Monday, June 16, 2008

Pain & Promises at McClatchy

This is a time of considerable pain at McClatchy, most especially for the 1,400 people who are being told their jobs are gone. That amounts to about 10% of the full-time equivalent workforce at our company. Amongst editorial employees, the total is about nine percent, probably ending up between 310-320 people.

Almost all are people we wish we could keep. The numbers include colleagues with impressive resumes and long tenure who have contributed great things. In places where last-in, first-out rules apply, too many are talented minorities we have worked hard to recruit and retain. At a time of stress and challenge in adapting to new demands, online and elsewhere, moving backward on staffing is doubly painful.

We’ve never done anything like this before. While other news companies went through round after round of broad, across-the-board layoffs, we relied principally on managed attrition to help cut expenses while revenues fell. (Some people also were let go when jobs were outsourced, though never in the newsrooms.) This is a cultural as well as individual trauma for us.

The combined impact of increased media competition and a deepening national recession has forced us to cut more quickly. We hope this aggressive move will spare us another like it down the road, though there are no absolute certainties in today’s volatile environment. We need the the 90% of employees who aren’t in the downsizing to focus on the work at hand with confidence, not be looking over their shoulders for another round of layoffs. I hope we can achieve that.

I expect some employees at the “old McClatchy” papers will see this as confirmation that the company changed irrevocably when it bought Knight Ridder. For folks at the former KR papers, I suppose this must be evidence that not as much changed as they hoped.

Both are wrong, in my view. The economic squeeze we’re in right now has nothing to do with greed or corporate culture, or even business mistakes. It has everything to do with a radically changing business environment and with revenues, which, for us, have fallen by hundreds of millions of dollars. Airlines are canceling flights, laying off crews and charging for checked luggage. More than 65,000 jobs have been lost on Wall Street. Auto workers and real estate agents are working at Starbucks.

I wrote here just a week ago about why I think it’s foolish to predict the death of newspaper companies like ours on the basis of simpleminded dichotomies. Yes, there are powerful forces at play that have changed the old rules of the game forever. Yes, there are cyclical economic forces that have deeply compounded our pain.

But while we are not immune from those forces, neither are we stupid. We’ve recognized for some time that irrevocable changes were afoot, that business-as-usual was no strategy for the future. Because we didn’t simply renounce the print franchise (which, as I keep mentioning, is a $40+ billion-a-year industry that reaches half the adults in America every day), some critics attach the label "dinosaur" and predict imminent demise. What they have failed (or refused) to note is the rapid transformation we’re already undergone, and the latent potential for more change in our future.

Integrated multimedia news and information companies employing sophisticated newsrooms and big sales departments (that’s us) can assemble big, growing audiences. And while Google’s AdSense and related technologies have changed the advertising/revenue paradigm, growing audience remains the best predictor of future success for any media company.

We have to tailor this 151-year old company differently to operate profitably and respond efficiently in the new arena. With an advertising recession layered on top of the other changes, we found we had to move faster than we wanted, and that required the layoffs we announced today. Some things you simply cannot control.

But some things you can, and our response to this period of challenge is one of those. I can assure you that thousands of McClatchy employees, like me, will take some time to grieve the loss of colleagues being laid off and to curse the conditions that led to it, and then go back to work producing quality public service journalism.

We will be around doing that at McClatchy for a very long time to come. If any of you doomsayers would like to put some money where your mouth is on that prediction, you know where to find me.

36 comments:

  1. Anonymous11:14 AM

    ouch, Howard.

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  2. Anonymous11:16 AM

    10% layoff 3 days after announcing the creation of a new VP position?

    I wonder how many positions you have to cut to offset a VP's salary/bonus/options...

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  3. Steve Bernard, the new VP/Advertising, is coming on board to increase revenues. He will pay for his salary by hundreds, perhaps thousands of times.
    You ought to be celebrating that announcement.

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  4. As someone at a newspaper that has felt this pain, I know what you and McClatchy are going through. You articulated it well.

    Good luck. Things will get better.

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  5. Anonymous12:37 PM

    Maybe this would all be easier for the folks feeling the bleeding edge of change, no matter what the reasons, if some folks at the top started sharing the pain. When will we see these reduction percentages being applied across the corporate suites?

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  6. Anonymous12:57 PM

    The onset of print's death continues to be accelerated from the inside, from the "decision-makers". Suicide. This is nothing new. It's still an affront to sensibilities, still very, very depressing, but it's not new. That's the disgusting part.

