CEOs-a-go-gone: top row: Frank Gannett, Paul Miller, Al Neuharth; bottom: John Curley, Doug McCorkindale, and Craig Dubow.
Even on an interim basis, Chief Financial Officer Gracia Martore faces an enormous job in shepherding Gannett's unwieldy collection of businesses now that she's adding chief executive responsibilities to her office. CFO since January 2003, Martore, 57, is expected to cut costs even further with another companywide layoff believed scheduled for the first week of July.
Yet, Martore (left) and Chairman and CEO Craig Dubow, 54, who just disclosed plans to take a medical leave of absence, have worked closely since Dubow's elevation as chief executive in July 2005. That means she can hit the ground running in the difficult months ahead. What's more, today's announcement did not give a firm date for Dubow's return. Should his leave end in early retirement, Martore would be well-positioned to assume the CEO's duties permanently. To be sure, that would present the board of directors with another complication: It's hard to imagine Chief Digital Officer Chris Saridakis staying a moment longer if he doesn't get the job for which he's been groomed over the past year.
The company's financial condition is precarious. After an extraordinary writedown, GCI recorded a $1.8 billion loss last year vs. $1.1 billion in net income in 2007. Revenue plunged 9% to $6.8 billion vs. $7.4 billion. The company employed 41,500 employees at the end of 2008, the most recent figures show. With USA Today, the company owns more than 100 dailies in the U.S. and the U.K., plus 23 television stations, and a portfolio of digital businesses that includes majority control of the largest employment-related website, CareerBuilder, plus online advertising services firm PointRoll and other companies. GCI also owns hundreds of smaller subsidiaries in the healthcare, armed services and other sectors.
Background: CEO No. 6
Dubow became Gannett's sixth CEO in July 2005. He had been chairman of the company's board since June 30, 2006.
His tenure has been marked by the most dramatic changes in GCI's 103-year history. Under his watch, the company was forced to move rapidly toward a digital future that is still not guaranteed. As the Internet and other forms of digital publishing became even more of a threat, Gannett's revenue has dived. The company's global workforce fell to 41,500 at Dec. 31 from a high of 53,400 in 2000, after the company grew rapidly with the aquisition of newspaper groups in western and midwestern states.
Those ill-timed acquisitions came mostly during the term of his immediate predecessors, Doug McCorkindale and John Curley. The purchases, which included The Arizona Republic and The Indianapolis Star, added billions in debt that may prove to be the company's final undoing. Yet, Dubow and his powerful CFO, Martore, compounded those errors by gambling on the company's stock through a series of buybacks that have now proved disastrous.
Reflecting industry-wide trends, Gannett's stock collapsed, falling to $4.10 a share at today's closing price vs. $75 a share in May 2005, when the board of directors announced his appointment; he assumed office July 15 of that year. GCI's stock had reached an historic high in the low $90s in spring 2004.
Dubow, Martore order massive cuts
Scrambling to reduce the cost structure, Dubow and Martore hacked away at the most expensive line item: payroll. Starting a year ago, they ordered a series of cuts that resulted in two dramatic companywide job reductions, mostly through layoffs: 1,000 in August and about 2,200 in December. Speculation in recent weeks suggests another round of cuts will take place the first week of July, a reduction that may rival the December reduction.
Dubow's administration also pushed through a series of consolidations in its biggest and most troubled unit: the newspaper divsion, which employs more than 30,000 workers. In the past 12 months, Gannett has shuttered about a dozen presses, consolidating printing at regional production sites owned by Gannett or rivals. Amid those consolidations, publishers were given responsibility for two or more papers. So, too, were finance, circulation, production and human resource chiefs. In one move, Gannett elminated about 100 of those high-paying jobs in September 2008.
GCI froze the pension plan a year ago. More recently, the company pushed for two rounds of unpaid furloughs, in the first quarter and the quarter now ending June 30. Employee morale sank to historic lows.
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Bravo, good story.
ReplyDeleteDon't thank me -- thank Investigative Reporters and Editors with a contribution!
ReplyDeleteCurious when you report, as a reporter, that employee morale fell to historic lows, how you measure this as a fact or are you writing opinion. Some of the post is fact but this seems opinionated, even though I would tend to agree.
ReplyDeleteTo another point, when you monitor comments ahead of time it often make it difficult to follow what people are saying since the comments can actually appear in a disjointed fashion.
That was opinion. (This is a blog, after all!)
ReplyDeleteJim is right. Morale is very low and most employees are profoundly unhappy and uncertain about their futures. With the economy is such bad shape, many of our fellow Gannett employees are hanging in there hoping things will turn around and they can get out. But for now, working for Gannett is a job and an income stream. Many of us realize that but have zero loyalty and don't trust "them" one bit. Most of us are bracing for the next round of firings and expect this event to be equal to December or even worse. Maybe someone will come to their senses and get rid of the dead wood and incompetent managers who do nothing in terms of productivity.
ReplyDelete6:15. I share your sentiment and I'm sure others do. One can only hope the deadwood is trimmed. There is plenty of it at USAT. 60 to 70 people could be sliced if it was done the right way. Get rid of a DME from each section, the 1A desk, some former upper managers being paid now to do God knows what and trim reporters who don't do more than a story every 10 days or so (at most) would be a great start and actually improve morale and an effective way to keep up productivity.
ReplyDeleteHow about it, Mr. Hunke?
I'm sad to learn this blog will close. We are getting few real answers about our fates. Now the death and mayhem will be a bigger surprise as we continue the downward spiral.
ReplyDelete