Financial woes continuing at daily newspapers, which are mirroring state in ordering staff ?furloughs? | Around Town | Jeb Bing | |

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By Jeb Bing

Financial woes continuing at daily newspapers, which are mirroring state in ordering staff ?furloughs?

Uploaded: Feb 11, 2009

State of California workers aren't the only ones being required to take days off from work without pay, being called "furloughs" in business-speak.

Tough times are continuing, even accelerating, at many large daily newspaper groups across the country, including at my "alma mater," the Chicago Tribune where I was a reporter and Neighborhood News editor for 13 years. That newspaper, part of the Tribune Company that also owns the Los Angeles Times and a group of television stations, has furloughed or terminated hundreds of reporters and other editorial employees as payments on its heavy debt load come due and profits decline.

Here in the East Bay, the dailies owned by Denver-based MediaNews Group are also suffering financially. To reduce costs, Media News has ordered its employees, including editors and reporters, to take five unpaid furlough days by March 31.

The order, issued in a letter emailed to 3,000 staff members at its California newspapers and reported by other publications, including Editor & Publisher and the San Francisco Press Club, affects the Tri-Valley Herald, Contra Costa Times, Oakland Tribune, San Jose Mercury News, Monterey Herald and 24 other newspapers. All were told that they must take five unpaid days off or face possible layoffs.

According to the Press Club report, Human Resources Vice President Charles Kamen said the company was following the example of Gannett Co., another large newspaper group, which issued the same directive to its 3,100 employees recently.

Union representative Sara Steffens said the company would have to discuss the issue with union leaders before the furloughs could take place, according to the report. The e-mail, however, said the company was confident union members would accept the furloughs "as a means of avoiding layoffs, to the degree that can be accomplished."

The letter, published by the Press Club, follows:

Dear Fellow Employee:

In a further effort to help offset the continuing decline in revenue and position the company for future financial success while mitigating further job losses, I am announcing the implementation of a mandatory one (1) week furlough to be scheduled during the period beginning February 1, 2009 and running through the month of March. All executives and management of the company will be included. Each employee's department head will determine the actual week an employee is furloughed.

I realize that we are all working hard to overcome this difficult time. I know this action will create a strain on our personal budgets, and unfortunately, I cannot guarantee that a furlough will prevent any further layoffs. However, from what I am hearing across our company, "a brief period without pay is better than many more layoffs."

The Guild responded to the memo with a statement on its Web site saying the furlough would be discussed in contract negotiations on Friday.

"All of us are aware of the difficult economic climate affecting the newspaper industry in general and MediaNews in particular. We are committed to working cooperatively with any management committed to working with us," the Guild said in the unsigned statement. "As always, our primary goal is to minimize the impact of any cost-cutting on our memberships, and to enhancing job security in these difficult times

Last Friday, Media News expanded the directive to include papers it owns in at least five more states: Texas, New Mexico, Minnesota, Massachusetts and New Hampshire.

"There's been a deeper recession than what we've ever seen," said Andrew Mick, president of New England Newspapers Inc., a MediaNews unit that ordered unpaid leaves Friday, according to a new report by the San Francisco Press Club. "We found it necessary to do something in the short term to go through our toughest months of the year, which are January through March."

Denver-based MediaNews Group has not announced furloughs at the Denver Post, which it owns. The privately held media company is in negotiations with its unions at the money-losing Post, seeking $2 million in pay cuts and benefits concessions.

It also has frozen pensions and suspended its 401(k) fund match payments for managers and other non-union workers at the Denver daily.

Up in Sacramento, deep cuts are also planned this year at The McClatchy Co., on the heels of a $21.7 million loss for the fourth quarter, including frozen pension plans and the suspension of matching funds to its 401(k) retirements plans.

The company, which publishes the Sacramento Bee and 29 other daily newspapers, disclosed that it is in danger of being delisted from the New York Stock Exchange because its stock price has fallen below $1 for the past several weeks. Reports said that McClatchy (NYSE: MNI) revenue has fallen as readers and advertisers migrate, and the recession worsens.

Gary Pruitt, McClatchy's chairman and chief executive officer, called 2008 a "difficult and disappointing year."

"The economy remains mired in recession and our industry is in a period of transition," Pruitt said, in a news release. "The advertising environment continues to be weak and we expect print advertising revenues to continue to be down."

The company also announced it will freeze its pension plans and temporarily suspend the company match to its 401(k) plans, effective March 31.

McClatchy also is continuing a salary freeze for senior executives, first implemented in 2007. A company-wide salary freeze was in effect between September 2008 and September 2009.

McClatchy's debt was about $2 billion at the end of last year. Much of the company's debt comes from its purchase of the Knight Ridder newspaper chain in 2006. The company paid off $30 million of debt in the fourth quarter and $433 million for all of 2008.

The Sacramento Bee already had multiple rounds of layoffs and buyouts last year and, according to Sacramento Bee publisher and president Cheryl Dell, will be making additional expense reductions, including eliminating some jobs.