Thursday, December 04, 2008

If Scripps loses $15M, what is GCI's hit in Detroit?

Maybe this is why I feel like something big is going on in ominously-quiet Detroit:

To start, surely you saw that E.W. Scripps expects to lose $15 million on the Rocky Mountain News this year, prompting the publisher to put the paper on the auction block today. If that's the toll in Denver, how much is the Detroit Media Partnership losing on the Detroit Free Press and the other daily in that joint operating agency, The Detroit News? Remember, the Freep was already bleeding a year ago, well before the credit crisis engulfed the U.S. auto industry -- right there in the Freep's back yard. Detroit's economy has got to be in worse shape than Denver's.

Gannett has controlled the Detroit JOA since buying the Freep in 2005 from Knight Ridder, then selling the News to MediaNews Group. In Denver, MediaNews owns the Post, which is in a JOA with the Rocky. Blogger Alan Mutter wrote today that MediaNews is the most likely buyer for the Rocky, which would probably then be shut down -- giving MediaNews sole control of the Denver market. Is anything like that afoot in Detroit?

Waiting for Detroit's plan
With Corporate now on a rampage to cut costs anywhere, the Freep and the JOA would be expected to report job reductions in the current layoff, even after buying out 116 employees in July. But we've heard nothing yet from Detroit Media Partnership CEO David Hunke, who also is Freep publisher. Ditto for Hunke's boss, USA Today Publisher Craig Moon.

Then a reader pointed me to yesterday's alternative Metro Times, where columnist Jack Lessenberry notes "persistent rumors have been circulating that the Detroit Free Press was on the verge of publishing mainly on the Internet." And then there was this curious comment, by Anonymous@7:53 p.m. . . .

Earlier: Documents reveal double-digit profit margins at scores of papers now on verge of massive layoffs.

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: yesterday's front page, Newseum]

71 comments:

  1. Mr. Hopkins -here is a teaser on Detroit, keep digging, they are keeping this VERY tight. Expect huge "first in our industry" changes that will quickly be followed by massive job cuts (more than the 10%). The announcements could come any day.

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  2. Jack Lessenberry is reporting on "rumors" .. He is ridiculous.

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  3. It would be worth noting here that Michigan has been in a one-state recession, and now close to depression, for quite some time. MUCH longer than the rest of the country. It would be no surprise then that the Freep would lose money earlier than the rest of the country's papers. So consider what most of you are facing now that the rest of the country is catching up. Any wonder layoffs are happening?

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  4. Be careful about believing anything written by Lessenberry. He's got some fine credentials and is a good reporter/writer. But he also carries grudges and is somewhat indiscriminate with anonymous sources and rumors.

    He's long had a grudge against Gannett...perhaps deserved...but it colors his coverage. One example: He wrote a column about the horrible wages paid an editor of a small daily. He made that a slam against Detroit and Gannett even though the woman worked in Ohio for a non-Gannett paper.

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  5. To see what the free Press is up to:
    http://www.digitalfreepress.com/

    Use FREEFP as your user name and password.

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  6. keep the freep12/04/2008 10:42 AM

    Sorry, Lessenberry is usually right. And Metro Times has generally done a better job covering local news.

    I've been a Freep subscriber for about 30 years, not a newspaper worker. I've been considering giving up my sub lately because the paper has shrunk and lost most of the local content. I read tons of info online, but I like the feel and readability of print--electronic is not the thing for a leisurely read, much less for doing a crossword.

    Now what? On line subscription? Including comics? Or a twice a week print edition as Lessenberry says?

    The Freep broke the mayoral scandal--wouldn't it be ironic if they won a Pulitzer posthumously?

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  7. Lessenberry is a kook. I once sent him an e-mail disputing something written, and he responded with a profanity-laced tirade. Dude has issues.