    I had unbelievably high hopes when McClatchy bought KR. That seems like 10 years ago. MNI went from being old KR to new KR in many ways. Not changing the KR mentality with management changes was a huge error.

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  7. Anonymous 3: We saw the shrinkage in corporate two years ago (and it continues). McClatchy operates 30 newspapers with a corporate staff about 35% smaller than KR had to operate its 31 newspapers.

    For example, KR had a VP/News, an assistant VP/News, a diversity executive and a recruiter; McClatchy has me.

    Anonymouse 4: What part of the economic recession or increased competition from online do you do suppose result from suicide decision making? Have we made management mistakes? Of course. Are they the reason we have to cut? Not hardly.

    What have you done (or been stopped from doing) that makes things better?

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  8. Anonymous1:13 PM

    Tell me why Mr. Pruitt accepted a large bonus this year. McClatchy managers know how tell of your "pain" but the reality is that continue to pull a fat bonus on top of your salary. Act as if you care.

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  9. Anonymous1:47 PM

    Why should the grunts in the field doing all the work (and making all the money McClatchy makes) suffer when the bloated Knight-Ridder-McClatchy bureau in Washington, D.C. is left untouched. Here's an operation staffed by stenographers rather than reporters that needs to haul its own load.

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  10. I have a much higher opinion of the McClatchy D.C. bureau than the previous poster. I believe they're not slated for any cuts. That's a small bit of good news on an awful day. And that's from someone may be on the "bleeding edge."

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  11. Anonymous2:15 PM

    I wish I could share the optimism, but it's a little difficult when things like this, it's hard not to "look over our shoulder" for more fallout.

    I just want to throw up knowing that I'm losing two good friends in a bureau at a time when metro reporters in the main newsroom -- some of whom have less seniority -- aren't facing buyouts or layoffs.

    But then again, nobody said this kind of thing has to be fair, huh?

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  12. This forum is a fine way for people to have a say in a reasonable dialogue, unlike the Bee's website with all the vitriol and narrow-minded comments. Many will say they saw the layoffs coming and I can't say McClatchy knew too and was trying to avoid the inevitable. So more of the people I knew from my tenure are now in bind. It's not a happy time for anyone and I'd bet this is not the end of the trauma.

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  13. Anonymous6:35 PM

    Middle management certainy did know this was coming -- we weren't told who was going to be culled, but we knew this annoucement was going to be made soon.

    And the Washington bureau isn't entirely composed of stenographers. There are political cheerleaders there, too.

    Industry troubles can't be blamed entirely for this turn of events. No senior corporate managers (no matter if they're selling widgets or world news) like to have their authority questioned, even if their logo says "Truth to Power." There are vanity projects -- entire departments -- that escaped the ax because they fulfilled a McClatchy MBO.

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  14. Anonymous7:01 PM

    I, too, want to know why Gary Pruitt accepted a generous bonus last year. And how about you, Howard? How much was your bonus? And did you visit any of the departments at the Bee today and answer their questions? They were asking for someone from corporate in the Bee newsroom today. Why weren't you there?

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  15. Anonymous8:57 PM

    What would Howard have said in the Bee newsroom that would have been any different from what Melanie or Cheryl had said?

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  16. Anonymous9:45 PM

    What I find troubling in these cuts (at least in Charlotte) are that NO upper management personnel were let go and seemingly no department heads in the newsroom. All of the cuts are front line employees or managers. These are the people doing the majority of the daily work.

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  17. Jim Richardson10:51 PM

    Howard --
    As an alumni of McClatchy whose wife is still there, I am deeply in grief at losing so many friends, as I know you are also. I appreciate your words here and they help.

    What I find lacking is a conversation about journalism. How will this impact the core mission of the newspapers to cover our communities, states, the nation and the world? It is fine to talk about strategy and revenues, and the economics of the news business. But that I expect from Gary Pruitt. I especially want to hear you of all people talk about journalism in this environment. How will reporters and editors do their jobs? What's your vision for journalism is this environment? It is fine to say the survivors who are left should focus on their jobs, but how? Doing what? What will not be covered? What beats are going by the boards? And I ask this as a member of the Sacramento community who depends on my newspaper to cover the community and the state. The Sacramento Bee has 151 years of credibility. What are you going to do with it as journalists? And I am happy to post my comment with my name.

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  18. Howard,

    I'm not sure I understand what you meant when you said, "The economic squeeze we’re in right now has nothing to do with...business mistakes."

