Monday, December 10, 2012

Furloughs | On chances for another Q1 furlough

In a bid to shore up profits amid ad revenue declines, Corporate has ordered unpaid furloughs every first quarter since 2009 for most employees.

What's the likelihood there will be another round in the first quarter of 2013? Recent trends in revenue, plus remarks by CEO Gracia Martore and Corporate's latest earnings forecast offer clues.

Advertising revenue from newspapers and other print media -- the company's single-biggest revenue source -- remains soft. It fell 6.6% in the third quarter from a year before. While that was the smallest rate of decline this year, it was the seventh consecutive quarter of lower results. (See quarter-by-quarter changes since Q1 2011.)

For the current, fourth quarter, when a decision about more furloughs could be made, Martore told media stock analysts in a mid-October teleconference she expected only "a little bit of improvement" in newspaper advertising over the third quarter.

On a more positive note, however, Corporate said just last week that it now expects current quarter earnings will be 87 cents to 88 cents per share, higher than the 85 cents stock analysts had been expecting.

Facing the fiscal cliff
Still, that forecast comes amid jitters over the fiscal cliff negotiations now underway in Washington. Against a Dec. 31 deadline, failure to reach agreement could send the economy into a tailspin early next year.

"There are going to be fiscal cliffs and there are going to be whole lots of other things," Martore acknowledged during last Wednesday's media conference. "We've done contingency planning and we'll do things that are necessary to get the company through that."

Here's the dilemma: Having used furloughs to subtract millions of dollars from payroll in each first quarter since 2009, Martore must now either find other ways to cut costs, or raise revenue still more, to avoid calling another furlough starting next month.

In this year's first quarter, furlough savings totaled $8 million. (In Q1 2011, savings were higher: $10 million.)

Clues in past announcements?
Corporate would like to announce furloughs as far in advance as possible, so managers have plenty of time to schedule them.

But among the past first-quarter furloughs, two were announced after the quarter had already begun. So, just because Corporate hasn't disclosed furloughs now, well into December, doesn't mean they aren't in the works. Here are the previous Q1 furloughs, and the dates they were announced:

First quarter 2012
Announced Nov. 29, 2011

Q1 2011
Jan. 4, 2011

Q1 2010
Dec. 1, 2009

Q1 2009
Jan. 14, 2009

What's your best guess? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.


  1. furlough will be announced next week !

  2. Not that it means much, but Dickey did say Gannett wants to get out of the furlough business during the editor's meeting last week. Hopefully a positive sign.

  3. 6:18....Let's hope he puts his money where his mouth is. Unfortunately, I'm not that optimistic because there is no other revenue source to take the place of furlough savings.

  4. GCI hasn't fired enough people to avoid the annual gift of furloughs.

  5. No first quarter furloughs. Pay wall revenue will carry the company through the first half of the year. Mark it down.

  6. ?What Dickey meant when he said at the editors meeting that he wants to "get out of the furlough business" is: he wants to outright fire people and be done with them altogether.

  7. The company saved $8 million by furloughing employees during this year's first quarter.

    Therefore, in the absence of any furloughs starting next month, the company must produce an additional $8 million in revenue just to stay even with a year ago. (Or, as I noted above, another $8 million in savings from somewhere else.)

    As 9:15 notes, the big print subscription price increases passed off via the new paywalls could produce that needed extra revenue.

    In the third quarter, when the last of the price increases were going into effect, subscription revenue rose a strong 5.6%, to $276.7 million. That's an increase of nearly $15 million. It should be even bigger by the first quarter next year.

  8. I talked with my boss, ( No not that one.) about furloughs in the 1st quarter so that I could plan my furcation. He answered that the talk had been of no furloughs because of the added overtime to cover furlough days and weeks.

    If you have to cover a furlough day with an overtime day, it kind of defeats the purpose. If you don't need someone else working extra to cover, then you were overstaffed to start. The only way to win at furloughs is to cover an hourly person with a salaried person.

    How many people on salary are capable of accomplishing the task anymore?

  9. If they cut bonuses to local and national managers, they coukdnt need to furlough anyone. Ask you senior editors. They will tell younwhatnthey get in cash and shares every year

  10. Furloughs - no one was allowed overtime. the salaried had to suck it up. no exceptions.

  11. USAT was spared furloughs last Q1 so I'll bet we get hit with them this time around. Once you start feeding from the furlough trough, you just can't stop.

  12. Jim: $8 million in new revenues will in no way replace what Gannett saved via furloughs last year unless there is zero costs associated with it which is highly unlikely.

  13. In the "bad" economy Gannett companies "try" to save money by layoffs and furloughs. It saves them money and allows for higher bonuses. I see it as S.O.P. until they can't do it any more. Whenever I went to an employee review the boss always said, "It's been a tough year" and I got maybe 4% max. They are shrude business people. They are in the business to make money, screw the little man, and blow smoke and confusion to the stock holders.

  14. Right 9:46. You'd need $8 million in profit. Not revenue.

  15. In Nashville, we were told that there will be no layoffs or furloughs for the first HALF of 2013. Not just quarter.

    1. In Nashville is that for GPS employees or Gannett?


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