McClatchy Co., a publisher of 30 daily newspapers and 50 non-dailies, including The Miami Herald, Charlotte’s Observer and the Sacramento Bee, announced Monday that it’s slashing 15% of its workforce, or 1600 jobs, as it deals with an advertising recession and outstanding debt.
Additionally, Gary Pruitt, McClatchy’s chairman and chief executive will see his base salary reduced by 15%.
“The effects of the current national economic downturn make it
essential that we move even faster to realign our workforce and make
our operations more efficient,” said Pruitt.
McClatchy, which already had two rounds of layoffs last year, is still saddled with a mountain of debt. The company owed about $2.04
billion as of the end of 2008, stemming mainly from its 2006
acquisition of the Knight Ridder newspaper chain, according to the AP.
The latest news from the newspaper industry isn’t surprising. Most newspapers have been struggling as advertising migrates to the Internet. But more recently, the weight of the debt many papers carry and the fact that advertising is also drying up online has made the current environment even more challenging for the industry.
The Miami Herald was identified as one the nine papers in trouble.
More from the McClatchy press release:
The headcount reductions will be achieved through severanceprograms, attrition and further consolidations and outsourcing of some business functions. The company expects to incur an estimated
of severance costs in connection with these reductions. The workforce
reductions will begin by the end of the first quarter of 2009. The plan
also involves wage reductions across the company for additional savings.
chairman and chief executive officer, declined his 2008 and 2009
bonuses and other executive officers did not receive bonuses for 2008.
Today, the company announced that Pruitt’s base salary will be reduced
by 15%, other executive officers’ salaries will be cut by 10%, and no
bonuses will be paid to any executive officers for 2009. In addition,
the company has reduced the cash compensation, including retainers and meeting fees, paid to its directors by approximately 13%, and the directors declined any stock awards for 2008 and 2009.
“We have been transitioning steadily from a traditional newspaper company to a hybrid print
and online, news and advertising company for some time,” Pruitt said.
“The effects of the current national economic downturn make it
essential that we move even faster to realign our workforce and make
our operations more efficient. We previously discussed a plan to reach
a targeted level of cost savings, but given the worsening economy, we
must do more. I’m sorry we have to take these actions, but we believe
they are necessary.
“While painful, we know these actions
are working. Evidence of our cost reduction efforts can be found in our
results. Excluding severance and other benefit charges related to our
previously announced restructuring plans, cash expenses were down 14.4%
in the fourth quarter of 2008 and were down 11.5% in all of 2008.”
The
headcount reductions will affect virtually every area of the
organization, but each newspaper will determine how best to implement
the savings in its market, while retaining its strategic focus on
sales, news and online operations.
said the company would work to ensure a smooth transition during the
downsizing, providing severance packages to affected employees.
(image source: inquistr)