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  8. To understand what is about to happen in Detroit, you have to remember the September mystery $1.2 billion loan that GCI drew from the banks. What was this for? Do you think that it was to buyout cash-strapped Billy Dean Singleton? Lessenberry picked up some rumor about the Freep going Thursday-Sunday in print, and the rest of the days online. But under the JOA, GCI is obliged to print the News daily. Of course, the JOA is subject to being changed if there is agreement of both parties. Billy Dean is probably really on the ropes, ad revenues are collapsing much more than budgeted, so expect something to happen real soon.
    P.S. Expect something in Denver, too, which doesn't involve GCI, but does involve Billy Dean being on the wrong side of a JOA.

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  9. Jack is on to something - this is the same person that posted at 12:54am - the "first in our industry" changes will be significant - way out there and will send shock waves throughout the industry - it will either work (for awhile) or kill the company - regardless it will come with enormous staff reductions.

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  10. Seems like the WARN act -- the factory closing law -- would come into play here, guaranteeing everyone at least 60 days' notice or 60 days pay in the event of a mass layoff, right?

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  11. The THursday-Sunday print, rest of the week online model is not new. Phil Anschutz's Examiners have been doing this for about the last six months, with much success I am told by insiders. So it would not be so much of a gamble for the Freep to move to this model. The Examiners are free papers, so I wonder if the Freep would then become a free paper.

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  12. That online Freep page is pretty cool-looking, I have to say.

    But to replace the paper with it? That'd seem odd.

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  13. WARN would kick in, if they were closing the newspaper. But they are not. Under this plan, it will continue online, and I am sure that GCI management will insist it will thrive online.

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  14. c'mon, that online freep page is crap. How on earth does it make sense to put something designed to be held in your hands on a screen? It seems more like a way to proof a page before sending it to press than it does a way to actually read the paper.

    Also, $12.50 per month? for what? clunky navigation and once-a-day publishing? Where's my rss feed, where's the comments (seriously, look how well they work for Jim), where's any feature that is a strength of the internet as a publishing format? Ah right, they use those crazy hyperlink things. My bad.

    This looks like something from Internet 1.0, circa 1998. It's just another terrible idea of how to 'transition' print to web. Answer: you don't. You're either print, or you're online.

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  15. It is a done deal, will be carried out after Xmas. Corporate wants to get the last penny out of Christmas ads before embarking on this project, which is why details are suppressed.

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  16. This paid, online-layout is great, but it's hardly new.
    The Scranton Times-Tribune in Pa. -- a family-owned Times-Shamrock Communications paper -- has been using it for some time.

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  17. I just said it LOOKED cool. I didn't say anything about it being functional or that readers would like it.

    12:24 PM wrote: "This looks like something from Internet 1.0, circa 1998."

    Really? Then why have I never seen other papers do this, even back in 1998?

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  18. @12:38 = wasn't trying to blast you or anything, the whole concept just annoys me. It's exactly the type of "innovation" I expect from Gannet.

    And you haven't seen it because newpapers are ten years behind the rest of the online world. I saw a prototype for this idea in the academic world at least as early as 2002, maybe before that.

    The story below is from last year, but he's been pushing the idea for years.

    http://www.editorsweblog.org/analysis/2007/04/part_3_the_paperless_paper_int.php

    While we thrash about to find some way to continue functioning with our current business model, people like Jim are busy figuring out the internet. Read the Innovators Dilemma if you haven't. It outlines exactly what's happening to our industry.

    http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996

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  19. The Freep will be an experiment for what they want to do with USAT -- shift it online ASAP. I am surprised they didn't do that during this most recent round of cuts, since it would reduce cost pressures on the community papers and transfer profits back to the local papers.

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  20. 2:14 Jack Lessenberry acknowledges he is reporting rumors -- I know this because he says that clearly on his blog. There are Wall Street moguls who make billions trading on this sort of information, so don't be so dismissive.

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  21. Warren Act.

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  22. No, it's the WARN act -

    http://www.dol.gov/dol/topic/termination/plantclosings.htm

    And, according to the site "...[requires] employers with 100 or more employees ... to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment."

    So Gannett certainly employees more than 100, and I count at least a dozen papers with more than 50 layoffs. Do you have to be a manufacturer for this law to apply? I'm definitely not a lawyer.

