Less than a week before management reports to Wall Street, Gannett's shares have sunk to fresh lows -- swinging the spotlight on CEO Craig Dubow, after he reportedly disclosed plans yesterday for more layoffs in as little as 10 weeks.
Dubow told Courier-Journal employees in Louisville, Ky., that another round of layoffs is in the works, according to reader comments here, and details I've gathered from people familiar with the matter. Dubow didn't give details on Friday, other than to say the new cuts could come by year's end. An employee in the meeting said Dubow himself raised the subject of layoffs, without prompting.
"He brought it up and said he wanted to be as transparent as he could be and answer any questions,'' the employee told me in an e-mail.
Dubow and his team are reportedly reviewing contingency plans for sharp budget reductions -- up to 7.5%, possibly more -- in the newspaper division. The timetable is unclear; this may be part of the 2009 budget review. Or Corporate might apply them to the current budget, which would almost certainly require layoffs.
Whatever the timing, I would think Dubow would want to preview details with Wall Street analysts during next Friday's third-quarter earnings conference call. Big strategic shifts also require approval of the board of directors. The board, with Dubow as chairman, is likely to begin its quarterly two-day meeting on Wednesday.
Any job cuts would follow the layoff of 100 newspaper managers last month in a reorganization of the newspaper division. Those layoffs followed 1,000 jobs eliminated in August in the revenue-losing newspaper division.
A new round would not be surprising, given the economy's direction (see: toilet) -- and Corporate's prior warning two months ago, in its layoff instructions to publishers: "If advertising and circulation revenues continue to decline, further payroll reductions may be necessary."
Ad revenue slide accelerates
The newspaper division, which employs about 30,000, accounted for 65% of Gannett's $1.7 billion in operating revenue during the second quarter. But the division is hemorrhaging ad revenue, the No. 1 source of GCI's income and profits -- further raising the stakes in next Friday's third-quarter earnings release.
Following are changes in newspaper ad revenue from a year before; the list starts with last year's first quarter, when revenue first started falling:
- First quarter, 2007: down 2%
- Second quarter: down 5%
- Third quarter: down 6%
- Fourth quarter: down 12%
- First quarter, 2008: down 10%
- Second quarter: down 14%
The third quarter probably isn't going to look a lot better. And all that will pale alongside what the fourth quarter delivers. We're three weeks in, banking crisis and all, and it's not looking pretty.
Yesterday, Dubow and newspaper division President Bob Dickey also met with Cincinnati Enquirer employees, before heading to Louisville. And a Gannett Blog reader said today that "some very important folks from Corporate" are due Tuesday at North Carolina's Asheville Citizen-Times. This suggests Corporate could be softening up the field for big news. (Or it may just be a busy travel week for McLean, Va.)
As Dubow met employees Friday, Gannett shares touched new lows. The stock closed at $10.79, up 12 cents, after trading as low as $10.40 earlier in the afternoon. Still, that capped one of its worst months since I began tracking GCI: shares fell 40%, according to Google Finance. In contrast, the battered S&P-500 Index fell a smaller 22%. (Chart detail, inset; bigger view).
Is Corporate scheduled to visit your paper or TV station in coming weeks? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.
[Image: today's Louisville Courier-Journal, Newseum]