Forgoing the McClatchy tradition of opening the presentation with a song, Pruitt took a defiant tone and said that advertising revenue is "finally, finally, improving," that all 30 of its newspapers are profitable and that McClatchy expects to maintain, if not grow, cash flow in 2010.
Pruitt acknowledged the increase in ad revenue isn't nearly enough to cover current expenses and the company will make significant cuts -- more than 25% -- in 2010.
... McClatchy is expected to trim expenses in the "high 20" percentage range next year. McClatchy is looking to outsource more production, financial and back-office functions -- it already outsources the printing of eight of its papers -- and to continue partnering with other news organizations, increasing shared editorial content.
OK, where's the peanut gallery comments? I was looking forward to reading what people have to say about this. Come on peeps!!
Another 25% = A lot more Pain
Bias = Layoffs
So if ad revenue is improving and all the papers are profitable, why are you going to lay off more staff?
Outsource? I didn't know we had any subscribers in India.
If the company is predicting 20-25 percent revenue decline in the 4th quarter and it's coming off declining revenue in previous quarters, you have to continue to cut costs in order to maintain a profit. Seems pretty simple to me.
A lot of layoffs would seem the only legit answer. Not good news my peeps.
They could sell papers but nobody wants to buy these losers. They could sell land like in Miami but they can't swing a deal. That leaves staff cuts and more downsizing.
Or maybe they might print only four or five days a week and close some of the biggest losers in specific markets.
You know more layoffs are in the future, it's just how many and when.
Not suprised and was expecting this info as the holiday
season comes to a close. All the papers are still losing ad revnue in the upper teens to low 20 percent.
Look for more papers taking $$$$ from ROP to prop sagging online sales. Look for more papers to bundle their product with some type of online version of the paper to reduce newsprint cost while boosting esubscribers.
So ad revenue is not improving after all?
Or is this more democrat math where losing 100,000 jobs is an improvement?
Aw, come on now, they lifted the wage freeze didn't they?
Now it's time to find a sense of humor because that is the only way to look at the fact that 0 operating cost = 100% profit.
This is where things appear to be going, no sellable product BUT 100%profit
It is about the debt. All papers may be profitable. Ad revenues may be improving. But they better have enough cash to meet the debt covenants or the family loses the company and they won't let that happen.
The only way to cut expenses by 25% is to cut staff.
Since the wage freeze was lifted, I suspect they are not cutting salaries or hours. So the only way to do it is a hiring freeze or layoffs.
There is no way to reach 25% without looking at staff levels.
They are just remaking the business to be more efficient and to change with the times. Changes will focus on the inevitable decline of print and and equally inevitable rise of digital. It doesn't make sense to continue in the newspaper business with the current cost structures or resource allotment. Many companies and other industries are making similar strategic changes. This, too, is an industry in transition.
Will we they need all the current staff?
Will they need to print their own papers?
Should they outsource commodity work that can deliver equal or better results at lesser cost?
Is there a shift of readership and revenue to digital?
Should they change the business?
Does that mean cutting expenses and job functions?
I guess protecting yourself from bankruptcy and living to fight another day is just not an acceptable alternative to this board.
Unfortunately, the points about the industry are well said from the comment above. The business model is broken and no one is carrying any replacement parts. What's sad is after Pruitt's announcements, McClatchy stock took a spike up. Good news for stock holders, bad news for employees.
Anytime the President or a CEO brags about how the economy or bottomline is improving (no matter how weak the argument), stock goes up. Common sense prevails after a few days and stock settles back. It's amazing how gullible and outright ignorant the stock buying public can be.
Be prepared for McStrachy to import Indian workers, put them up in shady sides of town, pay them nothing, and let them take ALL of our jobs.
Where is that Obama campaign promise to tax companies who continue to send American jobs offshore???
What are the 2 biggest expenses? People and newsprint. You decide which one will go first. Good luck to all of the current employees who have to worry if the next cut will be them.
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