N&O plans more cost cuts as parent slashes jobs by 15%

Posted March 9, 2009

— More cost reductions are coming at The News & Observer, but specific decisions about layoffs and other expense cuts won’t be made for “a couple of weeks,” Publisher Orage Quarles III said Monday.

“We have been looking at a lot of things,” Quarles said after the newspaper’s parent company, McClatchy Co. (NYSE: MNI), announced it would cut 1,600 jobs across the chain of 30 daily newspapers – a 15 percent reduction.

“Hopefully we’ll have this done in a couple of weeks,” Quarles said.

N&O, News & Observer Author: N&O cuts part of cycle

The N&O has cut more than 200 full-time jobs over the past year, leaving it with 613 full-time positions, according to the newspaper. The paper's Web site lists some 165 employees in its newsroom.

The latest reductions came in December, when The N&O decided to use a third party for newspaper distribution. The cuts also took 58 part-time positions.

"The cuts are becoming greater, and the intervals between them are shorter. To me, (that's) an accelerated path to destruction," said Philip Meyer, a former University of North Carolina-Chapel Hill professor who wrote "The Vanishing Newspaper."

"They're having to do such desperate things that are damaging the product," Meyer said.

Longtime reader Taylor McCrae said he notices a difference in the newspaper since the cuts began.

"I really don't like the fact I see so many articles that are taken from other sources. I prefer more staff writers writing in a local paper," McCrae said.

Quarles told that the newspaper remains profitable, but it isn't achieving its budget goals.

"The advertising environment has just gotten worse,” he said, adding the newspaper is “very close” to its goals in circulation.

Circulation is being cut in some cases "by design” in order to reduce “unprofitable circulation,” he said.

“We are experiencing advertising losses greater than any of us have ever seen in our history. As the economy declines, so do our revenues,” Quarles said in a Monday memo to N&O employees.

“We understand how disruptive the last several weeks have been and how announcements by other McClatchy papers increase concerns about the future," he said in the memo. "We apologize for the delay, but want to make sure we carefully review every option before making final decisions. We anticipate communicating these decisions to you over the next couple of weeks."

McClatchy, which is based in Sacramento, Calif., said before the markets opened Monday that cutting 1,600 jobs was part of a plan to reduce expenses this year between $100 million and $110 million. It also cut its dividend by 90 percent.

The salaries of Chairman and Chief Executive Officer Gary Pruitt and other executives also are being cut by 10 percent.

Quarles wouldn't say whether his salary was reduced.

McClatchy is burdened by more than $2 billion in debt dating to its 2006 acquisition of the Knight-Ridder newspaper group.

Layoffs and cost cuts have already occurred at several McClatchy newspapers. Last week, for example, The Sacramento Bee announced plans to cut 34 of the 268 Newspaper Guild-covered positions in the editorial and advertising departments. Another 19 jobs would have been in jeopardy, but union members agreed to take pay cuts to save the positions.

In February, Fitch Ratings and Standard & Poor's Ratings services lowered their ratings for McClatchy. S&P said its action reflects a belief that the company is likely to violate the terms of its credit facilities at the end of 2009.

In addition to the daily papers, McClatchy has about 50 non-dailies and direct marketing and direct-mail operations.


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  • mrs. me Mar 9, 2009

    Hi kcfoxie,
    I am actually not that old (40) and you have a valid point - but in this case the photo was huge (almost 5x7) of someone in leather & chains (that could have been left out) and the the story was glorifying the S&M club scene that was "up & coming" at the time in Raleigh. (I happened to work at this paper at the time & decided enough was enough).
    Mind you, I don't care if someone is gay - as long as I don't have to see it. It's none of my business & I don't want to know! God created men & women to procreate and being gay is completely unnatural in my view. (Sorry folks, we can't all agree on everything).
    On the other hand, sometimes straight couples are way too blatant with the PDA too! I am not a prude, but I do not have to hang all over my husband to prove to the world I am "in love" - and this way I don't make anyone around me uncomfortable. Just common courtesy in practice - some of you should consider it!

  • aspenstreet1717 Mar 9, 2009

    I canceled my subscription long ago. And yes it was the editorials that did it.

  • mrs. me Mar 9, 2009

    no not scarred for life, just sickened to have to be exposed to something unnatural - and my children are not scarred for life because I threw the offending paper away before they could see it!

  • copforlife Mar 9, 2009

    1600 jobs. That's 1599 more then read their paper.

  • Smiling Mar 9, 2009

    These reports are coming from the N&O almost monthly now....I feel bad for the people who work there, especially behind the scenes, that are glad to have jobs, right, wrong or indifferent...I can't imagine the roller coaster they must be on to heat this news so often and to know that they might be next.

  • Wheelman Mar 9, 2009

    The N&O certainly has some liberal/conservative diversity issues, but the main reason I stopped my subscription was because they kept cutting back on local news. They still suffer from the mistake of thinking that that people are looking to them for the national "picture". All they are doing is reprinting AP stories which I can get for free in a hundred places. They have almost no real local news and sports or business news. Maybe they don't think it's "exciting" enough. Now I only have to take my recycling bin out every other week.

  • meteo Mar 9, 2009

    I still subscribe to the N+O even though the amount of quality content keeps decreasing. The reason I still subscribe is because of the coupons in the Sunday paper. They easily cover the cost of the subscription, so it would cost me more to NOT receive the paper. As long as the coupons keep coming, I'll keep my subscription.

  • uncwgirl02 Mar 9, 2009

    Glad I left my job at the N & O two years ago when this started getting out of hand. They own other small newspapers and pretty much the entire workforce and the small town papers have been cut.

  • Road-wearier Mar 9, 2009

    Good grief. Why does every single comment section on every single article on turn into a liberal vs conservative whinefest? Grow up people!

  • odell Mar 9, 2009

    Were it not for the Chapel Hill newspaper, I wouldn't have anything to line the bottom of my parakeet's bird cage.