Democrat-Gazette Looks to Reduced Hours to Cut Costs

Noted in the Arkansas Times blog, this memo from Arkansas Democrat-Gazette General Manager Paul Smith to DG staffers.

In move to avoid (or at least put off) deeper cuts, the paper asks for volunteers who agree to reduce their hours, thereby saving the paper in payroll expenses:

We would consider any employee who is willing, at least temporarily, to reduce their workdays to four days a week, reducing their hours from 40 hours a week to 32 hours a week, with compensation reduced accordingly. Health care insurance would remain in force.

Similarly, we would also consider employees who might want to voluntarily reduce their workday. For example, if some employees wanted to reduce their workday from 8:00 a.m. to 3:00 p.m. instead of 5:00 p.m., and reduce their workweek from 40 hours a week to 30 hours a week by doing this, we would consider such requests.

We would modify our policy so health care insurance would remain in force for those working 30 hours a week or more.

As mentioned above, these programs would be totally voluntary at this time. For employees who make these requests, which are accepted, we would consider future requests to increase hours once business has improved and is back to normal levels.

Smith goes 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 downturn.”

UPDATED: Gannett Co., which owns KTHV-TV, Channel 11, in Little Rock and the Baxter Bulletin in north Arkansas, is making similar moves, with staff asked to take a week off without pay. The Gannett Blog has more.

Credit Crisis Further Weakens Big Newspapers

This credit crisis on Wall Street isn’t good for anyone (except maybe CNBC), but it couldn’t come at a worse time for daily newspapers, which were already in pickle from falling advertising revenues, a drop in subscriptions and reader migration to the Internet.

Take, for example, the pickle that the Star Tribune of Minneapolis is in. As the Wall Street Journal points out, lots of newspaper groups took on lots of debt in recent years, including the Tribune Co. and the McClatchy Co., which owns papers including the Fort Worth Star-Telegram. And you know how bad it is to be in debt these days.

From the New York Times:

The Star Tribune skipped a $9 million quarterly payment to its senior creditors that was due on Tuesday, said Chris Harte, the publisher and chairman. The paper has been in default since June, when it began missing payments on its smaller junior debt.

With advice from the Blackstone Group, The Star Tribune has been trying to negotiate new terms with its lenders, a consortium of banks, insurance companies, hedge funds and others.

The paper has cut its staff and reduced other operating costs, while trying to obtain wage and work rule concessions from its unions.

The default means that lenders could force a bankruptcy, but they have been reluctant to take that step with battered newspaper companies as long as there appeared to be a chance of agreeing on new repayment terms.

The Gannett Co., which locally owns KTHV-TV, Channel 11, and newspapers like USA Today, has also had to tap its credit line. In fact, Standard & Poor’s has put the newspaper giant on credit watch, fearing that revenue declines there could accelerate.

What does all this mean? The Journal puts it this way:

As debt conditions sour, interest rates will go up for many papers, and lenders will impose onerous conditions. Some publishers risk default or even a trip into bankruptcy court.

The bright side? According to the Journal, banks’ — given their current troubles — might be lenient with newspaper, cutting them some slack. Consider the other choice: taking over newspapers, something the Journal says most banks “wouldn’t stomach,” because, really, who wants to be in that business now anyway?


Star-Ledger Achieves 200-buyout Goal [New Jersey Star-Ledger]

Newspaper in Minneapolis Halts Debt Payments [New York Times]

Financial Downturn Futher Hurts Newspaper Publishers [WSJ]

For Newspapers, the Storm Gets More Perfect [Forbes]