Tuesday, June 21, 2011

The hits just keep piling up for Gannett and McClatchy; 700 job cuts at Gannett's US Community Publishing

It's hard to keep track of the number of times one has heard that "the recovery is just around the corner", only to then hear of more industry layoffs.

Today Bob Dickey, president of Gannett's U.S. Community Publishing division announced that 700 positions would be eliminated, representing about 2 percent of all employees.

"National advertising remains soft and with many of our local advertisers reducing their overall budgets, we need to take further steps to align our costs with the current revenue trends<" Dickey wrote in his memo to employees. "Each of our local media organizations faces its own market conditions, challenges and opportunities. Therefore, it has been up to each local publisher to determine his or her unique course of action."
The independent Gannett Blog has been keeping track of the layoffs and have identified about 20 percent of the lost positions.

To industry observers, the layoffs are hardly surprising considering the enormous pay increases top management earned in 2010, despite a steep decline in newspaper ad revenue. The huge bonuses were attributed to stronger earnings – earnings achieved through cutting costs, creating a predictable cycle of actions.

In April, the NYT's David Carr profiled Gannett's efforts to right the ship, which at that time included staff furloughs. "...Gannett is a high achiever when it comes to downsizing. In the five years that Mr. Dubow (Gannett's CEO) has run the company, its work force has gone from 52,000 employees to just over 32,000."

Carr also quoted the company's position regarding dramatically increasing its management's pay: “The company achieved substantial expense reductions through a variety of efforts, including continued centralization and consolidation efforts and salary freezes, positioning the company for growth as economic conditions improve.”

For a newspaper chain with such a wide and deep reach into so many American communities, the actions of Gannett – slash and burn with no substantial rethinking of its business model – is creating exactly the kind of opening new players such as Patch, Main Street Connect and others are counting on.

Then, when you combine this with the institution of pay walls, you can certain visualize a completely new media landscape in the area of news arising – and soon.

Disclosures: none, really – Gannett is one of the newspaper companies I not worked at.

McClatchy did not announce any layoffs today – at least not that I am aware of.

Instead they said that April and May revenue had fallen 9.1 percent.

"We have seen an improvement in revenue trends in the second quarter of 2011, helped in part by retail advertising associated with the later Easter holiday in April," said Gary Pruitt, chairman and chief executive of McClatchy in its press release.

This way of presenting ad declines as positive news is not new as many other companies in the past three years have been doing similar things. But it should be remembered in July of last year the company reported that its Q2 2010 ad revenue was down 9.7 percent from 2009.

In 2009, when announcing a huge increase in earnings, McClatchy also reported that ad revenue was down 30 percent. And just to pile on, in 2008 the company reported that its Q2 revenue was down 15.6 percent, and in Q2 of 2007 they reported revenue declined 9.8 percent.

Making all this news worse is the knowledge that every reported decline was versus a previous year's decline – that's quite a streak the company has going there.