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  23. From E&P

    "The latest Gannett newspaper job cuts will end up eliminating about 2,000 positions across all of the company's 85 daily papers, except the Detroit Free Press and USA Today, according to Tara Connell, the company's vice president of corporate communications."

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  24. Hey guys, Brevard was the 1st Gannett site that had a digital edition, EEdition is what we call it.

    It's the same technology that the FP is using.

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  25. 12:50 PM: Thanks for the book tip. I'll check it out.

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  26. I thought online contributes to about only 10% of revenue. Sure, this figure might be ascending gradually as we speak, however, print will probably continue to account for the majority of revenue for years to come ... imo.

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  27. @ 1:29 PM: WARN would indeed apply here too. Some media companies have avoided it by implementing rolling layoffs – elimination of staff positions over a couple of months, for instance. Call the Detroit Newspaper Guild.

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  28. 1:29 You didn't take all of the prevailing language. It goes on to say " WARN makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters." The Freep is a faltering company, certified as such by the Justice Department when it joined the Freep and News together.

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  29. Here's a fresh wrinkle: Scripps today put the Rocky Mountain News in Denver up for sale. Assume GCI buys it with some of that $1.2 billion bank loan, and then would be in a position of controlling the partnership with Billy Dean Singleton's Denver News. So Corporate then goes to Billy Dean and makes a deal; GCI gives the Freep to Billy Dean, and Billy Dean gives the Denver Post to GCI. Gannett then controls all of Denver, with no opposition/ Billy Dean controls Detroit. Win-win for all.

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  30. @2:17 - So the JOA means it is considered faltering? I guess that makes sense... But what about non-JOA papers, like Des Moines, Indy, Nashville? Each laid off well over 50 employees.

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  31. Just guessing (my favorite kind of post here): if this is quoted correctly above

    advance written notice of a plant closing AND mass layoff affecting 50 or more employees at a single site of employment

    then the operative word could be the "and."

    Don't think GCI COMPLETELY closed anything with more than 50 employees. An "or" would have made a world of difference.

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  32. Tucson's been serving up an e-edition, in addition to the website, for quite a while.

    It's crap.

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  33. 3:12 The Newspaper Preservation Act, which authorizes joint operating agreement, requires papers to be failing when they ask the Justice Department to join some of their operations units. Failing or faltering is about the same.

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  34. 3:12 Corporate has been hauled over the coals for announcing the cutbacks so far in advance of this week's action, but I think the reason that was done was to somehow avoid triggering this act. I have forgotten the date when Corporate announced these cuts, but there have been several weeks of notice they were coming. Also this WARN act is pretty toothless and probably enforced as strictly as any other labor law by a GOP administration.

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  35. Detroit is losing at least double that and still fat as hell - there have been chirps about tomorrow -lets see what happens.

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  36. I notice you recast this item, and I think you and I are thinking alike. I smell a move afoot to really put pressure on Billy Dean SIngleton.
    The Scripps announcement about the RMN has drowned out some considerations. Like GCI in Detroit, Scripps operates the Denver JOA. So come January and no buyer comes forward, how does the Denver Post continue to publish. Does Billy Dean have enough cash to build his own press, and put together an advertising and circulation staff in two months?
    So I see Corporate pulling a similar game plan in Detroit, proposing to sell the Freep and leaving Billy Dean looking for some place for his now homeless News.
    There is arguably little room even for one newspaper in Detroit, or Denver these days. Also note that like Detroit, Scripps spared the Rocky any of the cutbacks it made at its other papers last month.
    I think both GCI and Scripps are serious, and this really isn't a bluff. It's not worth much to either business to continue such sparse operations and if they can't win, they will withdraw.

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  37. 9:31 p.m.: Indeed, I've reworked it, then moved it up near the top of the home page. But I'm mostly just thinking out loud, and watching what you guys are saying. ;)

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  38. Billy Dean has no spare change to buy anything. Someone should try to get the scoop on his operation. He's hurting.

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  39. 9:31 I'm not following you. If the Rocky doesn't find a buyer, that puts "Billy Dean" in the catbird seat in Denver. How do you figure the Post or the Detroit News would be "homeless"?

