Newspaper publisher McClatchy cuts 1,600 jobs as it fights declining revenue, bad economy

Newspaper publisher McClatchy Co. said Monday that it will shrink its work force by another 15% as it contends with sharply declining revenue amid a deepening recession. The 1,600 job reductions should help the publisher of The Miami Herald, The Sacramento Bee & other newspapers meet previously announced plans to save up to $110M over the next year. McClatchy Treasurer Elaine Lintecum said the company will likely exceed that target, but it didn't release a new estimate. "The effects of the current national economic downturn make it essential that we move even faster to realign our work force and make our operations more efficient," Chairman & CEO Gary Pruitt said in a statement. Pruitt will take a 15% cut in his base salary, while other executives will see their pay reduced by 10%. Pruitt got a $1.1M salary in 2007, the last year for which McClatchy's disclosed his pay. Cash compensation to the company's directors will decline about 13%. Senior execs are also forgoing bonuses in 2008 & 2009, while directors are declining stock awards. Other wage cuts are planned, but the company did not provide details. Shares in McClatchy fell 15¢, or 25%, to 44¢ in morning trade. The newspaper industry has seen ad revenue fall in recent years as advertisers migrate to the Internet, particularly to sites offering free or low-cost alternatives for classified ads. Starting last summer, the recession intensified the decline in advertising revenue in all categories. Many newspaper publishers, including McClatchy, also face debt incurred during healthier times. The company owed about $2.04B as of the end of 2008, stemming mainly from its 2006 acquisition of the Knight Ridder newspaper chain. McClatchy already went through two rounds of job cuts of about 10% each last year to produce an estimated $200M in annual savings. It also plans to suspend dividend payments after April 1 to conserve cash. The company said its cost-control efforts, excluding severance & other benefit charges, led to a 14.4% drop in cash expenses for the 4th-Q. The latest round of cuts, which will start by the end of the 1st-Q & include just about every business component, will come through attrition, consolidation & outsourcing of some functions. The company expects about $30 million in severance costs. McClatchy has 30 daily newspapers, about 50 non-dailies and direct marketing and direct-mail operations. Last week, The Sacramento Bee announced plans to cut 34 of the 268 union-covered positions in its editorial & advertising departments. Another 19 jobs would have been in jeopardy, but union members agreed to take pay cuts to save the positions. The Fort Worth TX Star-Telegram & The Myrtle Beach SC Sun News also disclosed job cuts last week, which are part of the 1,600 announced Monday.