Stripes cutting costs
Faced with the likelihood of losing more than $1.5 million for the second straight year, Stars and Stripes is taking steps to cut costs.
While key changes may affect Stripes’ European edition, some will be apparent to Pacific readers.
“Some we are putting into effect immediately and some we are studying,” Publisher Thomas Kelsch said in a recent telephone interview from Washington, D.C.
Staffers are studying how to consolidate the paper’s four weekly magazines into a single Sunday magazine of up to 32 pages, Kelsch said. The most popular features from each magazine will be merged into one product, he said. Currently, Stripes publishes Accent on Tuesday, Pulse on Wednesday, Travel on Thursday and Sunday magazine on Sunday. It also publishes a TV guide in the Pacific on Sunday, and a sports magazine, Time Out, about nine times a year.
Other cost-cutting measures being studied include: limiting publication to six days a week, closing the Stripes printing plant in Germany and contracting out the printing of the newspaper in Europe.
Kelsch dismissed the idea that Stripes is facing imminent closure.
However, if action isn’t taken now, he said, that might eventually be the case.
“We have the obligation to be financially solvent,” Kelsch said, adding that not all changes the paper is considering could be attributed strictly to financial concerns. “Good management requires that we constantly monitor our activities.”
Stars and Stripes is partially funded by Congress through the Department of Defense. Kelsch said it receives about $12 million each year. The newspaper’s budget is about three times that, with advertising sales and daily newspaper sales making up the difference.
Kelsch said several factors contributed to the paper’s financial woes:
• The decline of the dollar. A stronger euro is costing the paper “seven figures” this year, Kelsch said. Exchange rates have not fluctuated as much in Japan and South Korea.
• Conflict in the Middle East. The newspaper has received federal money for contingency operations, but it still has had to divert other resources to send staffers to the Middle East and distribute papers there.
• A falling circulation. With Europe-based units deployed to the Middle East, circulation in that theater has dropped. In the Pacific, circulation has been relatively stable since 2001, and grew slightly in 2003. Robb Grindstaff, general manager/Pacific, added that Pacific advertising revenues also have grown considerably for the past three years.
Kelsch said that job cuts were “a possibility,” but that he didn’t think large layoffs were likely. Grindstaff said no cuts were being considered in the Pacific.
“Overall, Pacific is in good financial shape, and improving every year,” Grindstaff said. “But Pac is only one small part of this worldwide organization, so we are impacted by operations and economics that affect the rest of the organization, such as the European economy or the Iraq and Middle East operations.”
Kelsch said he and other decision-makers would act with readers in mind. And he said that regardless of the changes, he feels the paper will continue to serve its customers.
“There’s no doubt in my mind about that,” he said. “Stars and Stripes is a very strong news product.”