“I am sad for my former colleagues, and I worry about the quality of the newspaper that I still read every day,” he writes. “I am also angry that hard-working journalists must bear the brunt of McClatchy’s debt and business decisions.”

Among the many Facebook comments he posts, surely from a reporter: “Who’ll save my ass now?”

——– Original Message ——–
Subject: Weekly meeting today…
Date: Tue, 7 Jun 2011 09:33:38 -0400
From: John Drescher <john.drescher@newsobserver.com>
To: allnews@nando.com

at 2 pm in the McDaniels conference room.

And, from The N&O’s Afternoon Update today, why copy editors are important:

(Emphasis ours.)

***

Managers at the The News & Observer in Raleigh told about 25 copy editors and page designers on Monday that their jobs were being transferred to a new production hub at the Charlotte Observer. The move is to start over the summer and be fully in effect by mid-September.

The Charlotte production center will produce The N&O and its 10 community papers, including The Chapel Hill News, The Cary News and The Herald in Smithfield. The Charlotte copy desk already prepares The Herald of nearby Rock Hill, S.C.

Look for McClatchy’s South Carolina papers, including The State in Columbia and the Sun News in Myrtle Beach, to eventually be added to the Charlotte production hub, though their managers are waging the same futile fight against it that The N&O’s management lost.

N&O employees will be able to move to positions in Charlotte and get a $5,000 relocation stipend plus one week’s pay per year worked with The N&O, up to 13 weeks.

Some Raleigh copy desk managers will lose their supervisory duties and take pay cuts as Charlotte takes over, and others at the top of their pay ranges may see their pay cut or frozen, a company memo says. Pay cuts are not to exceed 10 percent and would come at the end of the year.

Those who don’t want to move will get the standard severance package of two week’s pay per year worked up to 26 weeks and COBRA insurance assistance. All Charlotte copy desk employees are being offered buyouts with the same deal.

Many of the copy editors and designers now in Raleigh are veteran workers (because most of the young workers have been laid off already) with ties to the community and are not expected to move. This will allow McClatchy to hire new and younger designers and copy editors for less money or make do with fewer.

The move is another attempt to bail water instead of repairing the ship. McClatchy is incrementally merging the Charlotte and Raleigh papers, having already merged the Sports and Features  departments and the Capital bureau in Raleigh, but hasn’t shown what it will take to make the big, final, inevitable move.

Most positions are being physically moved toward Charlotte instead of to the state capital because the Charlotte office building inherited when McClatchy bought the paper from Knight Ridder is vastly superior to the dingy offices of The N&O in Raleigh. And because Charlotte managers continuously prevail in negotiations with N&O brass.

***

The Charlotte Observer follows The News & Observer and others last week with its announcement this week of 26 positions being cut, as the Lexington Herald-Leader announces the elimination of 15 jobs, the Associated Press says.

Charlotte will also freeze 25 vacant positions. Four positions will be lost from Charlotte’s newsroom.

Lexington’s lost jobs include four now vacant.

McClatchy newspapers announced the elimination of about 100 positions in Raleigh, Miami, Kansas City and Bellingham, Wash., last week following a first quarter report that showed a $1.96 million loss as ad revenue plunged 11 percent year-over-year.

“The Chicago Sun-Times — home of the much-loved and always popular Roger Ebert,” Business Insider explains — “led the list with a jump of 48.41 percent between March 2010 to March 2011.”

McClatchy’s Fort Worth Star-Telegram is second on the list with a 12.79 percent change in circulation from ‘10 to ‘11. The Miami Herald weighs in at 15th, where the growth is a meager 3.16 percent, but is growth nevertheless, and across the peninsula, the Bradenton Herald was 20th with a 1.6 percent uptick in circulation.

At 16, with a 3.12 percent increase, is the San Jose Mercury News a former Knight Ridder newspaper that McClatchy acquired in 2006 but sold off (to Media News) because it had no growth potential.

Jobs will be eliminated through a combination of buyouts, layoffs and open positions left vacant. At The N&O, reportedly, a 50-year veteran of the Business office is among those being laid off.

The company is also closing two suburban papers in Kansas City and one in Missouri.

And, the company announced Tuesday that its employee stock purchase program is ending because of lack of participation. Fewer than 5 percent of eligible employees are buying stock, which is available at a discounted price through the program, Heather Fagundes, vice president, Human Resources, said in a memo to employees.

McClatchy stock closed at $2.83 Tuesday. It once sold for $77 and, at one point, for as little as 35 cents a share.

McClatchy announced last month that it  lost $1.96 million in the first quarter of the year on an 11 percent drop in advertising revenue.

Elsewhere, Challenger, Gray & Christmas said today that U.S. employers had announced plans to cut 12 percent fewer jobs in April than they had in March.

Media Jobs Daily reminds us that the publisher lost $2 million in the first quarter of 2010, too. And, as Rachel Kaufman writes: “Doesn’t look good.”

As the company’s slump deepens, the Associated Press says part of the problem is that seven of McClatchy’s newspapers are in California and Florida, two of the regions where the downturn in housing prices has been sharp. And, of course, the advertising shift from print to the Internet also continues to hurt.

The 1Q report actually shows that McClatchy’s digital ad revenues grew by  2.2 percent compared to the first of 2010, and were 20.1 percent of  the quarter’s total advertising revenues, up from 17.5 percent in the first three months of 2010.

