Dimming Star: Things just get less and less bright at the city's shrinking daily paper 

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On Monday, October 21, 2013, Greg Farmer, senior assistant managing editor of The Kansas City Star, placed a rare call to Karen Dillon. He wanted to know when Dillon would be in the office that day.

Good reporters are invariably compared with canines: "dogged," a "pit bull," a "bulldog." Dillon belongs to this breed; she's the kind of journalist whom other journalists admire. On the morning Farmer called, Dillon had been with the Star for 22 years, during which time she had earned a reputation as one of the city's best investigative reporters. In 1998, she won a George Polk Award for a series of stories on gender-equality violations at the NCAA. A report on controversial practices by Missouri police during drug-money seizures earned her the 2001 Goldsmith Prize for investigative reporting from Harvard University. More recently, Dillon had been patrolling Johnson County for the Star, uncovering stories about missing municipal money in Merriam, improper searches of homes in Leawood, and the fractious city government in Shawnee.

Dillon, in other words, possesses the sharp instincts that build up over the course of a career in bullshit detection. But even a rookie would have intuited something amiss about Farmer's call. Dillon paused, then asked Farmer if she was being fired.

"You know the drill, Karen," Farmer said, according to Dillon.

She did. Less than a year before, on December 10, 2012, Dillon had answered a similar call from Farmer. He asked her to meet him in the publisher's conference room — grim site of dozens of the layoffs that have decimated the Star's ranks over the past decade. There, she met the firing squad: Farmer; Steve Shirk, the Star's managing editor; Mike Fannin, Star editor and vice president; and Chris Piwowarek, human resources vice president. Also present in the room, curiously, was another Star reporter, Dawn Bormann.

"Fannin explained that he had been told to eliminate a position and he had selected either my job or Dawn's," Dillon tells The Pitch. "He said I had seniority, so if I decided to leave, Dawn would stay, and vice versa. Piwowarek talked about the process and said we had one week to decide."

Dillon and Bormann exited the building and spent the next several hours talking over the ugly and bizarre task their employer had just assigned them. They eventually agreed that Dillon would stay — she had two young grandchildren to take care of.

"I had thought that being fired would be the worst thing I could face," Dillon says. "I realized I was wrong. I hadn't prepared myself for being put into the position of sacrificing a friend."

By the following day, word had spread in KC media circles. Hearne Christopher Jr., the former Star gossip columnist who took a buyout from the paper in 2006, published an account of the meeting on his blog, KC Confidential, comparing the Star's management approach with something out of The Hunger Games. Christopher's piece caught the eye of Jim Romenesko, who runs a nationally influential journalism site.

"Any chance you want to comment on being put into this position?" Romenesko asked Dillon in an e-mail.

"I knew that any response would be frowned upon by management," Dillon says. "I also knew that journalistic cowardice would not be acceptable. I decided to walk the tightrope the best I could by responding truthfully, yet not criticizing management."

She wrote back: "It's one of the most difficult situations I've ever faced."

Romenesko's story was subsequently picked up by several other outlets, including Gawker, The Huffington Post and Bloomberg Businessweek.

The next day, Fannin called Dillon to his office. He was furious.

"A special project that two reporters had worked on for a year had been published that Sunday and Monday," Dillon says. "Fannin actually told me that the favorable reaction he had expected from the series was being overtaken by the Hunger Games controversy."

Fannin pounded on his desk and demanded to know if Dillon had been the one who called Christopher. Then he reprimanded her for responding to Romenesko.

"I asked him what he expected me to do and was met with a stony silence," Dillon says. "I told him that I had been put in the situation unwillingly. I said I wouldn't lie to Romenesko or anyone, and I thought it was cowardly to respond with a 'no comment.' I told him I gave Romenesko the most innocuous quote I could think of."

Fannin dismissed Dillon from his office. The next day, Star publisher Mi-Ai Parrish sent out an employee memo with a less-than-plausible denial of the reports.

