• by Erik Sass  @eriksass1, September 11, 2007

Recent events at The Wall Street Journal are a microcosm of major trends affecting the newspaper industry, both for good and ill. Its formation of a cross-platform sales team combining print and online operations, announced last week, show management's commitment to embracing digital distribution. But other developments, including an employee picket over contracts, serve as reminders that the newspaper business is on the defensive.

Cross-platform sales groups have proven effective in raising overall spending by individual advertisers by pitching integrated packages to media buyers. By offering something akin to a volume discount, newspapers have found they can boost spending by up to 20%. L. Gordon Crovitz, executive vice president of Dow Jones, WSJ's publisher, said the integrated sales group covers other Dow Jones properties including MarketWatch.com, Barron's Online and AllThingsD.com.

While newspapers once offered integrated packages as a way to entice print advertisers online, the tables may now be turning. As print revenue tumbles, newspapers are offering deals with attractive print components to lure advertisers who might otherwise just want online deals. Thus, online is attracting ad dollars that can help shore up print revenue too.

But all is not well at the WSJ newsroom, as indicated by a picket line of about 35 employees who were protesting new labor contracts proposed by Dow Jones management. Some of the elements they object to are common problems in American business, like higher health care costs, but employees are also concerned about the possibility of job cuts. In fact, Dow Jones CEO Rich Zannino conceded in a note on Monday that some job cuts are "unavoidable."

The pressure to cut newsroom staff is mounting at newspapers across the country, with management slashing hundreds of full-time positions through layoffs and voluntary buyouts. In 2005, the Boston Globe cut 160 jobs--including 35 from the newsroom--followed by another 125 in January of this year, including 19 from the newsroom. In April, the Los Angeles Times cut 70 newsroom staff as part of a total cut of 250 positions by owner the Tribune Company. In February, the Atlanta Journal-Constitution cut 80 newsroom jobs. And under new ownership, the Philadelphia Inquirer cut 71 newsroom positions in January.

Adding an additional sour note to the tune, on Monday, Wachovia Capital Markets issued a note cautioning investors that newspaper revenues would be steeply down in the second half of 2007. Analyst John Janedis predicted that key revenue areas, particularly classifieds, would continue falling through 2007 into 2008. According to his analysis, Journal Register, Lee Enterprises, the New York Times Company, and Gannett are the most risk-prone for missing revenue targets.