UPDATE: Hiring, Salary Freeze at the Arkansas Democrat-Gazette

Update II: The Democrat-Gazette’s story on its salary freeze here.

Update:

Arkansas Business media reporter Mark Hengel talks to Arkansas Democrat-Gazette President Paul Smith about the salary freeze, the subscription increase and more. Smith says the newspaper industry will improve when the economy does. Also: Hengel talks to American Journalism Review writer John Morton, who assesses the Democrat-Gazette’s move.

Previously:

Arkansas isn’t immune to the economic difficulties the country’s major metro daily newspapers are facing, after all. Max Brantley’s Arkansas Times blog today reports what the Arkansas Democrat-Gazette is doing to deal with advertising revenue declines and increased costs for newsprint and fuel: a hiring and salary freeze.

Max has the memo from Democrat-Gazette president Paul Smith:

We have 1,316 employees. While many newspaper companies have had several rounds of layoffs during the past several years, we have resisted doing this and we hope we can continue to do so, but we must keep our payroll costs from going higher. In an attempt to do this, we are eliminating salary increases for the remainder of this year. We will also try to reduce costs through attrition so we will temporarily not replace departing employees unless absolutely necessary. These polices will apply to all employees in all departments throughout the newspaper. We will evaluate our situation and these policies again at the first of next year.

We realize our employees are responsible for much of our success. Knowing that makes this decision even more difficult. However, if if we don’t act prudently now the cost to our employees could be greater.

In his memo, reprinted in full after the jump, Smith noted a couple of factors contributing to the decision to cut back:

  • Advertising revenue declines “for the second consecutive year and the newspaper industry as a whole for the third year in a row.”
  • A 24 percent increase in the cost of newsprint, year over year, adding $4 million to the newspapers’ costs.
  • Its more than 1,100 carriers drive 1.6 million per month to deliver the paper. Fuel costs have risen.

Smith’s memo also noted that, “Many banking companies, auto dealers, real estate firms and retailers of all kinds are struggling to maintain their operations.” Those, of course, are all major newspapers advertisers, particularly the auto dealers. And earlier this week, we heard how auto dealers’ tough times were rippling through the newspaper industry.

Max also notes something us at Arkansas Business Publishing Group, as niche publishers, are very well aware of: that to find new revenue sources, the Democrat-Gazette has dipped into niche publishing. It launched Sync, aimed at younger readers, a little more than a year ago, and it plans to battle our company’s own society magazine, Little Rock Soiree, in September with a new monthly glossy mag called Arkansas Life.

We’ll also point out something Democrat-Gazette subscribers might already be aware of: the paper has increased its subscription rates.

Larry Graham, the paper’s circ director, announced the increase in business brief in the paper’s Saturday edition on Aug. 2. One-month subscriptions for seven-day delivery goes up a $1 to $13; three-month subscriptions for seven-day delivery goes to $39 from $36; one-month subs for Sunday-only delivery goes to $6.25 from $5.67; and the three-month rate for Sunday-only goes to $18.75 from $17.

Graham cited higher fuel costs for the increase. He said single copy sales wouldn’t budge, citing the cost to revamp the vending machines.

(The full memo from Smith after the jump.)

Arkansas Democrat-Gazette employees:

Most businesses are experiencing intense pressure due to very unstable economic conditions. Many banking companies, auto dealers, real estate firms and retailers of all kinds are struggling to maintain their operations.

More than 80% of the Democrat-Gazette’s revenue comes from advertising. When our advertising customers are dealing with reduced revenue, it impacts the amount of money they allocate for advertising. As a result, we are experiencing advertising revenue declines for the second consecutive year and the newspaper industry as a whole for the third year in a row.

We have 1,132 newspaper carriers under contract. These carriers, along with our bundle haulers, drive more than 1.6 million miles per month to deliver our newspaper to our subscribers. As a result, few businesses have been impacted as much as we have from the high cost of gasoline.

Our current cost for newsprint is 24% higher than at the same time last year. This increase, if it doesn’t go any higher, will add more than $4,000,000 to our costs.

We have 1,316 employees. While many newspaper companies have had several rounds of layoffs during the past several years, we have resisted doing this and we hope we can continue to do so, but we must keep our payroll costs from going higher. In an attempt to do this, we are eliminating salary increases for the remainder of this year. We will also try to reduce costs through attrition so we will temporarily not replace departing employees unless absolutely necessary. These polices will apply to all employees in all departments throughout the newspaper. We will evaluate our situation and these policies again at the first of next year.

We have many things going for us at the Democrat-Gazette. We have a higher Sunday penetration in the City Zone than any newspaper in America in markets with more than 100,000 households. More people in Central Arkansas read the Democrat-Gazette on a typical day than watch the Super Bowl, television’s highest rated program.

We realize our employees are responsible for much of our success. Knowing that makes this decision even more difficult. However, if if we don’t act prudently now the cost to our employees could be greater.

Sincerely
Paul Smith
President

More: Max’s full post here, plus the comments.

Previously: Democrat-Gazette Publisher Walter Hussman, Editor & Publisher’s Publisher of the Year

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4 Responses

  1. […] August 18, 2008 by lanceturner Arkansas Business media columnist Mark Hengel has a little more on last week’s word that the Arkansas Democrat-Gazette, feeling the same pinch newspapers across the country are […]

  2. […] on to note that the paper has seen “modest” cost savings from its previously announced hiring and salary freezes, and that those savings have “not large enough given the economic […]

  3. […] Most Watched Arkansas Legislature Ever?Editor & Publisher: Newspaper Circulation Down AgainAboutUPDATE: Hiring, Salary Freeze at the Arkansas Democrat-GazetteSnuggies, Aaron Jones and KATV in Arkansas Business This […]

  4. […] This is the latest attempt by the newspaper to stop the slide. Last week, layoffs. Before that, a request for workers to voluntarily cut hours. Before that, a salary and wage freeze. […]

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