Business

Charlotte Observer cutting staff by 11%

The McClatchy Co., publisher of The Charlotte Observer and 29 other daily papers, said Monday that it plans to eliminate 1,400 positions, about 10 percent of its work force, as it faces declining advertising revenue and increased competition from the Internet.

Observer publisher Ann Caulkins told employees that the paper will eliminate 123 positions, or about 11percent of its staff. The cuts will be made through voluntary and involuntary buyouts.

The reductions are occurring in departments throughout the company, including advertising, circulation and operations. The Observer newsroom is losing 22 jobs.

The paper also announced efforts to more closely align the Observer's news operations with the News & Observer of Raleigh, also a McClatchy publication. The papers are combining capital bureaus, sports staffs and research departments in an effort to eliminate overlapping work. Their features departments also will work to develop jointly produced sections.

Caulkins said previous efforts to trim costs – including an earlier round of buyouts, reduced use of newsprint and the outsourcing of ad production work to the Philippines – were not enough to offset a slowing economy and increasing competition.

The company will remain committed to providing investigative reporting and local news, she said. “We're not compromising on that,” Caulkins said.

Overall, she said, the paper will have to evaluate “what's important to readers and what's not” and make choices. The paper, for example, has been reducing the number of regional sections it produces and combining sections to save on newsprint.

In South Carolina, McClatchy also publishes The Herald of Rock Hill; The State of Columbia; The Sun News of Myrtle Beach; the Beaufort Gazette; and the Island Packet of Hilton Head.

The News & Observer plans to cut 70 jobs, or about 8 percent of its staff. It's also combining its Business section with the City & State section Tuesday through Saturday. The Herald is not cutting staff. Caulkins said the cuts vary because each paper's financial situation is different.

The nation's No. 3 newspaper chain by circulation said it historically has not used broad layoffs to reduce staff size, relying instead on attrition and outsourcing. The Sacramento, Calif.-based company's work force is down 13 percent between the end of 2006 and April 2008.

In May, the Observer said it was offering voluntary buyouts to trim staff, and 32 employees were selected to leave under that program. The paper also has cut 13 part-time telemarketing positions. The company currently has about 1,100 employees.

The newspaper industry has been slumping for years as readership moves online. Now the economic downturn is adding to its problems. Industrywide, print advertising sales fell a record 14percent in the first quarter, according to figures released last week by the Newspaper Association of America.

McClatchy, in particular, has suffered because of its exposure to struggling real estate markets in California and Florida.

In the first quarter, the company lost $849,000, compared with a profit of $9 million the previous year. In May, ad revenues fell 16.6 percent, compared with the same month last year, the company said Monday.

McClatchy's papers include the Miami Herald, Sacramento Bee, Kansas City Star and the Fort Worth (Texas) Star-Telegram. One of the hardest hit papers is the Miami Herald, which is losing 250 jobs, or 17 percent of its work force.

Monday's actions are expected to produce annual savings of about $70 million from staff reductions as part of a plan to slash overall expenses by $95 million to $100 million over the next four quarters, the company said.

“It's important to recognize this move as part of a continuing, strategic vision for successful future operations, not solely a response to today's adverse conditions,” McClatchy CEO Gary Pruitt said in a statement. “McClatchy is committed to remaining a healthy, profitable company … .”

Despite a difficult economic climate, McClatchy said it has continued to increase its total audience. Counting newspaper, online, niche and other products, the company said it reaches 70percent of adults in 29 markets. McClatchy's online audience grew 25 percent last year and 41percent in the first quarter.

Counting the Internet, the Observer's audience is as large as it has ever been, Caulkins said. The problem is that, in the more competitive Internet market, advertising rates are lower, she said.

McClatchy's cuts are the latest in the industry's downsizing. The Tribune Co. and New York Times Co. have also reduced staff.

“This is a permanent downsizing of newspaper companies,” Ken Doctor, a media analyst at Outsell Inc. in Burlingame, Calif., told Bloomberg News. “They're not using the word ‘permanent,' but it's a recognition that they will get much smaller as they try to find their way in a digital world.”

Observer employees began learning the status of their jobs on Monday, and most of those displaced will be leaving by June 27. McClatchy said it is providing severance and benefits continuation to affected employees.

As for the initiative to combine efforts with the News & Observer, Caulkins said it will proceed as rapidly as practical. She said the motive was to eliminate duplicative work so each paper can use resources more wisely. As an example, she said, Charlotte readers might find more News & Observer reporters covering Triangle-area sports stories.

In an effort to cut costs, some McClatchy papers have sold property and buildings. Caulkins said the Observer likely will evaluate its holdings but “nothing more serious than that has been discussed.”

Staff cuts mean Observer bureaus in Catawba, Gaston and Union counties will no longer be open to walk-in traffic from customers. Bureaus in Cabarrus County and Lake Norman will be open to the public.

Since McClatchy expanded through its Knight Ridder acquisition in June 2006 at the peak of the housing bubble, its shares are down more than 80 percent. The shares closed down more than 1percent Monday at $8.04.

Jonathan B. Cox of the (Raleigh) News & Observer and Bloomberg News contributed.

