• by Erik Sass  @eriksass1, June 21, 2011

With the economy sluggish and newspapers still suffering from declining print ad revenues, big newspaper publishers are again resorting to wide-ranging layoffs to maintain their profit margins. 

In the latest round, Gannett Co. announced that it is cutting 700 positions from its beleaguered U.S. Community Publishing division, which includes almost all of Gannett's newspaper properties, save national flagship USA Today. That amounts to just over 2% of the company's total workforce of 32,600 at the beginning of the year.

In a memo to employees obtained by Gannett Blog, Community Publishing president Bob Dickey admitted that the economy was not recovering "as quickly or favorably as we had hoped and continues to impact our U.S. community media organizations."

Citing continuing weakness in the main classified categories of automotive, recruitment and real estate, Dickey also wrote: "National advertising remains soft... with many of our local advertisers reducing their overall budgets."

What isn't clear is whether the continuing declines in print newspaper ad revenues are due primarily to the slow economy, or rather a long-term secular decline in the newspaper business.

According to the Newspaper Association of America, total print ad revenues declined 9.5% in the first quarter to $4.75 billion, marking the 19th consecutive quarter of declines for newspaper print ad revenues. That compares to an overall 4.4% increase in ad spending across all media, according to Kantar Media, to $32.5 billion -- the fifth consecutive quarter to see a year-over-year increase on this broad-based measure.

However, the new rounds of cuts at Gannett have excited comment because of the recent disclosure that Gannett CEO Craig Dubow and COO Gracia Martore received all-cash bonuses of $1.75 million and $1.25 million, respectively, for implementing cost-cutting measures, including layoffs, in 2010.

In March, Gannett disclosed that it paid Chairman-CEO Craig Dubow $9.4 million last year -- double his 2009 pay -- as the company laid off hundreds of workers and imposed wage cuts on thousands more. COO Gracia Martore got $8.2 million, more than double her $4.0 million in 2009. (The bonuses were part of their pay package.)

While it may be cold comfort for laid-off employees, Gannett isn't the only big newspaper publisher wielding the ax.

McClatchy Co. has quietly eliminated several hundred positions, with a first round of layoffs in February followed by even deeper cuts in May and June. These included 76 positions at The Sacramento Bee, 70 positions at The Fort Worth Star-Telegram, 50 positions at The Miami Herald, and a total of about 60 at The Lexington Herald-Leader, The Kansas City Star and The Raleigh News & Observer.