Decherd and Moroney also face a legal challenge from several Belo stockholders who are seeking to turn their 2004 suit into a class action. They charge that between May 2003 and August 2004, Belo overstated the Morning News’s circulation in order to fraudulently inflate advertising revenue and stock value. This May, a federal judge ruled that the lawsuit could proceed after finding a “strong inference” that Decherd and Moroney “were severely reckless . . . in reporting substantially inflated DMN circulation figures that caused Belo to report artificially inflated financial results to investors and the market.” The two men declined to comment on the suit.
Philip Meyer has been a reporter, editor, corporate officeholder, and pioneer in computer-assisted reporting, and is one of the country’s most respected journalism scholars. Meyer understands why managers at The Dallas Morning News eliminated two hundred newsroom jobs. He only wishes they would look at the long-term implications.
“It seems to me that papers that do what Dallas just did have decided to liquidate the business and get as much money out of it as they can,” says Meyer, who holds the Knight Chair in Journalism at the University of North Carolina. “That’s not crazy. It’s a rational strategy if you only care about what happens on your watch as a manager because it takes a long time for a newspaper to die, and, while it’s in its death throes, it can still be a pretty good cash cow. But it’s really bad for the community and for the business in the long run.”
Meyer and other researchers have published more than a dozen studies over the past ten years exploring newsroom staffing, journalistic quality, and profitability. A recent study by Esther Thorson, an associate dean at the University of Missouri’s School of Journalism, examined four years of financial data from hundreds of newspapers. Thorson, who has studied media for twenty years, says those who try to cut the newsroom to maintain profitability are doomed to failure. “That’s not a business model,” she says. “That’s a death model.” Thorson found that larger newsroom investments would translate into greater profits. “A newspaper is a rich environment of information and entertainment,” she said. “That makes it a fabulous locale for advertising. But if your product is degraded and circulation plummets, why would advertisers want to invest in that?”
Belo is investing in the future, Moroney and Mong contend, by spending hundreds of thousands of dollars on Web training and video equipment. “We’re the most progressive newsroom in the United States in terms of shooting video,” says Moroney. The result, they insist, is a first-rate Web site, DallasNews.com. But a recent survey by Nielsen/NetRatings of the nation’s thirty most popular newspaper Web sites ranked DallasNews.com twenty-eighth by number of visitors. John Banks, the former news and sports editor for DallasNews.com, says he left in 2006 because he felt the newspaper refused to invest sufficiently in the Web. “The Dallas Morning News is moving too slowly in new media and that’s one of the reasons I decided to leave,” he says.
The paper unveiled a redesigned site in November. Mindy McAdams, who helped pioneer The Washington Post’s Web site and holds the Knight Chair in Journalism Technology at the University of Florida, examined DallasNews.com in May for CJR. Her verdict: “They have a bad Web site.” McAdams says the site features too much advertising and too little news at the top of the home page, miniscule headlines, and a lack of photos and graphics. She concludes that the site does not serve the local community. “This is a failure of their mission,” she says.