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Belt-tightening in media squeezes more workers

By Michael Liedtke
AP Business Writer / February 18, 2009
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SAN FRANCISCO—Thousands of workers at U.S. newspapers and broadcasters are facing more layoffs, wage freezes and pay cuts as their cost-cutting owners scramble to survive an advertising drought that has become even more dire in recent weeks.

The grim conditions prompted Media General Inc. to inform its 5,600 workers Wednesday that they will be forced to take 10 unpaid days by the end of the year. Four of the days off must be scheduled by the end of March, with the remainder spread over the final six months of the year. The Richmond, Va.-based company expects the furloughs to save about $9 million, spokesman Ray Kozakewicz said.

Media General previously had trimmed about $19 million from its expenses by suspending its matching contributions to workers' 401(k) retirement plans and suspending dividend payments to shareholders. The company publishes 24 daily papers, including The Tampa Tribune and Richmond-Times Dispatch in Virginia, and owns 19 television stations.

In another austerity measure, the Tribune Co. earlier this week froze the wages of all the nonunion employees at its newspapers, which include the Los Angeles Times and the Chicago Tribune, and its TV stations, which include WGN.

The Chicago-based company filed for bankruptcy protection in December as it tries to cope with $13 billion in debt that is becoming more difficult to repay as advertisers curtailed their spending.

In a memo to employees, a Tribune executive said the Chicago-based company plans to negotiate with labor leaders to extend the freeze to unionized workers as well.

"Hopefully, freezing salaries will now allow us to avert more drastic action in the future," wrote Gerry Spector, the Tribune's chief administrative officer.

Tribune spokesman Gary Weitman declined to provide any further details about the freeze.

At the time of its bankruptcy filing, the Tribune Co. had about 14,600 full-time employees. Court documents also indicated the company's payroll expenses ranged from about $15 million to $20 million every two weeks, which translates to $390 million to $520 million annually.

Major media companies are pinching pennies because their main source of revenue -- advertising -- has been rapidly drying up.

The downturn for newspapers began several years ago as Web sites like Craigslist offered free advertising alternatives and Internet search leader Google Inc. developed a more effective marketing vehicle. The worst recession since the early 1980s has prompted advertisers to curtail spending even further.

The U.S. newspaper industry, as a whole, is expected to collect about $28 billion in ad revenue this year, a 40 percent drop from $46.6 billion in 2006, according to a Barclays Capital analysis.

U.S. television broadcasters have fared better than newspapers, but they won't get a boost as they had last year from the Olympics and political ads. The industry's ad revenue is expected to fall 13 percent this year to about $38 billion this year.

While both Media General and Tribune indicated their belt tightening is meant to preserve jobs, newspaper publisher McClatchy Co. is gearing up for its third payroll purge since June.

McClatchy executives warned of more layoffs earlier this month when they disclosed a fourth-quarter loss of $21.7 million and acknowledged the slide in its advertising revenue was accelerating.

The Sacramento-based company, which owns 30 daily papers including The Miami Herald and The Sacramento (Calif.) Bee, hopes to save $100 million to $110 million this year after lopping $200 million from its annual expenses last year, primarily by reducing its work force by 10 percent on two different occasions.

In meetings last week, McClatchy representatives told employees at the Bee to expect another wave of substantial job cuts in early March, according to a memo from the California Media Workers Guild, a labor union at the newspaper. Pay cuts and mandatory furloughs also loom as a possibility, according to the memo.

To spread the misery more fairly, the California Media Guild this week asked McClatchy Chief Executive Gary Pruitt to cut his salary drastically. Pruitt received a $1.1 million salary in 2007, the last year that McClatchy has disclosed his pay. The labor union wants him to get by on a $500,000 salary this year.

"It's about dollars and cents at a moment when every dollar counts," the union wrote in an open letter to Pruitt. "A voluntary reduction on your part would save jobs. Simple as that."

Elaine Lintecum, McClatchy's treasurer, declined to comment on how Pruitt will respond to the request.

Pruitt, who saddled McClatchy with debt in a 2006 acquisition of papers formerly owned by Knight Ridder Inc., has already agreed to forgo his bonus for 2008 and 2009. He received an $800,000 bonus in 2007.

USA Today publisher Gannett Co. already has imposed a one-week unpaid furlough for most of its U.S. employees, while News Corp.'s The Wall Street Journal recently trimmed about two dozen newsroom jobs and imposed a one-year wage freeze for nonunion employees.

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