Tuesday, January 06, 2009

Breaking: Is another big payroll cut in the works?

I'm now hearing rumblings about another one in the newspaper division as soon as early February, and on par with last month's huge reduction.

This tip is now starting to gel. Here's where we are at 11:46 a.m. ET. A source who's been spot-in in the past told me today in an e-mail: "I know firsthand that the cuts are coming and are in the 10% to 12% range. I've heard secondhand from a controller at a site in the _____ Group that he/she is redoing the 2009 budget with additional cuts of 12%."

It's not clear whether all newspapers would be subject to this round, however. A top editor at one of Gannett's bigger papers told me today they had heard nothing about more cuts.

Yet, I understand some publishers are now assembling lists of employees targeted for layoff; such lists would go to regional group presidents for initial approval as soon as this Friday. Any layoffs could begin the first week of February, in time for savings that would be booked starting in Gannett's "Period 2" accounting cycle.

Earlier newspaper job cuts
  • August: 1,000, including 600 layoffs
  • September: about 100 production, IT and other directors
  • December: 2,184, based on Gannett Blog field reports
Can anyone confirm a February round -- and add details? Please post 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.


  1. There are some rumblings at USAT about this too. USAT has yet to get hit as hard as some other GCI dailies, but the feeling is that USAT's fortune is running out and will have to take a bigger hit fairly soon. Would explain why Paulson and Wilson jumped ship.

  2. The August and December rounds were just dress rehearsals.

  3. Dead god I hope you're wrong.

  4. Jim,

    "The August and December rounds were just dress rehearsals."

    Um...can you elaborate? That is a rather firm statement. I would expect a statement like that from one of our "anonymous" sources. But from you!? I doubt that you would stir the pot like this without some real information.

  5. This is all legit and accurate. Some of the upper level mgt may not know all the detail b/c everyone is on the block this time.

  6. 12:09 pm: That is based on current business conditions, recent practices -- and simple, common sense.

    The company has signaled at every turn that it will keep reducing expenses until they are aligned with revenue. That's how you keep profits more or less steady, and that's what the big investors are going to get.

    Revenue, which is principally from newspaper advertising sales, has been falling at a double-digit clip for about a year now. And that was before the economy took a deep-dive further into recession with the banking/Wall Street panic that began five months ago, in August.

    Now, Corporate has seen the full results for Period 12 and so the full quarter. Based on that, as they schedule the fourth-quarter earnings release, they must be looking at all available options for immediate additional cost cuts. The one place they can go time and again is payroll.

    Bottom line: 2008 was a bad year. 2009, for the entire newspaper industry, will be worse. I wish I thought otherwise, but I do not.

  7. Very hard to believe, but: I hear Corporate might try to organize this one completely off-line -- that is, no e-mail trail to leak out.

  8. Jim, do you think perhaps part of the reason they did not lay off everyone who volunteered in December was to give them a place to start this time around?

  9. Didn't they say the company's pension fund took a hit, but that they wouldn't know how big until the end of 2008? Wonder if those results are in.

  10. In Fort Myers there have been talks of cuts in the first quarter. This was happening during the December round of cuts.
    I heard this from an upper management person.

  11. Period 12 was an advertising disaster, but that should come as no surprise to anyone looking at the thin papers that were published last month. I am hearing that USAT is definitely going to be included in the next round of cuts, which will be unveiled by Jan. 20. Also look for more radical consolidations (New Jersey, you are clearly in the spotlight.).

  12. knew this was happening....they need to have answer for the "worse than anticipate Q4 and 08 results. This again will only be the beginning for this year - every cut will effect revenue and it will just keep going down and down - great leadership Craig!

  13. OMG - - why are we surprised that revenue is falling month by month? This is not ONLY the fault of the economy. Gannett is resspnsible for this self-fulfilling prophecy. Customers will cont. to cancel subscriptions because their paper is printed off site, arrives late and doesn't look like a local newspaper any longer.

    AND the more Gannett cuts revenue producing and revenue supporting positions, the lower the revenue will be!!! ANY FOOL knows this. It is cause and effect. At some point revenue will fall so low and there will be so few left to generate revenue and a reasonably readable product Gannett will have the "numbers" that justify closing down sites. One smaller site is already in talks to move out of current facility - don't need the space with more than half their staff gone and printing elsewhere. The next step has to be outsourcing all operations except a few reports and a few ad sales people.

