past five years, the newspaper industry has shed thousands of jobs. Using data she collected, Smith told the St. Louis Journalism Review that at least 39,781 layoffs and buyouts occurred within the newspaper industry between January 1, 2008, and July 2012. The number may have been as many as 50,000, she added, since some print publications did not provide exact figures.

“Newspapers are still profitable and they still make money, but their revenue has been declining for about six years,” says Gillin of NewspaperDeathwatch.com. Not helping matters is the massive debt the big chains accumulated when they purchased dailies, weeklies, and other media companies during the 1980s and 1990s, he explains. The newspaper industry, along with the rest of the economy, contracted, and these papers suddenly found that they couldn’t pay off their debt.

The Internet poses another challenge to print publication. Between 80 percent and 90 percent of most newspaper advertising still comes from print ads, according to a February 2013 Editor & Publisher article. And a study released in late 2012 by the Pew Research Center concludes that newspaper readership is on the decline. When asked “Where did you get your news yesterday?” only six percent of 18- to 24-year-olds said they received news from print sources. Those ages 40 to 49 totaled just 16 percent, and for those between 50 and 64 years old, the total was still just 30 percent. Pew also found that 56 percent of Americans surveyed in 1991 got their news from newspapers. By 2012 that figure was down to just 29 percent.

CoverStory_17_TerilliDuring that February 7 conference call with investors, McClatchy CEO Pat Talamantes assured listeners that his company was making the transition from print to digital. Although total ad revenue was down 6 percent for McClatchy’s newspapers, digital advertising went up 4 percent, he said, and digital advertising made up 20 percent of total advertising revenues in the fourth quarter of 2012, compared to 19 percent for the same period in 2011.

But even shifting to the Internet may not be enough to help McClatchy and other newspaper companies. Trends indicate that the public is moving away from newspapers altogether, and from television news. Though digital news consumption is up, news consumption in general is dropping. The Pew study noted that “29 percent of those younger than 25 say they got no news yesterday, either from digital news platforms, including cell phones and social networks, or traditional news platforms.” People are apparently spending more time on social networking and game sites than on news-gathering sites.

CoverStory_18_Shutts&KnightMarketingcharts.com reported on January 30 that nearly one in three marketers participating in an American Marketing Association survey plans to reduce its ad focus from newspapers. Meanwhile 82 percent of respondents plan to turn more to mobile media, primarily cell phones.

“It’s all going to cell phones,” says Jay Fredrickson, a former Miami Herald advertising account executive who now works as an advertising sales manager for hibu.com. “That’s really ultimately the biggest nail in the coffin for newspapers. Smart phones are going to totally dominate the entire advertising market.”

Actually, the path of the advertising market is unclear, argues Tim McGuire, a journalism professor at Arizona State University and past editor of the Minneapolis Star Tribune, a former McClatchy paper. “The fact that gets overlooked is that advertisers are pretty friggin’ confused right now, too,” he says. “They used to understand exactly how to reach audiences. They might be confused about it now.”

Confusion in the ad market is more bad news for newspaper companies because advertising has been subsidizing newspapers for the last 100 years, McGuire notes.

That standard advertising model may not be as lucrative for online publications, according to the Pew Research Center’s data in September 2012. An online Atlantic article noted, “Since 2003, print ads have fallen from $45 billion to $19 billion. Online ads have only grown from $1.2 to $3.3 billion. Stop and think about that gap. The total ten-year increase in digital advertising isn’t even enough to overcome the average single-year decline in print ads since 2003. Ugh.”

 

CoverStory_19_Stoneman CoverStory_20_Hills

 

Ironically, the Herald’s executives had a glimpse of the future decades ago. The paper’s previous corporate owner, Knight Ridder, invested $50 million experimenting with electronic media in the late 1970s and early 1980s. Called Viewtron, the idea was to send Miami Herald and Associated Press stories to a subscriber’s computer through special terminals and software. The service was expensive, yet the number of subscribers increased from 3000 in 1983, when it was launched in South Florida, to 20,000 in 1986, according to a March 1986 InfoWorld article. Knight Ridder determined that it was impossible to make a profit, so the project was killed.

“It was ahead of its time, far ahead of its time,” says Sam Terilli, former special counsel for the Miami Herald who is now an associate professor for UM’s School of Communication. And Viewtron was far more primitive than the Internet. Today’s product-sellers don’t need traditional media -- newspapers, magazines, and broadcast television -- as much as they used to.

