Las Cruces Sun-News pressmen pause for a photo on Jan. 24, 2008, before starting the press to print the last daily newspaper ever printed in Las Cruces. After that night, printing was moved to El Paso, and the press was dismantled and moved to Farmington. (Rio Grande Digital photo by Michael Scanlon)
Michael Scanlon | Commentary
The Las Cruces Sun-News building in downtown Las Cruces is contrary to today’s trend of newspapers shedding their real estate assets. (Rio Grande Digital photo by Michael Scanlon)
Rio Grande Digital
Last week marked a milestone in journalism of the Paso del Norte region when the Las Cruces Sun-News — with much fanfare — opened its new building at the corner of Las Cruces Avenue and Alameda Boulevard.
Dignitaries gathered. A ribbon was cut. The governor said a few words. The revelry surrounding the new $1.3 million building eclipsed another milestone in the newspaper’s history that came and went without notice just four days earlier.
It was the fifth anniversary of the last time a daily newspaper was printed in Las Cruces. That happened on Jan. 24, 2008 — the day the locomotive-sized press went silent in Las Cruces forever. Pressmen, some of whom had worked at the newspaper since they were teenagers, were unceremoniously fired.
The Sun-News, along with several other New Mexico newspapers, is printed at the El Paso Times, and the newspapers are trucked back across the state line.
And it’s not just the printing. What makes the Sun-News building even more impressive is how little newspaper production is done there. Reporters write their stories, but the copy editors, page designers, headline writers and printers are in El Paso. This building makes an enormous statement of confidence in its digital future.
Online news people live in a world where street address is of little importance since the news organization is connected in more useful ways.
Still, it is remarkable — unbelievable, really — that the Las Cruces newspaper built a new building at a time when many newspapers — from the El Paso Times to the Washington Post to the Chicago Tribune and many others — are moving their much-downsized operations out of prestigious quarters and selling the real estate to free some cash.
To say that the last 10 years have been disastrous for the newspaper industry risks an understatement.
In decades prior, big corporations with more passion for finance than journalism embarked on a frenzy of leveraged acquisitions. The idea was to take advantage of the economies of scale while eliminating competitors from their far-flung market areas. That and reap nice profits.
Newspapers were long known for their high profit margins. Twenty percent profit was not uncommon. Forty percent was not unheardof. So the newspapers kept borrowing and acquiring, sometimes even engaging in bidding wars with other companies for the same newspaper.
The result was something to behold: A handful of corporations, some heavily burdened with debt, owned most of the newspapers in the United States. If information is power, a few people had a lot of power.
Then, the first cracks began to appear. In markets where morning and afternoon newspapers enjoyed the cost-sharing benefits of joint-operating agreements — El Paso, Albuquerque, Tucson and Denver among them — one by one, the afternoon newspapers ceased operations. No one, they said, wanted to read the newspaper in the afternoon.
In fact, a growing number of people didn’t want to read the newspaper on paper. As the Internet came into more and more homes, people expected to get more of their news online. So newspapers complied by putting all their news on websites. And in what proved to be the worst strategic mistake the industry ever made, they granted access to those sites for free.
It was a concession made grudgingly to those early adopters of the Internet. Newspapers were very late in taking their online future seriously. People can’t take their computers with them on the subway or to a deli, they reasoned, failing to foresee tablets and smart phones.
Meanwhile, aspiring news purveyors saw that for the first time in history, they could compete with newspapers. No longer was a printing press necessary. Neither was buying ink by the barrel or paper by the ton. So these more nimble upstarts — free of the legacy costs associated with expensive printing plants, bloated corporate overlords and, best of all, debt — built business models around free distribution of news.
Newspapers now had competitors in their markets. Much worse, the precedent was set: Online news was free.
But it was not competition for readers that dealt the hardest early blow to the newspaper industry. It was the abrupt flight of classified advertisers to a website called Craigslist. There, advertising was free — except for a few categories of ads that generated vast financial reward for the site’s creators.
