So is McClatchy about to drop the hammer?

Indeed. I think that's one of the biggest problems a lot of these companies face - debt load. The latest wave of consolidation in the industry (the Lee - Pulitzer deal, the McClatchy-KR deal, the going-private deals like Tribune, Philly and Minneapolis) was financed by a lot of debt.
That's no problem if cash flow stays at, or even near, recent levels. It was part of the business model. But a big problem when the housing market tanks and department stores merge and ad revenue falls a lot faster than expected. So now these companies have lots of debt to service, and not enough cash flow to do it. Shitty situation for us poor slobs who actually work for these companies. But, hey, the investment bankers and lawyers and execs who orchestrated the mergers all got paid.

 

There's no disputing that the economy has been a legit issue. But too many newspaper execs spent too long blaming the economy, particularly post-9/11. The truth though, is that the economy was in moderately decent shape from three-years beginning in late 2003 or so, and yet newspaper companies were continuing to tank.

Face it, their classifieds base (employment, cars, real estate, private-party ads) was being ravaged then and now by Monster, craigslist, etc. Not only was that ad content highly profitable, it was largely unique to newspapers, making subscriptions and single-copy sales easier to sustain.

Newspapers are fighting back and may win back some of that money, but most if not all of it is gone and isn't coming back. Nor will department stores be coming back, so forget about thrice-weekly, eight-page ROP pieces from Macy's saving the day. The Wal-Marts of the world will stick with direct mail or other channels of distribution, leaving many papers with thick stacks of less-profitable inserts on Sundays and not much else in the way of big-box ad revenue.

The sooner they stop blaming the economy as a whole, the sooner the execs can get down to the business of fixing more of the real problems.

 

My paper didn't really start to freak out until Macy's decided to leave the local mall, leaving a giant financial hole — Macy's seems to rely on print advertising more than its competitor, Dillards — in both on-the-page and insert ads. The sky's been falling ever since. We went through a hiring freeze for a while, which lifted only after we got to a completely non-functional situation at some positions (most notably, photography). There haven't been raises, etc.

All since Macy's left. Fucking Macy's.

And we're a family-owned in a town where Monster and Craig's List have not had as big an impact. We can still put together a classified section similar to classified sections of 10 years ago. So the other shoe has yet to drop.

 

Rumor is that McClatchy is planning to thin the herd at newspapers across the entire chain by one person for every 1,000 papers it circulates and that word could come as early as Monday.

Again, it's only a rumor, though it is what some McClatchy folks have heard.

That'd be about 300 or more jobs at places like the Minneapolis Star-Tribune, Miami Herald or Sacramento Bee. According to McClatchy's corporate site, the chain has a combined circulation of 2.7 million papers across its 31 daily newspapers, so that'd be a total of about 2,700 jobs.

The justification, of course, is declining revenues. Through the first four months of the year, total revenues were down 14 percent and advertising was off 15 percent. Off, that is, from last year's declines. Which were off from ... well, y'all know the story.

And here is the coldest slap of reality: McClatchey stock closed at $8.15 per share on Friday after hitting a low of $7.51 earlier in the week. A year ago, it was at $28.73. In early 2005, it was well north of $50.

 

That's a monster blow if it's true.

 

Anyone else remember 20 years ago when the rule of thumb was that newsroom staffing for a respectable mid-size metro should be around 1 employee per 1,000 daily circ?

With circs tumbling and the body counts running high, does anyone have a feel for the current ratio?

My last gig was historically running at 1 per 1,250 or so. It's moved into the 1 per 1,750 range lately.

 

And after McClatchy "thins the herd" again, CEO Gary Pruitt will receive another $5 million bonus from the board of directors for his leadership.

 

Wasn't 20 years ago and wasn't just at metros. That was the staffing ratio - prescribed by corporate - at my first job earlier this decade, at a 75K paper.
Now, whacking 1 per 1,000 circ? That's crazy. Though I assume that's not just newsroom (because, really, that wouldn't leave much of a newsroom at all in most places, would it?)

Also, while it's far too simple to just blame "the bad economy," for our woes, I think it's more fair for McClatchy to do so than most.
Most of their papers, especially the big ones, are in markets that have seen a lot of growth in the last couple of decades (Sacramento and the Central Valley, the Carolinas), and the KR papers it kept were mostly in growing areas (Miami, Charlotte, etc. They dumped slow-growth markets like Detroit, Akron and Philly).
So McClatchy is concentrated in the kind of places where the housing downturn has been most severe, and thus ad revenue has likely fallen the steepest. Some of that will come back, one hopes.

 

minneapolis is no longer a mcclatchey paper

 

I really hope this isn't true. It's not like there hasn't already been a lot of negative movement inside McClatchy. Charlotte and Myrtle Beach are some of the latest.

 

This is why I didn't apply for a job that would have been my dream non-sports-but-still-back-in-journalism a couple of months ago. I figured the other shoe was going to drop eventually and I'm surprised it took this long.

 

Damn. Good catch. I guess even editors need editors.