  14. Documenting the job cuts should go back further. A bunch of us took buyouts at the end of 2007, a significant number of veteran newsroom people.
    So Gannett has been reducing the ranks for longer than just since August. I don't have any way of coming up with the numbers, but in 2007 I can count 8 or 10 who left my newsroom alone.
    Jim is right about the chronology of corporate thinking and the business logic it is using. And considering the agony of those who waited to hear if they were chosen to leave, the editors and publishers likely won't leave anybody hanging this time. It will be more decisive. A sharp blade this time ...

  15. Just to clear up any remaining confusion, there were cuts at USAT in December, and they reached far beyond the relatively small number in the newsroom. In fact, non-editorial cuts outranked newsroom reductions by approximately four to one.

    I don't wish a job loss on anyone, but I'm tired of reading how USAT is immune from cuts, and that editorial people are suffering the most.

    We're all in this together.

  16. God, I left the newspaper business two years ago, but all this still depresses the shit out of me.

    My wife tells me I just need to stop reading about the industry, but I can't. Also, since I'm in PR now, I need to be up to speed for professional reasons.

    But I am so sad sometimes.

  17. 2:16 pm: If there's been any confusion, it is because USA Today never publicly reported the total number of jobs it eliminated in the fourth quarter. Only the newsroom said it expected 20 job cuts.

    Based on your figures, it sounds like the total was about where I figured it would be: 100. Is that the official, final number -- finally?

  18. There was no newsroom cuts at the Asheville paper in the last two cuts since Hammer took over. Hmmm maybe I should apply there because it seems like they have job security.

  19. Is it possible that this round will involve the broadcasting division but not community newspapers?

    Just a theory.

  20. Re: "... a bunch of us took buyouts in 2007."

    Staff reductions have been gone on a lot longer than that.

    Gannett has been reducing payroll since at least 2004 by freezing positions every time somebody resigned.

    Those of us who work or worked at the Montgomery site watched as year after year our publisher made his goals (and earned his rings) by cutting staff. At some point it has to come back to haunt. Well, it did. When you're forced to put out a substandard product, people stop buying. When people stop buying, there's no demand for your service, which resulted in the companywide layoffs we're seeing today.

    Who's to blame? The corporate journalism business model. If we were all community newspapers again, where decisions are made locally, we might have survived.

    There are plenty of small newspaper groups (Boone Newspapers is one in the Southeast) that are doing OK because they didn't start gutting their talent five years ago.

    I feel like I've lost my best friend. Yesterday is gone, and I'm afraid large print products are already a dinosaur about to take their last breath.

  21. USAT's newsroom will suffer more cuts. Not sure if the newsroom is ahead or behind in total layoffs at the paper, but you can bet more folks will be leaving one way of another in the next several months. The strategy there is to get rid as many folks as possible who are too connected to the print past (and likely make a fair amount of money) and to hire cheaper, web-only employees. They've been on a mission to shred print for a couple years now, thinking the public won't notice the declining content/quality of the newspaper. It's made for a miserable workplace for many who still care about the paper and caused the unfair dismissal of many good/bright print people, in and outside of the newsroom.

    It is no secret that top USAT management wants to see as many senior print folks leave ASAP. But many staffers are of an age where leaving isn't a great option, so layoffs will be necessary. Layoffs will be deeper in the newsroom next time around. So if any print people haven't gotten the message yet, your time is limited. Forget about retiring there if you aren't within weeks or maybe months of that date. For the few who survive and put out a watered down print product, your lives are going to be impossibly difficult, your days long and the rewards non-existent.

    This is a newspaper that is and will continue to treat loyal employees like dirt. And if all the online folks think they are immune, they are not. There's going to be a major reshuffling there too.

  22. Regardless of when the cuts began, this round is going to be the mother of all cuts. I am hearing that corporate wants double digit cuts in expenses from all the properties. Yes, that includes TV and USAT.

  23. Would these cuts mostly affect production and circulation? I can't see how, at least where I am, any more newspeople can be cut--not that I want to see anyone in any section lose their jobs.

  24. AP I wonder who is in the next round of cuts. After the Feb cuts do not be surprised if there are not cuts in June as well.


