GateHouse plans to cut newspaper pay

A MESSAGE FROM RICK DANIELS, CEO/PRESIDENT GHMNE
TO EMPLOYEES REPRESENTED BY COLLECTIVE BARGAINING AGREEMENTS
As we all know too well, the road out of the horrendous economic and advertising slump has been extremely difficult, and yet we have a lot to be proud of on how we have responded. We are still bringing valuable and unique local news, information and advertising to our huge print and digital audiences. Together, we have taken many tough actions that have preserved – and often enhanced – our capabilities, while substantially decreasing GHMNE’s structural costs.

Regrettably, we need to share some tough news: We have asked the leadership of all of our unions to enter into immediate negotiations with regard to implementing a temporary salary reduction. The amount of reduction the company is seeking is 7.75%. This is consistent with the average reductions that all other GateHouse Media Massachusetts employees will experience, per a communication earlier today.

Why are we taking this step? Why now? It’s really pretty simple: As much as we have done everything in our collective power to blunt the negative effects the economic crisis has had on advertising, virtually ALL major metropolitan markets have been hit by advertising declines that have soared to the mid-twenties to mid-thirties percent (compared to prior year months) since early January. These revenue declines have dramatically hit the cash flows of most publishers.
Common sense tells us that when companies start suffering from negative cash flow, there is NOTHING good that happens, and these days, with lenders and vendors on short strings themselves, the “bad stuff” happens quickly. We seriously considered opening negotiations earlier this year, but given the obvious difficulties a pay cut creates for each of our family’s finances, we decided to make sure we were not going to see an advertising rebound that could allow us to avoid this painful step. We also considered the possible use of additional staff reductions to generate the almost $2.5 Million of savings this pay cut will generate for the remainder of 2009. Such cuts would have to be about 100 positions, and we did not believe we could continue to operate and deliver the high levels customers value were we to quickly cut this many positions. However, if we do not see some sustainable positive revenue trends in the latter part of this year we may be forced to revisit this subject.

Some might ask: Aren’t newspapers dead anyway? Are we just prolonging the inevitable? As a consumer and advertising medium, newspapers that deliver truly unique news and information are still very much in demand, although some very important parts of the business model, including the need to be fluently digital, are changing. One of the largest advertising agencies in the country visited us recently with a very simple message: Large local newspaper companies, with some changes, will be the major beneficiaries of the newspaper industry restructuring. As a corollary: Metro daily newspapers are in a world of trouble. Our industry IS going through wrenching changes, but a great many of those changes are poised to benefit us – as long as we remain economically sound in the near term. We will keep you informed about our challenges, AND our victories. Thank you – in advance – for your willingness to support personally difficult steps during these times that WILL allow us to grab the opportunities that arise out of adversity.
The senior management team and I will be conducting employee information sessions at a great many of our locations in early to mid June, we look forward to updating you further at these meetings.