Bad News, Everybody! More Hits for Newspapers

The Star-Ledger 9/17/08Market woes hit the industry--again. Newspapers took another round of blows this week with tandem announcements of more job cuts at McClatchy, an employee lawsuit at Tribune and the likely closure of the Newark, N.J.-based Star-Ledger in January. 

McClatchy announced Tuesday that it plans to cut an additional 1,150 positions, or roughly 10% of the total workforce. About half will be achieved through layoffs, and the rest will come from voluntary buyouts and leaving empty slots unfilled. The current round of cuts follows close on the heels of its elimination of 1,400 positions in June--also about 10% of positions at the time.

In McClatchy's restructuring plan in 2006-2008, 2,000 positions--or 13% of the total at that time--were cut. Doing the math, in the last two years, McClatchy has eliminated a total of roughly 4,550 of 15,400 positions, or 30% of its workforce.

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The news was delivered alongside revenue figures from August showing a 17.8% decline, compared to the same month in 2007. Following the 19.3% decline in July, McClatchy looks to be headed for another bad quarter; it's likely cutting staff to preempt shareholder complaints when September and third-quarter results are announced.

At Tribune Co., five former Los Angeles Times employees are joining one current employee to sue Sam Zell, alleging mismanagement of the company in a potential class-action lawsuit open to participation by other current and former Tribune employees.

The plaintiffs--Dan Neil, a Pulitzer Prize-winning columnist who is still with the LA Times, Jack Nelson, ex-Washington bureau chief and former writers Corie Brown, Henry Weinstein, Myron Levin and Walter Roche Jr.--charge Zell and his team with mismanaging Tribune and raiding pension funds while failing to consult Tribune employees, who are the ostensible owners of the company.

Zell engineered a novel deal last year that sold Tribune to an Employee Stock Ownership Plan by assuming an enormous debt of $8.2 billion. The lawsuit seeks more employee representation in financial decisions.

Finally, the Star-Ledger may close this January, leaving Newark--a city of almost 300,000--without a daily newspaper. (The newspaper is distributed statewide.) That's according to publisher George Arwady, who warned in July that the paper needed to cut a total of 200 employees, plus extract concessions from various unions responsible for printing and distributing the paper.

This week, Arwady said he got concessions from everyone except the drivers' union--and therefore would be forced to close or sell the newspaper by Jan. 5th, per instructions from the owners, the Newhouse family, who also own Conde Nast, if the union did not ratify an agreement by Oct. 1.

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