Business

Insiders: N&O plans cuts to news operation

Posted June 10, 2008 3:34 p.m. EDT
Updated June 10, 2008 4:19 p.m. EDT

— 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 WRAL.com.

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 WRAL.com.”

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.