CoverStory_21_Chapman

“[Businesses] have their own web pages and other avenues of commerce,” Terilli says. “There are other ways to get to consumers, like social media, mobile. That affects where advertisers go.”

Finally, Miami-Dade County is a particularly tough news market, says Terilli. “It’s a very decentralized market. How much does someone living in West Kendall have in common with someone in North Miami Beach? This is a multiple geographic market in multiple communities, and it’s hard to be everyone’s local newspaper.”

There are also the language barriers, which is why the Herald introduced its Spanish-language newspaper, first as the supplement El Miami Herald in 1975, then as the expanded El Nuevo Herald in 1987, and finally as a stand-alone paper in 1998.

But going for cost-efficiencies and new platforms and multiple markets may not be enough to save the Miami Herald. A Pew Center Research Project for Excellence in Journalism report in January 2013 concluded that all their cost-saving measures aren’t helping the newspaper owners. Cuts in newsroom staff, and the resulting reduction of news coverage, do not go unnoticed, and consumers are speaking with their wallets. “Nearly one-third -- 31% -- of people say they have deserted a particular news outlet because it no longer provides the news and information they had grown accustomed to, according to the survey of more than 2000 U.S. adults in early 2013,” the report states. “And those most likely to have walked away are better educated, wealthier, and older than those who did not -- in other words, they are people who tend to be most prone to consume and pay for news.”

Former Herald reporter Martin Merzer maintains that the rise of the Internet and the recession hurt his paper, and that poor management decisions compounded the disaster. For example, access to ever-changing online news pages was free, while the Herald still charged for its print version, which had a slower, almost obsolete news cycle. That’s a mistake most other newspapers around the country made, he adds, although the Herald’s website did charge an archive fee to retrieve older stories.

Another mistake, according to Merzer, was the campaign to downsize the Herald’s newsroom through attrition during the 1990s, when the Internet was still in its infancy. Now, as the Herald prepares to charge for online content, he says, readers will be offered less original material to read.

“A large newsroom produces more stories and art than a smaller newsroom, making the newspaper more dynamic, more relevant, and more important to its readers,” Merzer says.


ICoverStory_23_Mortonn a way, the Herald owes its very existence to failure and miscalculation.

In 1901, Frank Stoneman, the father of author and environmentalist Marjory Stoneman Douglas, and A.L. LaSalle started the Orlando Daily Herald. Orlando’s economy was still wrecked by the Great Freeze of 1895, in which winter storms destroyed the citrus crops, so the two men moved south to Miami and founded the Miami Evening Record.

Business was so good that Stoneman and LaSalle bought a two-story building at S. Miami Avenue and Second Street to serve as the Evening Record’s offices. By 1907, they had bought the struggling Miami Morning News, and the Miami Morning-News Record was born, paid for, in part, by loans from railway baron and Miami pioneer Henry Flagler.

Then came financial troubles. “Unfortunately, LaSalle and Stoneman chose a recession year to plunge into debt,” wrote author Nixon Smiley in his 1974 book Knights of the Fourth Estate.

Frank Shutts, the founder of the Shutts & Bowen law firm and the court-appointed receiver of the Morning-News Record, convinced Flagler that he himself should take ownership of the paper to counter anti-Flagler stories that routinely appeared in another local paper, the Miami Metropolis. Flagler reluctantly agreed, but only if Shutts would sign on as publisher of his new venture. On December 1, 1910, Shutts renamed the paper the Miami Herald and hired Frank Stoneman as editor.

A couple of years later, when Flagler objected to Shutts using Herald funds to purchase a car and provide the salary of a chauffeur, Shutts responded by offering to buy the paper for $29,000. The deal closed in 1912, but Shutts was forced to borrow more money to replace printing equipment and expand cirulation, which he doubled from 2000 at the time of his purchase to 4000 in 1917. (The 1910 U.S. Census records that fewer than 5500 people were living in Miami, according to HistoryMiami.)

CoverStory_22_Lewis_NEEDS_CROPTwenty-seven years later, Shutts was trying, through a broker, to sell bonds to finance the Herald’s debt. The purchaser was to have been John Knight, who published Akron Beacon Journal and Massillon Independent in Ohio with his brother James. But instead of buying the bonds, John Knight journeyed to Miami with a counteroffer: He wanted to buy the Herald.

