Ad drop prompts Tribune cutbacks
As many as 500 jobs targeted by company
By Phil Rosenthal Tribune media columnist
February 14, 2008
Stressing he still believes Tribune Co. cannot cut its way to prosperity but citing the impact of "a weak economy and significant declines in advertising volume at our newspapers," Chairman and Chief Executive Sam Zell announced cutbacks at the flagship Chicago Tribune and its sister papers Wednesday.
Between those and previously reported reductions at Tribune Co.'s corporate offices, sources said these cuts were likely to eliminate at least 400 to 500 positions companywide, or about 2 percent of its workforce. Zell said Tribune Co.'s broadcasting and interactive divisions, both of which have new leadership as of this week, remain under examination.Chicago Tribune Publisher Scott Smith told staff that the paper looks to eliminate about 100 jobs in nearly all areas, or about 3.5 percent of its roster, by the end of March through buyouts, layoffs, attrition and closing open positions.
"It was a rough year last year, but I would say business got a whole lot tougher at year end and so far this year," Smith said in an interview. "If we thought it was a one- or two-month blip in business conditions, we would make sure we weren't overreacting. But there are no signs of near-term improvement in business. That's why we made the decisions now."Zell, who led the $8.2 billion transaction that took Tribune Co. private late last year, wrote to staff that these reductions were necessary because of "the reality of our significant debt levels and financial covenant obligations." He expected most of the affected positions will be in support-service areas, such as finance, human resources and technology."I can't turn this ship from its course of the past 10 years within just a few months," Zell said in his memo. "Further, while I will do everything in my power to drive, pull and drag this company forward, I can't promise we won't see additional position eliminations in the future if we continue at our current rate of cash-flow decline. But, make no mistake. This is not my ultimate strategy."It will be up to the management of individual Tribune Co. papers how reductions are achieved. The Los Angeles Times aims to cut 100 to 150 jobs, including 40 to 50 in the newsroom, while the Baltimore Sun and Hartford Courant each look to get rid of 45 jobs. A source said New York's Newsday intends to eliminate 70 to 80 jobs.The effect on Tribune Co. papers in Florida (Orlando Sentinel and South Florida Sun-Sentinel), Pennsylvania (The Morning Call) and Virginia (Daily Press) was not immediately known.
The Daily Press last month said it was eliminating 14 positions after reducing its staff by close to 100 in recent years.Smith said total revenue for the Chicago Tribune Media Group was down 5 percent in January, and ad revenue was down double digits, continuing a trend from last year, while cash flow decreased beyond the 8 percent drop recorded in 2007.An incentive for employees to volunteer for buyouts is the indication the company will reduce its severance packages next year, but not everyone who volunteers for a buyout will be accepted. Exit packages, voluntary or not, will be paid through the overfunded part of Tribune Co. employees' cash-balance pension plan, which the company estimates has $300 million more than it needs.----------
philrosenthal@tribune.com
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