Consistent with a trend that is overwhelming print publications across the nation, the body that oversees the finances of The Michigan Daily and other student publications at the University is grappling with significant financial issues.

A budget summary dated Feb. 2 forecasts that Student Publications’ cashflows would be in the red by the end of the 2009 fiscal year in June. The prediction, along with months of mounting revenue decline, forced the organization to take a serious look at expenses, and develop new plans for generating income.

Student Publications, which is not funded by the University, and is almost entirely student-run, includes The Michigan Daily, the Michiganensian yearbook and the Gargoyle magazine. It also produces the student directory, and employs a staff of over one hundred students and seven full-time professionals.

Of the units within Student Publications, The Michigan Daily is by far the largest, accounting for about half of the money budgeted for the remainder of the fiscal year. Projects overseen by the Board of Student Publications are allotted 28 percent of the funds, and 22 percent go to development projects like seeking alumni donations. Combined, the Michiganensian, the Gargoyle and the directory use about two percent of the total budget.

In December, the financial situation of Student Publications led the board to decide to withdraw $300,000 from its $3 million invested in the University’s endowment, which is usually not intended for day-to-day operations. To prevent further withdrawals of these funds, the board is crafting a series of cuts it hopes will total $64,302.97. While this number will be a substantial relief for the budget, it is not a guaranteed fix.

Chip Peterson, board co-chair, said the board hopes to avoid tapping the endowment again, but that might not be possible.

“Our goal is to not have to do that,” Peterson said. “However, with where the numbers are coming in right now, it’s looking like we might have to.”

While the newspaper industry has consistently suffered across the board, the situation for Student Publications has escalated over the course of the past year. A struggling economy, lackluster ad sales and high building and maintenance expenses have all put significant strain on the budget.

When the financial circumstances of Student Publications were beginning to cause concern about a year ago, then-Daily Editor in Chief Andrew Grossman presented a proposal to the Board about a year ago to save money through a website overhaul. The Daily dropped its former web host, College Publisher, in part because the company took a cut of the Daily’s online ad revenue. The board then decided to invest $100,000 to switch web hosts in order to generate more revenue for the Daily, which in turn would benefit Student Publications as a whole. Since then, officials at the Daily say that online ad revenue has increased over 200 percent.

Online advertisements cost less than print ads, though, and cannot entirely make up for the empty spots in the print edition of the newspaper. According to Elaina Bugli, the Daily’s business manager, the fall semester was slow and January was one of the worst months for advertisements in years. But Bugli said ad rates are up substantially for February, and the business staff has already reached 75 percent of their monthly goal for advertising, as of last Friday.

Bugli also said that while it may be years before online ads become as financially viable as print ads, they can compensate for the gaps.

“We can make up what we’re losing, that’s definitely feasible,” Bugli said.

Daily Editor in Chief Gary Graca said that improving the website, which includes a complete redesign, is a top priority for the paper. The Daily is also planning on adding entertainment and restaurant guides, as well as a listing of available student housing and a crime map, Graca said. As the website develops into a resource for more than just news, he said web traffic should increase, and with it, the costs paid by advertisers.

Graca said that while the situation isn’t easy, it forces the staff to operate more efficiently and allows the current staff to leave their mark on the paper.

“It’s a good opportunity to look at what you’re doing and look at where you want to go in the next 10 years,” Graca said, “to look at the future of our publication in the national context of how other newspapers are changing and in the context of bad economic times.”

In addition to efforts to increase revenue through the website, Student Publications is making cuts where possible. The Daily is eliminating some phone lines and office supplies, and the editorial staff is expected to take a 10 percent pay cut. The Gargoyle and the Michiganensian are both looking at how they can cut down on printing costs. Most notably, the board decided to make a reduction in force of one professional staff position.

Peterson said the board is confident that Student Publications will be able to continue to maintain the Daily, the Gargoyle and the Michiganensian through the cuts and increased focus on online and other revenue development.

Peterson said that in contrast to many publications, the Daily benefits from a consistent readership and the ability to address that target audience in a way that no one else can.

“It’s very likely that the Daily, being what it is and the role that it serves to the students and to advertisers, can be insulated from the overall market that’s on a fairly sizable decline overall,” Peterson said.

— Because of his central role in the decision-making reported in this article, Editor in Chief Gary Graca did not edit it. You can read his take in a viewpoint here.

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