Owner: The McClatchy Co.
Announced: Feb. 5, 2009
The company announced it will cut its operating expenses. An unknown number of layoffs will be part of the plan.
78 employees will be laid off at the News & Observer, The Cary News and The Herald. Remaining employees must take a week off unpaid, and salaries will be cut.
Sources: News & Observer via Paper Cuts tip; News & Observer
* Updated March 16, 2009, with an additional source and layoff information.
By Jonathan B. Cox – Staff Writer
Published: Mon, Mar. 16, 2009 01:17PM
Modified Mon, Mar. 16, 2009 01:26PM
RALEIGH — The News & Observer Publishing Co. this afternoon announced it is cutting jobs, cutting pay and requiring unpaid furloughs for its staff as it contends with steep declines in advertising revenue.
The newspaper company, which also owns community publications such as The Cary News and The Herald in Smithfield, will eliminate 78 positions, or 11 percent of its work force. The equivalent of about 27 full-time positions in The N&O newsroom are included.
The N&O will require remaining workers to take a week off without pay between May 1 and Oct. 31.
And it will cut salaries from 2.5 percent for lower-paid employees to 10 percent for the higher paid. Those making less than $25,000 a year won’t see a pay cut.
“We are making our way through difficult times by making difficult decisions,” N&O Publisher Orage Quarles III wrote in a memo to employees. “It is never easy to say goodbye to so many of our friends and colleagues, but we must make these additional cuts to sustain our company and adjust to new competitive and economic realities.”
The cuts were expected and have been telegraphed for weeks after The N&O’s parent, The McClatchy Co. of Sacramento, Calif., said it had to pare its business. The newspaper chain is wrestling with a severe drop in revenue as it tries to pay down debt.
McClatchy’s borrowings jumped in 2006 after its $4 billion purchase of larger rival Knight Ridder. It has worked to pay down that debt and now owes about $2 billion. But with revenue falling precipitously, it risks violating bank covenants if it can’t keep expenses in check.
During the past year, the company has eliminated its dividend, outsourced operations and required several rounds of cuts at its newspapers, which also include The Sacramento Bee and The Miami Herald.
The N&O has reduced staff through buyouts, layoffs and attrition since May, consolidated sections and increased cooperation with The Charlotte Observer, which McClatchy also owns, to shed costs.
Quarles said The N&O will increase its cooperation with Charlotte to increase efficiencies and will speed the transition to a narrower newspaper, which will save on production costs.
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By Alan M. Wolf – Staff Writer
Published: Thu, Feb. 05, 2009 02:00PM
Modified Thu, Feb. 05, 2009 01:34PM
The corporate parent of The News & Observer announced this morning that it will take further steps to cut costs after reporting weaker fourth-quarter revenue and profit.
The McClatchy Co., which also owns the Charlotte Observer, Miami Herald and other newspapers across the country, will freeze its pension plans and temporarily suspend the company match to its 401(k) retirement plans, effective March 31.
McClatchy also is developing a plan to reduce costs by an additional $100 million to $110 million over the next 12 months. Details are still being finalized.
The plan is likely to include further job cuts, including some at The News & Observer Publishing Co. The Raleigh company eliminated 233 full-time positions in the past year through voluntary buyouts, outsourcing and other steps. The company now has 613 full-time positions.
“We had hoped that previous cuts would be sufficient to see us through the sharp revenue declines affecting our industry,” N&O publisher Orage Quarles III said in a statement e-mailed to employees this morning.
“Unfortunately, we have seen an unprecedented loss in advertising revenue with many of our retailers and auto dealers either going out of business or leaving the area, and employment advertising dropping to all time lows,” he said. “Instead, we must continue to respond to the deepening financial crisis that is threatening not only our industry but all kinds of businesses in almost every sector of the economy.”
The company is exploring options that could limit the number of local layoffs, Quarles added.
The moves follow other cost-cutting efforts by McClatchy, including eliminating 1,150 jobs last year, freezing salaries and suspending its dividend.
As with other publishers, McClatchy has been hit hard as the recession erodes ad sales and readers migrate to the Internet. The company also is trying to reduce its $2.04 billion in debt.
“This necessary transition to a more efficient company is especially painful in a horrible economy, and we have had to make some very difficult decisions to keep the company safe,” CEO Gary Pruitt said in a prepared statement.
The Sacramento, Calif.-based company reported that fourth-quarter revenue fell 17.9 percent to $470.9 million. After excluding some one-time costs, the company’s adjusted net income from continuing operations was $21.8 million, or 26 cents a share.
There were some bright spots. Online ad revenue rose 10.3 percent in the fourth quarter. Average monthly unique visitors to McClatchy Web sites increased 33.5 percent in 2008.
The company also warned today that its stock, which closed at 66 cents on Wednesday, faces delisting because it doesn’t meet minimum requirements of the New York Stock Exchange. McClatchy has six months to comply with NYSE listing requirements.
In morning trading, the stock rose 4 cents to 70 cents.
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