The McClatchy Co., publisher of The Charlotte Observer and 29 other daily papers, said Monday that it plans to eliminate 1,400 positions, about 10 percent of its work force, as it faces declining advertising revenue and increased competition from the Internet.

Observer publisher Ann Caulkins told employees that the paper will eliminate 123 positions, or about 11percent of its staff. The cuts will be made through voluntary and involuntary buyouts.

The reductions are occurring in departments throughout the company, including advertising, circulation and operations. The Observer newsroom is losing 22 jobs.

The paper also announced efforts to more closely align the Observer's news operations with the News & Observer of Raleigh, also a McClatchy publication. The papers are combining capital bureaus, sports staffs and research departments in an effort to eliminate overlapping work. Their features departments also will work to develop jointly produced sections.

Caulkins said previous efforts to trim costs – including an earlier round of buyouts, reduced use of newsprint and the outsourcing of ad production work to the Philippines – were not enough to offset a slowing economy and increasing competition.

The company will remain committed to providing investigative reporting and local news, she said. “We're not compromising on that,” Caulkins said.

Overall, she said, the paper will have to evaluate “what's important to readers and what's not” and make choices. The paper, for example, has been reducing the number of regional sections it produces and combining sections to save on newsprint.

In South Carolina, McClatchy also publishes The Herald of Rock Hill; The State of Columbia; The Sun News of Myrtle Beach; the Beaufort Gazette; and the Island Packet of Hilton Head.

The News & Observer plans to cut 70 jobs, or about 8 percent of its staff. It's also combining its Business section with the City & State section Tuesday through Saturday. The Herald is not cutting staff. Caulkins said the cuts vary because each paper's financial situation is different.

The nation's No. 3 newspaper chain by circulation said it historically has not used broad layoffs to reduce staff size, relying instead on attrition and outsourcing. The Sacramento, Calif.-based company's work force is down 13 percent between the end of 2006 and April 2008.

In May, the Observer said it was offering voluntary buyouts to trim staff, and 32 employees were selected to leave under that program. The paper also has cut 13 part-time telemarketing positions. The company currently has about 1,100 employees.

The newspaper industry has been slumping for years as readership moves online. Now the economic downturn is adding to its problems. Industrywide, print advertising sales fell a record 14percent in the first quarter, according to figures released last week by the Newspaper Association of America.

McClatchy, in particular, has suffered because of its exposure to struggling real estate markets in California and Florida.

In the first quarter, the company lost $849,000, compared with a profit of $9 million the previous year. In May, ad revenues fell 16.6 percent, compared with the same month last year, the company said Monday.

McClatchy's papers include the Miami Herald, Sacramento Bee, Kansas City Star and the Fort Worth (Texas) Star-Telegram. One of the hardest hit papers is the Miami Herald, which is losing 250 jobs, or 17 percent of its work force.

Monday's actions are expected to produce annual savings of about $70 million from staff reductions as part of a plan to slash overall expenses by $95 million to $100 million over the next four quarters, the company said.

“It's important to recognize this move as part of a continuing, strategic vision for successful future operations, not solely a response to today's adverse conditions,” McClatchy CEO Gary Pruitt said in a statement. “McClatchy is committed to remaining a healthy, profitable company … .”

Despite a difficult economic climate, McClatchy said it has continued to increase its total audience. Counting newspaper, online, niche and other products, the company said it reaches 70percent of adults in 29 markets. McClatchy's online audience grew 25 percent last year and 41percent in the first quarter.

Counting the Internet, the Observer's audience is as large as it has ever been, Caulkins said. The problem is that, in the more competitive Internet market, advertising rates are lower, she said.

McClatchy's cuts are the latest in the industry's downsizing. The Tribune Co. and New York Times Co. have also reduced staff.

“This is a permanent downsizing of newspaper companies,” Ken Doctor, a media analyst at Outsell Inc. in Burlingame, Calif., told Bloomberg News. “They're not using the word ‘permanent,' but it's a recognition that they will get much smaller as they try to find their way in a digital world.”

Observer employees began learning the status of their jobs on Monday, and most of those displaced will be leaving by June 27. McClatchy said it is providing severance and benefits continuation to affected employees.

As for the initiative to combine efforts with the News & Observer, Caulkins said it will proceed as rapidly as practical. She said the motive was to eliminate duplicative work so each paper can use resources more wisely. As an example, she said, Charlotte readers might find more News & Observer reporters covering Triangle-area sports stories.

In an effort to cut costs, some McClatchy papers have sold property and buildings. Caulkins said the Observer likely will evaluate its holdings but “nothing more serious than that has been discussed.”

Staff cuts mean Observer bureaus in Catawba, Gaston and Union counties will no longer be open to walk-in traffic from customers. Bureaus in Cabarrus County and Lake Norman will be open to the public.

Since McClatchy expanded through its Knight Ridder acquisition in June 2006 at the peak of the housing bubble, its shares are down more than 80 percent. The shares closed down more than 1percent Monday at $8.04.

Jonathan B. Cox of the (Raleigh) News & Observer and Bloomberg News contributed.

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