BANG the Drum Slowly?: Buyouts Offered at Bay Area Papers

By: E&P Staff Employees at the Oakland (Calif.) Tribune, the Contra Costa Times, and the other 22 dailies and weeklies in the Bay Area News Group-East Bay (BANG-EB) are being invited to apply for voluntary buyouts, the group said late Tuesday.

In an announcement, BANG-EB said the buyout offered "improved severance benefits," which it did not specify.

President/Publisher John Armstrong said BANG-EB was looking to save a dollar amount, not a specific number of jobs. If it doesn't reach that number with the buyout, he said, there will be involuntary layoffs.

"Almost without exception, real estate forecasters believe the Bay Area will be saddled with a housing slump for 12 to 18 months, and talk of a recession is now commonplace," he said in a statement. "We have concluded we must reduce our operating expenses quickly, and we cannot get where we need to be without reducing the size of the workforce."

The group -- part of the California Newspapers Partnership, which is owned by MediaNews Group, Gannett Co. and Stephens Media -- had been relying on attrition to reduce costs, but it's not been enough, Armstrong added.

In a memo to staffers he wrote:

"As you are well aware from my State of the Company remarks and my monthly updates, we are faced with huge financial challenges. There is no need to repeat the reasons for them now, other than to emphasize the challenges are of historic proportions.

"One example: In January BANG-East Bay had a positive cash flow, but only because of an accounting adjustment. Looking back nearly 30 years in the history of the Contra Costa Times, we could find only one month in which the paper had a negative cash flow, in 1991 when Bush I invaded Kuwait.

"With the housing slump continuing, with widespread talk of a recession, Pete Herschberger, Advertising & Marketing VP, and his team took another look at advertising revenue prospects for the balance of this fiscal year and for the 2009 fiscal year, from now through June 2009.

"It's not a pretty picture. We think the short-term future, from the current quarter looking forward 16 months, will continue to show advertising revenue declines, although at less severe rates as we move into the 2009 calendar year. At the same time, our costs will continue to increase. Newsprint, our most expensive commodity, is expected to have three price increases this year alone.

"We reviewed these projections with Mac Tully, the new publisher at San Jose who now also is responsible for all of BANG, and Steve Rossi, the MediaNews executive vice president who, with George Riggs' departure, is now responsible for the California Newspapers Partnership. We did some tweaking of the forecast, showing modestly better results in some categories, weaker performance in others. We also projected our costs if we made no major changes in our operations.

"When we finished that work, we reached the unavoidable conclusion that we must reduce our operating costs, and we must do so quickly. And we cannot accomplish what we need to accomplish without reducing the size of our workforce. In the past few months, we've relied on attrition to bring down the number of employees, but that no longer is adequate."