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  40. Yeah, that electronic edition is nothing new. A lot of papers have it now, and, yes, Brevard was way ahead of most of them. And if any one of them stakes its future on the electronic edition, the "paper" will certainly die.

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  41. I'm going to propose the following entirely plausible scenario happening in Detroit and Denver: GCI and MediaNews switch places. That means GCI will use money from that $1.2 billion loan it recently took out to buy from Singleton a controlling interest in the Denver JOA. GCI will then either make Singleton a junior partner in the JOA or find another company to take the Rocky, while it takes over the Post. Then, Singleton will use some of the proceeds from the sale of his company's interest in the Denver JOA to buy the controlling interest in the Detroit JOA. He would find a junior partner either in Hearst, with which he is closely allied, or another company.
    It's well-known in Detroit that GCI wants to GET OUT of Detroit. It wants that town's many economic problems OFF its books. The long-term economic prospects of Detroit are MUCH darker than they are in Denver. As a bottom-line-oriented and publicly company, Denver is much more attractive to GCI than Detroit.
    As a privately held company, MediaNews needs to earn some cash quickly. So, the sale of its Denver JOA shares would be helpful. And, trust me, Singleton will NOT have to shell out a lot of money to get control of Detroit. I bet he could get it for half the $250 million Gannett spent to buy out Knight Ridder in Detroit.
    Neither company wants to deal with the legal firestorm of shutting a paper, particularly now that a Democratic administration is about to take over the Justice Department, which oversees JOAs. Please note that the revised Detroit JOA of 2005 STILL has not been formally approved by the Justice Department. And please remember that the News, while having a smaller print circulation than the Freep, has a Web audience of about the same size. And the News' circulation of 180,000 is nothing to dismiss. The Detroit JOA would lose almost all those print readers if the News were to be shut down.
    One other intriguing fact: The GCI-controlled Freep reportedly held a party for its staff using the money it would have used to throw a bash for advertisers during the Detroit auto show in January. That decision is VERY unlike a company
    that plans to stay in Detroit.

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  42. Following the Lessenberry article did provide a link to a current offer being made which is here

    http://tinyurl.com/6s35ve

    This is more then a hint - now the push back offered by the Freeps Elnick may be correct - there may be a paper published 7 days a week but on the non Sunday Thursday days - how many? Think newstand (and online) only folks.

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  43. A correction of fact, 9:31 p.m.: MediaNews runs the Denver JOA. Scripps is the junior partner. That's why the Denver Post, which is owned by MediaNews, has the Sunday paper. It's also why MediaNews is headquarted in Denver.

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  44. The Detroit situation has been weird since Gannett bought the Free Press.

    Though they've been bleeding money, their editor hands a giant pile of cash to anybody who tries to leave for elsewhere. It's weird.

    And, if you're looking for change agents, you won't find that in the editor or the top two managing editors.

    They're just driven sycophants who know that if they oppose whatever's coming, it'll be the end of their short reign of terror.

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  45. One of the Freep's Sunday papers this year was a whopping 48 pages thick. For a big city daily with metro circ, that's pathetic.

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  46. 10:14 Sorry, but you are wrong. Check your facts. Scripps gave up the Sunday paper and gave Billy Dean $25 million, but retained the position of senior partner in a 50-50 deal. Look at the clips, and you will see it was the advertising and circulation departments of the RMN that continued, while the Denver News let theirs go.
    If Scripps walks away, where does Billy Dean get the money to continue on? He's already against the wall, and no one is lending money these days. Another wrinkle is what happens to the Scripps-owned Boulder Camera, which has been printed on the Denver presses for the last year.
    On Detroit, GCI is in the same position as Scripps, and I believe has been putting money into the Freep operation. Again, if it pulls the plug, where does Billy Dean get the money to continue the operation?
    In both the cases of Detroit and Denver, the withdrawal of the cash-rich company pulls the entire operation down and both papers go.

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  47. Not that it is Gannett, but The Detroit News laid of 4 people in the marketing department today. Not sure if the axe fell in any other department of not. Expect word on the Freep and DMP in the next week or so.

