$$$ | Why the real job cut number isn't 1,400

I believe Corporate is actually focused on a payroll savings target -- perhaps $300 million to $400 million -- rather than a set number of jobs, in the layoffs that may kick into higher gear on Monday. I said that in my layoff FAQ, originally posted June 23. But I didn't emphasize it enough, and then it got lost in the news. Here's where I'm coming from.

This round is built around the July 15 analysts' teleconference call, when Chief Financial Officer Gracia Martore will discuss that morning's release of second-quarter results, and give a glimpse of the near-term outlook. Wall Street wants to know about cost savings. Telling analysts Gannett is trimming some number of jobs is meaningless to them.

It's very meaningful to you, of course: If that memo from Bob Dickey had set only a dollar figure, you would have been justifiably angry, because it wouldn't give you a sense of the chances you might lose your job.

So, much of the debate has been about two numbers: 1,400 jobs vs. 4,500 jobs. The former is the number given by Dickey for the 83 dailies in the community newspaper division. The latter is one supplied by a source, My Boss, who's been very reliable in the past. (Note: I'm still counting the Tucson Citizen because, I think, it has a skeleton staff maintaining what remains of that Arizona daily, a website.)

What if they nuke Newsquest?
The community papers do not include the Detroit Free Press and USA Today. And they certainly don't include the U.K. division, Newsquest, which has received almost zero attention in our discussion.

Newsquest is important to this debate. At Dec. 31, its 17 dailies and hundreds of weeklies employed 6,600, down more than 18% from 2007. Recall that Corporate's nearly $3 billion writedown last summer was almost exclusively for the U.K. division, once a reliable hedge against the U.S. dollar.

But as the pound sterling has fallen, Newsquest is no longer delivering those goods. CEO Paul Davidson (left) has been cutting jobs there like crazy; Newsquest recorded the biggest percentage decline in jobs among Gannett's divisions last year vs. 2007.

It has adopted the Information Center business model first rolled out for the domestic papers in late 2006. But that may have not been enough, given the meltdown in real estate prices there. London might have been hurt less, because it's the economic engine. But Newsquest's papers are outside the city. It's conceivable that Gannett may sell some or all of Newsquest for pennies on the pound. Corporate paid $1.5 billion cash for the chain in 1999.

(A year later, in an even bigger deal, Gannett paid $2.6 billion cash for The Arizona Republic, The Indianapolis Star and other papers owned by Central Newspapers. Also in 2000, Gannett paid a bit over $1 billion for Thomson papers in Wisconsin, Ohio, and three other states. In all, Gannett was buying at or near the top of the market, just before the dot-com crash that sent values skidding.)

Some of those 6,600 Newsquest jobs could more than make up the difference between Dickey's 1,400 and the reported 4,500.

I posted the 4,500 jobs figure, and attributed it to the original source. (Later, a poster identified only as Anonymous@9:41 p.m. wrote June 22: "The magic number is 4,623 on July 15." But I give far less credence to that, even though its specificity is intriguing.)

Has anyone grilled Dickey?
My critics have tried to knock down the 4,500 number, apparently based on one source: Dickey. Now, has anyone spoken to him, and asked to see how he arrived at that number? Has anyone here seen the payroll savings goal set by Martore, and been shown how that translated into Dickey's 1,400 jobs? Why do you trust Dickey over a source here, who has been so accurate in the past?

Now, let me anticipate your response: Hopkins is naive; no business -- let alone Gannett -- would produce that sort documentation. "That's not the way business is done,'' they'd say.

Far too many journalists, on and off the business-news beat, don't ask important questions, and demand answers, because "that's the way business is done.'' The problem with that in Gannett's case: Doing business the way it's done is what's gotten the company staggering under mountains of debt, and threatening any number of 41,500 employees with job loss as early as Monday.

You all will see the final result on July 15. I won't, because I'm out of here on Friday.

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