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"They're seeing these unprecedented declines and they're trying to stay ahead of the curve," said Ed Atorino, an analyst who follows the media industry for Benchmark Co. in New York.

McClatchy has extra pressure because it took on a mountain of debt to buy Knight Ridder. It still has about $2.4 billion in long-term borrowing on its balance sheet, and bank agreements require that it maintain a specific level of operating income relative to that debt.

With revenue declining precipitously, McClatchy runs the risk of violating that provision unless it also keeps costs in check.

Revenue slumps

"We're operating in a time of great change and challenge for our operations, for the McClatchy Company and for the newspaper industry overall," N&O Publisher Orage Quarles III wrote in an e-mail message to employees. "Increased competition and a pronounced economic downturn have combined to reduce revenues dramatically, and these cuts are part of the way we must respond."

The N&O, which has average paid circulation of 176,083 Monday through Friday, has fared better than other newspapers owned by McClatchy. For one thing, its audience is growing online with 1.6 million unique visitors last month. But the print product has seen revenues soften since October.

The N&O has already worked to rein in costs. In April, for instance, the company offered voluntary buyouts to about 200 employees. Quarles said 33 accepted, including six in the newsroom. The company has also closed its Greenville office and left positions, including two at the vice president level, unfilled.

With the most recent job cuts, which take effect June 27, The N&O will have about 805 employees. Affected employees will receive severance packages and outplacement assistance.

As part of the other expense reductions, the Business section will merge with the City & State section. The N&O's sports, political and research departments will combine with those of Charlotte. And The N&O will begin producing only two daily editions: one for the Triangle and one for the rest of its circulation area.

That change will have one of the biggest effects on readers. Scores for games that end after midnight, for instance, might not always be in the next day's print edition.

Quarles said that the decision was tough, but that by altering production in that way he was able to save the equivalent of 50 full-time jobs.

At a staff meeting, an employee asked whether the job cuts were over.

"I hope we don't have to have this conversation again," Quarles said. "But there are no guarantees."

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