US publisher McClatchy to fire 15 per cent of its workforce
09 Mar 2009
US newspaper publisher McClatchy said on Monday it would cut 1,600 jobs, or about 15 per cent of its workforce, in an attempt to deal with the faltering economy and a decline in advertising revenue.
McClatchy, whose papers include The Miami Herald, Sacramento Bee and Anchorage Daily News, has been under pressure to cut costs to meet heavy debt payments from its purchase of newspaper chain Knight Ridder Inc in 2006. The job cuts will be achieved through severance programmes, attrition and further consolidations and outsourcing of some business functions, the company said.
McClatchy expects to incur an estimated $30 million 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.
The publisher of the Sacramento Bee and Miami Herald this year eliminated its dividend, halted matches to employee 401(k) funds and froze employee pension plans after its advertising revenue plunged 18 per cent last year. It may lose its stock listing if the publisher doesn't lift its share price.
McClatchy's February announcement noted that Gary Pruitt, McClatchy's chairman and CEO, 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 per cent, other executive officers' salaries will be cut by 10 per cent, 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 per cent, 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 per cent in the fourth quarter of 2008 and were down 11.5 per cent in all of 2008," he added.
The headcount reductions will affect virtually every area of the organisation, 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. McClatchy said the company would work to ensure a smooth transition during the downsizing, providing severance packages to affected employees.