By: Allan Wolper
You know times are tough in the newspaper industry when the financial jewel in the Newhouse family’s newspaper empire orders major budget cuts. E&P has learned that Advance Publications’ The Star-Ledger of Newark, N.J., is struggling to find $10 million to slash from its budget because many of its key retail advertisers have filed for bankruptcy or cut their spending.
“Overall, we are trailing our projections by many millions of dollars,” Publisher Linda Dennery wrote in a recent memo to employees obtained by E&P, adding that “the outlook has darkened.”
The Star-Ledger still promises to honor its famous handbook pledge not to lay off any of its nonunion employees due to a bad turn in the economy — but jobs are being lost elsewhere because of its cutbacks. Red ink has forced the newspaper to trim the size of its contract with the Mountainside, N.J.-based Dorf Feature Service, an important component of its news-gathering operation.
Dorf, which is so entwined with the newspaper that its editorial employees say, “Star-Ledger,” when they answer the telephone, provides copy for the paper’s suburban-news pages, its high-school and college sports sections, and the great majority of its obituaries.
“The Star-Ledger told us it was cutting back on its coverage, so we had to cut back as well,” explained Sid Dorfman, the CEO of the 64-year-old news service and author of a column that appears regularly in the newspaper. “It hurt us, but we will survive. We had to let a dozen people go.”
The Star-Ledger also canceled its Christmas party, has closed a small satellite office in Newark, is offering buyouts to selected employees, and will decrease the amounts of its annual raises and bonuses. Publisher Dennery said in a telephone interview with E&P last week that the paper’s work force knows that she will keep Advance Publications’ long-standing no-layoff pledge. That promise in its handbook is one reason The Star-Ledger has not had to worry about anyone unionizing the newspaper, according to numerous sources.
Dennery refused to discuss specifics of her cost-cutting plans, but insisted that the measures being taken would be met with understanding because of the tremendous losses being experienced by the business side of the 410,547-weekday-circulation newspaper (393,221 under previous Audit Bureau of Circulations rules). Repeating that there would be “no layoffs” and that there was “no wholesale plan for buyouts,” she acknowledged that “some people are being given the opportunity to leave.” She also revealed that there would be “adjustments” in the staff’s traditional Christmas bonuses and cost-of-living raises. “What we are doing is fair, given the state of the economy,” the publisher said.
Dennery wrote a comprehensive explanation of the state of The Star-Ledger‘s financial troubles in her Sept. 28 memo, which was e-mailed to every employee of the newspaper and subsequently obtained by E&P.
“Here at The Star-Ledger, we witnessed the demise or bankruptcies of an unprecedented number of key accounts,” she wrote, listing 13 firms, including Aisle 3, Bradlees, Caldor, Computer City, Foodtown, Grand Union, Just For Feet, Nationwide Electronics, and Sterns.
“To compound our revenue shortfalls, as the dot-coms of the world disappeared, so did a great portion of our help-wanted advertising; and the demand for employees in many industries plummeted. In August, for example, we were down 45% in the employment category.”
Dennery detailed in the memo how her administration had already managed to lop $5 million off the newspaper’s expenses, expecting that it would be able to cut a total of $6.5 million by the end of the year. But, she wrote, she realized that would not be enough.
“Unfortunately, our situation has now changed, and the outlook has darkened,” Dennery explained. “The Star-Ledger covered the unimaginable events of Sept. 11 with great commitment, but that coverage was costly. Subsequent additional losses in advertising revenues, especially in categories such as travel, have made a bad situation worse.
“We cannot know what the future will hold. We do know we will strive even harder to do everything in our power to increase revenue. What is certain is that we must work together to further cut costs — to an annualized level of $10 million. Therefore, I am asking all departments to review expenses and commitments and to eliminate all nonessential expenditures.”
“With your cooperation,” she concluded, “we will achieve the $10 million in cost savings necessary to ensure the continued prudent operation of our newspaper, without any loss in the quality of our journalism.”