Buyout Plan Announced at Philadelphia Dailies, Layoffs Could Follow

By: Joe Strupp

The rumor mill had it right. Buyouts aimed at reducing staffing at the Philadelphia Inquirer and its Knight Ridder stablemate The Daily News were announced this morning.

In a memo to staff Tuesday, Daily News Editor Michael Days called it “a lousy day.” He said full-time Guild-covered employees were eligible.

“The goal is to reduce our staff by about 25 employees before the end of the year,” he wrote. “The Inky’s goal is about 75 staffers.”

Rumors had suggested that the total for the two papers combined would be 75, so this may actually be worse news than some expected. And in another memo to staffers, Publisher Joe Natoli wrote: “We need to achieve the targeted expense reductions and hope to achieve much of the savings through the voluntary program. However, if there are not enough subscribers to the buyout, there will be newsroom layoffs.”

The buyout offer, which is available until Nov. 4, includes two weeks of pay for every year of service up to one year’s salary.

Editors distributed a notice to employees at both papers this morning, according to newsroom workers.

“We’re going to have to really reinvent this paper,” Inquirer Editor Amanda Bennett told E&P Tuesday after the news broke. Bennett said that she had made numerous non-personnel cuts for months before turning her attention to staffing levels. “I am going to start a process that will be very inclusive before I decide what we are going to do. But we are going to have to reexamine our core values.”

She said staffers among her 500-person editorial crew were “shocked and stunned” but dedicated to making it work.

Don Russell, an 18-year Daily News writer who also pens occasional columns, said the number of buyouts sought by management was a surprise. “Twenty-five is a huge number and would really put a dent in our newsroom,” he told E&P, adding that his newsroom has about 130 staffers. “I think the Daily News is going to be a different paper when it happens and it will be worse for it.”

Russell, who is married to criminal courts reporter Theresa Conroy, said he did not know if he would take the buyout, which would give him a nice severance package. He said pending contract negotiations for the union, whose current agreement ends next summer, may be affected by the buyout situation.

“There is some feeling that this scares people in terms of what they would be willing to do in negotiations,” Russell said about management. “I don’t know what it will mean.”

Natoli’s memo to PNI staffers went on to say:

“As you know, we continue to face a challenging business environment. As a result, we have made many changes, both to reduce costs and to strengthen our sales and marketing infrastructure to help us grow in the future.

“But, these steps have not been nearly enough to offset revenue shortfalls and we face new challenges as we head into 2006, particularly the loss of one of our largest advertisers, Strawbridge’s, due to its purchase by Federated Department Stores, and significant cost increases for newsprint and fuel….

“This isn’t a step we took lightly. Over the last year, we have done everything we could to try to avoid getting to this point. We’ve cut presses and single copy routes. Reduced management. Trimmed the Technology department. Had our first Inquirer home-delivery price increase in several years. We’ve added advertising sales pressure, expanded the research and presentations department, and created more targeted preprint zones to help us better compete for that business.

“Despite these and many other initiatives, our financial results have been disappointing. Total PNI revenue — that is, the total money coming in the door, including and other subsidiary operations – is running below prior year. More concerning, our revenues have been essentially flat for the last several years.

“At the same time, costs continue to increase resulting in a decline in operating profit and margin. No business can operate indefinitely with flat or declining revenue and increasing costs. We need to turn that trend around….

“If the number is not achieved through buyouts, will there be layoffs and, if so, who will be impacted?

“We need to achieve the targeted expense reductions and hope to achieve much of the savings through the voluntary program. However, if there are not enough subscribers to the buyout, there will be newsroom layoffs.”

In his note to staffers, Daily News Editor Days had written: “We’ve gotten to this point largely because PNI increasingly finds itself in a tougher environment in which to do business….

“Yes, I know how disruptive this process is,” Days wrote. “All of us have pledged our careers to giving birth each day to this exceptional tab that is both essential and fun to our readers, so anything that gets in the way of that is just plain awful.

“Having said that, none of this should be misconstrued as a death knell. The Daily News is not closing.

“With a smaller staff we will have to refocus our priorities and restructure our operations. That process is already underway, and I welcome your suggestions. I am not suggesting it will be easy, but I’ve been here long enough to know that our collective DNA forbids us from doing anything other than quality work.”

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