NEW YORK (Reuters) - U.S. newspaper publisher McClatchy Co plans to cut its work force by about 10 percent, or about 1,400 jobs, as part of a restructuring plan to deal with a damaging drop in advertising revenue.
The cuts will be the largest at McClatchy in recent history. They will be achieved through layoffs, buyouts and leaving jobs open, McClatchy said in a statement on Monday.
Chief Executive Gary Pruitt said in an interview that he hoped to avoid further broad job cuts but that he did not know when the worst will be over for the industry.
Like many U.S. newspaper publishers, McClatchy is dealing with a downturn in the wider U.S. economy and the migration of paying customers away from its papers. The primary result of these trends is a persistent decline in advertising revenue, particularly in real estate, automobile and employment.
“I can’t tell you where the bottom is,” Pruitt told Reuters. “We are still facing a very rugged advertising environment and I can’t say we have bottomed yet.”
McClatchy shares were off 13 cents, or 1.6 percent, at $8.02 in afternoon trading on the New York Stock Exchange.
Pruitt said newspapers and their online components remain strong franchises but in the meantime they must cut costs.
“McClatchy will likely end up with online revenue around a couple hundred million dollars this year,” he said. “But it will not equal print revenue in the foreseeable future.”
McClatchy reported a 12.9 percent gain in online ad revenue in May as it attracted more readers online. Online audience growth rose 25 percent in 2007 and 41 percent in the first quarter of 2008.
McClatchy expects the job cuts to produce annual savings of about $70 million, part of a plan to cut overall expenses by $95 million to $100 million over the next four years.
The move comes after other publishers, including Gannett Co Inc, Tribune Co, New York Times Co and Washington Post Co have instituted layoffs or buyouts of their own.
McClatchy’s newsrooms are not exempt, although staffing decisions will be different depending on the paper, spokeswoman Elaine Lintecum said.
“In general, we’ve cut newsroom (jobs) much less than our industry peers,” she said. “We will continue to seek to preserve robust reporting capacity and to ensure high-quality coverage.”
McClatchy’s Charlotte Observer plans to cut 123 jobs, or 11 percent of its work force, the paper reported on its website on Monday. The Miami Herald plans 250 job cuts, or 17 percent of its work force, and The Kansas City Star is cutting 120 positions. The Herald-Leader in Lexington, Kentucky, by contrast, is dropping 17 positions, or about 4 percent.
McClatchy is responding to a persistent decline in the newspaper publishing market that cut the company’s consolidated revenue by 15.1 percent and its ad revenue by 16.6 percent in May. Its performance has led to investors hammering the stock, with the share price falling 69 percent in the past 12 months.
Nearly all U.S. newspapers are feeling the pain. First-quarter print ad sales fell 14 percent, the worst quarterly decline in more than three decades, according to figures published by the Newspaper Association of America last week.
Pruitt said McClatchy plans to remain publicly traded despite the bad news and the effect that falling ad revenue has had on its stock price.
Separately, McClatchy said on Monday Pacific Northwest publisher Pioneer Newspapers will print two McClatchy-owned papers, the Idaho Statesman and Washington State’s The Bellingham Herald.
The deal with privately held Pioneer will help McClatchy avoid tens of millions of dollars in capital expense to refurbish or replace the Statesman’s press, McClatchy said. The Statesman also will cut 24 full time-equivalent production jobs as part of the deal, McClatchy said.
Additional reporting by Kenneth Li; Editing by Mark Porter and Gerald E. McCormick