No Alternative to Higher Profits

Seven staffers have lost their jobs in layoffs at The Village Voice, the largest economic reduction in years, perhaps ever, at the flagship paper of the alternative press.

The move comes at a time when the Voiceand the L.A. Weekly — as well as their corporate parent, Village Voice Media — are making money, but when profits have been held below investor expectations because of a costly deal with another newspaper, a still shaky economy and rising health-benefit costs.

Voicepublisher Judy Miszner did not agree to an interview, but said in a company statement that “We believe taking these proactive steps is the right course of action to maintain our long-term health and sustain profitability. The market in New York City remains challenging, and it is our sense that we will not see a significant turnaround in the coming months.”

The terminated employees, less than 5 percent of the workforce, included longtime writers and editors. They got the bad news on July 16. “They told everyone that we’re doing this because of the economy,” said one laid-off employee, who asked not to be named. “But they said we’re still making money.”

Exact figures are not available for the privately held company, but the typical profit margin is estimated at 15 percent to 20 percent a year for the entire company, and higher for the Weeklyand Voice. Though page counts remain lower than in the peak years of the 1990s, Voice Media still claims to have made more money in 2002 than it did in 2001. And 2001 was itself profitable, despite the 9/11 terrorist attacks that decimated New York City businesses.

The economic outlook among Voicecompetitors is mixed. Time Out New York, a magazine whose calendar listings compete with those of the Voice, has healthy profits and no plans for layoffs, said publisher Alison Tocci. Nor are layoffs in the works for the New York Press, a smaller alternative paper, but then it’s already staffed razor-thin. “The meaning is the economy blows out here,” said New York Presseditor in chief Jeff Koyen. “We’re all having a tough time competing for advertising. A while ago, we circled the wagons and made cuts. The Voiceis finally facing the fact that they have to start cutting people.”

The Voicealso debuts a redesign this month, which features a brighter, lighter layout and shorter articles — a response to the competition as well as an effort to pull in younger readers. Economically, however, the paper remains dominant in its market. It’s still where readers turn for an eclectic mix of progressive politics, sex ads and movie times.

One industry insider pinpointed the source of trouble elsewhere: “The real

problem is that the company paid $9 million to make New Timesgo away in Los Angeles, and they’re not getting as much extra advertising revenue as they had hoped.”

New Times, of course, was the largest competing alternative newspaper in Los Angeles. Although the New Times corporation consistently lost money in L.A., it still poached Weeklyadvertisers and held down advertising rates. So Voice Media and New Times cut a deal last October: The New Times chain pulled out of L.A., and, in exchange, Voice Media shuttered its Cleveland paper and handed over $9 million. Government regulators accused the two companies of illegally dividing up markets. In the end, the chains paid fines, while admitting no wrongdoing. But fines and legal fees probably added $2 million in expenses to Voice Media. All told, the antitrust entanglement could easily have added up to half of Voice Media’s annual profits.

Thus, the very public cost cutting at the Voiceis likely a message of reassurance: The paper’s management is asserting that it can be trusted to look out for investors’ interests. Viewed from the West Coast, the timing was especially portentous, because it came during contract negotiations between Voice Media and the union at the L.A. Weekly. The company cited rapidly rising health-benefit costs and the spotty economic recovery as justification for offering a lower level of benefits and wage increases than that obtained just last year by the union at the Voice. And company negotiators implicitly submitted the layoffs at the Voiceas Exhibit A. The union and the Weekly reached a tentative, compromise agreement this week, but Voice Media’s tough stance is more cheery news for the investors. The message resonates altogether differently for company employees.