Cutting costs, or profits?

Although controlling costs is undeniably a necessary part of managing a successful business, sometimes it's wiser to wield a scalpel, rather than an axe. This is something we've seen time and time again lately, as newsrooms across LANG and the rest of the country fall into the same herd mentality and reflexively slash newsroom staff every time revenue starts to droop.

Unfortunately, as we and many others have said all along, cutting into your core business product isn't a smart business decision. You don't need an MBA or a PhD in economics to see that. And now there are hard numbers to back up that argument.

Gary Scott posted a link to this study by the University of Missouri, which indicates that short-term savings, eked out by cutting news expenses, quickly translate into lower revenue and profits down the road.

The authors advised that newsrooms should be the last department cut. When cutting costs, newsroom cuts are by far the most damaging to revenues – and the longer the reductions occur, the greater the acceleration of damage. The authors wrote, “We find that newsroom cutbacks hurt a newspaper’s revenue many times more than cutbacks in either distribution or the sales force departments.”

This of course isn't news to anyone familiar with the vagaries of life inside LANG. MediaNews' ongoing pursuit of lower costs has been a case study in what happens to the bottom line when newsrooms become less important than the boardroom.

The real question is, what can we do to change course?