Another American Newspaper Lays Off 100% of Its Staff

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Less than a month after the storied New Orleans Times-Picayune laid off all 161 members of its staff, another paper has done the same. The Reading Eagle, which was just been bought out of Chapter 11 by newspaper chain Digital First Media, has cut all 221 employees. It is unclear how many the new owner might hire back. The purchase price was $5 million.

The Reading Eagle, the daily newspaper in Reading, Pennsylvania, was founded in 1868. It filed for Chapter 11 bankruptcy on March 20, after its owners said they could not sustain years of losses.

The Reading action is part of a pattern that has rippled across the industry and echoes what happened in New Orleans. The troubled Times-Picayune, founded in 1837, was bought by a local rival, the parent of the New Orleans Advocate, which owns papers in nearby Baton Rouge and Lafayette, and was sold by was Advance Local Media, a large chain owned by the billionaire Newhouse family. Despite the family’s wealth, it would not support the paper’s losses. The new owner did not need staff to run two papers in the same city.

In Reading, it was a small owner that sold to an industry behemoth: Digital First, also known as Media New Group. It is among the nation’s largest newspaper chains. Digital First is known for brutally cutting staff to maintain margins. In the past several years, it has done so at several of its largest papers, including the Denver Post, San Jose Mercury News and Boston Herald. Industry observers believe that the Digital First owner, Alden Global Capital, has little interest in editorial quality and will milk its papers for cash flow, even if it means they eventually go out of business.

Digital First recently tried to buy Gannett Co Inc. (NYSE: GCI), the country’s largest newspaper group, and publisher of USA Today. Gannett shareholders rebuffed a slate of directors that Digital First tried to install. Gannett still has to contend with the fact that its own margins are under pressure.

The problems of the newspaper industry have been repeatedly chronicled. People have turned away from the purchase and readership of print media. Revenue from print has collapsed at both papers and magazines. As the media have moved online, digital advertising and online subscriptions, it was hoped, would offset the drop in legacy revenue. So far, the model has only worked at a few papers, such as The New York Times and Wall Street Journal.

The Reading Eagle may not be the last paper that survives mostly in name only. The newspaper industry’s tragedy is far from over.


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