On October 15, 1937, John and James Knight bought the Herald from Shutts for $2.25 million. By that time, Miami had three daily papers: the Miami Herald, the Miami News, and the Miami Tribune. Within a couple of months, John Knight made Miami a two-newspaper town. He bought the Tribune and then closed it, sold off the paper’s printing press and building, hired half of its staff (three reporters, an editor, a photographer, and a circulation manager), and laid off the rest.

In 1942 the Herald hired Lee Hills, an editor who believed that a good newspaper should be the conscience of the community and “become involved in community affairs while reserving the right to criticize,” according to a December 2012 article in Preservation Today, the magazine of the Dade Heritage Trust.

Under Hill’s leadership and the Knight brothers’ encouragement, the Herald launched a series of exposés targeting Greater Miami’s illegal gambling parlors, corruption of local and state politicians, and the enrichment of organized crime syndicates traced back to Chicago. The reporting, which included extensive coverage of the U.S. Senate Crime Investigating Committee’s hearings on Miami’s gambling parlors, earned the Herald its first Pulitzer Prize, in 1951.

The Herald had a direct hand in the demolition of two gambling houses, the Frolics Club and the Little Palm Club. Their structures, as well as various other buildings along 631 feet of bayfront, were razed in the late 50s, after the Herald purchased the properties to construct a $30 million building for news operations.

“That building never should have been built on the bay,” acknowledges former Herald lawyer Terilli. Besides calling it an “aesthetic travesty” Terilli contends that 1 Herald Plaza “made no sense in terms of business -- having a printing plant and facility backed up against the bay on the eastern edge of Miami, as opposed to a strategic facility in the suburbs.”

CoverStory_24_MooreParks

James Knight, who oversaw the construction, built big because he wanted to be sure the new building would not only withstand hurricanes but also future growth, all the way up to 1980. For decades, the Herald had been growing rapidly. In 1937, when the Knights bought the paper, it had an average circulation of 55,000. Its workforce had grown from 383 to 1113 in August 1958, when Herald executives announced their intention to move from 200 S. Miami Ave.

The massive new building opened in 1963, and the paper kept growing, both in staff and in reputation. In 1974 Time magazine included the Miami Herald in its list of top ten U.S. dailies. That same year, 1 Herald Plaza became the headquarters of Knight Ridder, the public company formed after the merger, also in 1976, of the Knight and Ridder newspaper chains. Assisting in the business marriage was Alvah Chapman, who had been the Herald’s president and publisher since 1969 (and no relation to photographer Tim Chapman). Chapman would go on to become CEO of Knight Ridder from 1976 to 1989 (he died in 2008).

Working in the newsroom between 1957 and 2001, Miller brought the Herald its second and third Pulitzers, in 1967 and 1976. As editor, he recruited recent graduates from colleges around the country. “They had some of the best and brightest at the Herald,” says UM professor Treaster.While publisher Chapman enhanced the business reputation of the Herald and Knight Ridder (as well as the Herald’s power base in the community through the Greater Miami Chamber of Commerce and the mysterious Non-Group of local powerbrokers in the 1980s), reporter Gene Miller helped build the paper’s journalistic reputation.

Former reporter Merzer recalls those glory days as well: “We had a large, energetic and ambitious Broward bureau. We had numerous state bureaus, stretching along both coasts from Key West to Tallahassee. We had resident correspondents in many parts of Latin America and in the Middle East and in China.”

Jay Fredrickson, who worked at the paper between 1981 and 1991, remembers the bravado that reached even into the sales offices. “We used to have a slogan at the Miami Herald,” he remembers. “It was ‘I am from the Miami Herald and I can ruin your day if I wanted to.’ That’s how powerful that newspaper was. If somebody did something bad, it was front page on the local section. You might as well head out of town.”


MCoverStory_25_Ridderichael Lewis, veteran editor and publisher of the business weekly Miami Today, believes that the Herald’s golden age ended when the Miami News shut down on December 31, 1988. It was the very existence of the Miami Newshe maintains, that made the Herald as good a news organization as it was.

With a circulation no higher than 90,000, the News, where Lewis worked as assistant managing editor, was by far the smaller of the two daily papers. “We were extremely competitive,” Lewis says. “I personally felt that the Miami News was a better newspaper. We were undermanned, had a much smaller staff, but we had the same high-quality stories.”

