Tuesday, February 24, 2009

Hearst seeks 'significant' cost savings

Perhaps it is just a bargaining tactic with the unions, but Hearst Corp. issued a statement this afternoon saying that if it couldn't get "significant" cost savings at the Chronicle, the paper would be put up for sale and, if no buyer comes forward, the paper would be closed.

Hearst is in the process of closing its Seattle Post-Intelligencer, which has lost money since 2000, and the company has lost millions at the Chronicle.

The company did not specify the size of the staff reductions or the nature of the other cost-savings measures it has in mind.

Here's the statement:
    NEW YORK, February 24, 2009 — Hearst Corporation announced today that its San Francisco Chronicle newspaper is undertaking critical cost-saving measures including a significant reduction in the number of its unionized and nonunion employees. If these savings cannot be accomplished within weeks, Hearst said, the Company will be forced to sell or close the newspaper.

    Hearst said that the Chronicle lost more than $50 million last year and that this year’s losses to date are worse. The Chronicle has had major losses each year since 2001.

    “Because of the sea change newspapers everywhere are undergoing and these dire economic times, it is essential that our management and the local union leadership work together to implement the changes necessary to bring the cost of producing the Chronicle into line with available revenue,” said Frank A. Bennack, Jr., vice chairman and chief executive officer, Hearst Corporation, and Steven R. Swartz, president of Hearst Newspapers. They added, “Given the losses the Chronicle continues to sustain, the time to implement these changes cannot be long. These changes are designed to give the Chronicle the best possible chance to survive and continue to serve the people of the Bay Area with distinction, as it has since 1865. Survival is the outcome we all want to achieve. But without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down.”

    Hearst noted that these cost reductions are part of a broad effort to restore the Chronicle to financial health. The Chronicle has been asking its readers to pay more for the product through home delivery and single-copy price increases. In June, the Chronicle expects to begin printing on new presses owned and operated by Transcontinental Inc., which will give the Chronicle industry-leading color reproduction capabilities.
At about the same time Hearst issued that statement, the Chron posted a story at SFGate saying management will immediately seek discussions with the Northern California Media Workers Guild, Local 39521, and the International Brotherhood of Teamsters, Local 853, which represent the majority of workers at the Chronicle.

The article also notes that the expense of producing and delivering the newspaper to a seven-day subscriber is more than double the $7.75 weekly cost to subscribe.

Publisher Frank Vega said the challenge the Chronicle faces is bringing its revenue into balance with expenses so that the paper can at least break even.

UPDATE, 4 P.M.: Here's the memo that was sent to Chron employees today:
    From Frank Vega, Chairman & Publisher
    February 24, 2009

    Dear Fellow Employees:

    The rapidly declining economy, coupled with severely declining advertising revenues, is forcing nearly every newspaper company to re-think how it conducts business while continuing to serve its respective communities.

    Despite all of our best efforts as an organization, The Chronicle continues to show staggering losses each week. Recent staff and expense reductions have not stemmed these losses, which are only worsening in the present economy. In response to our financial picture and the bleak economic forecast for the foreseeable future, our management team has begun a series of cost-saving initiatives designed to alleviate those losses.

    First and foremost of these cost savings will be a significant reduction in force across all areas of our operation affecting both represented and non-represented employees. We will shortly begin discussions with union leadership on proposals. Our current situation dictates that we accomplish these cost savings quickly. Business as usual is no longer an option.

    If we are unable to accomplish these reductions in the immediate future, Hearst Corporation, which owns The Chronicle, has informed us that it will offer the newspaper for sale or close it altogether. We know these are painful times for everyone and we face difficult choices. We share in the sincere hope that we will reach agreement with all parties involved on the concessions needed to continue to operate and provide the Bay Area with a quality newspaper.

    I will update you throughout this process. Thank you for your support and good work, particularly in economic times that are difficult for all of us.

6 comments:

Anonymous said...

All newspapers should go online exclusively or sell papers only. They can't do both. Take a gamble and hope it works.

Anonymous said...

Sounds like a "Dean" plan to me.
Why would the Chron go into contract with Transcon to build a new facility only to have the Chron sell or fold. They want cuts and they want it now. Sounds like a bluff to me but with the economy what it is we will never know.

The Chron has been taking a major hit for years why now could it be because now the economy is in the I.C.U. and the hits just keep on comm'in and they have a contract with the new "print shop"

Anonymous said...

In case you do not remember, the Chronicle posted an Associated Press item about a boat crashing on the Bay Bridge, hours after it had happened. This means there's no more local reporting, the paper is now simply a conduit for "canned" news produced elsewhere.

Anonymous said...

Chronicle closing? Nancy Pelosi is losing a mouthpiece! Surprised money for Hearst wasn't in the stimulus bill like that mouse she's trying to save.

Anonymous said...

Creative destructionists rejoice!

Anonymous said...

Posting an AP story on a Web site early into a breaking news story is a common practice. It doesn't mean that local reporters aren't out getting the story, just that the Web team is committed to getting as much information to readers as quickly as possible...