Posted on 02/19/2008 4:22:04 PM PST by abb
As you are well aware from my State of the Company remarks and my monthly updates, we are faced with huge financial challenges. There is no need to repeat the reasons for them now, other than to emphasize the challenges are of historic proportions.
One example: In January BANG-East Bay had a positive cash flow, but only because of an accounting adjustment. Looking back nearly 30 years in the history of the Contra Costa Times, we could find only one month in which the paper had a negative cash flow, in 1991 when Bush I invaded Kuwait.
With the housing slump continuing, with widespread talk of a recession, Pete Herschberger, Advertising & Marketing VP, and his team took another look at advertising revenue prospects for the balance of this fiscal year and for the 2009 fiscal year, from now through June 2009.
It's not a pretty picture. We think the short-term future, from the current quarter looking forward 16 months, will continue to show advertising revenue declines, although at less severe rates as we move into the 2009 calendar year. At the same time, our costs will continue to increase. Newsprint, our most expensive commodity, is expected to have three price increases this year alone.
We reviewed these projections with Mac Tully, the new publisher at San Jose who now also is responsible for all of BANG, and Steve Rossi, the MediaNews executive vice president who, with George Riggs' departure, is now responsible for the California Newspapers Partnership. We did some tweaking of the forecast, showing modestly better results in some categories, weaker performance in others. We also projected our costs if we made no major changes in our operations.
When we finished that work, we reached the unavoidable conclusion that we must reduce our operating costs, and we must do so quickly. And we cannot accomplish what we need to accomplish without reducing the size of our workforce. In the past few months, we've relied on attrition to bring down the number of employees, but that no longer is adequate.
So we're announcing today that we're extending to all employees a one-time voluntary separation opportunity, commonly known as a buy-out. Everyone except Operating Directors and me will get the opportunity to apply for a buy-out. Each of you will have the opportunity to apply. We are distributing a packet with all the details. If you don't get one within 24 hours, by 2 p.m. Wednesday, please contact your department manager or Human Resources.
Here are some of the things I hope you'll keep in mind as you review the buy-out information:
Your getting a packet is not in any way a reflection on your performance or value to the company. Everyone is getting a packet.
Announcements regarding the need to reduce costs also were made this afternoon in San Jose, at the Mercury News, and in San Ramon, at the Shared Services Center. This is a BANG-wide effort.
This program is part of a general cost reduction program. We also will be taking other steps unrelated to our compensation costs to bring down operating expenses. We'll have more to say later about these other steps, such as limiting days for inserting and reducing the size of the TV tab.
We are not announcing the number of job eliminations. For one thing, the number can change depending on who applies and is accepted for a buy-out. Second, we are seeking a dollar savings, not a reduction in a specific number of jobs. But I will say this: The number of jobs that will be eliminated will be significant. So each employee needs to give the buy-out opportunity full consideration.
Applying for a buy-out doesn't mean you'll get one. The decision whether or not to accept a buy-out application will be made by senior management based on our business needs.
If we do not get and accept enough buy-out applications to reach our cost savings goal, we will have to do involuntary layoffs. We won't know where we stand on layoffs until after the buy-out acceptance deadline, which will be March 3rd. Very quickly thereafter, we will make a decision on layoffs.
To encourage employees to apply for a buy-out, the severance benefits for voluntary buy-outs are twice the severance benefits for involuntary layoffs. The severance payouts and benefits associated with buy-outs and layoffs are contained in the information packet.
These are very difficult times. They demand that we move quickly and decisively. It is easy to get discouraged, to wonder about the future of newspapers and companies like ours. Personally, I still believe in the power of newspapers and, specifically, the power of our newspapers and Web sites. We deliver the biggest media audience in the East Bay, and that will be the key to our growth in the future as we rebound from these economic challenges. And we will rebound.
The senior management team appreciates your understanding and continued dedication to moving us forward.
John Armstrong, President & Publisher
ping
The real reason these hay-shakers are in trouble is that they are propagandists, not purveyors of news. Given an opportunity to simply state that July (or whatever month it was) 1991 was a month of negative cash flow, they chose, instead, to identify it as the month "Bush invaded Kuwait."
Good riddance.
I guess Saddam had nothing to do with it.
I know nothing about these newspapers but with a comment like that...
No wonder these adolescents are going out of business.
I play tennis with a guy who was a copy editor at the SF Chronicle and took their buyout offer a year ago. He then went to work for the CC Times. He had seniority there from a previous stint when they were owned by Lesher. Now he can really take it easy—with two simultaneous buyouts. His tennis game is going to get even better.
Students, in the journalism profession, this is an example of what we used to call "gratuitous horse$hit".
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