Insiders: N&O plans cuts to news operation

Posted June 10, 2008

— The News & Observer is preparing to lay off about 10 percent of its newsroom staff and will announce other cuts affecting its news operation, sources inside the N&O tell

A formal announcement may not come until next week, however. The N&O is part of the McClatchy (NYSE: MNI) newspaper chain, and the group reportedly is planning to announce corporate-wide cutbacks, one newsroom source said. McClatchy also owns The Charlotte Observer.

The nation’s third-largest newspaper chain is based in Sacramento, Calif. It reported May 21 that revenues for the first four months of 2008 were down 14 percent from the same period in 2007. McClatchy stock hit a 52-week low of $7.59 on Tuesday.

Asked about layoffs, Felicia Gressette, vice president of marketing for the N&O who spoke on behalf of publisher Orage Quarles III, said, “We’re just not going to comment.”

When asked about other cost-cutting moves, Gressette noted: “Any changes will be announced in the N&O, not”

The layoffs could affect as few as 15 or as many as 30 newsroom staffers, the sources said. Numerous people had expected the layoffs to be made Monday following an announcement by John Drescher, the paper’s senior vice president and executive editor, at a recent staff meeting that layoffs would take place.

Gressette noted that Drescher talks often with the newsroom “about the great changes” the newspaper industry faces and that “more are headed our way.” Drescher did say that there would “likely be more staff reductions,” Gressette said. However, she added, that comment “did not mean there would be layoffs.”

“Management put out the word that layoffs were coming,” one source said. “There was no timeline.” Among the staff, “no one knows the criteria” that will be followed in determining who is let go, the source added.

A person in direct contact with several newsroom staffers described the atmosphere at The N&O as “incredibly anxious. … People are waiting for the hammer to fall.”

Word of the pending layoffs surprised many among the “rank and file,” according to one source who spoke on the basis of anonymity. They had expected that a series of voluntary buyouts offered by the N&O in April would be enough to pare newsroom expenses as the paper struggles with its finances, but, “Things just changed at the corporate level,” the insider said.

Six newsroom employees, including five editors ranging from business to features, took the buyouts, sources said. Buyouts were offered to 230 of approximately 900 employees, including more than 760 full-time, across the company.

Gressette said the N&O would not “release publicly” how many people accepted the buyout. She added that the buyouts were part of a “voluntary program.”

According to a contact list published on the N&O’s Web site, the news operation numbers 224 people. However, due to attrition, a hiring freeze and recent departures, the number is now around 190.

Other cutbacks and changes include:

  • The folding of the Business section into the City/State section. Business is currently published as a separate section, although the newspaper no longer runs extensive stock listings.
  • The size of the space devoted to news will be reduced.

Drescher also could announce what a source described as a “major” reorganization of the news operation.

When asked about that move, Gressette said, “We are always looking for ways to be more efficient.”

The N&O recently said it would increase subscription prices.

In announcing the buyout offers six weeks ago, Quarles did not rule out further changes.

“While there are limits on the number of employees who may be offered this package, there is not a minimum ‘target’ that we are required to achieve,” Quarles wrote in April. “This program does not become involuntary if a certain number of employees do not volunteer. However, this does not preclude the possibility of The News & Observer identifying efficiencies or other business model changes that could impact staffing in the future.”

Quarles cited rising fuel costs, declining revenues and “other factors” such as rising newsprint costs as reasons for the buyout offer.

Other McClatchy newspapers include the Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram and The Kansas City Star.

Based on data recently published by analyst firm Lehman Brothers, which follows McClatchy stock, The N&O’s daily circulation is around 171,000 and Sunday circulation is approximately 211,000.


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  • IMPressive Jun 11, 2008

    We cancelled our subscription a few years ago due to numerous delivery problems - if you got the paper at all. We started it back with a paid subscription purchased at the state fair this past October. A month later, we received a bill from the N&O stating that our subscription was due for renewal. When you call Customer Service, you speak to someone in a different country, since they laid off their Raleigh folks, and moved the Customer Service "Off Shore". You get numerous apologies and promises that they would investigate. Called each week, and told the same thing "I am sorry about that ma'am. I will see your problem and will contact our billing office. It took three months to finally resolve. Still have many problems with getting a paper somewhere near our property. Even put up a paper box, but the carrier does not understand to place the paper in the box. Needless to say, we will not renew.

  • coolwill Jun 11, 2008

    Good, maybe we now they will show news stories with American citizens on the front page and not illegal aliens.

  • rand321 Jun 10, 2008

    i have enjoyed getting the paper, but the coverage seems to be more general and less focused on the triangle.

    I most likely will cancel my subscription to it with the increase.

  • FloydTurbo Jun 10, 2008

    I'm a hard-core right-winger ..... BUT since Editor Sill was "transferred" after the embarrassment of their Lacrosse-Nifong debacle, the paper HAS improved. New Editor Drescher is a "good guy" in a tough position.

    I disagree with ANYTHING that Steve Ford has ever said, thought or written on the op-ed page ..... but he won't be caught in this cut. Maybe the next one?

  • thewayitis Jun 10, 2008

    I still like newspapers, because they usually go into more depth than online news stories. Sadly, most Americans seem to be happy with a little blurb of news here and there, and they could care less about what is really going on in the world. I am often so amazed at how clueless people are, and how they believe anything they read as the gospel truth. Nobody seems to want to delve deeper anymore.

    That said, I don't subscribe to any papers any more. Newspapers have really gone downhill, ever since all the locally owned papers sold out to the chains. All the chains care about is making money, and many of them bled the local papers to death just to reap a profit. Sad, really. Plus, newspapers are not very customer-service oriented. I wanted to get the Wed. and Sun. papers, and I did for some time, but then it was no longer allowed -- I had to fit into one of the official subscription plans. Oh well, they ended up losing my business.

  • imback Jun 10, 2008

    I enjoy newspapers and magazines over reading something on a monitor, but I will probably not renew my subscription this time around. It's a shell of a paper now.

  • tsquaring Jun 10, 2008

    Isn't funny the way they bash other business for laying off people, raising prices and offering early outs.

    I think papers should be taxed higher too. Making money of the backs of the poor like they do ;-)

  • DeathRow-IFeelYourPain-NOT Jun 10, 2008

    Politics aside, (and I could go off bigtime on the Liberal News and Disturber), I haven't subscribed to the N&O since the early 1990's. It was about that time that I got Dial-Up Internet access. In a fast-paced life, I didn't have time to sit down and read a newspaper. It was much easier to catchup quickly on the Top News Stories through a website like WRAL. Newspapers are a dying breed and its a horrible business for the future. Newspapers and the US Postal Service will almost disappear in a couple of decades. Hard to believe the Postal Service still delivers to almost EVERY household in America. How inefficient is THAT! And the Newspapers basically report on Yesterdays news. Who wants to read yesterday's news?!?! Both businesses will die almost totally in a decade or two.

  • davidgnews Jun 10, 2008

    ifcdirector - I guess you're not aware that in the legislature, Basnight used to contribute thousands to Jesse Helms, either.

  • Smokin Jun 10, 2008

    Waaay too much coverage of John Edwards, waay too many advertisements. Fair to middling reporting at best. I like the comics and a few other things, but the "A" section is one big furniture ad. If they cut out any more news, there won't be any left.

    Guess I'll just continue to read WRAL, Fox, CNN, NYTimes and others online.