McClatchy cuts workforce 10 percent

Battered by declining revenue and profits, The McClatchy Co., which owns The Modesto Bee, announced a 10 percent cut in its work force Monday.

The decision will eliminate 1,400 jobs companywide. The Modesto Bee is cutting 15 jobs, or 4 percent of its work force; The Sacramento Bee is cutting 86 jobs, or 8 percent of its staff; and The Fresno Bee, 44 people, or 7 percent of its staff.

Monday's announcement comes just two months after 11 Modesto Bee employees accepted voluntary buyouts.

"We've been very effective at managing our costs through attrition, filling critical positions as needed," said Margaret Randazzo, president and publisher of The Modesto Bee.

Asked about additional cuts, Randazzo said this downsizing is meant to minimize the need for future reductions in The Bee's work force.

"We cannot provide absolute promises, but that's our intent," she said.

Randazzo added that The Bee will continue to look for operating efficiencies with its sister McClatchy papers in California.

The 15 employees being laid off work in The Bee's advertising, circulation and operations divisions. They will leave at the end of the week, with severance packages and health benefits based on tenure with The Bee.

No newsroom employees were laid off.

"Our mission of public service journalism is unchanged. That's the center of everything we do," Randazzo said. "Our audience continues to grow. We reach 74 percent of this market in any given week through our online and print products."

McClatchy has prided itself on avoiding across-the-board layoffs even as it has used buyouts and attrition to cut its work force by 13 percent since April 2006.

But with the company struggling and its stock price down about 80 percent in two years, McClatchy said it had to act more decisively to reduce costs as it transitions to a company more fully focused on the Internet. In a separate announcement, McClatchy said its May revenue fell 15.1 percent; ad sales fell 16.6 percent.

"The effects of the current national economic downturn -- particularly in real estate, auto and employment advertising -- make it essential that we move faster now to realign our work force and make our operations more efficient," Chairman and Chief Executive Officer Gary Pruitt said in a prepared statement.

The job cuts are designed to save about $70 million a year as part of a larger plan to reduce total costs by $95 million to $100 million a year.

McClatchy is the third-largest newspaper chain in the country. Besides the three Bees, the company's 30 daily newspapers include the Merced Sun-Star, San Luis Obispo Tribune, Miami Herald, Kansas City Star, Fort Worth Star-Telegram and Charlotte Observer.

The economic downturn has been another big blow to publishers, particularly McClatchy. The company gets a third of its revenue from California and Florida, two of the states hardest hit by the crash in the housing market.

Despite falling profits, McClatchy has been moving to reduce quickly the heavy debt load generated by its 2006 purchase of Knight Ridder. The company paid about $4 billion, plus $2 billion in debt assumption, for the rival chain. Currently, McClatchy owes nearly $2.4 billion but expects to reduce that to $2 billion by year's end, putting extra pressure on the company to cut costs.

This story was originally published June 17, 2008 at 4:40 AM with the headline "McClatchy cuts workforce 10 percent."