    Can you elaborate? It seems to me that newspaper companies' failure to get online earlier and innovate was a catastrophic business mistake that has exacerbated the economic squeeze. Shouldn't we have created sites like Craigslist and Monster? And shouldn't our hyperlocal coverage been presented more effectively online? And shouldn't video play a more prominent role? And shouldn't our blogs be the freshest?

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  19. Theresa Johnson6:08 AM

    Journalists are supposed to care about facts. It is disingenous to state: "We’ve never done anything like this before. While other news companies went through round after round of broad, across-the-board layoffs, we relied principally on managed attrition to help cut expenses while revenues fell. (Some people also were let go when jobs were outsourced, though never in the newsrooms.)"

    As a former McClatchy manager (whose husband was laid off from his editing job at a McClatchy paper two months ago), I know very well that newsroom people are regularly "let go" at papers throughout the chain. The only thing new about yesterday's announcement was that McClatchy decided to issue a press release. The company always parses its words carefully regarding layoffs, but for the men and women who've been sent packing since the Knight-Ridder purchase, the impact is exactly the same.

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  20. Thanks for using your name, Theresa; I appreciate that.

    Your comment, though, is simply wrong. I obviously don't know your personal situation or what happened to your husband, but for you to suggest "The only thing new about yesterday's announcement was that McClatchy decided to issue a press release," is wildly at odds with the facts.

    Of course some people have lost jobs; some could be characterized as layoffs. But never in memory have had a situation remotely like this. We have tried, even in this context, to make decisions strategically, doing the best we can in a rotten situation to be fair and position the company for success.

    I'm sorry you feel the way you do. But you're wrong about our intentions, our motives and our honesty.

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  21. Theresa Johnson9:34 AM

    I only take issue with your contention that the company has never eliminated positions or outsourced jobs in its newsrooms. I appreciate that yesterday's announcement is more sweeping than anything that's happened before, and certainly more difficult because it is company-wide. But I contend it is not accurate to say "Some people also were let go when jobs were outsourced, though never in the newsrooms." That's all. Thanks for your commentary on all this-- I think highly of McClatchy,and realize it's a very tough time. I wish you and everyone in the company the best.

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  22. Anonymous10:00 AM

    It's a shame that corporate leadership rarely feels the pain they inflict on journalists who have remained dedicated to their profession despite poor newsroom management, low salaries and long hours.

    A great deal of the blame for our current situation belongs to the bean counters who long ago replaced the entreprenuetrs who built the industry. They don't know how to make money. Cutting costs is the only trick in their book.

    They will milk the industry until it dies, their parachute pops or they retire. At some point, journalists should band together and say "Off with their heads."

    No one believes they feel anyone's pain but their own.

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  23. Anonymous10:04 AM

    Howard,
    I appreciate your commentary and your willingness to be open and criticized.
    I feel like a couple questions have not been addressed.

    Our industry is definitely facing revenue declines, but isn't the real pressure to meet some Wall Street-inspired demand for profitability? Isn't a business with only a 5 percent profit margin still profitable? Why must our industry, and its stockholders, insist on trying to live up to a historic profit margin that is no longer possible?
    Given those unrealistic stockholder expectations, isn't the future of journalism in the hands of private owners more willing to accept smaller margins and not public ownership that puts profit margin ahead of journalistic responsibility?

    Second, do you feel the corporation did a credible job of handing out the pain fairly? In many companies, not just yours, it's the bigger papers with the bigger staffs that are losing money. Do you feel it's fair for the corporation to make everyone "feel the pain" of the cuts, or should the focus have been solely on the papers that are losing money?

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  24. Anonymous10:25 AM

    hey Howard, could you address this article? I'd appreciate it.

    http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003817289

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  25. Anonymous10:25 AM

    In not one of the stories on the McC layoffs have I seen any reaction from an affected employee, or any evidence of reportorial efforts to obtain such. Is this an example of the quality journalism McC keeps promising? It seems more like press release journalism of, by, and for VPs and other suits who aren't being laid off.

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  26. To: Anonymous 13 (I think it is)

    If you invest a dime and make 15 cents, you have a 50% profit margin. But you still can't pay back the quarter you owe me.

    Margin is a derivative of business operations, not the point of them. You can't spend margin. You spend free cash flow -- the amount left after you subtract expenses from income --, and that's what has declined so dramatically for everybody who depends on ad revenue.

    We are not trying to live up to a historic margin; there is no margin target for any of our operations.

