The anxiety hung in the air for almost two days.
On May 19, a Tuesday, The Advocate announced through a news release that 49 employees would be laid off. No one would know until Thursday, when the unlucky ones were called in, one by one, to meet with their department heads.
For one newsroom employee, that meant stepping out of a gray cubicle and walking the plank across the sterile, high-ceilinged office, past the central kitchenette, right by the People section’s nook and into a conference room, where three editors were waiting.
“We sit down, and [Executive Editor] Carl Redman looks at me with a sad face, slides over an envelope and says, ‘Sorry, this is just strictly because of business,’ or something like that,’” says the former employee, who asked not to be identified. “He said, ‘Here’s your package. You’ll get two weeks severance. We hate to do this, it’s strictly a money deal and it’s effective immediately.’ That was it.” Everyone shook hands, and the employee made the trek back to that cubicle for the last time.
The layoffs were spread across various departments, but no one in management was let go, which still irks some current employees. Other papers faced with cuts, including The Times-Picayune, made buyout offers to the veterans first. But the Manships, who aren’t beholden to stockholders, have always been free to do things their own way.
For a century, the Manship family has owned and operated Capital City Press, the parent company of The Advocate. In an era of media consolidation, The Advocate remains proudly independent [the mast proclaims the paper as “the independent voice of south Louisiana”]. As other newspapers shrink, The Advocate maintains a generous newshole stuffed with local, state, national and international stories. And while other papers were shedding staff, The Advocate held out—until this spring.
The May layoffs were the first significant cuts at Capital City Press since the State-Times was shuttered in 1991. The Manships say they had to do something about the $70 million debt that’s been looming since the company replaced its outdated printing presses. The family’s $22 million tug of war with the Internal Revenue Service, the still-shaky national economy and the overall decline of the newspaper industry all contribute to the uncertainty.
Whenever there’s upheaval at The Advocate, rumors that the Manships are about to sell always follow. The family usually dismisses such speculation. Instead of looking for a buyer, they’ve been steadily chipping away at the debt; the former press site sold this summer for just under $10 million, and the site of the paper’s former Lafayette Street headquarters is on the market for $6.5 million. The company plane, once an affordable convenience, has been sold off. A consultant is reviewing The Advocate’s business model even now, looking for ways to ease the transition into whatever the future of the newspaper business might be.
Advocate Publisher David Manship was involved in the State-Times layoffs and the more recent cuts. He remembers both rounds of bloodletting with a wince.
“None of the people we let go were bad employees,” he says. “They were good people, they were trustworthy, they came to work when they needed to.” He says the newspaper probably became a little overstaffed when times were flush, as highly lucrative organizations tend to do.
Discouraging headlines about the newspaper business have been common for at least two years. It’s hard to say what was more depressing when Gannett, the nation’s largest newspaper chain and owner of USA Today, announced third-quarter earnings in October: the realization that profits were down 53% despite ruthless cost-cutting, or that expectations are so low that the numbers were actually better than analysts’ forecasts.
Manta.com estimates Capital City Press grossed $34.7 million last year, down nearly 47% from 2007. Manship says revenue is down about 22% from a peak about two years ago. Recession-scarred national retailers have slashed their advertising budgets, and classified ads for cars, jobs and real estate are scarce, but Manship says the decline has leveled out. Circulation is down for the first time in six years, but only slightly; The Advocate still delivers close to 95,000 copies on weekdays and 125,000 on Sundays, he says.
Many large newspapers and chains are in trouble because they’re severely overleveraged. The Manships were always proud to be debt-free, but they knew those days were over when they finally decided to replace their old presses—which some people say were antiquated when they originally were purchased—on Bluebonnet Boulevard.
“Things broke, and you couldn’t get parts for it,” Manship says. “We were a dinosaur looking for a place to die if we didn’t build a new facility and buy new presses.”
The company spent about $70 million combined for a new printing center off Siegen Lane and refurbishments to the Bluebonnet headquarters, leased from Jimmy Swaggart Ministries, to which the paper’s staff moved in 2005. David Manship says the note is down to about $48 million, and says their lender, JPMorgan Chase, has been reasonably accommodating.
“It’s the lender’s job to hammer you; they’ve got a big stake in this,” says Richard Manship, the company’s president and CEO. “They know our business. We’re in contact with them. We’re like brother and sister.”
A media empire
Today, most traditional media outlets strive, or claim to strive, for objectivity. But for most of American history newspapers were explicitly partisan.
