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Brown: Vindy Lost Money in ‘20 of Last 22 Years’

YOUNGSTOWN, Ohio – There was no alternative, no way left to keep the 150-year-old Vindicator newspaper alive, its 144 employees and 250 carriers employed.

“In 20 of our last 22 years, our expenses exceeded our revenue,” says Mark Brown, general manager of The Vindicator. “Obviously some years we cash-flowed, but other years we did not.”

Brown’s candor came after a day of reporting, in private meetings, the bad news to employees, some of who later described themselves as “heartbroken.”

So, too, was Brown, who described himself as “fried,” his mind a jumble on the worst day of his family’s business life.

Brown represents the fourth generation of the Maag family to own and operate the newspaper, which was founded in 1869 by James H. Odell and purchased by William F. Maag Sr., Brown’s great-grandfather. His mother, Betty J.H. Brown Jagnow, has worked at the newspaper for 71 years.

“We never thought we’d be in this position,” he says.

The Browns had planned to announce the closing Saturday in a letter to readers but instead, WFMJ-TV, which also is owned by the family, scooped the newspaper and posted a story on its website Friday afternoon. “The news wasn’t supposed to break the way it did,” he says. “The whole schedule got thrown off.”

As Brown was meeting with Vindicator employees, WFMJ employees received a letter that stated, according to the TV station, “We have no plans, no intentions, no desire, no thoughts and no interest in selling WFMJ. Period.”

At a hastily arranged press availability Friday evening, he told reporters that The Vindicator secured the services of a newspaper broker in December 2017, and started the sale process.

By the spring of 2018, “Several people had looked at the property but we only had two potential bidders,” Brown says, declining to identify them. One pulled out after “a large property came on the market that they wanted for a long time, and the other one had internal problems that caused them to pull out. So we ended up with no potential buyers.”

Management then explored cutting by three the number of days it would print and deliver a newspaper, publishing only online for the off days. “We looked at subcontracting some work and making other changes to save money but none of that added up enough to get us out of the red,” he says. “So the only alternative was closing.”

The Vindicator Printing Co. actually stopped paying dividends in 1992, “built up enough money to pay for a new printing press, and had a rainy day fund that ended up running through.”

The new press was purchased with the intent that “we could print other papers, which is one way to survive,” he explains, “Once we got it installed and got things positioned with our staff, we were unable to get any of the other papers that hadn’t been merged.”

The Vindicator’s precarious situation was no different than how other independent, family-owned daily newspapers are trying to stay alive in the digital age. Minus the many-times deeper pockets of newspaper chains, which had swallowed up many of the independents over the last 20 years, economies of scale essentially do not exist.

Brown cites the Columbus Dispatch, which was owned by the Wolfe family until June 2015, when it was purchased for $47 million by GateHouse Media LLC, a subsidiary of New Media Investment Group Inc., based in New York City. The newspaper was founded in 1871 and purchased by the Wolfe family in 1905.

Today GateHouse Media publishes 156 daily newspapers, 464 community publications and operates in more than 615 local markets, reaching more than 22 million people in 39 states, according to its website. Among its other daily newspapers in Ohio are the The Alliance Review, The Repository in Canton and The Record-Courier in Kent. In Pennsylvania, the company owns the the Erie Times, the Ellwood City Ledger and the Beaver Valley Times.

The Vindicator, founded 150 years ago this month, was purchased by William F. Maag Sr. in 1887. Brown is the fourth generation of his family to operate the newspaper.

Nondisclosure agreements prevent Brown from identifying the two companies that were interested in making a bid for The Vindicator. The most likely candidates would seem to be GateHouse and Ogden Newspapers, based in Wheeling, W.Va., which owns the Tribune Chronicle in Warren, the Salem News in Salem, The Review in East Liverpool and the Morning Journal in Lisbon.

A call to Charles Jarvis, publisher of the Tribune, was not returned as of this posting.

At its circulation peak, the Sunday edition of The Vindicator reached 160,000 homes in the five-county region. Today home delivery stands at just “32,000 on Sundays,” according to Brown, and “25,000 on weekdays.”

Advertising revenue is the largest share of any daily newspaper’s revenue stream, and for that steep plunge, Brown blames Google and Facebook “driving down the price of the ads and controlling the inventory.”

For sure, the entire newspaper marketplace has changed, and the downward trend in revenue and circulation “has happened all over the country,” he said. “But we started out at a lower level. When the internet really started hitting newspapers, that happened to be a time period when we were in the red. So we never caught up whereas if we had started in the black.”

And while Vindy.com has a large following, publishing daily only via digital would not generate sufficient advertising revenue, he said.

“Ninety-nine percent of the newspapers in the country can’t make enough money from digital to support their newsrooms. The New York Times can, The Wall Street Journal and the Washington Post might, but only a few other papers in the country are close to being able to do that.”

Three labor unions represent Vindicator employees and collective bargaining agreements mean severance arrangements for displaced workers must be negotiated. In their letter to readers, Brown and his mother noted they had “the cooperation of our employees and unions” as they “attacked expenses” and fought “against the tide of a changing business model and [struggled] to place The Vindicator on sound financial footing.”

The company filed its WARN notice Friday, providing employees, the appropriate government agencies and offices with the required 60-day closing notice.

As for the disposition of the huge building and its printing press at 107 Vindicator Square, “It will go up for sale.”

In the meantime, a few employees, including Brown and his mother, will remain at work for about a year to complete the wind-down of operations.

“We’ve tried very hard to serve the community and cover the school board issues, the local government issues, the township trustee issues so that politicians had to behave and pay attention and do things the right way and not be tempted to go off course,” Brown said.

“We are very grateful to our subscribers, readers and advertisers for supporting us over the years. And we’re very grateful to our employees and carriers but also very upset that we couldn’t find somebody to provide them with work.”

PREVIOUS STORY:
In Depth: Vindicator to Cease Publication Aug. 31

READ letter to Vindicator readers, posted at 10:17 p.m. Friday and printed in Saturday’s paper.

Pictured at top: Mark Brown, general manager of The Vindicator.

Published by The Business Journal, Youngstown, Ohio.