Bee cheaper

Merry Christmas, worker bees. The McClatchy Co. is making money, thanks to deep cutbacks and layoffs and a marginally improved economy. This month, honchos at McClatchy, The Sacramento Bee’s parent company, announced they are lifting a companywide wage freeze. And CEO Gary Pruitt boasted last week that all of the company’s daily newspapers are now profitable.

But all is not necessarily calm and bright at 21st and Q streets. The Bee is beginning a new round of labor negotiations with reporters and other newsroom employees. Their contract expires at the end of December. The Bee management team has put forward what it calls a “tough proposal” to further cut costs at the paper.

Employees are particularly concerned about provisions that would cut severance pay for laid-off workers. Currently, the maximum severance pay allowed is 40 weeks. This proposal would cut that to 26 weeks. Little more than a year ago, major layoffs were unheard of at the Bee. Today, “Not only has McClatchy abandoned its long held position that it doesn’t lay people off. Now they want to make it cheaper to do it,” said Ed Fletcher, a reporter and officer for The Sacramento Bee Newspaper Guild in a statement to his co-workers.

Guild representatives say the new severance rules would make it $10,000-$20,000 cheaper to lay off some veteran employees. Although Bee workers that SN&R spoke with are hopeful that major layoffs are, for now, in the past, the severance proposal has been troubling news.

“It takes months to find a new job, and so that severance, that cushion really makes a difference,” said Carl Hall, with the California Media Workers Guild, based in San Francisco. Hall added that the severance rules offer some protection against layoffs. The guild is worried that the company will be quicker to lay people off if it’s cheaper to do so.

Among the other concessions that the company is seeking are the unlimited use of part-time and freelance workers, and the ability to assign Bee employees to do work for other McClatchy newspapers and Web sites.

For its part, the Bee guild is trying to roll back a 6 percent pay cut that was imposed in the spring, and to restore the company’s contributions to employee 401(k) plans.

The new demands come at a time when McClatchy CEO Gary Pruitt says the company’s revenue picture is actually improving, sort of.

McClatchy is based in Sacramento, but owns 30 daily newspapers around the country. The company has been staggering under a triple burden: the worst economic recession in decades; the long-term decline of newspaper revenue, thanks to the rise of new digital media; and the $2 billion debt McClatchy acquired with the purchase of the Knight Ridder newspaper chain in 2006. With the purchase, McClatchy momentarily became the second largest newspaper company in the nation. Then the bottom fell out of the economy and the company’s stock price plunged an astounding 98 percent.

But last week, CEO Gary Pruitt announced that McClatchy advertising revenue was “finally, finally improving.” Specifically, for the fourth quarter, revenue is going to be down 20 to 25 percent compared to the same time last year, which Pruitt views as “a clear improving revenue trend,” compared to the year’s second quarter, which saw a 30 percent drop, and the third quarter, with its 28 percent drop in advertising sales.

When asked whether he shared Pruitt’s upbeat assessment, Fletcher replied:

“After seeing so many of our friends and co-workers let go because of layoffs, after having 6 percent of our paychecks taken from us, after having our pensions frozen and 401(k) retirement accounts take a hit, we welcome any reason for optimism that McClatchy CEO Gary Pruitt can give us.”

It’s possible that pay raises could be back on the table. Individual papers are free to resume raises some time next year, but the issue may be addressed in the current contract negotiations. “There is no framework at this time,” said Bee spokeswoman Pam Dinsmore. She also said that company representatives would not discuss the ongoing labor negotiations.

Like most daily newspapers, the Bee is suffering from steep losses in ad revenue and print readership.

The Bee’s daily paid readership dropped by a dramatic 14 percent this year, from 253,000 to 218,000. According to Dinsmore, that’s partly because the company has trimmed its delivery territory. “The footprint is smaller,” she explained. The paper also raised subscription prices earlier this year and jacked the street price of the paper from 50 cents to 75 cents.

While the print paper is in decline (smaller distribution area, smaller page size), the Bee’s reach is actually greater than ever.

The Bee measures its total audience, which includes online viewers, at 1,276,300, which is up almost 2 percent from a year ago. Of course, much of that new readership is not paying for content.

And despite Pruitt’s cheerful report last week, McClatchy still plans to cut costs companywide by more than 20 percent in 2010. According to Editor & Publisher magazine (which, in another sign of the times, went out of business last week), McClatchy wants to outsource more of its production and share more editorial content between newspapers.

The Bee’s new contract proposal, with its emphasis on freelance, shared and nonunion work appears to be a component of that cost-cutting plan. Union officials are still trying to figure out all of the implications of the management proposals. But last week, the guild sent a letter to Bee publisher Cheryl Dell, accompanied with a petition from 135 Bee employees, condemning the cut in severance pay.

“The declining industry and crippling economic climate forced the company to take unprecedented steps to weather the storm. We get that,” the letter reads.

“What we don’t get is that just as the economy and the company show signs of recovering, the company wants to make it easier to lay off the longtime employees who helped it weather the monsoon.”

Of course, there’s a big difference between riding out some bad weather and completely remaking a newspaper to move into the post-print era—which is what most observers say has to happen for newspapers now, the Bee included.

“There has been a colossal failure of leadership in this industry,” said Hall, who characterized the entire newspaper business as suffering from “a slow bleed punctuated by periodic arterial spurts.”

He’s not picking on McClatchy in particular, he says, which he notes in some ways is ahead of other newspaper chains. But he added, “I’m waiting to be convinced that McClatchy is ready to make the transition to a more prosperous future.”