The Democratic Advocate was founded in 1842 to compete with The Gazette, which supported the Whig party. After a merger, The Democratic Advocate evolved into the State-Times. The New Advocate was formed in the 1880s.
In 1909, James Edmonds and Charles P. Manship Sr. formed Capital City Press and bought the State-Times, with the stated intention of creating a newspaper beholden to no party or officeholder. The State-Times absorbed The New Advocate, and Manship bought out Edmonds shortly thereafter. In 1925 Manship created the Morning Advocate to pair with the afternoon State-Times.
At its peak, the Manship media empire included ABC affiliate WBRZ-TV, WJBO-AM, WFMF-FM, ABC affiliate KRGV-TV in Weslaco, Texas, and radio stations in Texas and Illinois. The family is out of the radio business now; WJBO and WFMF were sold to a local group led by longtime employee George Jenne after no family member wanted to take over. The Manships still own both TV stations and WBTR-TV, a low-power station purchased about two years ago.
Charles Manship Sr. had two sons: Charles Jr. and Douglas Manship Sr. Charles died without children, leaving roughly half of the business to his widow, Paula. Douglas, who died in 1999, had four children: Doug Jr., 66; Richard, 62; David, 61; and Dina, 54. Doug Sr.’s heirs bought out Paula in 1998; today, stock in the Manship media businesses is divided more or less equally among the four siblings.
More than a decade after Doug Sr.’s death, the Manships remain locked in a dispute with the IRS over the value of his estate. As David explains it, the family paid $24 million in estate taxes. A day before the statute of limitations would have expired, the IRS sent a letter saying the family owed another $22 million. The Manships had two choices: not pay, and go to tax court, or borrow the money, pay up and then sue the feds in local district court. The family chose the latter.
“I’m not going to say we’re totally innocent in this thing,” David says. “We knew after we hired the people to come in and evaluate, we probably owed them a minimum of $3 million. We’d be glad to pay them $3 million [today].”
When discussing the IRS battle, Richard leans forward, visibly agitated.
“We have paid the money that we’re in dispute over. It is in our best interest to try as hard as we can to get the money back. It is in their best interest to drag their damn feet and hold on to it, and spend your money,” he says, pointing a finger at a reporter, “and everybody else’s money in Baton Rouge,” he points out his office window, “to hold on to the money. And it’s criminal.” He starts to lean back in his chair, and then leans forward again. “It has been almost 11 years.” He leans back. “That’s why I don’t like to talk about it.”
Maintaining a successful family business through multiple generations is tricky. The children don’t always have the same work ethic or talent as their parents, and money or family connections can create a sense of entitlement. Kathleen Hoye, director of the Family Business Center at the University of Louisville, says such businesses often experience a “shirt-sleeves to shirt coats” phenomenon.
“The first generation does all the heavy lifting and the innovation and takes all the risk, and the second generation takes all that for granted and squanders the family wealth,” she says. “Then the third generation, if there is a third generation, has to pick up the pieces and remake the company.”
The third generation of the Manships, by contrast, inherited a cash machine. The second generation, Charles Jr. and Doug Sr., are remembered as hard-driving newsmen with shrewd business acumen. Both men had impressive educational resumes that included stints at Harvard.
“My father said, ‘I can sell these [companies], but then what am I going to do with all that money?’” Dina Manship Planche says. “Daddy was one of those people who loved to work.”
She remembers her father as the risk-taking businessman of the two brothers, starting WBRZ while Uncle Charles was content running the newspaper.
At WBRZ, Doug Sr. became known for taking stands on controversial issues. His editorials defending court-ordered integration surely brought the risk of violence to the station and himself.
“It had to be done. At least I thought it had to be done,” Doug Sr. said in a 1996 Business Report interview. “In the end, it was nothing but harassment. … I knew if it wasn’t done, we would have had a lot more trouble than we were having.”
Keeping the business in the family was important to Doug Sr., Dina says.
“You want your children to carry it on, at least for the first generation,” she says.
While there might have been expectations from outsiders that Doug Sr.’s four children would enter the family business, none say their parents pushed them into it. All three boys went to military school as teens, and all three served in the armed forces. Doug Jr. had aspirations to be a psychiatrist, until he realized he had to become a doctor, which meant taking chemistry. He ended up with a degree in radio and television speech from what is now the University of Louisiana at Lafayette and becoming the only reporter among the four. By the mid-1970s, he was the company’s first Washington, D.C., correspondent, covering a local Congressional delegation that included John Breaux, J. Bennett Johnston and Russell Long.
