By: Dave Carpenter, AP Business Writer
(AP) Citing the “worst advertising environment since the Depression,” Tribune Co. announced new cost-cutting measures Wednesday, including 5% pay cuts for senior managers and a wage freeze for nonunion employees.
The publisher of the Chicago Tribune and Los Angeles Times also said hiring will be limited to “critical functions,” corporate expenses will be further reduced, and all the company’s business units will take additional cost-saving measures.
Tribune said it was taking steps to reduce staff through attrition to avoid further layoffs. The media company cut 1,700 jobs, or 6% to 7% of its work force, in the second and third quarters through a combination of layoffs and voluntary retirements.
“We’re trying to avoid as many staff reductions as we possibly can,” Tribune spokesman Gary Weitman said.
The moves were announced as Tribune disclosed that October revenues of $410 million fell 8% short of a year ago.
Revenues from its publishing group, consisting of 11 newspapers, were $298 million, or down 10% from the same month a year ago. Retail advertising decreased 7% last month due to declines in ads by electronics and department stores, and national ad revenue was down 13% because of weakness in the entertainment and movies, financial, and technology categories.
Tribune also owns 22 television stations and more than 50 Web sites. It said TV revenues decreased 6% in October due to the continued soft advertising economy.
About 140 senior managers will take the 5% cuts as of Jan. 1, including chairman and chief executive John Madigan, president and chief operating officer Dennis FitzSimons, and chief financial officer Donald Grenesko, along with the presidents of the company’s three business groups: Jack Fuller, David Hiller, and Pat Mullen.
Cash bonuses in 2001 will be “minimal,” and the six top executives will get none. Madigan received a bonus of $3 million last year, when Tribune acquired Times Mirror, and the others got bonuses ranging up to $700,000.
“As you know, the economy has been in a downturn this year, and we are experiencing the worst advertising environment since the Depression,” Madigan said in a memo to Tribune staff. “The Sept. 11 terrorist attacks in New York and Washington only made a bad situation even worse.”
Madigan said the Tribune remains committed to meeting the heavy demand for quality news and information in the wake of the attacks.
Tribune also said it was adding merit-based stock options as a long-term incentive for the approximately 18,000 Tribune employees not covered by a collective bargaining agreement. Wage freezes for those employees will begin Jan. 1 and last for one year.
The company reported its first operating loss in 10 years in the third quarter, and operating profit from continuing operations was down 37% compared with the same period in 2000.
Tribune shares rose 48 cents to close at $35.81 Wednesday on the New York Stock Exchange, but remain down 15% this year.
After the market closed, Fitch Inc. lowered Tribune’s credit rating to negative from stable, citing the “deterioration in credit protection measures” resulting from the recessionary conditions prevailing in its newspaper and TV markets.