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Gannett laying off 700 more workers amid ad slump
Question of the Day
SAN FRANCISCO (AP) - Newspaper publisher Gannett Co. is laying off 700 workers, or 2 percent of its work force, in the latest cutback triggered by a relentless advertising slump.
The layoffs Tuesday affected most of Gannett’s 82 daily newspapers in the U.S., including The Indianapolis Star and The Courier-Journal of Louisville, Ky., but not USA Today, Gannett’s largest. Gannett would not say how many of the cuts were in the newsroom.
The cuts marked the company’s largest round of layoffs in two years and the latest in a string of austerity measures imposed since print advertising, its main source of revenue, began to fall in 2006.
Like most newspaper publishers, Gannett has been hurt by technological and cultural shifts, which have driven readers and advertisers to the Internet. Newspapers have been attracting more online advertisers, but not enough to offset erosion in their print editions, where ad rates typically have been 10 times higher than on the Web.
Those challenges were compounded by the Great Recession and then a weak recovery. Although ad revenue has been growing again on the Web, radio, TV and even magazines, the biggest U.S. newspapers are still suffering declines.
Gannett’s annual revenue has fallen more than $2 billion, or nearly 30 percent, since 2006.
Gannett has reduced its work force by 20,000 employees during the past five years through layoffs, attrition and other actions, such as the sale of a Hawaii newspaper. Before the latest cuts, it had 32,600 employees.
Belt tightening helped Gannett boost its earnings by 66 percent last year. The performance resulted in a $1.75 million bonus for Gannett CEO Craig Dubow, a 21 percent increase from $1.45 million in 2009.
Although cost-cutting has allowed Gannett to remain profitable, it hasn’t prevented a sharp drop in Gannett’s market value. The company’s stock has fallen about 75 percent since the end of 2005. It increased 40 cents to close Tuesday at $14.16.
Gannett’s newspaper ad revenue fell 7 percent in the first three months of 2011 compared with a year earlier. That weakness persisted in the current quarter, which ends this Sunday.
“The economic recovery is not happening as quickly or favorably as we had hoped and continues to impact our U.S. community media organizations,” Bob Dickey, president of Gannett’s U.S. community publishing division, wrote in a memo to employees Tuesday.
Without providing details, Dickey wrote that ad revenue had been hurt by high unemployment, sagging home sales and, more recently, softening demand for automobiles.
Gannett, which is based in McLean, Va., will announce its second-quarter results next month.
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