Alan D. Mutter, newspaper consultant and author of the Reflections of a Newsosaur blog, observes that under its previous management, JRC was a company ahead of its time, but for all the wrong reasons. He says of its first CEO, Bob Jelenic: “His approach to the newspaper business of trying to maximize profitability by putting out the minimally good-enough product really foreshadowed what’s happening broadly in the industry today.” Mutter remembers that JRC’s profit margins in the nineties were notably high, even compared to the cash machines that newspaper companies then were. Jelenic was cinching the belt “before it was necessary or fashionable.”

JRC employees say that Jelenic’s ruthlessness took its toll on both their morale and their product. There are stories of him summoning under-performing managers to the local airport, where he would fire them from the tarmac without stepping out of the corporate jet. When cancer killed Jelenic in 2008, his former employees used a Yahoo message board to express their lack of sympathy. The board has since been taken down, but a Gawker piece at the time—“Employees Spit On Newspaper CEO’s Grave”—captured a taste of the vitriol. “Ding-dong, the witch is dead” was a characteristic comment, though there were much worse.

Employees also recall how Jelenic, convinced that putting content online would threaten sales of the print paper, put a strict limit on how many stories went up on the websites each day. According to Glenn Gilbert, executive editor of Michigan’s Oakland Press, who has been with the company for nineteen years, “There was probably no newspaper company more backward in its approach to digital media. Our websites were a complete afterthought.” Not that the staff would have had the tools to keep up with the digital revolution even if they had been allowed to do so. Another editor says that, until last year, he had been working on a 1994 Mac with a floppy drive; he could barely visit his own newspaper’s website.

JRC finally filed for Chapter 11 protection in February 2009, emerging that August as a private company. Following the bankruptcy process, its equity holders included lenders like GE Capital, JPMorgan, and Bank of America. Paton, who had first been brought on as a director to help create a plan of action, was then hired in January 2010 as CEO. (He also got a stake in the company, though he won’t say how large.)

The challenges for Paton were clear. JRC came out of bankruptcy with $225 million of debt, with infrastructure and technology that were appallingly out of date, and with a skeleton staff that was used to keeping quiet and not taking risks. JRC was so stripped down that it had nowhere to go but up. It was a blank slate for a new plan. Paton had one.

Stacking Dimes, Pinching Pennies

At a conference JRC held in Philadelphia shortly after Paton took over, the new CEO delivered a PowerPoint presentation to the company’s editors and management describing his business plan—a presentation that he also put up as the first post on his new company blog. To those who complained that digital ad prices were so low compared to print ads that it was like “trading dollars for dimes,” he retorted with his catchphrase, “Start stacking dimes.”

Those “dimes,” he told them, would come from new sources of online revenue that JRC had never produced or sold before. Meanwhile, Paton told his audience, he would slash infrastructure costs. He would soon shut down most of the papers’ printing presses, mailrooms, and circulation departments, either outsourcing these operations or consolidating them to one paper in each geographic area. And staff members who were particularly adept in digital content or digital sales would be promoted.

“I went in knowing what I wanted to do,” Paton says, explaining that in his thirty-five years in the news business, he’s seen print people in charge, print and digital operations segregated, and print and digital integrated. “The only thing I know that works is to put digital people in charge of all of the efforts to understand how news today is created and consumed.”

Paton remembers finishing his presentation and being met with silence. Several hundred employees in the audience stared at him—a slightly short, stout man with a short-trimmed white beard and blue eyes that are both friendly and intensely focused. He says, “They were like, ‘Who’s the fat guy in the front telling us that we’re broken? Who the fuck is he?’”

Lauren Kirchner is a freelance writer covering digital security for CJR. Find her on Twitter at @lkirchner