Candid Memo p.

By: M.L. Stein

Candid Memo p.
Rumors of cutbacks at Seattle Times lead management
to distribute financial information to all employees
WHEN RUMORS OF cutbacks swept through the Seattle Times, management distributed a companywide memo in question-and-answer form that was unusually candid.
The idea, by publisher Frank Blethen and president Mason Sizemore, was to address "some frequently asked questions about our current financial situation."
"How bad is it?" was the first question posed.
The answer: "Pretty bad."
The memo went on to note that through April advertising revenue was down almost $2 million from last year, and that earlier this year the company had reduced its advertising budget forecast by about $5 million.
By the end of 1993, it said, "our best guess is that we'll fall another $5 million short of the revised forecast."
Question No. 2: "Is the company losing money?"
No, was the answer, but profits are low.
"We're not going out of business, or anything like that" or going to "abandon our values and commitments to our customers and employees," the missive assured staffers. "We are a financially healthy company, but we must make some hard choices and take painful actions to stay strong and independent," it said.
However, the officials predicted that the paper's lower sales level is permanent and that newspapers will never again enjoy the growth of the 1970s and '80s when their revenue "grew consistently."
A few paragraphs later, the message got down to the matter of cutbacks with the question: "How much do we need to cut?"
Blethen and Sizemore said the need for cuts is "obvious" but, in reply to a following question, they eschewed a decision to have all departments share equally in the downsizing, which could include layoffs.
"There are several reasons for this," they continued. "For example, it would be foolish to cut spending in the advertising department in ways that would cause us to lose additional revenue."
Employees also were reminded that some departments suffered more than others in previous cost containments.
Although the Times always has regarded layoffs as "last resort," it was stated, "the magnitude of the problem is so great that it seems likely we will need to eliminate some work" with the result that "we can't rule out layoffs." A modified hiring freeze is already in operation, they added.
The managers responded to another posed question by saying that the Times' owners are prepared to accept lower profits in this difficult period and already have done so in order to make long-term investments in quality and competitiveness.
"We wouldn't have built North Creek [a new production facility], gone to daily zoning, invested in audiotex or made other strategic investments if our focus were just on profits," they pointed out.
The Seattle Post-Intelligencer, the Times' partner in a joint operating agreement, will undergo the same financial scrutiny of its business side, the memorandum asserted in an answer to another question.
The memo's authors said they could not fix a date when the full extent of the cutbacks will be known but they observed that supervisors should keep employees abreast of developments and that "You should not hesitate to ask questions along the way."
Blethen said that he will be available for meetings with workers and will consider future memos on the company's financial situation.
Meanwhile, he suggested that employees offer ideas to improve efficiency and enhance revenue. A voice mail system to handle such contributions has been set up, the publisher reported.
The "let it all hang out" approach is not new or unusual for the Seattle Times, Blethen said in an interview.
"We've never had quite this kind of a [financial] situation before but we have handed out a variety of information to employees on our operation," he explained.
When Blethen became the Times publisher in 1985, he recalled, the independently owned paper was a "traditional, button-downed, closed-mouthed kind of operation."
He said that he and Sizemore, who became president at the same time, decided they would fully share information about the company with workers.
"We would be extremely open," he remarked.
This, Blethen continued, has taken the form of periodic memos to the staff, at-large face-to-face Q&A sessions, smaller meetings with people in various departments and employee-management dinners. Questions are solicited in advance for the general sessions and more can be asked from the floor.
"We let them know what's going on," the publisher said. "They can ask me anything except about my salary."
Even that was revealed (purportedly) in a May 23 Times story by staff reporter Terry McDermott that took what many Times managers regarded as an overly critical view of the JOA.
Despite declining advertising and circulation, McDermott wrote, Blethen "recently bought a $1.6 million waterfront home, drives to work in either a Lexus sports coup? or a company-paid $30,000 Range Rover, and last year earned, in combined income from his job as publisher and his position as part owner of the company, something in the neighborhood of $900,000 in salary, bonuses and dividends."
Blethen, who called the figure a "guess," said that several managers were upset by the disclosure and the article's generally bleak look at the JOA and the future of the newspaper business.
"I told them not to worry because our employees have come to expect that type of thing," Blethen said.
Regarding the latest memo, the publisher stated: "We know we will have to reduce our force. We are trying to do it without layoffs. We will do what we've been doing with fewer people."
One benefit of management's open policy is that employees are becoming more aware of how the local and regional economy impact on the newspaper and are learning more about the whole newspaper and how it works, Blethen observed.