Paton hardly could have picked a less likely company in which to play out his—or anyone’s—experiments in news innovation. From the beginning, JRC had a reputation in the business for being a penny-pinching corporate chain, headed up by a bunch of bankers who, starting in 1990, bought clusters of family-owned, small-town newspapers and made huge profits by cutting costs. And those cuts tended to come in the newsroom. When print ads took a nosedive in 2007 and 2008, there was nothing left to cut. JRC went into bankruptcy in 2009 with $692 million in debt.
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.”