Doug has dealt with serious health issues, and he now uses a walker to get around. But as he sits in his study decorated with reproductions of paintings of the Rolling Stones, autographed baseballs and duck decoys, with Willie Nelson playing softly in the background, he seems the picture of happy, healthy retirement.
“Everybody assumed I would become publisher,” Doug says. “I didn’t really have any great desire to be publisher. I like the news side of it better.”
David studied electronics at a Dallas trade school, returning to the paper to help train employees on a new computer system. He moved on to circulation, then advertising sales and marketing, then the publisher’s office. But in 1999, the other siblings voted David out after he dropped out of an alcoholism treatment center in Atlanta, and Doug moved up to the big chair.
David ended up completing an outpatient program at Our Lady of the Lake Regional Medical Center’s Tau Center, and says he’s doing well now. He returned as COO in 2007, and became publisher again the same year when Doug retired. Richard completed a stint in a chemical-dependency unit 20 years ago, and says he hasn’t had a drink since.
Their family’s issues might not be much different than yours. But in this city, if your name is Manship, your trials happen in public.
Richard’s only son, Hunter, 37, knows this as well as anyone. His 1998 arrest for attempted possession of marijuana with intent to distribute was reported in his family’s newspaper. The incident happened shortly after he moved back to Baton Rouge from Colorado, where he was working with friends in concert promotion and event planning. He says he was having a great time, and enjoyed being just Hunter, not the man with the famous last name.
“Growing up, people would apologize, ‘I used to think you were an ass, but I didn’t know you,’” he says. “People I didn’t even know at other schools were bashing me.”
Hunter is every bit his father’s son, tall and lanky with a narrow face. Like his father, he has gravitated to the TV side of the business. He’s the Web director for WBRZ’s new online site, and he oversees convergence between the station and The Advocate. Hunter met his wife in New Orleans after Hurricane Katrina, and now is father to a baby girl, an experience he calls a “fast-forward, grow-up deal.”
Hunter and 26-year-old Jake Manship, David’s son and an ad salesman for The Advocate, are the only fourth-generation members who are involved in the business. If Capital City Press and WBRZ have a long-range future under the Manship umbrella, they’re it.
“It’s very strange to see them in a suit and being so professional, when I used to see them partying and skipping school,” says one local executive who has known the Manship family since Jake and Hunter were young boys. “Jake just got married, and I’m just really proud of both of them. They’re very serious about what they do.”
Richard agrees wholeheartedly with the executive’s assessment.
“I think we all look back to our youth, not all of us, but to different degrees, it was wild, and some of us went longer than others did,” he says.
To sell, or not to sell?
For a while, conglomerates were gobbling up newspapers across the country, although there are far fewer acquisitions these days for obvious reasons. The Manship siblings have the right of first refusal if any of the four found a buyer for his or her stock.
If you were to gag each Manship and hand them a piece of paper with one question: “Do you want to sell?” and asked them to check a box, “yes” or “no,” all four might check “no.” But in conversation, each has a different answer.
Dina largely shrugs off the question and defers to her brothers. She has a degree in radio, television and film, and she has worked at both TV stations and the newspaper. But these days she’s a full-time mom to two teenagers, while training dogs and attending dog shows.
“We haven’t taken any [offers] seriously,” she says. “I suspect at some point everybody will want to retire. I don’t know, we haven’t gotten that far. I have a house in North Carolina, and I’d like to go live there after my kids graduate from high school.”
Dina acknowledges Hunter and Jake aren’t ready to take over, but she refuses to speculate about the future.
“You’re a journalist. I say something, it’s going to be gospel truth in two hours, ‘Oh, they’re selling the newspaper,’” she says, imagining the hype. “I didn’t say that. Shoot, I may get hit by a bus tomorrow and die.”
Richard, on the other hand, flatly dismisses the whole idea.
“Technically, there’s always people out there wanting to buy. We don’t entertain any offers, because we’re not for sale,” he says. “If we were for sale, we’d have sold.”
David muses that the family might be able to get $100 million for the paper, which would more than pay off their debts.
“I would hope it would stay in the family, but I don’t know if [Hunter and Jake] are interested in taking on the challenge. Because it will be a challenge,” David says. Both younger men say they can see themselves in charge one day, although both stress they’re not looking to rush the old guys out the door.