"The Star has tried to make voluntary options available on many occasions when it has been necessary to make reductions in our workplace, in order to lessen the impact of involuntary eliminations," Parrish wrote. "For this particular severance program, for any group of two or more employees in which a reduction is to occur we did offer the voluntary option. However, if there are no volunteers, as is our practice, the employee with the least tenure will be included in the reduction."

Got that?

Ten months later, when Farmer again informed Dillon that her position was being eliminated, he began the meeting by pointing out that she was in the room alone this time around — "an obviously sarcastic reference to the previous fiasco," Dillon says. She believes she was targeted for this second layoff as punishment for the answer she had given to Romenesko. (Neither Farmer nor Fannin would comment on Dillon's termination.)

In February, Dillon landed at KSHB Channel 41. Last month, she led a multi-part investigation for the station into Kansas law enforcement's restrictive open-records laws, drawing national attention to the issue.

Dillon, who was the only full-time reporter at the Star dedicated to covering government in Johnson County, has been replaced by freelancers who contribute occasional pieces to the paper's 913 section. The Star, headquartered two miles east of the Kansas-Missouri state line, has just one full-time government reporter covering the state of Kansas: Brad Cooper, who covers the Statehouse, 60 miles away in Topeka. Count only metro-area reporters, and the number is zero.

There are several reasons that KC's daily paper does not document the metro as comprehensively as it once did. "Because the Internet" is the short answer.

A more detailed explanation would note the emergence of Craigslist (which, by letting users post ads for free, effectively caused newspapers' classified-ad revenue to evaporate) and the foolish decision, made in the 1990s by just about every newspaper on the planet, to devalue itself by giving away its editions for free online (which taught readers to avoid paying for subscriptions).

Even before the Internet came along and disrupted the newspaper business model, though, the quality of many dailies was already suffering as a result of increased corporate ownership. As recently as 15 years ago, newspapers enjoyed luxurious operating margins — sometimes as high as 30 percent. Wall Street liked the looks of it: big dough, lots of market share, not much pressure to innovate. Before long, what once were hometown-owned organizations with vested interests in the communities they served became budget line items for billion-dollar conglomerates.

This is, to an extent, what happened to the Star. It hasn't been locally owned since 1977, when it was sold to New York–based Capital Cities Communications, which later merged with Disney, which in 1997 sold the Star to Knight Ridder. In June 2006, Knight Ridder sold the Star, along with 20 other newspapers, to the McClatchy Co., a Sacramento-based newspaper chain, for $6.5 billion. After the sale, McClatchy CEO Gary Pruitt came to Kansas City to give a customary newsroom pep talk.

"He's standing up behind this podium, giving this big spiel about how great of a purchase it was," says Jim Fitzpatrick, a former Star bureau chief in Wyandotte and Johnson counties, who was with the paper for 36 years. "When in fact McClatchy had bought all these papers at the exact wrong time and had taken on all this debt to do so. The previous few years with Knight Ridder had been pretty rough — lots of buyouts and layoffs. So I raised my hand and asked if he was planning any buyouts. He just laughed and said they were planning on expanding, not contracting. I just remember thinking, 'How the fuck am I gonna get out of here?'" (Fitzpatrick retired later that year.)

Newspapers are struggling everywhere, of course. But McClatchy papers are facing a particularly scary future. In 2005, McClatchy stock traded at $75 a share. Today, the share price hovers around $6. And the company still carries a staggering amount of debt from the Knight Ridder purchase: $1.5 billion in consolidated debt, as of its 2013 SEC filing.

The hope that the print business model might be replicated online fades more and more with each passing quarterly statement. Print advertising revenue and print circulation continue to drop as readers go online for their news. In theory, the Star could just transfer its ad rates and circulation fees to the Web. But online advertising fetches only a fraction of what print advertising does. The paper has erected a paywall online, called Star Plus. But the newsroom is thin from a decade of steady layoffs, and getting readers to pony up $120 a year to read an online Star is a tough sell.

"This is the big question for companies like McClatchy — the question of digital transition," says Ken Doctor, a newspaper analyst who writes the "Newsonomics Of" column for Harvard's Nieman Journalism Lab. "Can they cut the legacy costs — printing papers, operating presses, owning huge office buildings, trucks, the old circulation apparatus — and grow new revenues? Because there is no growth on the print side of things. You just have to try to manage the print side down while growing the digital side as much as possible. But you have to have enough news capacity to produce a substantial enough product to entice people to pay for all-access subscriptions, like the Star's Plus program. And that is the tough part."

