McClatchy cutting 1,150 jobs, dividend

Reductions include N&O buyouts, maybe layoffs

The McClatchy Co., parent of The News & Observer, said Tuesday that it is cutting 1,150 full-time jobs and halving its quarterly dividend as it deals with a deep advertising slump.

The staff reductions are already under way and include voluntary buyouts announced this month at The News and Observer Publishing Co., which also owns The Cary News, The Chapel Hill News and other papers. Nationwide, the cuts will affect about 10 percent of McClatchy's staff.

The N&O expects to eliminate as many as 70 jobs, or about 9 percent of its work force, Publisher Orage Quarles III said in an e-mail message to employees Tuesday. The News and Observer Publishing Co. has offered buyouts to 320 workers, and if too few take them -- the deadline is today -- it will move to layoffs Monday.

McClatchy must cut costs as the economic downturn and a shift toward the Internet drains its advertising revenue at a precarious time. The Sacramento, Calif.-based company took on debt in 2006 to buy larger rival Knight Ridder and is trying to stay in compliance with bank terms.

"It is painful to announce these staff reductions, but the continued restructuring of our company is necessary," McClatchy chief executive Gary Pruitt said in a statement. "McClatchy is committed to remaining a healthy, profitable company positioned to meet current challenges."

The actions announced Tuesday mark McClatchy's second broad work-force reduction in three months. In June, it implemented its first-ever companywide layoffs, which eliminated about 1,400 full-time positions. Effective this month, it imposed a one-year wage freeze.

At The N&O, the layoffs, combined with an earlier buyout and attrition, have trimmed more than 100 employees. The paper has reduced the number of pages it prints, and it plans additional cuts.

By early next month, for example, The N&O will combine its Travel section with Sunday's Arts & Living section and will begin publishing Friday's What's Up entertainment section in a new format. It also will eliminate Sunday's Q section and move that day's editorial section behind Nation & World.

Quarles said Tuesday that The N&O, separate from the work-force reductions already announced, will outsource some financial responsibilities to another company. That change will occur early next year and likely will affect about five positions, he said in the e-mail message to employees.

McClatchy is evolving into a company that includes print and online products, and there are signs of success. In the first eight months of the year, revenue from Internet advertising grew 11.2 percent compared with the same period last year.

But that growth is not fast enough to make up for declines in print advertising, which largely pays for the operations of newspapers. In the first eight months of the year, total advertising revenue declined 16.7 percent, McClatchy said Tuesday.

The current staff reductions will save McClatchy about $100 million over a year. By cutting its dividend to 9 cents a share, it will save about $7 million per quarter.