McClatchy Announces 10% Workforce Reduction Plan

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By: Joe Strupp

The McClatchy Company plans to cut its workforce by about 10%, according to a release Monday, which estimates the cutback will affect some 1,400 full-time positions and save about $70 million annually.

“We have been transitioning steadily and successfully from a traditional newspaper company to an integrated multimedia company for some time,” McClatchy CEO Gary Pruitt said in a statement. “The effects of the current national economic downturn — particularly in real estate, auto and employment advertising — make it essential that we move faster now to realign our workforce and make our operations more efficient. I’m sorry this requires the painful announcement we are making today, but we’re taking this action to help ensure a healthy future for our company.”

McClatchy, which owns 30 daily papers and 50 non-daily publications, said it is reducing workforce “through both voluntary and involuntary separations, as well as managed attrition, involving about 1,400 full-time equivalent employees (FTEs). The company will retain its strategic focus on sales, news and online operations as it realigns operations, with decisions about the size and profile of changes differing by location.”

At The Kansas City Star, about 120 jobs will be eliminated.

The Miami Herald will reduce its workforce by 250 full-time employees, or 17% of its staff. Publisher David Landsberg told the paper those cuts include 190 full-time and part-time employees, along with the elimination of other open positions.

”This is a painful but necessary step,” Landsberg wrote in an e-mail to employees. “We’re operating in a time of great change and challenge for our operations.”

The company, which offered no specifics about where cuts will occur, stressed that it “historically has not used broad layoffs to manage staff size, relying instead on attrition and selected job eliminations through outsourcing. This has been an effective strategy, resulting in workforce reduction of 13% between the end of 2006 and April 2008, but today’s more competitive media environment and challenging operating conditions mean the company must move more aggressively to shape the overall workforce.”

Adds Pruitt: “It’s important to recognize this move as part of a continuing, strategic vision for successful future operations, not solely a response to today’s adverse conditions. McClatchy is committed to remaining a healthy, profitable company positioned not only to meet current challenges, but to take full advantage of opportunities for growth as we restructure to support our mission of delivering high quality news and information. Our five-year plan has recognized the need for a workforce smaller than today’s; in adjusting to the current economic environment, we find we must move more quickly to that goal.”

McClatchy’s cash expenses dropped 10.5% in the first quarter of 2008, the company stated, and its full time equivalent positions (FTE) were down 7.5% from the prior year.

The company expected the job reduction to save about $70 million annually as part of a plan to reduce overall expenses by $95 million to $100 million over the next four quarters. “Combined with previous expense control initiatives, the company expects to reduce non-newsprint cash expense in the low double-digit percentage range over the balance of 2008 excluding severance costs of about $30 million,” the release stated.

McClatchy added that it has continued to grow total audience, with an online increase of 25% in 2007 that “far outpaced industry averages, and the first quarter of 2008 saw even more dramatic growth of 41%.”

“Growing audience has always been the best predictor of future success for any media company, and in our case it is also an essential foundation for our public service mission,” Howard Weaver, McClatchy’s vice president/news, said in a statement. “As difficult as it is to say farewell to valued colleagues, we continue to employ by far the largest and most experienced newsrooms in each of our communities and will continue to do so. They enjoy greater reach and employ better tools today than ever in our 151-year history, and we do not intend to slack in pursuing our obligations.”

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