McClatchy's only play at the moment, apart from filing for bankruptcy, is to unload assets and use the cash to pay down debt. It appears to be moving in that direction, having recently sold its stake in apartments.com, which netted the company $90 million. Cars.com, another digital classified company in which McClatchy shares ownership, is also being shopped around, reportedly for around $3 billion. McClatchy's share of such a sale, after taxes, would be $475 million. A windfall like that could greatly reduce McClatchy's debt burden. McClatchy stock rose at news of the potential cars.com sale, a sign of encouragement from the market.

But even after such a deal, McClatchy would still have close to a billion dollars of debt on the books. And it would still have to figure out how to suck revenue out of a shrinking industry, mostly through specialized products, events and marketing services.

A recent internal McClatchy memo boasts that 39 percent of the company's revenue is now derived from sources outside the daily paper, namely digital advertising and digital marketing. But its total revenues aren't growing — they were down 5 percent in 2013, compared with 2012, "due to the continued decline in demand for advertising," according to its annual filing.

"Obviously, when we talk about these financials, we're talking about how they translate to the health of the newsroom, which produces the paper," Doctor says. "At McClatchy and elsewhere, they've already suffered great losses in the newsroom. The product has taken a big hit. Given the situation on the financial side, I don't think there's any chance we'll see any newsroom growth at McClatchy papers until at least 2018. And by then, who knows how small they'll be?"

What McClatchy's woes mean for the staff at 1729 Grand is more of the same: layoffs, buyouts, furloughs and, as of last year, wage freezes.

"Miserable," "morguelike," "paranoid," "bleak" — these are among the words that current and former Star employees use when asked by The Pitch to describe the mood in the daily's newsroom.

What this means for KC's citizens is a lighter paper, one without the resources to cover an entire metro. The Star has shuttered its bureaus in Independence, Johnson County and Wyandotte County; western Jackson County is the only part of the city where it still maintains a significant news presence. Significant but hardly robust: Roughly 20 reporters are now on the metro desk — down from a high of 100.

Meanwhile, the Star continues to pay actual salaries to lightweights such as Jenée Osterheldt, whose recent columns explore such topics as her sick dog, Lindsay Lohan's reality show, and how the seasonal Easter bunny statues on the Plaza are scary-looking. And though the sports desk hasn't gone without departures, there has been little reduction overall in that section. Indeed, the paper's only notable hiring the past couple of years is its acquisition of a husband-and-wife pair from the St. Louis Post-Dispatch: Vahe Gregorian, a (white, male, gray-haired) sportswriter who replaced Kent Babb as the paper's second sports columnist, and Cynthia Billhartz Gregorian, imported to edit the fluffy House + Home section. Check the Star's homepage on a weekend, and you're likely to find that fully half the stories are sports-related.

From a business perspective, this makes a limited amount of sense. Kansas City is a sports town, after all, and the Star is answering a perceived want from its audience. Certainly readers don't want their local news to contain only stories of civic malfeasance. But American journalism is rooted in something like a higher calling — the idea of speaking truth to power. So when the Star lays off somebody like Dillon but keeps a writer primarily tasked with rewriting celebrity click bait from around the Web, the message to readers is that the Star isn't serious about its civic and investigative duties.

Dailies in cities of comparable size are less derelict.

Milwaukee's Journal Sentinel lost about 100 employees in a buyout several years ago, but the paper's commitment to investigative journalism has endured. It has built a special "Watchdog" unit, staffed by nine reporters, which won the paper the Pulitzer Prize in 2008, 2010 and 2011. (The Star's last Pulitzer came in 1992.) This strategy has translated to respect from its readers rather than financial disaster. Stock of the Journal Sentinel's owner, the Milwaukee-based Journal Communications, is trading two points higher than McClatchy's.