Classifieds had been vital for newspapers because they could bring a high price for a square inch of paper. A full page of classifieds was worth much more than a full-page ad. Nationwide, once-robust newspaper classified sections withered to just a few pages.
The newspaper managers — facing the relentless demands of stockholders and orders to help service the company debt — tried to cut their was to prosperity. So far, it’s not working. News pages became narrower. The once-controversial page-one strip ads grew from 1 inch tall to 2 inches, 4 inches, 6 inches to half the front page. Reporters and editors by the thousands were kicked jobless out into the streets.
Readers noticed, and a migration began to the online-only upstarts, where savvy, free-wheeling journalists in t-shirts and jeans posted hip local copy and aggregated stories from — well, everywhere.
In the retail industry, long a mainstay of newspaper advertising, the effects of Wal-Mart’s growth were showing full force. Healthy retailers were trying to stay that way by buying competitors. Less healthy ones closed their doors. When you have less competition, you don’t need to advertise as much. Retailers soon figured out they could not only advertise online, but they could sell merchandise there as well.
The loss of so many advertisers accelerated the downward spiral of the newspaper industry. At least newspapers still had good revenue from real estate advertising.
Or they did until the housing market collapsed in 2008 and 2009. The light at the end of the tunnel had gone out.
And that brings this rambling missive back to the subject of the Las Cruces Sun-News.
The Las Cruces newspaper, the El Paso Times and several other New Mexico newspapers are owned by the highly leveraged, Denver-based MediaNews Group.
By 2009, it had become apparent that the company’s $930 million in debt was unsustainable. In January 2010, MediaNews Group filed for Chapter 11 bankruptcy protection. Senior members of the corporation swapped stock for debt, and the company emerged just weeks later with debts amounting to $165 million.
The newspaper company’s board was replaced by a new board representing Alden Global Capital, a hedge fund firm. The new board installed new publishers at the company’s newspapers.
A year — to the day — after the bankruptcy filing, a fire broke out in a storage building that adjoined the Las Cruces newspaper plant. The gutted structure was owned by the newspaper, as were other nearby buildings on half a block in downtown Las Cruces. The Sun-News reported that the newspaper plant had sustained water damage but would be repaired. Staffers moved into rented offices.
The Sun-News building never was suitable for its needs. It was a converted grocery store that had been patched together to accommodate the specialized needs of a printing press, plate-and-camera equipment, news staff, advertising department and other things. Restrooms were impossible — small and dingy. Two of the restrooms were upstairs along with little else. There was no elevator. In places, the building looked like it had been remodeled by unskilled people who had found some plywood in the street.
At first, it appeared outwardly that construction crews were preparing to work on the old Safeway building that the Sun-News had called home for 40 years. But such a project would come with requirements that restrooms be brought up to code and accessibility standards, that wiring be brought to code — even that the city’s landscaping ordinance be followed.
Besides, with no pressroom or composing room — or any of the related space requirements — the old building was much bigger than the Sun-News needed.
So Plan B was to raze all the buildings on the half-block site, build a much smaller building on a portion of the land, make it pretty, and sell the rest of the land. The proceeds from the land sales along with insurance money from the fire and water damage would finance the new building.
And so we reach this milestone. The Las Cruces Sun-News has miraculously bucked the nationwide trend of media buildings being sold to generate cash for impatient directors while skeletal news staffs move into rented offices. And all this Las Cruces good fortune was blessed by a board of directors that represents a hedge fund. Such an attractive building too. Amazing. Unbelievable, really.
What happens next? The board that now controls MediaNews Group is still interested in getting cash out of the company’s newspapers, and the real estate assets are low-hanging fruit. Once the property surrounding the new building is fully developed, the building will increase in value. And by then, real estate values in general should have improved.
Whether the spiffy new building at the corner of Las Cruces and Alameda is an investment in the Sun-News or just an investment remains to be seen.
Michael Scanlon is editor and publisher of Rio Grande Digital. He worked as a reporter for the El Paso Times and at the Las Cruces Sun-News as business editor, news editor and managing editor. He resigned in 2006 to focus on his family and digital media pursuits.