Soft economy speeds newspaper decline, job cuts

The newspaper industry's downward spiral is accelerating as the weak U.S. economy depresses already-tumbling advertising revenue and forces more rounds of job cuts and other trims.

The developments of recent weeks come in a season when newspapers normally can anticipate boosts from upcoming holiday promotions and ads for new car models.

The decline's severity makes it even more difficult for newspapers to hang on while they figure out how to generate enough revenue from growing Internet audiences to make up for lost print ad sales.

McClatchy Co.'s Sacramento Bee and Fresno Bee offered voluntary buyouts to a majority of their full-time employees Monday, a week after The Modesto Bee made a similar offer. McClatchy also will freeze pay across the company for a year starting Labor Day, while Gannett Co. announced in mid-August it was cutting 1,000 jobs, including 600 layoffs.

Meanwhile, The San Diego Union-Tribune announced buyouts Thursday that aim to cut its staff by more than 75 positions, including some 30 in the newsroom. The offer comes a month after its owner, Copley Press Inc., said it was exploring a sale. Earlier this year, the paper cut 117 employees, or 10%, through buyouts and layoffs.

The St. Louis Post-Dispatch said Thursday that it cut another 18 jobs, while Chicago Sun-Times managers and union officials met Tuesday about additional cuts — on top of 29 reductions through layoffs and buyouts announced in January. And in mid-August, Tribune Co.'s The Chicago Tribune carried out previously announced layoffs.

Newspaper executives are cutting operating costs even further because advertising revenue has fallen faster than anyone anticipated.

Retailers are reducing back-to-school promotions, while employers are placing fewer help wanted ads given the weak economy. Foreclosures and other troubles in real estate have meant fewer classified ads for open houses. Auto dealers having difficulty selling cars lack the funds to buy large ads.

Few people expect newspapers to make a quick recovery. At best, they hope the plunge won't accelerate even more before the economy starts picking up again.

"There's no real light at the end of the tunnel for newspapers," said Mike Simonton, a media analyst at Fitch Ratings, a credit analysis agency. "It's not clear where the revenues are going to bottom out."

Although newspapers have made drastic reductions in recent years, Simonton said, "the cuts that they've taken have not been able to compensate for the decline in revenue. As the revenue picture becomes more bleak, those cost actions have accelerated."

Beyond job cuts, newspapers are consolidating operations.

The Gainesville Sun and Ocala Star-Banner in Florida, both owned by The New York Times Co., plan to merge editing, design and other tasks but continue to publish separate papers.

And on Friday, South Florida's three major daily newspapers said they will exchange basic stories during a three-month trial as each struggles to maintain coverage after cutting their newsroom staffs. The three are separately owned —The Miami Herald by McClatchy, the South Florida Sun-Sentinel by Tribune Co. and The Palm Beach Post by Cox Enterprises Inc.

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