"We're definitely not immune from the economic realities that face journalism," says Greg Borowski, the Journal Sentinel's investigations editor. "But the top editors here have always maintained that it's important to do public-service journalism. They've made it a top priority, and we see major results from our big investigative projects. Will the average Packers story have more hits online than the average courts story? Yes. But we don't measure our impact strictly by how many hits we get. We look at the impact on the public and the community as well."

Star editors and management — a group, it's worth noting, whose positions haven't been cut nearly as sharply as those in other areas of the paper — would likely point to last year's "Nightmare in Maryville" story as evidence of the paper's investigative bona fides. The story, by reporter Dugan Arnett, detailed the alleged sexual assault of a young woman named Daisy Coleman, and her family's mistreatment by Maryville law enforcement and townspeople.

It was an explosive story told well, and it became a viral sensation after Gawker picked it up and hacktivist site Anonymous took up Coleman's cause.

Fannin, who won several awards as the editor of the Star's sports page before being promoted to the paper's top editor position, is said to have entered the newsroom the day after Arnett's article ran and declared "Nightmare in Maryville" "the story of the century." (Fannin strongly denies this. "I'm very proud of the job that we did on that story," he says. "But I can assure you no one at the Star said that or thinks that.") The staff at KCUR 89.3 might have been interested to hear his alleged boast. The station had reported on the Coleman case five months before the Star, in a 1,900-word piece called "Why Was the Maryville Rape Case Dropped?"

Arnett and his editors made their version of the story sing, no question. But the packaging and follow-up also reeked of prize-sniffing. In March, after a special prosecutor re-examined the case and found insufficient evidence for a rape charge, new depositions related to the case surfaced. Among the revelations in the documents was an exchange between Coleman and a Nodaway County prosecutor in which she admitted that, on the night of the alleged rape, she indicated to Matthew Barnett, the accused rapist, that she might provide him sexual favors if he bought her alcohol. The Star's report on the deposition omitted this bit of information; such nuance apparently did not fit into its established narrative of Coleman as a one-dimensional victim. "In unusual tactic, Miranda rights were read to Daisy Coleman in Maryville case" went the headline.

Earlier this month, McClatchy sold the Anchorage Daily News, the 13th-largest newspaper in its portfolio, to the Alaska Dispatch, a billionaire-owned, online-only publication founded in 2008. McClatchy said in a press release that it hadn't planned to sell the Anchorage Daily News until Alice Rogoff made an offer. But presumably the company is happy to have the extra $34 million.

The Alaska Dispatch was originally the effort of two Alaska journalists who were concerned that local and state issues weren't getting adequate attention from Alaska media outlets such as the Anchorage Daily News, the state's largest daily. They eventually landed on the radar of Rogoff, a former CFO at U.S. News and World Report and the wife of David Rubenstein, the billionaire founder of the Carlyle Group. Rogoff bought in, and with her financing, the Dispatch was able to hire talent away from other media outlets and build an operation that, at the time of the acquisition of the Anchorage Daily News, boasted 30 employees devoted to covering serious issues in Alaska.

Rogoff is only the most recent wealthy individual to purchase a struggling newspaper. Jeff Bezos famously bought The Washington Post last year. Warren Buffett now owns several daily papers, including his hometown Omaha World-Herald. Minnesota Timberwolves owner Glen Taylor recently purchased the Minneapolis Star Tribune.

Could something like what happened in Alaska happen here? There are certainly plenty of people with deep enough pockets to buy the Star. There are not, however, any start-ups like the Alaska Dispatch doing original reporting in Kansas City.

That's somewhat unusual for a city this size. Nonprofit news ventures seeking to fill the gaps left by diminished dailies have sprung up in cities across the country over the past half-decade or so: MinnPost in Minneapolis, the St. Louis Beacon, Voice of San Diego, The Texas Tribune, Wisconsin Watch.

Kevin Davis is the CEO and executive director of the Investigative News Network, which promotes some of these nonprofit public-service journalism endeavors.

