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McClatchy planning to eliminate 1,400 jobs

Move will save $70m annually

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Bloomberg News / June 17, 2008

NEW YORK - McClatchy Co., owner of the Miami Herald and 29 other daily newspapers, will cut about 1,400 jobs, or 10 percent of its workforce, to save $70 million annually after a record drop in industrywide advertising sales.

The reductions are part of a plan to cut costs as much as $100 million in the next four quarters, Sacramento-based McClatchy said yesterday. The Miami Herald plans to eliminate 250 positions, or 17 percent of its staff, and the Charlotte Observer will cut 123 positions, or 11 percent, the newspapers reported.

Tribune Co. and The New York Times Co., which owns The Boston Globe, have also reduced staff to save money as companies that historically advertised in newspapers shift their spending to the Internet. Newspaper print ad sales slumped 14 percent in the first quarter, the Newspaper Association of America said Friday.

"This is a permanent downsizing of newspaper companies," said Ken Doctor, a media analyst at Outsell Inc. in Burlingame, Calif. "They're not using the word 'permanent,' but it's a recognition that they will get much smaller as they try to find their way in a digital world."

Ad sales at McClatchy, which also publishes the Sacramento Bee, fell 17 percent in May after a 15 percent decline in the first quarter. The company was hurt by the housing market slump in California and Florida, where it owns eight daily newspapers. Real estate and automotive classifieds both fell about 38 percent in May, the company said in a separate statement.

The job cuts will come through attrition, buyouts, and firings, McClatchy said.

McClatchy shares have declined 36 percent this year.

The stock has lost 84 percent of its value since the company revealed plans in March 2006 to acquire Knight Ridder Inc., the second-largest US newspaper chain at the time, for $4.1 billion. McClatchy trades at 9 times estimated 2008 earnings versus 18 times at The New York Times and 6.5 times at Gannett Co., the largest US newspaper publisher.

Tribune plans job reductions after disclosing this month it will eliminate about 500 pages a week from its newspapers, including the Los Angeles Times and Chicago Tribune. The New York Times cut 100 newsroom positions in May through voluntary buyouts and some firings, while The Washington Post Co. bought out about 230 employees at its newspaper unit this year, said a company spokeswoman.

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