Even for an industry awash in bad news, the US newspaper business went through one of its most severe retrenchments in recent memory last week.
Half a dozen newspapers said they would slash payrolls, one said it would outsource all its printing, and Tribune Co, one of the biggest publishers in the country, said it might sell its iconic headquarters tower in Chicago and the building that houses the Los Angeles Times.
The increasingly rapid and broad decline in the newspaper business in recent months has surprised even the most pessimistic financial analysts, many of whom say it’s too hard to tell how far the slump will go.
“They’re in survival mode now,” said Mike Simonton, a media analyst at Fitch Ratings, a credit analysis agency.
“We had very grim expectations for the sector,” Simonton said and publishers have either met or surpassed his estimates for how bad the results would be.
Last week alone, deep staff cuts were announced at the Hartford Courant and the Baltimore Sun — two Tribune papers — as well as at the Palm Beach Post and the Daytona Beach-Journal in Florida, while the Detroit News and Detroit Free Press said they hoped to reduce the head count in their joint operations by 7 percent through buyouts. The Boston Herald said up to 160 employees would be laid off as it outsourced its printing operations, and in a memo explaining the terms of its job security pledge, the Star-Ledger in Newark, New Jersey, said it is operating in the red. The week before, McClatchy Co, which owns the Sacramento Bee and other papers, said companywide staff cuts of 10 percent were coming.
Tribune, meanwhile, told its employees on Wednesday it hoped to wring more value out of its “underutilized” real estate in Chicago and Los Angeles, extending an asset-selling program Tribune is pursuing to service a US$13 billion debt load, much of which it took on from going private.
Tribune has already reached a deal to sell one of its largest newspapers, Long Island, New York-based Newsday, but ran into delays early last month in liquidating Wrigley Field, where the Chicago Cubs baseball team plays, when negotiations for the stadium’s purchase by a state agency broke down over financing. Tribune is also moving to sell the Cubs.
Tribune has enough money to meet its debt requirements this year, bond analysts have said, but it must make headway on asset sales in order to meet its obligations next year.
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