To David, the identity of the potential buyer would matter. He says some chains allow their papers to be independent and community-minded, while others just slash away without regard for the quality of the product. But Doug Jr. says the decision probably would come down to price.
“If somebody threw a bunch of money at us, we’d certainly have to take a look at it,” says Doug, who blew off several inquiries when he was publisher. “If somebody came to us and said, ‘Here’s $200 million,’ I’d be beating down my brothers’ doors saying, ‘Let’s at least talk to these people.’ But how much less than that [would we consider]? I don’t know.”
There’s also a possible middle path: keep the companies in the family, but bring in a non-Manship as publisher or CEO, at least until Hunter or Jake are ready to step up. The family would consider that option if absolutely necessary, but David and Richard say they’re willing to stick around for a while.
“I don’t plan on going anywhere under these circumstances,” Richard says. “It wouldn’t be fair to them. ‘Here, the world’s a mess. Take over. I’m gone.’ ‘Thanks, Dad.’”
Pros and cons
Over the years, the Manships rejected several offers for WBRZ and the newspaper, but it’s hard to know how serious those offers might have been. Thomson Newspapers, Cox Newspapers and Knight Ridder all were reportedly interested in The Advocate. An IRS report that became public when the Manships’ lawsuit was filed said Capital City Press could have been worth as much as $250 million. That might have been an inflated estimate, and no one would consider paying such a sum for any newspaper today.
The lone daily in the state’s capital city is still worth something to someone, although it’s hard to say what the value might be since there hasn’t been a comparable sale recently. Realistically, selling in such a depressed market might not even raise enough cash to cover the outstanding debt. The San Diego Union-Tribune, with more than twice the circulation, reportedly sold earlier this year along with its real-estate holdings for less than $50 million.
But the Manships aren’t looking to hold a fire sale; David, at least, doesn’t sound worried about his paper.
“If the economy were to come back to half of where it was, we wouldn’t have any problems at all,” David says. “As we work our debt down, it’s going to take care of itself.”
When told of the family’s optimism, Paul Gillin, an Internet marketing consultant, author, former journalist and publisher of the Newspaper Death Watch blog, suggested they might be “smoking something.”
“The newspaper market’s never coming back,” he says.
The advertising model that supported large newspapers was incredibly inefficient, Gillin argues. A famous department-store owner once supposedly said he knew half his advertising budget was wasted, but didn’t know which half. With the Internet, advertisers can target their message to a specific audience.
But Jay Shelledy, the director of student media for LSU’s Manship School of Mass Communication, says most newspapers still are making money. The days of 25% to 30% profit margins might be gone forever, but he says the average paper still cleared about 12% in 2008. Many papers are in trouble only because they were bought at the height of the market and are carrying more debt than they can service.
There are pros and cons to local ownership. In some cases, a chain improves quality, as many observers say happened when New York Times Co. bought dailies in Thibodaux and Houma. On the other hand, Gannett mercilessly cut jobs after taking over Lafayette’s daily, even though the paper was making money. Local owners can be more sensitive to the community’s needs and demands, although that can be a downside if a powerful advertiser or politician wants to squash a story. From a business standpoint, an independent paper doesn’t have the buying power of a chain; conversely, an indie doesn’t have to bear the brunt of a corporate parent’s poor business decisions.
Tom J. Hardin was publisher of The Town Talk in Alexandria until Central Newspapers bought the paper in 1996. Hardin says Central ran “a very good, community-oriented newspaper,” but says the quantity and quality of the local content as well as the staff size seem to have taken a dive since Gannett purchased Central in 2000.
“You have a great newspaper in Baton Rouge that is still family-owned, and is operated as such,” Hardin says.
David Nelson, an associate professor of media management and marketing at Northwestern University in Evanston, Ill., says that while some smaller papers are still changing hands, there don’t seem to be any chains looking for a product at The Advocate’s level.
“It all comes down to price,” he says. “It’s all about the family’s needs and requirements.”
Nelson has noticed some publicly traded chains starting to unload papers onto wealthy families that believe in the future of newspapers.
“I’m pretty bullish on family ownership being able to transition into Web-based media,” Nelson says.
The writing on the wall
People who deal with the Manships seem to like and respect them. But some question the direction, or lack thereof, of the companies they own. One longtime public-relations professional was incredulous the recent layoffs didn’t include a management shakeup. Over the years, this person believes, The Advocate sales team got used to being “order takers,” simply expecting the ad buys to roll in without having to really sell the brand. Other people say the news department fell into a similar state of complacency, perhaps when the sometimes-fierce internal competition between The Advocate and the State-Times ended.
