Archive for the ‘Cost-cutting measures’ Category

The newspaper industry shed nearly 15,000 jobs in 2009, but investors did quite well.

Erica Smith’s Paper Cuts blog, which does the best job in the industry of tracking newspaper job losses, counted 14,845 lost jobs in the newspaper industry during 2009. Keep in mind that her running count includes all jobs, including production and advertising.

On the positive side, stock prices for media companies turned dramatically upward in 2009, reflecting the general trend in the stock market. Rick Edmunds does a nice job of summarizing the results here.

As we’ve seen in the past few weeks, several of the major newspaper chains have been turning profits. But McClatchy — which is the second largest newspaper publisher in the country as measured by circulation — has nixed the idea of un-freezing the salaries of its employees.

The reason? The cost cuts have produced the profits. Circulation and ad revenue continue to skid at alarming rates, and the newspapers have had to face some unpleasant realities. In addition to freezing salaries, McClatchy has laid off about one-third of its work force and required remaining employees to take unpaid furloughs.

McClatchy’s 32 dailies include the Sacramento Bee, Kansas City Star and Miami Herald. The chain also owns approximately 50 weeklies.

It’s a funny thing … a couple of weeks ago, nobody seemed to have a kind word to say about the near-term prospects of the newspaper chains. It’s only natural – we all tend to assume the trend we see right now will continue, and when there’s a seeming reversal, we’re not quite sure to make of it.

But now, Bloomberg reports that John Rogers Jr., of Ariel Investments LLC, expects Gannett and other chains will keep beating analysts’ estimates for the next five or six quarters, as they reap the benefits of the current wave of staff and cost cuts.

It’s worth keeping in mind that Rogers isn’t just an impartial observer. He is Gannett’s biggest shareholder and McClatchy’s second-biggest. Full Bloomberg story.

As we’ve been noting, three of the biggest newspaper chains have come in with strong earnings in the last few days. So how has it been reflected in their stock prices? Pretty well.

Here are the stock price changes since July 1:

• Media General +87%
• New York Times +18%
• McClatchy +90%

So what are these big earnings all about? Cost cuts, mainly. Advertising revenues are still down across the board, but the drastic staff cuts, forced furloughs and pay cuts have been effective. We could eventually find that a major key to that future “business model” I’ve been talking about is simply a lower cost structure.

Media General got into the black with a $20.6 million profit, and its stock doubled in minutes. Media General earnings release. You may also want to read Mark Fitzgerald’s story in Editor & Publisher.

Next up is the New York Times, which will release earnings before the markets open Thursday. The Times has been selling all the assets it can, and employees have had their pay cut 5 percent (which is mild compared to most other newspapers). Analysts are predicting a loss of 4 cents per share, but with the strong reports we’ve seen this week, I wouldn’t be surprised if they beat that.

First it was Gannett reporting better-than-expected earnings. Now it’s McClatchy. There were lots of footnotes and adjustments, but the bottom line is that the bottom line was better than analysts expected. The cost cutting measures seem to be working. Click the linked headline below to read the company’s full release.

The McClatchy Company – Press Releases

SACRAMENTO, Calif., July 21 /PRNewswire-FirstCall/ — The McClatchy Company (NYSE-MNI) today reported net income from continuing operations in the second quarter of 2009 of $42.0 million, or 50 cents per share – more than double the earnings per share in the second quarter of 2008. Adjusted earnings from continuing operations,(1) excluding several unusual items in the second quarter of 2009, were $25.2 million, or 30 cents per share, up 42.9% from the 2008 quarter. Total net income including discontinued operations was $42.2 million, or 50 cents per share.

The company’s second-quarter 2008 earnings from continuing operations were $20.1 million, or 24 cents per share. Adjusted earnings from continuing operations,(1) excluding several unusual items in the second quarter of 2008, were $17.3 million, or 21 cents per share. Total net income including discontinued operations was $19.7 million, or 24 cents per share.

As noted earlier, the focus among newspapers is toward cutting pay and keeping the people. Reporters, having nowhere else to go, have to go along with it. At least they stay employed, keep medical benefits and hopefully keep up the mortgage payments. Some recent ones:

• Gatehouse Media, operates almost 100 newspapers in Massachusetts, 7.75 percent.
• Morris Communications, owner of 27 dailies and 12 weeklies, 5-10 percent.
• San Jose Mercury News, 9 percent.
• Chicago Sun-Times, 9 percent.
• Anniston (AL) Star, 10%.
• Birmingham News, 5-8%.
• New York Magazine, not available.

Here’s the roundup of newspaper layoff news from the past week. Erica Smith’s Paper Cuts, which tracks these better than anybody, now puts the year-to-date total at 9,906 newspaper jobs lost. Here are the ones I spotted this week:

• South Florida Sun-Sentinel, an estimated 30 in newsroom – about 20% of the news staff. The Sun-Sentinel laid off about 50 last summer.
• Huntington (W. Va.) Herald-Dispatch, 24 in newsroom and administrative positions.
• Baton Rouge Advocate, 49 workers.
• St. Louis Post-Dispatch, 39 workers, mostly in circulation.
• The Portland Press Herald/Maine Sunday Telegram, none for now. They dodged a layoff bullet as the union agreed to concessions, including a 10 percent pay cut, a suspension of all retirement and 401k contributions by the company, and a two-year wage freeze.

This cut reduces the the San Diego Union Tribune’s staff by 18% to to 850. Upstate, the San Francisco Chronicle is laying off another dozen or so, and the Boston Newspaper Guild agreed to hefty concessions to keep the New York Times from closing down the Boston Globe. They Guild reportedly agreed to a 23% pay cut, unpaid furloughs and other concessions, and they’re still going to face serious job cuts. The Arkansas Democrat-Gazette, the biggest paper in Arkansas, cut its newsroom by 16.

Even San Francisco’s irreverent The Onion is closing, with its final edition this week.

In Reading, Pa., The Eagle sent 50 employees packing and didn’t even give them a severance package.

American Community Newspapers (ACN), which publishes the Stillwater (Minn.) Gazette and Plano (Texas) Star Courier plus dozens of non-dailies — has joined the chapter 11 parade. Editor & Publisher story.