Friday, May 8, 2009

Reader says McClatchy is not planning more cuts... "there is a sense McClatchy cut too deep last time"

A reader, apparently a McClatchy employee, says McClatchy is making no plans for more mass layoffs.

There is nothing being planned as of now in the way of more mass layoffs. On the last round they came back THREE TIMES to ask the newspapers for more. That's why it took so long to make announcements.

Although people are trimming expenses, there is not a whisper of that other type of activity. There is a general acknowledgment, I think, that we cut too deep last time and the organization can't sustain any more. Savings have to come from elsewhere. We have to raise additional revenue with circulation price increases and things like paying for TV books.

There might be some isolated job-consolidation and outsourcing but I'm not looking for any more across-the-board staff cuts. They deliberately went drastically deep last time so as not to have to come back for more.

Hard to evaluate this comment since I don't know who left the comment. Was it a corporate officer with insider knowledge? Or, was it a middle manager who wouldn't have inside info?



Anonymous said...

Even the senior managers and division VP's at the papers are not privy to the machinations of the third floor.

MNI is a very secretive and closed culture.

I can imagine the middle managers thinking among themselves, that the cuts are too deep.

But it all comes down to the quarterly numbers.

McClatchy Watch said...

This sentence -- "There is a general acknowledgment, I think, that we cut too deep last time and the organization can't sustain any more." -- sounds like it comes from a middle manager who doesn't realize the bottom line is what has to drive MNI's cost reductions.

Anonymous said...

They can easily cut much more. They have not even begun to trim the fat in the management ranks or the heart of their problems...EDITORIAL and the DC BUREAU.

Anonymous said...

The decline in revenue for newspapers continues unabated. Advertisers are fleeing paper ads for more efficient online ads. And there is nothing anyone can do about it.

There will be more 'cuts' at McClatchy and other newspapers. When you have no customers, you have no business. The final 'cut' will be when the presses stop for the last time.

Walter Abbott

Anonymous said...

I have heard the same thing.

As I have previously stated, (no I did not leave this comment that started this "post"), McClatchy said to cut to basically a 30% year over year decline through 2009.

That means that in Nov 2009 they have planned for another 30% decline in revenue/advertising over Nov 2008 (not that it will happen). Nov 2008 as we all know was down 20% thus meaning cuts were theoretically designed to cover a 2 year drop of 44%.

It will be interesting to see what happens for 2Q.

Anonymous said...

5:46 AM

Labor costs are only a portion of the expense pie graph. There are a large number of fixed costs that cannot be cut. So labor cost cuts need to be greater on a percentage basis than the revenue declines.

This is just a lousy situation. It is impossible to cut costs fast enough to stay ahead of a business that is imploding.

GM has revenue falling 48% compared to the previous year. It is not possible to handles those cuts in a business of that size.

McClatchy has a similar problem. Too much debt and revenue falling too quickly.

Both companies need bankruptcy to restructure. GM has already realized the truth and will likely file BK on June 1st.

McClatchy appears to still be in denial.

Anonymous said...

From what I've heard from the top of our organization, no more cuts are planned as long as - and this is the key phrase - [b]the revenue drop stabilizes[/b] this year. There is hope that we're going to hit bottom very soon on the revenue front, and the cuts thus far will have expenses in line with the new revenue floor.

If the revenue drop continues through '09 and '10, expenses will once again have to be slashed drastically. Does that mean more layoffs? Not necessarily, but labor is the company's No. 1 cost so it's hard to imagine steep cuts without additional cuts to labor.

I don't expect more layoffs soon - the current rumors about a big June cuts don't hold much water - but I wouldn't be shocked if we saw additional staff downsizing in 4Q09 or 1Q10 if the revenue declines continue.

Anonymous said...

There are reductions in opertational cost planned however staff reduction are not on the table.

There will be instances in certain markets where further consolidations may happen, however company wide staff reductions are no longer viable

Anonymous said...

Who's left to lay off when you're already at the bare minimum for survival? When you lay off a significant portion of your staff, cut the hours and pay of the people you keep but force them to do twice the work or more (often working unpaid overtime), there's no more fat to trim.

The next round isn't more layoffs, it's shutting down.

Anonymous said...

"The next round isn't more layoffs, it's shutting down."


That is likely true. Most of these newspapers are operating at 50% of their original staffing levels of two years ago.

So I guess that means we are close to the end for McClatchy.

Because even if 100% of the debt were forgiven and there was $0.00 in interest payments, the company still would have lost $11 million last quarter.

If they cannot cut any more staff and still put a newspaper out each day, and the revenue does not support the current level of staffing, then something is going to fail spectacularly.

I am getting my popcorn for this. It's going to be bloody with lots of crying and screaming.

Anonymous said...

If there is anyone who thinks there will not be any more cuts, they have their head pretty deep in the sand.

Chapter 11 is around the corner and then papers will be eliminated.

Anonymous said...

Let's look at the Q1 '09 numbers and they were not pretty. Gross revenues were $365,625,000, down 25% from the same quarter in 2008. Operating expenses were $376,487,000. Net operating loss was $10,862,000. Down from a net operating profit in Q1 '08 of $56,734,000. Interest expense was $33,921,000. (Interest expense is not an operating expense, BTW.) As a poster said, even debt free, MNI would have lost almost $11 million.

However, an $11 million loss in a deep recession for a company the size of MNI would have been no problem. Corporate would have simply tapped its revolving credit line and carried on. With the debt, MNI is in deep trouble. They drift closer to technical default on their large loan.

On the balance sheet, MNI did two things right. They increased cash significantly, from $5.0 million in Q1 08 to $36.0 million in Q1 '09. They did this by improving the management of their accounts receivable and drawing on their revolving loan facility. The improvement in accounts receivable management is long overdue. But, that is largely a one time only improvement. There is not much MNI can do to reduce A/R next quarter by a similar amount. They could cut the dividend which cost them $7.0 million. However, that would end the board's commitment to current management and avoidance of bankruptcy.


Anonymous said...

Mcclatchy is already run into the ground. Someone needs to dig a hole and roll them in.

It's Over ...

L H X FWST said...

if you belive cuts are over.... then you must be the one with the brown all over you nose.