McClatchy plans to eliminate 1,600 jobs

Newspaper publisher McClatchy Co. said Monday that it plans to eliminate 1,600 jobs, or 15 percent of its work force, as it contends with declining revenue and a deepening recession.

The company, which owns The Miami Herald, The Sacramento Bee and other properties, had said that it planned deep cost cuts this year, hoping to save between $100 million to $110 million, and slashed its dividend 90 percent.

But Chairman and Chief Executive Gary Pruitt said in a statement Monday that "given the worsening economy, we must do more."

The cost-control efforts come as McClatchy is faced with plunging ad revenues plaguing the entire publishing sector, as well as trying to recover $5.3 million owed by newspapers it had sold to companies that have recently filed for Chapter 11 bankruptcy protection.

McClatchy also has its own debt worries. The company owed about $2.04 billion as of the end of 2008, stemming mainly from its 2006 acquisition of the Knight Ridder newspaper chain.

While the job cuts will not solve all McClatchy's troubles, the company said its cost-control efforts excluding severance and other benefit charges related to previous reductions led to a 14.4 percent drop in cash expenses for the fourth quarter.

The latest round of cuts, which will start by the end of the first quarter and include just about every business component, will come through attrition, consolidating and outsourcing some functions and will include about $30 million in severance costs.

Last week The Sacramento Bee announced plans to cut 34 of the 268 Guild-covered positions in the editorial and advertising departments. Another 19 jobs would have been in jeopardy, but union members agreed to take pay cuts to save the positions. The Bee eliminated 86 positions in June as part of a 10 percent cut affecting all McClatchy papers and gave buyouts to another 87 employees in September, including 23 in its newsroom.

The newspaper publisher also plans to lower salaries across its operations, with Pruitt taking a 15 percent base pay cut. Last month, Pruitt decided to forgo his 2008 and 2009 bonuses.

Aside from Pruitt, other executives will have their salaries cut 10 percent, and no executives will receive 2009 bonuses. Board members, who declined stock awards for 2008 and 2009, will have their compensation reduced 13 percent, including retainers and meeting fees.

In February, Fitch Ratings and Standard & Poor's Ratings Services lowered their ratings for McClatchy. S&P said its rating actions reflect a belief that the company is likely to violate the terms of its credit facilities at the end of 2009.

McClatchy has 30 daily newspapers, about 50 non-dailies and direct marketing and direct-mail operations.