• by Erik Sass , January 14, 2009

There seems to be a new trend in the beleaguered newspaper industry: cutting costs through unpaid furloughs. On Wednesday, Gannett said it will require thousands of employees to take a week off without pay--the only option left for reducing expenditures without more layoffs. The news comes less than a month after The Seattle Times asked approximately 500 of its non-unionized employees to take a week's unpaid leave. However, newspaper publishers are still kicking: The Chicago Tribune launched a tabloid version.

Gannett did not specify how many employees would be asked to take unpaid leave--but Craig A. Dubow, Gannett's chairman, president, and CEO, wrote in a memo to employees that "most of our U.S. employees--including myself and all other top executives--will be furloughed for the equivalent of one week in the first quarter." The company is asking unionized employees to participate, but it can't force them.

It's unclear how a company built on publishing daily newspapers can take a week off and still produce up-to-date content--but it's quite clear that management feels it has no other choice. This stopgap measure indicates that Gannett believes it has cut staff to the bone, reaching a bare minimum under which the business may no longer be able to operate.

Indeed, Gannett has cut about one-third of its newspaper divisions in the last decade, from 41,000 in 2000 to around 29,000 or less today. The vast majority of these were cut in the last two years, including almost 5,000 in 2007 and 4,000 or more in 2008.

Even in bankruptcy, Sam Zell's Tribune Co. is still trying to find a way out of the current morass, although its efforts have had a mixed reception. In the most recent sally, the Chicago Tribune said this week it is replacing all broadsheet editions for sale at newsstands in the Chicago area with a new tabloid-format edition.

The content in the tabloid format will be nearly identical, except for changes to headlines and photo placement, but will only include the broadsheet's news, sports and business sections. Subscribers will continue to receive the traditional, complete broadsheet-style newspaper.

Tribune said it hopes the move will boost sales of the newspaper by appealing to consumers who want a smaller, more manageable newspaper.

Indeed, newspapers are adopting drastic measures to keep their heads above water.

In mid-December, The Seattle Times said it was opting for unpaid leave to avoid further layoffs. The request from the publishers came on the heels of three waves of job cuts and layoffs in the past year alone--including 86 positions in January, 200 in April and 150 in November, for a total of 436, or about 22% of the original 1,950.

Also in December, the Detroit Free Press and Detroit News, published under a joint operating agreement by Gannett and MediaNews, said they are cutting back home delivery to three days and two days a week, respectively. The prospect of newspapers simply closing is also becoming more real.

The Hearst Corp. put the Seattle Post-Intelligencer up for sale last Friday, saying it will close the newspaper if it can't find a buyer in the next two months. The Rocky Mountain News--one of two dailies serving the Denver metro area--could be closed if it does not find a buyer by mid-January, according to owner E.W. Scripps. Observers say it is unlikely that either paper will be sold, as revenue trends worsen and credit markets remain paralyzed.

Finally, a number of big publishers are defaulting, declaring bankruptcy, or at least flirting with the idea. Most recently, Tribune Co. declared bankruptcy in mid-December; earlier, Philadelphia Media Holdings--the publisher of The Philadelphia Inquirer--defaulted in June, followed by The Journal Register Co. in July. McClatchy narrowly avoided defaulting on its debt by renegotiating lending agreements in September.