McClatchy to reduce work force by 10%, eliminating 1400 jobs
The McClatchy Co. today announced a plan to reduce the company's work force by 10 percent in an effort to manage a difficult advertising market. The reductions mark the company's first-ever across-the-board cuts.
McClatchy (NYSE: MNI) said it will eliminate about 1,400 jobs through companywide layoffs, voluntary separations and attrition. McClatchy is the third-largest newspaper chain in the country. The company owns The Sacramento, Fresno and Modesto Bees, The Miami Herald and 26 other daily newspapers.
"We have been transitioning steadily and successfully from a traditional newspaper company to an integrated multimedia company for some time," McClatchy chief executive officer Gary Pruitt said in a prepared statement. "The effects of the current national economic downturn -- particularly in real estate, auto and employment advertising -- make it essential that we move faster now to realign our work force and make our operations more efficient.
"I'm sorry this requires the painful announcement we are making today, but we're taking this action to help ensure a healthy future for our company," Pruitt added.
The Sacramento Bee will eliminate 86 jobs, 46 by layoffs, Bee publisher Cheryl Dell wrote in an e-mail. The reduction will trim the paper's work force by 8.1 percent, including 11.5 jobs in the newsroom, Dell said.
"We are talking to all affected employees today," she said, adding that most will be notified this morning.
The Sacramento Bee's sister paper in Modesto will reduce its staff by 15 positions, or about 4 percent of the total, Modesto Bee publisher Margaret Randazzo wrote in a memo to all employees.
McClatchy historically has not used broad layoffs to manage its staff size, relying instead on attrition and select job eliminations through outsourcing. So far, those efforts have resulted in a work force reduction of 13 percent between the end of 2006 and April 2008.
McClatchy treasurer Elaine Lintecum said the reduction percentages will vary from paper to paper. She confirmed that the cuts announced today are in addition to previous staff reductions.
In its press release, McClatchy said "Today's more competitive media environment and challenging operating conditions mean the company must move more aggressively to shape the overall work force."
The company has been hit hard by a general downturn in the daily newspaper industry, which is losing advertising dollars to online classified ads and search engine traffic.
Those problems have been exacerbated by the economic downturn. McClatchy gets about a third of its revenue from California and Florida -- states where the housing markets have been particularly weak, leading big advertisers to drastically cut spending.
McClatchy's cash expenses were down 10.5 percent in the first quarter of this year.
In a separate announcement, McClatchy reported that its revenue fell another 15 percent in May. Ad sales declined 16.6 percent for the month compared to ad revenue in May 2007. The company said the declines in print advertising were partially offset by a 12.9 percent gain in online ad revenue in May 2008 compared to May 2007.
For the first five months of the year, total revenue fell 14.2 percent and ad revenue was down 15.4 percent. Online advertising grew 11.9 percent in the first five months of 2008, according to McClatchy.
The staff reductions announced today will produce an annual savings of about $70 million, as part of a larger plan to cut overall expenses by between $95 million and $100 million over the next four quarters.
McClatchy's stock closed at $8.04 a share Monday, down 11 cents for the day in lighter than average trading. Its 52-week high was $28.73. The stock was downgraded by Wachovia last week from "Market Perform" to "Underperform," due in part to the company's declining advertising revenue.
McClatchy (NYSE: MNI) said it will eliminate about 1,400 jobs through companywide layoffs, voluntary separations and attrition. McClatchy is the third-largest newspaper chain in the country. The company owns The Sacramento, Fresno and Modesto Bees, The Miami Herald and 26 other daily newspapers.
"We have been transitioning steadily and successfully from a traditional newspaper company to an integrated multimedia company for some time," McClatchy chief executive officer Gary Pruitt said in a prepared statement. "The effects of the current national economic downturn -- particularly in real estate, auto and employment advertising -- make it essential that we move faster now to realign our work force and make our operations more efficient.
"I'm sorry this requires the painful announcement we are making today, but we're taking this action to help ensure a healthy future for our company," Pruitt added.
The Sacramento Bee will eliminate 86 jobs, 46 by layoffs, Bee publisher Cheryl Dell wrote in an e-mail. The reduction will trim the paper's work force by 8.1 percent, including 11.5 jobs in the newsroom, Dell said.
"We are talking to all affected employees today," she said, adding that most will be notified this morning.
The Sacramento Bee's sister paper in Modesto will reduce its staff by 15 positions, or about 4 percent of the total, Modesto Bee publisher Margaret Randazzo wrote in a memo to all employees.
McClatchy historically has not used broad layoffs to manage its staff size, relying instead on attrition and select job eliminations through outsourcing. So far, those efforts have resulted in a work force reduction of 13 percent between the end of 2006 and April 2008.
McClatchy treasurer Elaine Lintecum said the reduction percentages will vary from paper to paper. She confirmed that the cuts announced today are in addition to previous staff reductions.
In its press release, McClatchy said "Today's more competitive media environment and challenging operating conditions mean the company must move more aggressively to shape the overall work force."
The company has been hit hard by a general downturn in the daily newspaper industry, which is losing advertising dollars to online classified ads and search engine traffic.
Those problems have been exacerbated by the economic downturn. McClatchy gets about a third of its revenue from California and Florida -- states where the housing markets have been particularly weak, leading big advertisers to drastically cut spending.
McClatchy's cash expenses were down 10.5 percent in the first quarter of this year.
In a separate announcement, McClatchy reported that its revenue fell another 15 percent in May. Ad sales declined 16.6 percent for the month compared to ad revenue in May 2007. The company said the declines in print advertising were partially offset by a 12.9 percent gain in online ad revenue in May 2008 compared to May 2007.
For the first five months of the year, total revenue fell 14.2 percent and ad revenue was down 15.4 percent. Online advertising grew 11.9 percent in the first five months of 2008, according to McClatchy.
The staff reductions announced today will produce an annual savings of about $70 million, as part of a larger plan to cut overall expenses by between $95 million and $100 million over the next four quarters.
McClatchy's stock closed at $8.04 a share Monday, down 11 cents for the day in lighter than average trading. Its 52-week high was $28.73. The stock was downgraded by Wachovia last week from "Market Perform" to "Underperform," due in part to the company's declining advertising revenue.
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