  25. I was told more cuts were unlikely because the 09 budget was written to come in under expectations. Things would have to be really, really bad for cuts to be made...so I'm told.

  26. Can somebody explain this: I was told that the company has to have layoffs to keep revenue in line with expenses, and because it's a public company, it can't "price fix," that is, set the year's goal lower to be more in line with realities. So if Gannett expects 13 percent profit margins and gets only 9 percent, let's say, then is it required to lay off people?
    I didn't go to B-school.

  27. And one more thing: if the stock price drops to zero, does that make the company insolvent?
    This is wacky; a company can generate profits but still be considered insolvent because of the stock market.

  28. Protect yourselves, kids. What to do before the ax falls:


    "If you want it, take it now."

  29. I'm tired of the print -vs- digital comparisons. Folks, if print goes, so does digital. Most digital revenues at a local site is from bundling and/or cross-over from print. No print income equals no online income.

    Mogulus is not going to save us.

    Someone with guts to tell investors that they won't be getting dividends for while might be able to pull it off.

  30. To 4:56

    I am not sure who told you that. But I would not believe anything that comes out of a department heads pie hole.

    Either they know and would not tell, or they are too oblivious to what is going on.

    More papers are going to follow the Detroit model and print less and go to more online. The reason is that they do not want to be local. If newpapers wanted to be local then they would report that. But it is cheaper to reprint am AP story from last week.

  31. OK, that cinched it. I'm definitely out of here. No way newsrooms are going to be immune. I don't want to stick around for another round of daily nausea waiting to see if I'm one of the lucky or one of the stunned.

  32. Keeping revenue in line with expenses has nothing to do with price fixing. Shareholders own Gannett. Not readers or employees or advertisers. Shareholders have an expectation of a return on their investment. Lately, shareholders have not placed much faith in newspaper companies to earn a reasonable return. Of course, this has destroyed the price that they are willing to pay for a piece of the company.

    The problem with the print newspaper model is that newspapers, and especially those owned by Gannett, are in a very fragile state. As they become more cost conscious, they are forced to look at the cost of generating unique content instead of looking at what it costs to become more relevant and therefore, more well-read.

    Newspapers have determined that there is a certain group of people that will pay for the newspaper to be delivered to their door every day. For the rest of the occasional or not interested reader, what used to be the "churn," newspapers have just stopped trying. These readers are too expensive.

    But the dedicated reader is growing tired of the watered-down product. As the product becomes less relevant, the dedicated reader starts to question his or her purchasing decision.

    Of course, the advertiser who paid the salaries of all of these content providers (see reporters) counted on the dedicated reader. And as they become fewer, the ad becomes less effective, and the advertisers stop spending. Remember, in the old days, newspapers raised advertising rates at will. Why? Because newspapers worked for advertisers. When newspapers don't work or are not cost effective compared with other media, the Internet or direct mail, advertisers stop spending in newspapers. It's that simple.

    And when this happens, Gannett lays off more people and the cycle continues.

    It's a race to the basement.

  33. There was also a huge shakeup in the Ohio newspapers long before the current chaos started.

  34. Any chance that Jim's specualtion is just a way to increase hits on his blog, to raise ad revenue? traffic has been slow since the last round of layoffs.
    Just a thought. Not saying I blame him. Hype always works for media.

  35. Just go back and read the filing Gannett did with the SEC before the year ended. It was very clear about more reductions coming and coming in 2009. Eyes in the Philadelphia market are looking very carefully at how many southern NJ retail ads are in the Philly Inquirer now and not in the Courierpost. Cuts are predicted to be coming late January or February and the Courierpost will get nailed big time again. Editions of this paper are so thin that there isnt enough paper to spread around the kitchen floor for the new puppy you got for xmas.

  36. At our West Coast paper, we've been alerted that circ and ad revenues for 4Q 2008 here tanked so hard that yes, cuts in the newsroom are quite likely in the first few months of this year ...

  37. Sorry to have to say it again but I love my job, I have a great boss and I still have faith in the leaders of this company. There I said it. I feel better.

    I know pass the koolaide and thanks for stopping by Craig. But it's true.

  38. 9:50 -- It would be totally out of character for Jim to speculate simply to drive traffic. I've read this blog a long time, and notices like this are usually followed promptly by official word. We can hope his source is wrong, but I doubt it.

