The Tribune Company is slashing its papers’ newshole and employees in a bid to stay afloat under its staggering debt. Across the company it will drop 500 pages of editorial content—about 12.5 percent of the total, The Wall Street Journal says on B8—every week in a bid to bring the level down to balance evenly with advertising. The Los Angeles Times alone will lose eighty-two pages of news a week.
To add to the woes, it looks like the LAT, Chicago Tribune, Baltimore Sun, and the like are about to get Gannett-ized. The New York Times on C3:
In his note to employees, (CEO Sam) Zell wrote that Tribune papers would be redesigned, beginning with The Orlando Sentinel, on June 22. Surveys show readers want “maps, graphics, lists, ranking and stats,” he wrote. “We’re in the business of satisfying customers, and we will respond to what they say they want.”
The Chicago Tribune reports that the company is looking at the productivity of reporters at its various papers to determine who it can eliminate without killing its copy output. The Times says the average LAT reporter churns out fifty-one pages of news a year, compared to more than three hundred apiece by reporters at the Sun and The Hartford Courant. The LAT says the changes will be in effect companywide by the end of September.
We’d like to think the bean counters would weight some of these numbers for quality, but we won’t get our hopes up.
It’s just more bad news for journalism, of course. The LAT, for instance, losing eighty-two pages of news (and who knows how many reporters and editors) is bad enough. But how much more newshole that was allotted to, you know, basics like in-depth reporting will be lost to “maps, graphics, lists, ranking and stats”?
Can a bunch of banks fail?
The Journal leads its front page with a report that the real-estate problems of banks have only just begun.
Banks are starting to unload billions of dollars of loans to builders of houses and condos—at huge losses. IndyMac Bancorp is selling half a billion dollars worth of loans at prices that reflect losses of up to 80 percent.
The losses have barely begun to be registered on balance sheets, but could be triggered by banks having to mark their debt holdings to the new market levels shown by the distressed sales. The Journal quotes a report saying up to 26 percent of loans that financed home construction and land purchases could be written off over the next five years because of tumbling asset values—up to $165 billion in losses. But so far, just 0.7 percent has been written off. The hundreds of billions of dollars in losses we’ve all heard about are largely tied to homebuyers’ mortgages, not construction loans.
The totals are much worse than the inflation-adjusted numbers from the commercial real estate bust of the late 1980s and early 1990s, which helped spark the savings and loan crisis and send the economy into recession. But while regulators expect a wave of small bank failures—the number of at-risk S&L’s has risen from twelve to seventeen in just two months—the chairwoman of the Federal Deposit Insurance Corporation says she doesn’t think any big banks will go under.
The Journal uses the congressional testimony of Federal Reserve Vice Chairman Donald Kohn and other bank regulators as its jumping-off point, and Bloomberg writes that Kohn said banks aren’t reserving capital fast enough to keep up with their losses and that that will limit their ability to lend, hurting the economy.
The Journal says regulators have had private talks with Treasury about “the potential fallout from a large number of bank failures.” In a C1 story, it reports that the troubled National City bank has been placed on a “serious” and “fairly rare” form of probation by federal regulators because of its bad practices.
National City probably isn’t alone in operating under such a memorandum of understanding. Regulators, hoping to fend off a wave of bank failures, have been pushing lenders to raise more capital, curtail their growth, and improve their risk-management and underwriting practices. Banking experts estimate that a handful of midsize banks recently have entered MOUs.
Ironically, European banks have been hit harder than their U.S. counterparts by the financial crisis that began in the U.S., the Financial Times reports on page one, showing just how good Wall Street was in unloading its junk until everyone caught on and it got stuck with a good portion of it.
Homeowners hit some sour benchmarks
The Journal says the banks had hoped a spring thaw in the housing-market freeze would ease their woes, but it hasn’t happened. News yesterday showed we’re in an ice age.