McClatchy Co., owner of the Miami Herald and 29 other daily newspapers, will cut about 1,400 jobs, or 10 percent of its workforce, to save $70 million annually after a record drop in industrywide advertising sales, the company said Monday.
The reductions are part of a plan to cut costs as much as $100 million in the next four quarters, the Sacramento-based McClatchy said in a statement.
The Miami Herald plans to eliminate 250 positions, or 17 percent of its staff, and the Charlotte (N.C.) Observer will cut 123 positions, or 11 percent, the newspapers reported.
Tribune Co. and New York Times Co. have also reduced staff to save money as companies that historically advertised in newspapers shift their spending to the Internet. Newspaper print ad sales slumped 14 percent in the first quarter, the most on record, the Newspaper Association of America said June 13.
“This is a permanent downsizing of newspaper companies,” said Ken Doctor, a media analyst at Outsell Inc. in Burlingame, Calif. “They’re not using the word ‘permanent,’ but it’s a recognition that they will get much smaller as they try to find their way in a digital world.”
Ad sales at McClatchy, which also publishes the Sacramento Bee, fell 17 percent in May after a 15 percent decline in the first quarter. The company was hurt by the housing market slump in California and Florida, where it owns eight daily newspapers. Real estate and automotive classifieds both fell about 38 percent in May, the company said in a separate statement.
The job cuts will come through attrition, employee buyouts and firings, McClatchy said.
McClatchy fell 11 cents to $8.04 yesterday in New York Stock Exchange composite trading. The shares have declined 36 percent this year.
The stock has lost 84 percent of its value since the company announced plans in March 2006 to acquire Knight Ridder Inc., the second-largest U.S. newspaper chain at the time, for $4.1 billion.
McClatchy trades at 9 times estimated 2008 earnings compared with 18 times at the New York Times and 6.5 times at Gannett Co., the largest U.S. newspaper publisher.
Gannett, which locally owns The Tennessean, froze employee pension benefits earlier this month, citing a “difficult business environment.” The move is expected to save $30 million in 2009.
Newspapers are competing against Web sites and blogs such as Google News and the Huffington Post for the attention of viewers seeking news and information. While readership has increased at newspaper Internet sites, publishers haven’t been able to offset the drop in print sales with increased revenue from their Web businesses.
McClatchy had resisted cutting its newsrooms, Doctor said. Drops in advertising sales and circulation forced the company to realign its cost structure, he added.
“The fact that McClatchy is cutting 10 percent of its workforce, when they have been the ones trying to hold the line, is further ratification that the newspaper world has completely changed,” he said.
Advertisers spent $8.43 billion on newspaper ads in the first quarter, according to the Newspaper Association of America, the eighth consecutive quarterly ad sales decline.