It Gets Worse: McClatchy Cuts Another 1,150 Jobs; Star-Ledger Publisher Threatens Closure

 

NEW YORK, NY (September 16, 2008) – While Wall Street weathers a financial disaster, and the Gulf Coast looks for billions to rebuild after Hurricane Ike's disaster, newspaper analysts are watching August's newspaper revenues to guess how much deeper the publishing industry's disastrous year might go.

In the midst: today The McClatchy Co. announces that it is cutting yet another 10 percent of its workforce (1,150 more jobs), and The Star-Ledger's publisher in Newark, NJ, threatens to close the paper.

The foreshadowing of what's likely to come was reported yesterday when the Gannett Co. announced a third-straight month of steep advertising declines, a 17 percent drop over the previous year.

Then today The McClatchy Co. announced its second major round of job cuts in three months, and this one is also a big one: another 10 percent of its workforce, or about 1,150 jobs. McClatchy said only half of the reductions would come through buy-outs and attrition.

As part of their job cuts announcement today McClatchy also said their consolidated revenues for August were down 15.7 percent and advertising revenues compared to last August were down 17.8 percent, while online advertising revenues for the first eight months of 2008 were only up 11.2 percent.

Today McClatchy also said it's cutting its quarterly dividend in half, to 9 cents per share from 18 cents in the second quarter.

At the McClatchy-owned Miami Herald, and eMail from publisher David Landsberg today informed employees that 119 more jobs will be cut. This is the third round of cuts at the Herald; previously jobs were eliminated in June and weeks before that buy-outs were offered to other employees.

McClatchy has recently come under criticism from the Lexington Newspaper Guild, a unit of the Communications Workers of America union, for continuing to use its expensive Dassault Falcon 20000EX corporate jet (tail number N57MN) while employees have "endured a wage freeze, seen their health insurance premiums skyrocket and had their short-term disability benefits gutted by 40 percent. ... In June, McClatchy announced corporate-wide layoffs of 1,400 ... Yesterday, McClatchy announced further staffing reductions of 1,150 nationwide. ... [Yet] McClatchy only grounded its corporate jet last month."

The Guild says that from April 16 to August 5 the jet was flown 30 times, and that many of the destinations were only an hour or two away by car.

"As workers were asked to do more with less, McClatchy executives enjoyed a plane that features two large flat-panel TVs, with 10 leather passenger seats and a wet bar with quarter fig mahogany cabinetry," the Guild said in a press release. "A basic Falcon 2000ES cost $23.5 million in 2003. To put that in perspective, $23.5 million is more than the annual profits of many small- to medium-sized newspapers."

'We find it deeply disturbing that the company looked to push loyal employees into the unemployment line before it forced its overpaid executives to sit in an hour or two of traffic."

In the same release the Guild also said it belives McClatchy headquarters in Sacramento had been "spared the brunt of cost cutting. In fact, McClatchy has added to its corporate bureaucracy. And not long ago CEO Gary Pruitt was even awarded an $800,000 performance bonus as the company's stock tanked."

The Guild represents 86 newsroom employees at the McClatchy-owned Lexington Herald-Leader in Kentucky, where at least 22 employees will be laid off.

McClatchy's latest round of job cuts came on the same day that an eMail from the publisher of The Star-Ledger in Newark, NJ, surfaced in which he told employees that if 200 buy-outs and some union concessions aren't met, including an agreement with union drivers, or if the newspaper can't be sold by January 5, 2009, then the newspaper will be closed.

Publisher George Arwady has been seeking 200 employees to volunteer for buy-outs, nearly 100 from the newsroom, where not enough people have applied for the separation.

"The advertising downturn is going to be deeper and longer than people had hoped," news industry analyst Ken Doctor told the Associated Press.

Industry analysts have been waiting this week for August revenue reports to come from Gannett, McClatchy, and The New York Times, and no one expects them to be very different that what the Gannett Co. reported on Monday: a third-straight month of steep advertising declines, a 17 percent drop over the previous year.

Gannett is America's largest newspaper company, and analysts are watching the numbers from the big newspaper publishers to see if there is any slow-down in the revenue dip that went down even faster than they expected it to go in June and July.

Newspaper industry experts are also this week watching to see if the current turmoil in the financial sector puts an even bigger chill on advertising, as well as what impact the weekend crash of Merrill Lynch & Co. and Lehman Brothers Holdings Inc., and the precarious footing of the nation's largest insurer, American International Group Inc., has on interest rates, credit, lending, and the ability of newspapers to borrow money to bail themselves out of trouble if need be.

Publishers and investors have been waiting for newspapers to make some kind of a recovery in the later part of this year after trimming costs, slashing head counts, and making drastic cutbacks in spending, while waiting for print advertising revenues to either stop falling or increase, and while readers continue to abandon print and move to the Internet (where advertising revenue has not grown in proportion to use).

But the current figures don't suggest that change in course has happened yet and circulation and revenue keep going down, while on Wall Street the value of newspaper stocks continues to fall.

 

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