Making the two newsrooms all the more competitive was the fact that the Miami Herald and the Miami News were housed in the same building. In 1966 the News, owned by Cox Newspapers, which also published the Palm Beach Post, was losing money. But instead of seeking to eliminate the competition, Herald owner John Knight sought to sustain it. Knight “felt strongly that cities needed two newspapers that offered alternative voices,” wrote Howard Kleinberg, the last editor of the Miami News, in Preservation Today. Knight worked out a deal with Cox Newspapers in which the Herald handled distribution and ad sales for the News, but the newsrooms remained separate, an arrangement that allowed the paper to stay alive another 22 years.

For John Morton, a Maryland-based newspaper industry consultant, the downturn for the Herald and the rest of the Knight Ridder chain began when Alvah Chapman’s successor, Jim Batten, died suddenly of a brain tumor in 1995. Under Batten’s leadership, Knight Ridder was “very journalistically oriented,” Morton says. “He cared more about the quality of its journalism than the quality of its net earnings.”

Arva Moore Parks, a local historian and author affiliated with the Dade Heritage Trust, describes Batten as a “newspaper man’s newspaper man.” “He had great respect from everyone in town, including me” she recalls. “If he hadn’t died, the Herald wouldn’t be in the pickle it’s in now.”

With Batten’s passing, P. Anthony “Tony” Ridder became CEO. The former publisher of the San Jose Mercury News had risen within the Knight Ridder company and was appointed president of Knight Ridder’s newspaper division in 1986, earning the nickname “Darth Ridder” among reporters for his insistence on cost-efficiency and higher profit margins.

CoverStory_12_Braman“At the time [1986], Chapman was worried that Knight Ridder…might be a target for one of the corporate raiders then roaming the landscape,” Devin Leonard wrote in a December 2001 Fortune profile of Ridder. “He knew he had to rein in costs -- even then analysts carped about the company’s fat payrolls -- but Chapman and his lieutenants were too much the products of the old Knight culture to take on the company’s strong-willed editors. Ridder was different. He considered it a personal challenge to impose financial discipline on the free-spirited, profligate papers.”

Within this new budget-driven environment, reporters and editors began to leave the Herald in droves, and when they left, their positions went unfilled or were eliminated, wrote Jim DeFede, then a staffer at Miami New Times, in 1995.

“When I look back on that story, I thought that was going to be the low point of the Herald,” DeFede says today. “Now it looks like the good-time salad days for the Herald.”

Indeed, Tony Ridder may have been pushing for profit margins as high as 25 percent at the Herald, and employees from circulation and production were getting pink slips. But so far the journalists weren’t being laid off. Ridder told Fortune that he wanted the newspapers within the chain to live within their means, instead of being subsidized by the money-making papers. Still, like the Knight executives of old, he tended to be reluctant to lay off reporters.

“The truth is that he’s pleasing no one,” declared Leonard in the 2001 Fortune article, “not his journalists, and not Wall Street either, which looks at Knight Ridder’s estimated 2001 profit margin of 18.4% and wonders why it can’t get its margins up to 25%.”

Complaining loudest for those higher profits was Bruce Sherman, founder of Naples-based Private Capital Management and leader of a frustrated group of shareholders. In March 2006, Sherman, whose firm was investing heavily in newspaper stocks, gave Ridder an ultimatum: Sell the company’s shares or face a hostile takeover.

CoverStory_26_PruittKnight Ridder lacked a dual-stock structure, like that of the New York Times Company and McClatchy, which protects the interests of a company’s founders. Ridder put the company up for sale and began telling potential buyers, according to an August 2006 New York Times story, that with a 5 percent cut of Knight Ridder’s 18,000-person workforce, $150 million could be saved, thereby boosting profits beyond the current 20 percent.

Besides owning 32 newspapers, Knight Ridder had partial ownership of such online classified sites as Cars.com, Apartments.com, and CareerBuilder.com back in 2006. (Seven year later, the online classified sites were among the few bright spots in a McClatchy investor report from February of last year.)

Knight Ridder had real estate as well, including 1 Herald Plaza and surrounding land, which, thanks to the Adrienne Arsht Center, had become attractive to developers. (The Herald had championed the development of a performing arts center and even donated land for it in 1992.)

