By: Joe Nicholson
Can the Miami newspaper boost its profit margin 5% higher without slashing staff?
AT THE SAME time they must adjust to the surprise resignation and replacement of their publisher, newsroom workers at the Miami Herald and El Nuevo Herald are also rattled by the prospect of job cuts.
A high-level Miami Herald source confirmed that staffing cuts were “inevitable” if the newspaper was to meet the Knight Ridder mandate for increased profits.
“Knight Ridder has said that ? over three years ? it wants to improve profit margins to 25%,” said the source, who added that it will require a difficult 5% jump. “Now whether we actually have any layoffs ? or attrite the folks over a period of time ? I couldn’t tell you,” he said.
Reporting on the general feelings inside the Miami Herald newsroom, the Miami Daily Business Review noted: “Cutbacks made about three years ago have already taken their toll. And with a fresh round in the offing, morale is in the toilet and r?sum?s are in the mailbox.”
All employees have been asked for cost-cutting suggestions, some 200 have offered ideas, and 30 executives were considering “a whole bunch of plans,” said the source.
Meanwhile, other executives within the Knight Ridder organization suggest the chain may soon require all of its newspapers to match the industry cash flow average, currently 27%. In the past, managers had stationary annual profit goals rather than a moving target that fluctuated with ongoing industry performance.
Another high-level Knight Ridder source said newspapers were ordered early this year to boost profits substantially over three years, leading up
to the end of 2000. “At the end of those three years, we do want to see our operating and cash flow margins at or above industry averages,” he said. That means, he was asked, current industry averages, right? No, he replied, adding the newspapers were expected to match “wherever that number would be in three years from now because I would think it would improve along the way also.” Might this mean matching a 30% cash flow margin? Yes, said the high-level Knight Ridder source, adding, “Or wherever we think the industry would be.”
Hours later, the source called back, and backpedaled, saying the whole process was far more flexible than his previous description.
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?(copyright: Editor & Publisher August 8, 1998) [Caption]