"These are news outlets that cover primarily civic-based news: the mayor, city hall, the budget, the school board," Davis tells The Pitch. "In other words, the areas that seem to be most lacking in what's left of the for-profit newspaper business, which tends to focus its remaining resources on sports and business — where you can sell more ads. Our members think of themselves as kind of a melding of community organizers and newspapers."

Davis notes that no one model fits each market, and none have really supplanted daily papers.

"I think what we're going to see, moving forward, is a mixed news market of nonprofits and for-profits — kind of like how metro areas have for-profit and nonprofit hospitals," he says. "I don't think either has the potential to grow to the size dailies once were, but I think there's a patchwork situation that you are starting to see, where some of these nonprofits are working hand-in-glove with smaller, more nimble for-profits."

Margie Freivogel worked 34 years at the St. Louis Post-Dispatch as a reporter, a Washington correspondent and an assistant managing editor, before founding the St. Louis Beacon in 2008. She says the budget for the Beacon's first-year staff — Freivogel, three editors, five reporters, a fundraiser and a general manager — was around $700,000. Funding for the venture came from donors big and small. Emily Pulitzer, a well-known St. Louis philanthropist, put up an initial challenge grant.

"She said, 'I'll give you this amount of money — several hundred thousand dollars — and I'll match you one dollar for every three dollars that other people donate," Freivogel tells The Pitch. "And that was smart of her because it made sure we were broadening our support throughout St. Louis — it made it so it wasn't just a thing that she was responsible for. It forced us to go out and talk to lots of people and listen to what they were looking for from a news organization. And they got to know us in the process."

Freivogel says the Beacon's basic pitch to donors was that good journalism, like the arts, is a fundamental resource for a community, and that it was suffering in St. Louis because of economic shifts in the media landscape.

"Back in 2008, people weren't used to the idea that substantive local news coverage was something that they should be supporting with their giving," Freivogel says. "As time went on, it became a more familiar idea."

Late last year, the Beacon merged with St. Louis Public Radio, creating a new-media operation that rivals the declining Post-Dispatch. "Now we have a newsroom twice the size of what either of us had separately," Freivogel says. "We don't overlap on stories, we can cover more with a lot of depth and context, and we can do much more with things like data visualization and long-term investigations." A similar partnership recently sprouted in Denver, where Rocky Mountain PBS, public-radio station KUVO and the Rocky Mountain Investigative News Network have merged to better cover Colorado.

"Daily newspapers aren't going to totally go away, but they're never going to have the dominant position they once had," Freivogel says. "Meanwhile, there's this great opportunity to use digital media, which is vastly superior for journalism and communications. It's an exciting time to be in the business of reporting — if you can get in the right position financially and technologically to execute it."

Given its debt burden and the general inflexibility that accompanies out-of-town corporate ownership, the Star is unlikely to engage in any experimental partnerships anytime soon. Certainly, it won't be teaming up with The Gardner News or The Dispatch in Shawnee, two suburban papers that last year quarreled with the Star over a contract for legal notices in Johnson County.

Rhonda Humble, publisher of the Gardner News, believes that Johnson County's Board of County Commissioners violated state law by awarding the Star the contract, which amounts to roughly $200,000 a year.

"It is frustrating to me that the county commission's decision is contradictory to their own published bid requirements," Humble tells The Pitch. "And I'm disappointed that the awarding of the bid to a Missouri-based corporation flies in the face of state statute. It makes me wonder whether there was not a political motivation to the legal maneuverings of the commission and county staff to sidestep legal requirements.

"One requirement is that the newspaper that publishes the notices must be published in Kansas," she adds. "The Star's press and headquarters is in Missouri. So then they say that the Olathe Daily News, which the Star owns, has an office in Lenexa. But that's not even a real newspaper. The Olathe Daily News is just an insert in the Saturday Star. It's not recognized by the Kansas Press Association. It wasn't, at the time of the bid, registered with the secretary of state in Kansas. And it didn't have a USPS number, which is also a requirement for the contract."

Humble doesn't think much about the way the Star has conducted itself in Johnson County, either.

"I work in Gardner, and I live in Olathe," she says. "And I never see any Star reporters anymore. They have a nonpresence. When did they fire Karen Dillon? That's the last reporter I saw out here."

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