    To your latter point, the "pain" was indeed apportioned exactly as you suggest it should be. As you can see from the press coverage, some papers lost a much higher percentage of total staff than others. It's not all about how much money they are making (although of course that's a factor) but also a wide range of other strategic considerations, like competitive circumstance, historic performance, expected future prospects, etc. etc. It's a complex matrix, and we don't always get it right, but the intent (and, in my view, the overall results) is to be smart and strategic.

    WARNING: This is all math done by a newsroom person; I could have some of it wrong.

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  27. Anonymous 15: This seems like a valid criticism of the coverage to me.

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  28. Anonymous11:00 AM

    Howard, have you answered Jim Richardson's question about how we're still supposed to do the quality journalism McClatchy is known for in an era of layoffs and steadily decreasing resources?

    Leadership in Sac consistently brushes our concerns aside as if we're naive to even ask. But in some ways, losing reporters while creating new local sections is the journalistic equivalent of lowering taxes while launching into a war of choice.

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  29. I haven't answered Jim's comments, but I intend to. I'm working on a new post that addresses that.

    P.S. How come some of you don't make up names? I can't keep this many Anonymouses separate ...

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  30. Anonymous12:03 PM

    Thank you.

    And shouldn't that be Anonymice?

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  31. Anonymous2:32 PM

    Please stop avoiding the question about the corporate bonus program. Your credibility is on the line here.

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  32. Whenever somone gets fired they panic...I know. But then its just time to get another $100K job, there are thousands of these jobs posted (literally) so dont be shy.

    http://www.realmatch.com
    http://www.monster.com
    http://www.simplyhired.com

    The chinese word for crisis also means opportunity!

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  33. Anonymous6:57 PM

    Please answer the question about corporate bonuses. Do Mcclatchy execs like Pruitt intend to give up their bonus this year?

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  34. Did the State Workers' Union protest have any lasting affects? That seemed a battle not worth fighting over information found elsewhere.

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  35. Anonymous7:45 PM

    Well, let's see...

    The McClatchy buyout of KNR -- known on Wall Street as a "leveraged buyout," "leverage" meaning "debt" as the cornerstone -of the acquisition -- was so ill-founded as to rank as one of the dumbest corporate moves in the history of American journalism.

    And of course, Howard, people are writing anonymously, because they fear for their jobs and worry about their families.

    But to the firings, which is what they were: The McClatchy paper I read buried the story at the bottom of the business page, with no real specifics. I imagine others did as well.

    Who Is this $4.6 million CEO, anyway? A libel lawyer who somehow curried his way to favor in a business environment, and the one who engineered the buyout that led to the downfall and hundreds of families losing their livelihoods.

    Successful corporations are the ones that prepare for business downturns, which are inevitable. This company continues to pander to Wall Street but still wastes millions of dollars annually, and everybody knows it.

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  36. Anonymous5:33 AM

    I am a victim of the 6/16 layoff and I had just joined the company 3 months ago. I moved my whole life to this city for this job. I signed a 12 month lease agreement which I can't get out of without paying $3,000, I worked my ass off, even on weekends because I like to work ahead and also because I'm just a dedicated, hard worker period. I didn't see this coming, not at all. You can't even imagine my shock or what this does to me financially. And once it happened, people at the newpaper walk around you as if you are chemically toxic, and management just wants you out. It was chilling, cold, and ruthless. HR is all smiles, fake ones, giving you the facts like some rehersed mime. Again, they too just want you gone. Last in, first out...was repeated to me a hundred times. And now I discover that my promised 3 months of health insurance was cancelled June 1 and McClatchy is taking its time to transfer coverage over to cobra leaving us unisured for weeks because of their laziness----after all, who cares about the people who were thrown out so the company could save 70 million? Nobody. I've never been fired or suffered a layoff before, but it feels like a black cloud, a black ball, a black mark. On interviews you're trying to explain to potential employers why you're not employed and why you were selected----it's embarrassing and it's a negative note when all interviewing should be resoundingly positive. While all of you on this blog discuss the financials and Howard defends his company, no one really talks about the personal impact of this layoff on their life. Let me tell you, first hand, it's damn hard. I have never had a victim mentality, but in this----well, it's like walking down a sidewalk and being hit by a stray bullet you never saw it coming. And there's people walking all around but no one helps. Why? They feel so damn lucky the bullet didn't hit them. At least, Howard, you could help the 1,400 departed by motivating your McClatchy HR to reinstate our health coverage now..today 7/9/08. And at least HR could make 1,400 phone calls to us to let us know it's been done. Then you can return to your stock watch and blogs.

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