Business

Herald-Leader reduces work force by 11%

The Lexington Herald-Leader is reducing its work force by 11 percent with 22 layoffs, 13 buyouts and the elimination of some open positions and temporary work, the company said Wednesday.

The reduction — the second in three months — followed Tuesday's announcement by the newspaper's owner, The McClatchy Co., that it will slice its stock dividend in half and eliminate 1,150 jobs, or 10 percent of its workforce, to cope with falling advertising revenues, Internet competition and a $2 billion-plus debt load.

An earlier workforce reduction this year at the Herald-Leader cut 32 jobs and left the company with 376 employees in August.

"We believed the cuts made in May and June would be sufficient to see us through the sharp revenue declines that have beset the newspaper industry and other traditional media," Publisher Timothy M. Kelly said Wednesday. "Unfortunately, we've seen that more is required."

The affected workers were members of the newspaper's news, operations, technology, advertising, circulation and interactive divisions.

They will receive severance pay, a continuation of some benefits and outplacement services.

Kelly said "a number of other changes" in the Herald-Leader are also planned, including cuts in news space and a price increase for street purchases of the Sunday paper.

Nine of those affected were in the Herald-Leader newsroom, where 86 employees are represented by the Lexington Newspaper Guild, a unit of the Communications Workers of America, Local 3372.

In a statement, the Guild said Herald-Leader employees "have endured a wage freeze, seen their health insurance premiums skyrocket and had their short-term disability benefits gutted by 40 percent" this year while "McClatchy's corporate headquarters has been spared the brunt of cost cutting."

In 2007, McClatchy awarded its CEO, Gary Pruitt, "an $800,000 performance bonus as the company's stock tanked," the union said. "Even when considering the wage freeze implemented for executives, corporate compensation is still excessive." McClatchy's stock closed Wednesday at $3.44, down from a high of $75.47 in March 2005.

McClatchy is based in Sacramento, Calif. It owns 30 daily newspapers and is the nation's second-largest chain. It is still paying off more than $2 billion in debt from the 2006 purchase of Knight Ridder, which owned the Herald-Leader.

Moody's Investors Service downgraded its rating on McClatchy's debt Wednesday, citing "ongoing significant declines in advertising revenue."

"McClatchy is an enlightened owner," said John S. Carroll, a former editor of the Herald-Leader and the Los Angeles Times, who lives in Lexington. "They really do try to do the right thing, but they are trapped by debt. The (job) cuts wouldn't be as bad if they hadn't taken on too much debt."

When they make cuts, newspaper companies generally say they will be "smaller, but smarter — and that can be done up to a point," Carroll said. "When you get cuts this deep, it can't help but affect the quality and scope of the paper."

Most other Kentucky newspapers are in smaller towns and have been less affected by Internet competition than the Herald-Leader or the Courier-Journal in Louisville, said Al Cross, director of the Institute for Rural Journalism and Community Issues at the University of Kentucky.

Rural papers cover smaller markets that are often ignored by other media, and they have not lost the classified advertising from their markets to Internet competitors, Cross said.

"They have a local franchise that no one else is invading," he said. "They can be more local than anyone else can be."

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