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  48. 1:23 a.m., who got offered a wad of cash to NOT leave the Freep? I don't know of anybody like that (more like the opposite) -- can you give an example?

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  49. Marketing is "Detroit Newspaper Partnership," not Detroit News...what jobs are you talking about?

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  50. Who cares what part of the partnership it was from, it shows that the layoffs are starting. I am wondering if they are going to do any buyouts, I know some old timers that would take it. And how about any of the 12+ VP's that we have here, and at least that many director and way too many managers.

    2 weeks ago they eliminated one VP position, so its a start.

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  51. LAYOFFS AT DMP ARE NOW ON GOING.

    People getting the axe as I speak.

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  52. Well you say, "Not that it is Gannett" and attribute these layoffs to the Detroit News.
    It IS Gannett, it's the Detroit Media Partnership.
    Aren't we journalists who value precision? Oh wait, you work for Gannett...

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  53. "good enough"

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  54. Please provide details of the layoffs at DMP. Very curious.

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  55. A few people in marketing, one in advertising, period. sorry to disappoint y'all

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  56. 4 from finance

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  57. The question now becomes: Are those layoffs linked in any way to a three-day-a-week delivered newspaper, followed by four days of slim newsstand print? One wonders ...

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  58. what the heck is everybody talking about. The Freep is not going to 3-day a week home delivery. That was somebody's false rumor started yesterday in the Metro Times in Detroit. Get your facts straight.

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  59. Who is your source? I understand that the Metro Times used some ridiculous logic to build its argument, but there are sources within the Free Press saying they attended a meeting in which it was asserted that the Free Press was dropping four days of home delivery.

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  60. That is crazy. Detroit has a JOA that would not allow that. The union has heard nothing of this and this is something that they would have caught wind of.
    The Metro Times reporter hates Gannett and likes stirring rumors up.

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  61. the layoffs are working. Gannett is up a cent already

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  62. The rumor didn't begin with the Metro Times. A meeting was held two weeks ago during which some top employees were notified of a slimmed-down version of the newspaper that would not be delivered. One of those employees leaked the news. Then Joel and Jack "the Hack" looked for every bit of evidence they could find to substantiate the employee's claims. They came up short, but that doesn't mean the leaker was lying or incorrect.

    I don't mean to fuel rumors, but if your only proof that the newspaper will be delivered seven days a week is based on union not being apprised, I'd suggest putting less faith in Gannett's willingness to share details.

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  63. Until there is some evidence. I will not believe it. Yesterday somebody said there would be a big announcement today at the Freep. Well, all is quiet here and will be.

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  64. The unions would have to be notified of layoffs, but a change in distribution? No. That would be a matter of re-opening the JOA, so Justice would be involved perhaps.
    Of course (thinking out loud), that sort of change in distribution, there would be layoffs for printers, Teamsters. You'd think they would know.

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  65. I heard they are going to shut down both Detroit newspapers tomorrow and sell them to the honorable Kilpatrick family. Elrick and Schaefer, the reporters who blew open the mayoral scandal this year, will most likely lose their jobs. Top editor Paul Anger was invited to entertain the prostitutes.

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  66. there is meat to those rumors - this plan has been in the works since July

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  67. If you look at the links provided above it looks like they plan to sell a Thursday and Sunday home delivery product and internet the rest of the week. That's stopping five days, not four.

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  68. Yep, this looks like only two delivery days.

    https://ecm-c-mass2one.leepfrog.com/detroitpress/newfod/fpnewfod.cfm?ccode=PM

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  69. single copy will be available everyday

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  70. They are not going to a 2 day print week, that would kill revenue. Get real people, on that website Freep is offering what most people want, the ads and not the other 5 days a week. They will probably just end up printing slim downed papers, or changing paper sizes like most smaller newspapers have to save money.

    Look at The Aspen Times, used to be broadsheet, now it is 32” Web Tabloid. I am sure most paper's will move to this on their smaller paper days. Smaller papers have done it, only a matter of time till the big guys follow. Kind of like the car companies going from big suvs to small fuel efficient compact cars, until they need to carry a large load and go back to the suv.

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