McClatchy Co. is shearing another 1,600 jobs in a cost-cutting spree that has clipped nearly one-third of the newspaper publisher’s work force in less than a year.
SAN FRANCISCO (AP) — McClatchy Co. is shearing another 1,600 jobs in a cost-cutting spree that has clipped nearly one-third of the newspaper publisher’s work force in less than a year.
The latest reduction in payroll announced Monday follows through on the Sacramento-based company’s previously disclosed plans to lower its expenses by as much as $110 million over the next year as its revenue evaporates amid a devastating recession.
The layoffs will start before April. Several of McClatchy’s 30 daily newspapers, including The Sacramento Bee and The Kansas City (Mo.) Star, already have decided how many workers will be shown the door.
After the latest purge, McClatchy will have saved at least $300 million annually, with management now confident it will exceed the $110 million target set for the latest cuts, although the company didn’t specify by how much.
The savings are accumulating mostly through the elimination of 4,150 jobs, or more than 30 percent of McClatchy’s work force, since June. The Sacramento-based company will end up with the equivalent of about 9,200 full-time workers.
Paying severance and other benefits in the latest round of layoffs will cost McClatchy $30 million.
Besides jettisoning jobs, McClatchy is also lowering the wages of many employees, including its chief executive, Gary Pruitt, whose salary is being trimmed by 15 percent. Labor leaders representing workers at The Sacramento Bee had sought an even bigger reduction that would have capped Pruitt’s salary at $500,000 this year. Pruitt received a $1.1 million salary in 2007, the most recent year his pay has been disclosed.
“I’m sorry we have to take these actions, but we believe they are necessary,” Pruitt said.
The downturn in McClatchy’s fortunes has been compounded by about $2 billion in debt, most of which was taken on to finance the company’s $4.6 billion acquisition of Knight Ridder Inc. in June 2006.
The newspaper industry began to suffer from declining ad revenue about the time that deal was completed. Classified ads have shifted to the Internet in recent years, and the recession has been siphoning away more revenue in all ad categories since last summer.
Investors have largely abandoned the company’s stock. The shares declined 18 cents Monday to close at just 41 cents. The stock has plummeted by nearly $40 since the Knight Ridder acquisition was completed.
The adversity has driven McClatchy to pursue a bare-bones strategy that’s likely to make online news coverage the top priority for its smaller newspaper staffs, said industry analyst Ken Doctor of Outsell Inc.
“They will try to milk the print product for as long as they can, but they are clearly shifting to more of a hybrid model as they restructure the work force on the fly,” he said.
The Internet accounted for about 12 percent of McClatchy’s revenue last year, up from about 9 percent in 2007.
Despite the progress, McClatchy — like other major newspaper publishers — still hasn’t been able to plumb the Internet for enough revenue to make up for what’s been lost on the print side.
McClatchy’s overall revenue plunged by $343 million, or 18 percent, last year.
Management is allowing its individual newspapers determine the best way to achieve the company’s savings targets.
The Kansas City Star is lopping 150 jobs, mirroring the company’s overall 15 percent reduction in work force.
The flagship Sacramento Bee is trimming 11 percent of its work force, or 128 jobs, and wringing other savings through wage cuts of up to 6 percent and possible unpaid furloughs of one week. Newsroom workers saved 19 jobs by making those concessions.
Similar job-saving pay cuts are coming up for a vote at two other McClatchy newspapers in California, The Modesto Bee and The Fresno Bee. The vote at the Modesto newspaper was scheduled Monday evening and the Fresno newspaper workers were to cast their ballots Tuesday.
The Fort Worth Star-Telegram in Texas and The Sun News of Myrtle Beach, S.C. are among the other McClatchy newspapers that have already disclosed their job cuts.