Suburban Chicago 'Daily Herald' Locks In 5% Pay Cuts, Unfreezes Raises

By: E&P Staff Saying display and classified ad revenues "fallen to levels not since the severe recession of early 2000," Doug Ray, publisher of the Daily Herald in Arlington Hts., Ill., has told employee a 5% pay cut imposed on a temporary basis last summer will become permanent.

At the same time, he said that pay raises that were frozen in August will go through, and will be paid retroactively.

"We had hoped for a different outcome, but we believe this is the most prudent course of action," Ray said in a memo distributed to employees Tuesday. "Rather than allowing this issue to linger, we are announcing the pay reduction now so that the company and you can plan for next year. This was a difficult decision, but one that hopefully will eliminate the need for another round of layoffs and other significant cost cutting which I believe would have a more negative impact on operations and staff."

In July, the Daily Herald, Illinois' third-largest daily, laid off employees for the first time in the Paddock family-owned paper's history.

At that time, the paper announced the across-the-board salary reduction, and said that every employee would receive an additional week of paid vacation to be take in the second half of 2008.

In the latest memo entitled "Operational update," Ray said that the newspaper expects the weak display and classified advertising sales to continue into 2008.

"The budget which we will present to the Paddock (Publishing Co.) Board of Directors next week will reflect this trend in display and classified," Ray said. "The good news in next year's revenue outlook is in the Internet and niche products divisions. Strong revenue growth this year will be followed by more next year, although not enough to offset the print-side losses."

Ray said the paper is developing more new products through the "Jobs To Be Done" innovation model created by Newspaper Next. "There have been early successes, with several profitable revenue products created as a result of this problem-solving process," Ray said.

But he added the long-term outlook "remains challenging."

"The question is when will the inflection point take place in which Internet and other revenues offset the decline in traditional newspaper advertising categories," he said. "Until that happens, the cost basis of the company must balance with the revenue declines."