Print and online media company McClatchy Co. (MNI) announced Monday morning that it intends to slash about 15% of its workforce or 1,600 employees, as a part of its cost reduction plans announced in February. The workforce reductions will begin by the end of the current quarter. Further, the company announced salary cuts across the board for the senior executives and directors, including a 15% cut in Chairman and Chief Executive Officer Gary Pruitt's base salary.
McClatchy is the third largest newspaper company in the U.S., with 30 daily newspapers, about 50 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets which extend its audience reach. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, The Fort Worth Star-Telegram, The Kansas City Star, The Charlotte Observer, and The News & Observer (Raleigh).
The newspaper companies, already reeling under hemorrhaging advertising revenue and declining circulation, have been further battered by the current credit and liquidity crunch. For those hobbled by heavy debt loads, bankruptcy court has become the next stop and for other surviving companies, cost reductions is the only option.
While reporting fourth quarter results last month, Sacramento, California-based McClatchy had noted that it is continuing to reduce expenses as the duration and depth of the economic recession have taken a severe toll on its advertising revenues, with no visibility of the economy improving. The company anticipates reducing costs in a range of $100 million to $110 million, or 7% of total fiscal 2008 cash expenses in the next twelve months starting from later in the current quarter.
Further, the company planned to freeze its pension plans and extend the salary freeze for senior executives in 2009 that was implemented in 2007. Pruitt also declined any bonus for 2008 and 2009, with other senior executives not receiving bonuses for 2008.
In a statement, Pruitt said, "While painful, we know these actions are working. Evidence of our cost reduction efforts can be found in our results. Excluding severance and other benefit charges related to our previously announced restructuring plans, cash expenses were down 14.4% in the fourth quarter of 2008 and were down 11.5% in all of 2008."
Under the cost cutting initiatives currently announced, McClatchy would reduce its workforce by about 15% or 1,600 full-time equivalent employees. The company also announced a 15% cut in Pruitt's base salary and 10% cut in other executive officers' salaries, and no bonuses for any executive officers for 2009. Further, cash compensation, including retainers and meeting fees, paid to its directors were cut by about 13% and the directors declined any stock awards for 2008 and 2009.
The job cuts, which will start by the end of the current quarter, would be achieved through severance programs, attrition and further consolidations and outsourcing of some business functions, McClatchy noted. The company expects to incur an estimated $30 million of severance costs in connection with the reductions, as it looks to ensure a smooth transition and provide severance packages to affected employees.
The company added that the job cuts are expected to affect virtually every area of the organization. However, each newspaper would be free to determine its strategy to implement the savings in its market, while retaining its strategic focus on sales, news and online operations.
Although the company had not used broad layoffs to manage staff size, relying instead on attrition and selected job eliminations through outsourcing, this has been an effective strategy, resulting in workforce reduction of 13% between the end of 2006 and April 2008. However, the company resorted to job cuts owing to more competitive media environment and challenging operating conditions.
Further, the company announced 10% job cuts each in June and September 2008, reflecting the ongoing economic downturn and lower advertising revenues hurt by increasing competition. The company had stated earlier that the workforce reduction was part of a strategic vision of becoming a hybrid print and online media company.
Last week, the company reported additional loss from discontinued operations for the fourth quarter in its annual report filed on Form 10-K for fiscal 2008 with the U.S. Securities and Exchange Commission. The company had reported its fourth quarter and fiscal 2008 results on February 5, 2009.
The company noted that it has recorded reserves related to uncollectible amounts from various newspapers formerly owned by the Company, which have filed for bankruptcy under Chapter 11 of the Bankruptcy Code in early 2009. Such reserves amounting to after-tax $5.3 million are now recorded under discontinued operations.
According to the filing, the company has reported a net loss of $27.0 million or $0.33 per share for the latest fourth quarter, compared to the net loss of $21.70 million, or $0.26 per share reported in the results announced last month. For fiscal 2008, the company has now reported a net loss of $4.0 million or $0.08 per share, compared to the net income of 1.35 million or $0.02 per share announced last month.
In January, the company declared of a quarterly cash dividend for the fiscal 2009 first quarter of $0.09 per share, payable on April 1, 2009 to stockholders of record at the close of business on March 11, 2009. However, the dividend was half the dividend paid in the first quarter of fiscal 2008. The company also said it will suspend its quarterly dividend after paying the first quarter 2009 dividend for the foreseeable future in order to preserve cash for debt repayment.
With declining readership, the newspaper industry, which has been running out of ink lately, appears just plain doomed. The once favorable advertising environment has also run into a rough weather, hurting the revenue streams of the newspapers. Further lag in the newspaper industry in general is due to its spiraling costs predominantly for newsprint and personnel.
In sharp contrast, online news media sources, which have siphoned off readers and advertisers from traditional newspaper media, operate at much lower capital thresholds. Although most major offline publishers have launched online versions, most of them have failed to shore up deteriorating revenues. Taking into account, the challenges confronting the newspaper industry in the U.S, the future looks difficult to read.
In Monday's regular trading session, MNI is trading at $0.49, down $0.10 or 16.95%. In the past 52-week period, the stock has been trading in a broad range of $0.35 to $11.21.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.