  39. 5:15 "because it's a public company, it can't "price fix," that is, set the year's goal lower to be more in line with realities"

    Where do I start?
    1. public companies can set budget prices where ever they like. Thats not price fixing.
    2. Keeping expenses in line with revenue means to cut expenses when you know that there will be less revenue so that you maintain profits or at least reduce losses.
    3. You dont have to go to "B-School" to know this stuff. This is common basic sence stuff.
    4. also, the government doesnt force companies to layoff people. Except if they are in court bankruptcy maybe.
    5. Just read what your post slowly and you should see that its dumb.

  40. What I really love about this, the advertising managers at our Gannett paper trained us on what to say to advertisers who wanted to cut back during a recession. We were supposed to tell customers that now was the time to advertise, keep their name in front of the public and when times were better, they would reap benefits. This is based historically on past recessions, where companies who promoted and promoted emerged very strong after the recessions.

    So, Gannett preaches one thing and then guides its own business exactly the opposite of what it is preaching.

    Idiots at the helm?

  41. 11:17

    I'm not sure why you would have faith in the people who have devalued our company by more than 80 percent in less than two years, all the while taking extravagant bonuses.

    But it's great that you love your job and I truly hope you and your boss survive this next round. It's good to see there are people who still care about journalism.

  42. 12:57

    "Idiots at the helm?"

    A rhetorical question perhaps.

    Actually, I don't think they're idiots. They're just greedy. The corporate business model isn't good for long-term sustainability. It encourages quick profits and constant growth, and the latter isn't realistic.

    Companies take drastic measures to keep increasing revenue even if it threatens the long-term viability of the organization. But since most CEOs are pulling down millions a year, they don't need to keep a company solvent for all that long to reap major rewards.

  43. 12:17

    Hey, this is just what I was told; I didn't say I agreed with it. Besides, it seems to be what's going on.

  44. I have no information on large scale layoffs, however, random small scale layoffs will likely continue.

    During every quarter of 2008 local papers were required to submit 1%, 2% and 3% expense reduction contingencies to corporate. The actual expense cuts submitted were at the discrection of the local paper and could include payroll or non-payroll. Each contingency level would include a package of various cuts. For example, if a local paper offered to cut some promotion dollars, payroll likely would not be affected. If a contingency was submitted to eliminate something like the NIE program, the positions in that department would likely be eliminated.

    The December layoffs resulted from the preparation of the 2009 budget. As the budget is flashed for each quarter in 2009, expect some small scale layoffs to occur randomly and likely unreported.

  45. 10:33, at least the layoffs will be reported here! Thanks again, Jim.

  46. I hope 10:33 is right, and I think it could be true. In a December meeting with our publisher, we flat-out asked about the rumors of another round of layoffs in February. While you can't take what a publisher says as gospel, he did say that he knew nothing about any across-the-board cuts, but that each site would be evaluated individually based on their performance. Budget cuts, accordingly, at individual sites.

  47. Gannett is public. That means the officers MUST get the stock price up. That's their No. 1 mission. Revenue is down 20-30 percent, so expenses must follow. The officers have NO choice.

    If all of your costs are in people and paper, what else can you cut? It has nothing to do with stupidity or greed or anything else. Gannett has been running a massively profitable business for years, but the model is changing. So Gannett is changing with it. Be thankful you're not at McClatchy or NY Times or Lee ... those places may be gone soon. Gannett is in solid financial shape, with little debt.

    It just employs far too many people for its business model.

    Having said that, most of Gannett's papers have always been crap, by and large. But that fact has nothing to do with the current layoffs.

  48. perhaps if the publications sold to advertisers were actually fully distributed the advertisers would get better response and continue to run ads. There are pallets full of undistributed publications at the paper I use to work for.

  49. A lot of USAT chatter here...what is interesting to me is the amount of newsroom talent that has walked out the door voluntarily in the last few months (or has announced a departure soon). Let's see...the editor, one of the executive editors, the graphics ME, the author of the most popular blog, the rewrite desk/website news section editor...I am sure there are more.

  50. 10:29 pm: You said the USA Today people who had left included "the author of the most popular blog.'' Are you talking about Whitney Maheson of the Pop Candy blog? I thought she just moved to NYC; did she quit? For Pop Candy blog: http://tinyurl.com/9nmddw


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