“You kind of saw the writing on the wall, with the way the universe has shifted,” the PR pro says. “You look at their Web site, and you can tell they have no idea what to do with that. … They were fat and happy for so many years.”
WBRZ once dominated local television, but now is beaten regularly in newscast ratings by WAFB-TV. An executive who buys all the advertising for one of the city’s top private companies says airtime on Channel 9’s evening news can sometimes command two or three times the price of WBRZ. The exec says Channel 2 seems less involved in the community than it once was.
“When I came to this town, Channel 2 was everything,” the exec says. “I used to do everything with Channel 2. But they’re not as promotion-minded as they used to be, and Channel 9 is.”
To be fair, the media is far more competitive now than in Doug Sr.’s day. Few companies are really cranking in this economy, yet the Manship properties appear relatively healthy, and The Advocate resisted layoffs longer than almost any other paper.
As for their commitment to the community, The Manship Theatre and the Manship School attest to the family’s generosity. If they had wanted to, the Manships could have sold out years ago, left Baton Rouge for an island and never looked back.
FTI Consulting was hired after the layoffs to review The Advocate’s business model, and David says he doesn’t know whether more staff cuts will be among the recommended changes.
“I think one of the things the consultant might say is, ‘You give away too damn much,’” he says, referring to the free Web site, 2theadvocate.com. Most papers always have had a free site, which David says might have been a wrong turn for the industry. Online consumers have grown accustomed to being able to get their information for free, but online advertising hasn’t proven it can support a large news-gathering organization.
Only a few niche and specialty publications have succeeded with a subscription model for their sites. The Advocate has started a pay-only online edition that’s essentially an exact reproduction of the daily paper, containing some stories the Web site lacks, but only a few hundred people have signed up. David suggests the main site might one day give away part of a story, then charge a little for the rest.
They also have more technology issues to work out. David says you can’t even subscribe to the paper online at the moment, and he says the online classifieds are not easily searchable. And while the presses and computers might be fairly new, reporters say The Advocate still uses an outdated software system to write and edit stories. One writer who worked at a smaller Louisiana daily before moving to Baton Rouge says he was shocked to discover his previous employer had better technology than his new one.
While the physical newspaper is smaller now than when the old presses were rolling, The Advocate still has far more news than most papers, and still gives significant space to national and international news as well as sports stories the reader can find anywhere. Newsprint is a hefty expense, and many experts believe the papers with the best chance of survival will be the small, nimble outfits that focus on the hyper-local stories you don’t see on CNN or ESPN.
David says his newspaper might get smaller. But he doesn’t foresee the complete disappearance of the dead-tree newspaper in favor of a purely Web-based product, in his lifetime or his son’s.
What’s the future?
Once, they had an empire. With two newspapers, two leading radio stations, and the dominant television news source, it primarily was the Manship properties that told Baton Rouge’s story.
The afternoon paper is long gone, the radio stations belong to others, and WBRZ doesn’t have the clout it once did. But the family still has The Advocate, the only daily in town.
No one covers a community like a daily newspaper. TV is primarily an entertainment medium. As ubiquitous as the Internet has become, you won’t find many bloggers writing about school boards of police juries in the smaller cities and outlying parishes. The blogosphere can aggregate information, provide commentary, and hold the traditional media accountable, but as one online wag says, the Internet is to newspapers as a wood tick is to a deer: parasitic.
Information might want to be free, but good reporting is expensive. People are increasingly happy to get their news from Web sites, but online readers and advertisers haven’t yet shown much willingness to pay for what they get. Even worse, a growing slice of the population barely reads at all. If this trend continues, the system breaks down, and it’s not clear that a better one will emerge. It’s scary, not just for people who still love newspapers, but for anyone who cares about democracy, which depends on a reasonably well-informed public.
The Manships haven’t solved this conundrum. Then again, neither has anyone else. Some might say they’ve earned the right, through 100 years of work in this community, to try and figure out the newspaper’s future. Still others might prefer to see new ownership, with a greater willingness to make bold moves. But in this economy, a generous purchase offer is unlikely, and the Manships don’t seem desperate to sell.
So for the foreseeable future, the Manships, The Advocate and Baton Rouge remain. And people will just have to keep reading to see how this story ends.