CHICAGO - A depressed economy and a shift in consumer behavior have taken another toll on the newspaper industry, with the latest round of job cuts planned at the New York Times and the Washington Post, two of the most widely read and influential dailies in the world.
New York Times Co. shares rose 9 percent to close at $4.98 on Thursday, while Washington Post Co.‘s stock rose 2 percent to $384.28.
New York Times Co. will eliminate 100 jobs on the business side of its flagship paper and cut employee pay by 5 percent over the next nine months in exchange for 10 days of leave, according to internal memos obtained by MarketWatch.
The 5 percent reduction in pay will affect staffers at The New York Times, The Boston Globe, Boston.com and the company’s corporate unit.
At About.com, the company’s regional newspapers, the Worcester Telegram & Gazette and other subsidiaries, salaries are being rolled back by 2.5 percent, with five additional days off.
“We have reported in our own newspapers and on our own Web sites that the economy is likely to continue struggling throughout this year and possibly longer,” said Chairman Arthur Sulzberger Jr. and Chief Executive Janet Robinson in their letter. “Given this economic outlook and the changes occurring in the media business, we, regrettably, must take even more steps to lower costs.”
Sulzberger and Robinson said that, while the company plans to restore salaries to former levels in 2010, “such a decision depends on the state of our business.”
The New York Times had also cut a number of jobs last year.
Meanwhile, the Washington Post said it plans to offer buyouts to employees this year at the paper, affecting workers in its newsroom, production and circulation areas, as well as a small number of positions in the advertising and information-technology departments.
Katharine Weymouth, publisher of the Post and chief executive of its media group, cautioned staffers that layoffs could occur if certain targets aren’t met through the voluntary retirement plan.
“I need not tell you that our industry is undergoing a seismic shift as readers face an array of media choices and our traditional advertising and circulation bases decline,” Weymouth wrote in a memo.
“The good news is that the appetite for news is as robust as ever. Thanks to our presence on the Internet and on mobile phones and other devices, our audience includes more readers now than we have ever had. But while online revenues have been growing, they have not yet grown fast enough to offset the declines we are seeing in print revenues.”
Weymouth pointed out that the buyouts being offered are not “as generous” as previous plans.
The Washington Post also had a staff reduction in 2008.
Fortunately for Washington Post Co., its primary revenue driver is now Kaplan Inc., a provider of higher education programs, professional training and other services to students of all ages.
For decades, newspapers relied on classified-advertising revenue to sustain themselves, and they generated plenty from retailers, financial services, movie studios and many other businesses that found newspapers to be their most effective ad tool.
With little competition for classified-ad dollars, profit margins of 30 percent or more were not uncommon, even as the 21st century began.
However, a number of factors have combined to take away this advantage. Using online classified sources such as Craigslist and Monster.com, consumers quickly discovered that they could find sortable, timely listings, and those who wanted to place the ads could do so far more cheaply than they could in newspapers. At the same time, readers of print newspapers began a steady shift toward online sources of news and information.
Still, while the economy was healthy, real estate and help-wanted classifieds were still strong for newspapers. Once the economy began to decline in 2007, however, those revenue streams eroded.
Then, as various problems festered among traditionally heavy buyers of newspaper ads such as airlines, automobile makers and retailers, the newspaper industry was thrown into an abyss by the worldwide financial collapse.
Last week, Hearst Corp. opted to shut down print operations of the Seattle Post-Intelligencer, turning it into a Web-only publication with a small editorial staff. In February, it warned that it might shut down the San Francisco Chronicle unless it could find a way to drastically cut operating costs.
Also in February, E.W. Scripps & Co. shut down Denver’s Rocky Mountain News, while Philadelphia Newspapers LLC and Journal Register Co. filed for bankruptcy.
Last December, Tribune Co., publisher of the Chicago Tribune, the Los Angeles Times, The Baltimore Sun and other major dailies, filed for Chapter 11 bankruptcy protection.
The parent of the Minneapolis Star-Tribune followed suit a month later.
Also in January, Gannett Co., the largest U.S. newspaper publisher, said it would shut down the Tucson Citizen if it could not find a buyer for the Arizona publication.