Overall revenues for the quarter were $303.7 million, down 9.5 percent from 1Q 2010. Advertising revenues were $225.1 million, and circulation revenues were $66.2 million, falling 5 percent.

“The slowing in advertising revenue that we previously reported for January continued through the first quarter,” CEO Gary Pruitt explained. “National advertising continued to be one of the largest areas of decline, falling by 29.3 percent in the first quarter of 2011 compared to 2010. In addition, the shifting of the Easter holiday to a later date in April 2011 compared to 2010 had a negative impact on retail advertising in March. As a result, advertising in March was down 12.7 percent, pulling down the overall ad revenues in the quarter to an 11 percent decline.”

Here’s a good idea from Pruitt, who took home $3.71 million last year, including a $1.85 million bonus: “In response to this year’s weak start in advertising, we have increased our ad sales efforts companywide … .”

On the other hand, he also says much of the lost revenue is not coming back. “I would say that we need to recognize that a big piece of that [a structural shift to digital marketing] is structural and permanent, and therefore we need to make sure that our expense structure is reflecting that and is permanently reduced as well.”

McClatchy eliminated nearly 540 full-time jobs in the first quarter of 2011, a nearly 9 percent reduction from the same time last year, the Associated Press said. The company has also consolidated computer systems and printing among newspapers and hired contractors in place of staff.

The newspaper publisher’s “major managed services contract” is with Atex,  an integrated content management and advertising solutions firm headquartered in Reading, Berkshire, in the United Kingdom.

The News & Observer in Raleigh, N.C., will be the first of McClatchy’s 30 daily newspapers to use the hosted software in a project to be completed this fall, News & Tech said.

McClatchy staffers will eventually manage all order entry, financial accounting, customer relationship management, ad layout and classified pagination from a single database.

Adoption of the new system is to standardize advertising workflows and establish common processes across newspapers and other publications to reduce operating costs, streamline advertising processes, and enhance revenue potential with targeted print and digital ad packages, the companies say in a news release.

The  McClatchy system will be hosted at an Atex SAS-70 approved data center to lower costs and consolidate IT infrastructure, the release says.

The publisher also “warned that ad spending appears to be falling at an even quicker pace than before,” the Associated Press said. Ad revenue dropped 10 percent in January from the same month a year ago, following a 7 percent decline for the fourth quarter and a 6 percent decline in the third.

“Although McClatchy’s digital ad revenue climbed 5 percent in the fourth quarter, it was not enough to offset a 9 percent decline on the print side,” the AP said.

“Meanwhile, revenue from newsstand sales and subscriptions fell 3 percent. That made for an overall decline of 6 percent to $370 million from $393 million.”

The Tampa Bay Business Journal’s report quotes McClatchy CEO Gary Pruitt as saying, “Overall, we made good progress in 2010. We held costs down and saw advertising revenue trends improve. As a result, we grew operating cash flow. We also strengthened our financial position by refinancing and reducing debt.”

Also on Tuesday, McClatchy’s Fort Worth Star-Telegram announced that it was cutting 22 positions, which matches moves by several of the chain’s papers since the start of the year.

The firm’s News & Observer in Raleigh announced last week that 20 positions would be cut, and the Herald-Leader in Lexington, Ky., announced the loss of six positions.

The papers are also requiring unpaid one-week furloughs for most employees.

McClatchy is to announce 4th quarter 2010 earnings next Tuesday.

The site keys on the relatively rosy picture pushed by McClatchy last month, saying “publishers across the board got a big boost when The McClatchy Company announced that its advertising revenue rose during the fourth quarter. What’s more, CEO Gary Pruitt said he expects these improvements to continue this year.

“As the third-largest newspaper publishing company in the United States, McClatchy’s news caused some bullish activity in the industry. But the fact remains that we’re talking about newspapers here. So even though McClatchy publishes more than 70 of them – including The Miami Herald and The Charlotte Observer – they’re still just … well, newspapers.”

And, in fact, since the first of the year, McClatchy’s Kansas City Star has announced layoffs, while at  The News & Observer in Raleigh, N.C., buyouts have been mentioned by management amid rumors of furloughs and layoffs. At Gannett, one-week furloughs in the first quarter are already policy at most of its papers, while some of its papers in New Jersey face much more drastic measures.

Elsewhere, the Washington Post said this week it returned to profitability in 2010 and expected to remain profitable in 2011.

Seeking Alpha leads the reader through the familiar decline of newspapers, concluding that “a daily paper simply can’t compete with the up-to-the-second Internet in terms of news. Plus, there’s the added incentive that the Internet is free, leaving publishers scrambling to find a way to successfully monetize their online product.”

Online advertising revenue presents a glimmer of hope,  including a 13.9 percent gain in the second quarter of 2010 – the first quarterly gain since 2008, and a rise in McClatchy’s online revenue for the quarter that boosted its stock price.

“But even if this trend continues, it’s still not enough to combat the rapid decline of printed ad revenue,” Seeking Alpha says. “The numbers have been in a freefall for 14 consecutive quarters … with no end in sight.

“The bottom line is that newspaper publishers are going down. They won’t all bite the dust, of course. But it will take a few more years of closings, mergers and tinkering with online advertising before the real winners emerge. So don’t let McClatchy’s bounce fool you – this is one industry to dodge.”