N&O offers buyouts to 320 employees

RALEIGH -- The News & Observer this morning offered voluntary buyouts to about 320 employees -- including all full-timers in the newsroom -- as the newspaper continues to contend with slumping advertising.

The number of people affected represents roughly 40 percent of workers at The News & Observer Publishing Co., which also owns community publications such as The Herald in Smithfield and The Cary News.

Publisher Orage Quarles III said the company expects "a relatively small percentage" of those offered buyouts to actually apply for them. The company might limit the number of applications accepted, he said, though he did not specify a target number.

In addition to employee reductions, the N&O also will trim newsprint expenses. Executive Editor John Drescher outlined a number of changes intended to cut about 10 pages a week from the publication beginning in early October. They include:

-- Combining the Travel section on Sundays with Arts & Living.

-- Merging the Friday What's Up entertainment section into Life, etc.

-- Converting the Channels television guide into a larger, 16-page tabloid from a quarter-fold publication.

The N&O, like most of the newspaper industry, is hurting amid the economic downturn that has eroded advertising revenue in key segments -- employment, auto and real estate -- even as its audience continues to grow. With myriad print publications and Internet sites, the N&O reaches more people than ever.

It just isn't getting enough revenue.

"We continue to tighten up in all areas of the operation based on what we're seeing," Quarles said in an interview. "The market is going to continue to be soft for longer than anyone had expected and, certainly, had hoped."

What's more, the N&O's parent, The McClatchy Co. of Sacramento, Calif., is facing broader financial challenges that affect the operations of its publications. McClatchy took on debt to buy rival Knight Ridder in 2006 and, because of the economic downturn and an shift toward online media, has struggled to pay it back.

It has sold real estate and other assets to reduce the debt burden and in June implemented the first company-wide layoff to reduce costs.

That action affected about 70 employees at the N&O and followed voluntary buyouts that the newspaper offered in April. The newspaper approved 33 employees for those buyouts, which were extended to about 200 workers.

Other newspapers in the McClatchy chain in recent weeks have also moved to reduce their staffs. The company also has implemented a one-year wage freeze to contain employee expenses.