Now it’s A.H. Belo’s turn. The Dallas-based publisher plans to cut $50 million in expenses over the next eight months by cutting staff at the Providence Journal, the Dallas Morning News and the Riverside, Calif., Press Enterprise. Belo said its hopes to reduce its workforce by about 500 people, or 14%, through voluntary severance packages, although layoffs are a possibility. Unlike some publishers, it’s targeting the cuts by property. The ProJo, for example, will offer buyouts to about a third of 700-person workforce but won’t accept more than 54 takers. Belo is also looking at selling some real estate it owns in downtown Providence and Dallas to boost the bottom line. Like many publishers, its dividend costs have skyrocketed and the company acknowledged that it may have to cut current $1/year dividend, which amounts to nearly 17% of the stock price.
The Morning News will lose about 10% of its 390 full-time newsroom staffers. It will also reduce frequency of Quick, a free newspaper for young adults, from five times a week to weekly. It’s continuing with plans to launch Briefing, a new free title for nonsubscribers who want a “quick-read” newspaper.
Belo has suffered more than most newspaper publishers in the last year. While its peers are mostly still profitable, Belo suffered a $3.2 million loss in the most recent quarter. As we’ve noted recently, losses can lead to a dangerous death spiral in which cuts lead to subscriber and advertiser flight, which leads to more layoffs.
The layoffs at the Providence Journal are particularly disheartening. The paper is under constant pressure from its neighbor Boston Globe to the north, but is generally acknowledged to have done an oustanding job of localizing its coverage and retaining reader loyaty. While the ProJo is getting off easy compared to the hits that many other papers around the country have seen, it’s clearly not impervious to industry trends.
BusinessWeek Gives ‘Em Zell
BusinessWeek visits Sam Zell in his plush Chicago office and comes to the conclusion that Zell’s $8.5 billion purchase of Tribune Co. is “one of the most disastrous the media world has ever seen.” Zell doesn’t mince words in the interview: “If current trends in advertising are permanent, we have a really serious problem.”
This profile is the best we’ve seen in the months since Tribune’s fortunes began to deteriorate. It notes Zell’s open disdain for the newspaper business as well as his distaste for baseball, which is a paradox since Zell owns one of the most storied franchises in the game. The piece also outlines clearly the financial sleight-of-hand that enabled Zell to acquire Tribune with just $315 million of his personal fortune. “When we first undertook this project, we viewed Tribune as 60 ways to get lucky,” he says. Zell doesn’t have to grow the business in order to reap a huge profit, the piece says. He just has to keep it afloat.
Which is a challenge in itself. The story quotes analysts as predicting that Tribune could default on its debt obligations as soon as December. Zell has put a number of innovative new practices into place, including consolidating some newspaper and broadcast operations in Florida and Chicago. However, the free-fall in newspaper advertising may just be too great. Meanwhile, Zell’s trash-talking about newspapers isn’t helping employee morale. “If you have a lemonade stand, you don’t try to sell the lemonade by saying it’s terrible,” says ex-LA Times reporter Myron Levin.
Things Get Stranger in Paradise
The State of Hawaii has stepped into the dispute between the Honolulu Advertiser and the 54 employees, many of them union members, the paper laid off earlier this month. The Newspaper Guild has problems with how the layoffs were handled, maintaining that seniority guidelines weren’t followed. Meanwhile, the union has printed up 100,000 cards that readers can send in to cancel their subscriptions in event of a strike. The thinking is that it’s better to take down the Advertiser and cause a whole lot more people to lose their jobs than to have 54 employees treated unfairly.
This entry was posted on Thursday, July 31st, 2008 at 10:45 am and is filed under Business News, BusinessModel, Layoffs, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.