Third quarter results were terrible in a bull market
Layoffs have to hit before the holidays
By Greg Michael
The Broad Street boys are mulling over a new memo warning that Philadelphia Media Holdings, new owners of the Philadelphia Inquirer and Daily News are threatening layoffs even if a new contract is signed by October 31, 2006.
The memo circulated around the newsroom. One employee e-mailed it to staffers a second time with a subject line with publisher Brian Tierney’s name and the line:
“Remember that guy who said he was about to start the next great era in journalism?” it reads. “He was full of shit.”
By Wednesday the fallout was raining down. “I’ve been besieged by members who feel outraged and betrayed that Brian Tierney has gone from ‘let’s work together’ to ‘let’s freeze the pension fund and selectively lay off some of our best people,’” says Newspaper Guild president Henry Holcomb.
The new owners are negotiating with the once powerful Newspaper Guild union with an Oct. 31 deadline for a new contract, after already pushing back the deadline once in August. The two sides still face numerous sticking points. But what leverage does the Guild have?
The new management has proposed combining some newsroom functions between the Daily News and the Inquirer, meaning some editorial employees would sometimes work for both newspapers.
The ego maniacs in Hollywood who are considering buying the LA Times from the Tribune, should study this situation in Philly very carefully.
While the LA Times tries to justify their huge sale price to the Tribune Company, and the execs try to make the huge acquisition work. The LA Times is using it’s own investigative reporters to help chart the future of the newspaper both online and in print.
According to the New York Times, the LA Times “is dedicating three investigative reporters and half a dozen editors to find ideas, at home and abroad, for re-engaging the reader, both in print and online.”
Editor-centric companies like this are doomed to failure. It’s not the newsgatherers who created the innovations that opened up Craigslist and Youtube. In fact, it’s not the editors who generated the 20 percent profit margins that newspaper monopolies once enjoyed.
The editors typically look down on the marketing and advertising staff for creating advertorials and special branded sections on travel, homes or automotive. Those in the editor class actually despise MBAs and tech geeks.
Based on horrible sales of several major newspaper chains in the third quarter, it appears that total automotive classified revenues for the year may tumble to as low as $4 billion, a level last seen in 1996.
Auto sales fell 15 percent to $1.8 billion in the first half of this year, as compared with $2.1 billion in the same period in 2005, according to the Newspaper Association of America, the industry-supported trade group.
Classified ads contributed nearly 40 percent of the industry’s $47.4 billion in print sales in 2005. Since the mid-90s, and the rise of such low- and no-cost Web competitors as Monster, eBay and Craigslist.org, the erosion has been swift.
The broadcast media is also losing power to the Web.
NBC announced it will shed up to 700 jobs — 5 percent of its workforce. The changes will be felt from Secaucus, N.J., where MSNBC will shutter its headquarters, to television sets around the country, which will soon begin tuning to game shows and reality programming in the 8 p.m. time slot. NBC said it plans to phase out costly dramas and comedies during the first hour of prime time.
It appears The Chicago Sun-Times, after being stripped of valuable downtown real estate, will be put on the block next. Were the buyouts (layoffs) at the Morning News and Plain Dealer enough to get them back to 20 percent profit margins?
Today, the new owners of the San Jose Mercury News (‘Lean’ Singleton, CEO of Media News Group/Garden State Newspapers, a privately held group of marginally profitable newspapers) announced layoffs.
From: [San Jose Mercury News publisher] Riggs, George
Sent: Friday, October 20, 2006 1:11 PM
Subject: Staff Reductions
October 20, 2006
A few weeks ago, I wrote to everyone about the challenges our business faces, both over the past six years and going forward. Since then, our business outlook has worsened and we have completed our budgeting process. Given continued declines in revenue, we need to reduce expenses significantly, and thus have no alternative but to implement a reduction in work force.
We plan on eliminating 101 positions by December 19th. The process of identifying individual employees subject to layoff is not yet complete. Under California law, if an employer lays off fifty or more employees within a thirty day period, it is required to provide the affected employees with sixty days advance notice of the layoff. This is known as a “WARN notice.” Since our planned reduction involves more than fifty employees, we are providing employees who may potentially be affected with the required WARN notice. Please understand that employees who are potentially affected include all employees in those departments where layoffs are necessary. However, not every potentially affected employee receiving the notice will ultimately be subject to layoff. But in order to meet compliance requirements, notice will be given to a larger number than the 101 employees.
There are some things that could favorably impact layoff plans should they occur. Any significant upturn in advertising revenue would, of course, have an impact. We are seeking additional commercial print work, which would also increase revenues. We are working with our production unions (Pressmen, Mailers and Drivers) to be better positioned to accomplish this. Price reductions in newsprint have been rumored recently, and could lead to expense savings should they occur. Lastly, we have three open union contracts we are negotiating (Guild, Composing and Pressmen) and, depending on the outcome, they may also lead to further expense reductions. All of these could reduce the ultimate number of positions eliminated.
I understand the uncertainty these staffing cuts create for everyone, and deeply regret that we have to take this action. Please know that we would not do so unless it was absolutely necessary to ensure the future viability of our newspaper.
Meanwhile, the Hearst’s San Francisco Chronicle is privately held and can afford to pay $1,000 a day in court fees for refusing to show sources in its Barry Bonds/BALCO case. That’s enough to pay for five staffers. And shows the power of being privately held. Another good example: The Poynter Institute which owns the St. Petersburg Times is hiring and happy with its profit margins even when they dip below that of oil companies. But there is much more to their success than just private ownership.