McLEAN, Va. – Fresh off a Pulitzer Prize win for his newspaper, Detroit Free Press Publisher David Hunke was appointed Tuesday to head the nation's largest newspaper, USA Today.
Hunke's first act as publisher was to name USA Today's acting editor, John Hillkirk, to the post on a permanent basis. Hillkirk has been with the newspaper since it was founded in 1982, most recently as executive editor.
Hunke replaces Craig Moon, who retired this month, while Hillkirk replaces Ken Paulson, who left Feb. 1 for a nonprofit group that promotes free speech.
The appointments, announced during the annual shareholders meeting of USA Today owner Gannett Co., come just a week after the Gannett-owned Free Press won a Pulitzer for local reporting. Journalism's top prize was awarded for uncovering a sex scandal that forced Detroit's mayor, Kwame Kilpatrick, from office.
The Free Press is also at the center of a bold, closely watched transformation aimed at ensuring its very survival amid sharp declines in advertising because of the recession and the availability of cheaper ad alternatives on the Internet.
Along with The Detroit News, the Free Press reduced home delivery on March 30 to just three days a week — Thursday, Friday and Sunday. On the other days it is producing a slimmed-down edition for newsstands and encouraging readers to turn to the Internet and portable devices for news. The idea was to cut printing and distribution costs while retaining full service on the three days most popular with print advertisers.
In a speech to shareholders at the annual meeting, Gannett Chairman and Chief Executive Craig Dubow said the Free Press "will lead the way" for other newspapers looking for ways to survive and thrive in a beleaguered industry.
Dubow declined to elaborate after the meeting. Dubow has said that the situation in Detroit is unique, not only because of the auto industry's crisis and the miserable economy there, but also because it remains a two-newspaper town. But he also said that Gannett may be able to apply some of what it learns from Detroit to other markets.
In an interview, Hunke said the Free Press model won't work at every newspaper, but he said Gannett likely will study the changes in Detroit for possible application to one or more of Gannett's other 84 daily newspapers.
As for USA Today, Hunke said he believes the newspaper is better situated to bounce back after the recession than other newspapers, partly because of USA Today's national advertising base.
As a national newspaper, USA Today is less reliant on classified and real estate ads for revenue. Those revenue streams have suffered in the recession, and some analysts wonder whether newspapers will lose those kinds of ads permanently to Web-based competitors.
Still, USA Today is far from immune to the difficulties facing newspapers. In the first three months of 2009, advertising revenue fell 34 percent compared with a year ago.
USA Today remains the nation's top-selling newspaper, despite seeing a 7.5 percent circulation decline to 2.11 million in the latest reporting period — by far the largest drop in the publication's 26-year history. Circulation figures covering the October-March period were released Monday by the Audit Bureau of Circulations.
The atmosphere at Tuesday's annual meeting to some extent reflected the tough times Gannett has faced in the past year. Gannett's stock has lost nearly 90 percent of its value during that time, while laying off roughly 10 percent of a work force that now stands at roughly 40,000 employees. Those employees who remain have been required to take unpaid furloughs of two to three weeks in the first six months of the year.
The newspaper also cut its quarterly dividend in February by 90 percent, to 4 cents a share. The company announced at Tuesday's meeting that the upcoming dividend will remain at 4 cents.
Dubow faced pointed questions from Jim Hopkins, a former Gannett employee who now runs a blog that frequently posts hostile critiques of Gannett management. His questions ranged from Dubow's compensation to the seating arrangement at the annual meeting. Outside the corporate headquarters, two protesters waved signs, including one calling for Dubow's ouster.
Dubow said the decisions to lay off workers were "the hardest I've ever had to make" and that the choice in recent months to implement furloughs has prevented further layoffs.
"We believed we needed to keep as many of our skilled employees as possible," he said.
Gannett shares lost 4 cents to $3.43 in afternoon trading Tuesday.