The Bergen Record: "Are We For Sale? Sure, For 50 Cents"
Last September, Malcolm A. "Mac" Borg, publisher of The Record in Bergen County, N.J., announced to his 1,400 employees that the company's profit-sharing program would probably be suspended. It looked like advertising revenue for the year would likely fall short of targets. How could that be? After all, the economy was red hot, advertising dollars were flowing, and the newspaper served one of the most affluent counties in the country. Borg would later blame the problem on morale issues among advertising staff, but bottom line, The Record missed out on 1999's boom. "It was a very, very unpleasant year," says Borg.
As it turns out, advertising picked up in November and December, so profit-sharing stayed intact. In March, employees received six days' pay as a 1999 bonus--not bad considering what could have been, but substantially less than the 3 1/2 weeks' pay handed out in the 1980s. Such is the roller-coaster ride at an independent, family-owned newspaper company. Once the norm of daily journalism, these operations are increasingly an anomaly in an era of media consolidation, and they are being pushed to the limit in the race for advertising and talent. Tribune Co.'s $8 billion acquisition of Times Mirror Co., announced in March, with its grand plans for newspapers, television stations, and the Internet, makes Mac Borg's niche in northeastern New Jersey seem inconsequential in the scheme of things.
But Borg, the irascible third-generation patriarch of Hackensack (N.J.)-based Macromedia Inc., the parent of The Record, thumbs his nose at the trend. "Why is it that bigger is always better? Does anybody ever think about the quality of the product?" asks Borg, 62, who started at The Record in 1959 writing obituaries. "I'm perfectly happy right here in North Jersey."
These days, that kind of talk might sound incredibly refreshing or incredibly naive. In any case, running a family newspaper without access to shareholder capital is a thankless task. To the south, The Record faces deep-pocketed competition from the Newark-based Star-Ledger. The state's largest newspaper is owned by the privately held Newhouse Newspapers chain, which in recent years has given the paper a facelift. Then there's The New York Times goliath, which has made a big suburban push. And Gannett Co., the No. 1 newspaper chain, has been steadily gobbling up properties in New Jersey; it now owns seven dailies in the state, with a combined daily circulation of 433,000.
READERSHIP DROP. The Record is "still in a good competitive position, but not being public limits the amount of money it can invest in the company," says David A. Laventhol, publisher of the Columbia Journalism Review and former publisher of Newsday, the Long Island (N.Y.) daily. Indeed, such constraints and declining newspaper readership among younger people are costing The Record customers. Its average weekday circulation dropped 12% between 1991 and last year, to 144,500, nearly double the rate of decline for all U.S. dailies in the same period, according to the Audit Bureau of Circulations and the Newspaper Association of America.
Newspapers are also hurting from the effects of retail consolidation on ad spending. Macy's used to spend $5 million a year advertising in his newspaper, says Borg. Today, the chain, taken over in 1994 by Federated Department Stores Inc., spends less than half that. "Big chains aren't spending as much, and a lot of stores are going to direct mail because they can hit every house rather than just the subscribers," says Lauren Rich Fine, a newspaper industry analyst for Merrill Lynch & Co. And the cash bonanza from advertising by dot-coms has skirted the smaller, regional publications, as Net companies opt to spend in national publications.
GREENER PASTURES. The Record is particularly vulnerable to staff defections, especially in these days of perks gone mad. While The Record has always served as a feeder paper to larger rivals, departures this year have really stung. Since January, 22 editorial workers have left; six to dot-coms, many others to the Star-Ledger, lured by salary offers that average $20,000 higher.
Despite the distractions, Borg says he's adamant about keeping his company a locally focused news operation, aiming to saturate Bergen and Passaic Counties with dailies, weeklies, and even some Net coverage. He's even in talks to sell three CBS Corp. TV affiliates the company has owned in other states since 1972, hoping to net $100 million. Since 1997, Macromedia has purchased the Herald & News, a daily in nearby West Paterson, N.J., and 19 weeklies in the region.
Borg rules out retirement anytime soon. But he's grooming daughter Jennifer, 35, now Macromedia's general counsel and vice-president of human resources. Youngest son, Stephen, 32, is the publisher of the weeklies. Even with the family well-ensconced, there's pressure to sell. "This paper is a very attractive takeover target," says Edward J. Atorino, an analyst for Wasserstein Perella Securities. "Who knows? When you get into the third and fourth generations of these family-owned businesses, things tend to happen." Borg has been approached by Times Mirror and Gannett in the past. "Are we for sale? Sure, for 50 cents every day and for $1.50 on Sundays," he quips. "As long as we're having fun, there's no reason to sell." But how much longer will the fun last?