Newsroom Layoffs Cut Closer to the Bone

By: Jennifer Saba The newspaper industry has been through tough periods that require staff reductions, most notably after the dot-com bust. But what makes this go-around so different is how close the axe is to the newsroom and how deep it may cut.

In mid-September, Knight Ridder rang a warning bell: Q3 earnings per share had fallen 20% due to rising health care costs, a 9.1% hike in newsprint prices, and other factors like the effects of Hurricane Katrina on its Biloxi, Miss., paper. Then came the body blow: Two of the company's largest newspapers, The Philadelphia Inquirer (and its sister, the Daily News) and the San Jose Mercury News announced they would have to cut about 15% of their newsroom staff through a series of buyouts and possible layoffs. The publishers of other larger papers at Knight Ridder, The Kansas City Star and Fort Worth Star Telegram, said for the moment no layoffs were planned.

The staff reductions are not exclusive to Knight Ridder. The New York Times Co. sent word the same day of the Philly announcement that it too was reducing its staff, including 45 newsroom positions at the The New York Times and 35 at The Boston Globe. Hearst's San Francisco Chronicle has also been trimming, and Tribune's Newsday, still struggling with its circulation fallout, is shuttering its New York City edition, eliminating 45 jobs.

The exit list could grow after Q3 results elsewhere are revealed this month. As E&P goes to press, analysts have done their own slashing: Merrill Lynch and JPMorgan downgraded Tribune Co., while Deutsche Bank lowered its ratings on Gannett and McClatchy.

With the announced reductions, Peter Appert, an analyst with Goldman Sachs, concedes that there's a sizable risk to hurting the product, calling the cuts "dramatic." Linda Foley, president of the Newspaper Guild, says in her 20 years of service these slashes "impact the newsroom more than any in my memory."

For now, management at the Mercury News and at the Inquirer are trying to bypass the axe. Buyout packages for "voluntary" reduction have been extended to editorial staffers at both papers. But how do they differ?

The package at the Mercury News includes two weeks of pay for every year of service with a cap of 44 weeks. There are medical benefits too, for six months, one year, or two years depending on how long the employee has been with the paper. As of late October, the guild estimates that 31 members have applied for the buyout. Employees have until Nov. 10 and the paper can reject those wanting to opt out.

In 2001, when the Mercury News went through a similar crisis, Luther Jackson, executive officer of the San Jose Newspaper Guild, says the buyout package was richer in that it offered two and half weeks of pay for every year of service, with no caps. However, the healthcare benefits with the current offer is better.

Another difference: "This time we need to get to this number of 52 [newsroom staffers] or we will have to lay off," says Susan Goldberg, executive editor of the Mercury News. "That was not the case in 2001."

In Philadelphia, the Inquirer and the Daily News are offering a package based on three tiers determined by retirement age and years employed. Essentially, employees get two weeks of pay for every year of service at Knight Ridder, capped at 52 weeks. The health benefits vary and each category has several options. Depending on the length of employment, the company will foot the entire bill from three months to two years. As of late October, the Inquirer had approved 41 buyouts, according to Managing Editor Anne Gordon. Employees have until Nov. 4 to apply.

Management at both companies are pinning their hopes that enough people will take the packages before resorting to other measures.

If cuts are in order, the San Jose Guild uses seniority, the ability to do work, and general competence as criteria to determine layoffs, says Jackson. It's different at the Inquirer, where it is based only on seniority ? a last-in, first-out set-up.

So management has a little more leeway at the Mercury News to figure out who gets the pink slips, since three of the four criteria are subjective. Not so in Philly. A list is circulating in the Inquirer and Daily News newsrooms there that breaks out who would be first (and next) to go, should the paper trim using involuntary methods. Reporters including Troy Graham, Kera Ritter, Jeff Shields, and John Shiffman (he helped break the story that Judy Miller was released from jail in late September, in the process scooping The New York Times), are high on the list.

Management at the Inquirer has some headroom. There are separate lists for each of the guild categories so if a lot of reporters take the buyout, management can skip the reporter category and go to copy editors.

The list may seem draconian, but Foley says its one way to assure objective decisions. "The reason why you base it on seniority," she explains, "is there has to be some criteria, otherwise they pick and choose."

Regardless of the method ? buyouts and or layoffs ? the newsroom is going to feel it. "This one is really cutting into the bone," says Henry Holcomb, president of the Newspaper Guild of Greater Philadelphia and a business writer at the Inquirer. He notes that very few layoffs occurred in the last two rounds of buyouts in Philadelphia, and this move may drastically change the paper: "This takes us back to staff levels that we had when the majority of our readers were in the city. Now 70% of our readers are scattered over nine counties in two states."