Front page blues

The financial troubles swamping the Globe washed into the newsrooms of other local newspapers long ago, leading to painful staff cuts and shriveling news operations at the Boston Herald and GateHouse Media Inc., owner of more than 100 daily and weekly newspapers in New England.

The Herald, which had a 265-person editorial staff about a decade ago, now has roughly half that, according to Sunday editor Tom Mashberg. With fewer reporters, the Herald has been forced to scale back coverage, gutting its arts and entertainment staff, investigative team, and business and metro desks.

There are now roughly 10 metro reporters covering the city - once the Herald's bread and butter. In-depth stories, former staffers complain, have been replaced by short stories and news briefs. Despite all the cutbacks - including the decision last year to eliminate pressmen in Boston and outsource the printing of the newspaper - staff cuts still loom. In late March, shortly before the New York Times Co. threatened to shut down the Globe due to financial losses, the Herald shed another 24 jobs - mostly in non-newsroom functions.

Herald circulation has fallen 38 percent over the past decade to about 167,500 daily and plunged 43 percent to about 100,800 on Sunday, according to Audit Bureau of Circulations.

"How are things now? It's tough," Mashberg said. "We once had a newsroom filled with reporters and a commercial department filled with commercial staff. And it has definitely shrunk."

Patrick J. Purcell, the Herald's publisher, declined to comment on anything including the paper's financial performance.

Similar cuts have hit GateHouse, which owns The Patriot Ledger of Quincy, the Enterprise of Brockton, and 117 other small newspapers in New England. Rick Daniels, chief executive of GateHouse Media New England, estimates that the company has slashed 25 percent of the company's total staff in the last two years to about 1,250 today. GateHouse will close seven of its local publications, including the Plymouth Bulletin, at the end of the month.

"We're looking at an environment where the total number of ad dollars being spent in Greater Boston has gone down somewhere between 25 and 30 percent," said Daniels, a former top executive at the Globe. "The ad dollars just aren't being spent like they were, including, most specifically, the first quarter of this year."

But even with the cuts, GateHouse's losses, companywide, have been eye-popping. GateHouse, which has acquired 416 newspapers nationwide since 1998, reported a $673 million net loss last year and the New York Stock Exchange de-listed its stock due to its plummeting value.

"The last few years have seen GateHouse go from a high-flying IPO darling at $20 a share to virtual obscurity on the penny stock pile," said Tom Corbett, an equity analyst tracking media for the Chicago-based Morningstar Inc., noting GateHouse's current trading price of just 8 cents a share. "That's how bad it has been."

With the debt GateHouse is carrying - it's more than $1 billion because of acquisitions - the company is in for a long haul that may require it to sell off assets or seek bankruptcy court protection, Corbett said. But GateHouse, the Herald, and the Globe are hardly suffering alone. Across the country - and particularly in the Boston area - traditional news outlets including TV and radio are struggling.

Sixty-one percent of adults in the Boston area live in households with broadband access, the second-highest penetration rate in the United States, and people have migrated to the Web in droves to get their news for free. Advertisers have followed them there, undermining the traditional business model of newspapers, and the recession, hitting hard in recent months, has only exacerbated the financial woes.

As recently as a few weeks ago, many would have considered it unlikely that the Globe, with an average daily paid circulation of 323,000, might close down before the Herald.

New England's biggest paper has endured many rounds of cost-cutting, whether it's shrinking the paper, closing a plant, or trimming jobs. Since 2001, the paper has shed 546 employees in buyouts and layoffs. Newsroom staff in particular has fallen 30 percent - from a peak of 510 employees to 355, according to Globe figures. The total staff is now about 2,100 employees.

More cuts could be on the way as the Globe's fortunes have fallen - a $50 million loss last year and a projected $85 million loss this year. That's what sparked the Times Co.'s ultimatum to Globe employee unions earlier this month: Agree to $20 million in concessions or face a Globe shutdown.

Whether it's a smaller Herald or Globe, cuts - even necessary ones - hurt readers most of all, said Andrew Costello, a former editor of the Herald and now an assistant professor of journalism at Stonehill College in Easton. When newspapers cut back - even if they do so to survive - fewer stories get covered, and the ones that do get covered are often reported with less depth and nuance.

"Reporting is very, very time consuming - as well it should be if you want to have a comprehensive, accurate, well-researched paper," Costello said. "It's a function of staff. And the more you limit yourself in terms of staff, the more you limit yourself in areas of coverage. And that's where the public is suffering."

But where some are seeing problems, others are sensing opportunities. In a memo to GateHouse staff last week, Daniels told employees: "We are likely on the cusp of a major, even 'seismic' shift in the eastern Mass media markets that will have untold readers and millions of advertising dollars up for grabs."

"Our aim," he added, "is to grab our FULL share."

In a Globe interview, Daniels declined to say whether he was referring specifically to the Times Co.'s threat to shut down the Globe. But there is a finite amount of ad revenue, he said, and he will do what it takes to make sure GateHouse claims the largest possible slice, no matter what happens at the Globe.

"The Globe has to figure out its own path," he said.

Keith O'Brien can be reached at kobrien@globe.com.