So the Knight Ridder package included profitable businesses and other valuable assets. Still, the price was steep, and McClatchy was the only bidder for the company, paying $67.25 a share, a rate that was more than nine times Knight Ridder’s 2005 cash flow, reported media analyst Ken Doctor in 2009. Other companies entertained the idea of buying Knight Ridder but had backed away after seeing “cracks” in the company’s business model, Doctor wrote.

In spite of the misgivings by financial analysts, Gary Pruitt, McClatchy’s CEO at the time, remained upbeat. “We do our best not to be influenced by the current sentiments on Wall Street, but rather to look at facts and look at evidence and make long-term decisions for the company based on what the evidence shows,” he told Herald staffers during a June 2006 visit. “Because newspapers are out of favor, we feel we got a bargain in acquiring Knight Ridder.”

A former Herald sales executive can’t help but be amused when recounting that day to the BT. “He was Mr. Cheerleader,” the sales exec laughs. “He was saying, ‘Oh, this is going to be great. This is going to be fantastic.’ Who was the most skeptical? The reporters. And they were right.”

To pay for Knight Ridder’s assumed debt. McClatchy sold 12 of its newly acquired Knight Ridder papers for $2 billion, including Tony Ridder’s old paper, the San Jose Mercury News. The Miami Herald was among the 20 Knight Ridder papers kept because McClatchy deemed Miami a growth market.

But by February 2007, CEO Pruitt was acknowledging in a press release that times were “turbulent” for media companies. In an effort to reduce the debt following the Knight Ridder sale, McClatchy sold the Minnesota Star Tribune for $530 million. Less than a decade earlier, McClatchy had paid $1.2 billion for the paper.

McClatchy remained officially mum on reports that it was looking to sell the Herald. In December 2008, Jorge Pérez, CEO of the Related Companies, had acknowledged to a Herald reporter that he and Florida Crystals CEO Alfonso Fanjul had spoken to McClatchy about buying the Herald, although “nothing has materialized.” Asked for confirmation, a McClatchy executive refused to respond to what she called market rumors, even from her own company’s reporters.


LCoverStory_27_Newsroomocal media consultant Seth Gordon wouldn’t be surprised if the Herald is still for sale.

“Every time there’s cost-cutting, I think maybe they’re dressing it up to be sold,” Gordon says. He thinks the paper “might be better in local hands.” That way the Herald’s owners can “have a finger on the pulse of the community and forge a new relationship with readers and build new business ties.”

Former Herald editor Bob Radziewicz, now a UM journalism professor, disagrees that the paper will be sold, noting that the Herald’s investment in Doral is proof that the paper intends to stick around. “McClatchy wouldn’t be investing any more money in the Herald if they didn’t feel it was going to be a McClatchy operation.”


McGuire predicts that locally based web operations with small staffs will spring into existence. “The news ecosystem is going to expand,” he says. “People want more stuff.” The challenge, though, is figuring out a model that will enable a news operation to make money.
One problem with corporate-owned newspapers is that they are infested with debt, says Arizona State journalism professor McGuire. “Wipe out the $1.6 billion in debt, and McClatchy newspapers are in good shape,” he says. “It’s debt that’s overwhelming every newspaper company.”

In spite of the debt that established newspapers have taken on, and the revenue lost to the web, media analysts say existing newspapers still have value, including name recognition, experienced staffs, and circulation lists. “The lists have all the value,” maintains Gillin of NewspaperDeathwatch.com.

There’s also the sense among investors that the market may have bottomed out for publicly traded newspaper companies. “It’s hard to imagine that their value is going any lower than it is right now,” he says.

So what does the future hold for the Miami Herald? “Something called the Miami Herald will be here in five years and probably in ten years, though no one can say what form it will take,” Martin Merzer states. “Twenty years? I’m not so sure.”

Nowadays, photographer Tim Chapman is more concerned with the past. Twenty years ago he discovered that Herald archivists were more likely to throw away old photographic negatives and pictures than to save them. So he worked out a deal with Herald executives to allow photographers to keep their pictures. At his home Chapman now has many thousands of pictures stacked in boxes.

Those photos, Chapman is certain, have value. They provide a window to Miami’s past, a time when newspapers helped to define their communities and people relied on them for vital information. Chapman intends to donate the collection to a local organization that will preserve and catalogue them, so that, years from now, the era of powerful, profitable newspapers won’t be forgotten.

 

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