N&O plans more cost cuts as parent slashes jobs by 15%

“We have been looking at a lot of things,” Quarles said after the newspaper’s parent company, McClatchy Co. (NYSE: MNI), announced it would cut 1,600 jobs across the chain of 30 daily newspapers – a 15 percent reduction.

“Hopefully we’ll have this done in a couple of weeks,” Quarles said.

The N&O has cut more than 200 full-time jobs over the past year, leaving it with 613 full-time positions, according to the newspaper. The paper's Web site lists some 165 employees in its newsroom.

The latest reductions came in December, when The N&O decided to use a third party for newspaper distribution. The cuts also took 58 part-time positions.

"The cuts are becoming greater, and the intervals between them are shorter. To me, (that's) an accelerated path to destruction," said Philip Meyer, a former University of North Carolina-Chapel Hill professor who wrote "The Vanishing Newspaper."

"They're having to do such desperate things that are damaging the product," Meyer said.

Longtime reader Taylor McCrae said he notices a difference in the newspaper since the cuts began.

"I really don't like the fact I see so many articles that are taken from other sources. I prefer more staff writers writing in a local paper," McCrae said.

Quarles told WRAL.com that the newspaper remains profitable, but it isn't achieving its budget goals.

"The advertising environment has just gotten worse,” he said, adding the newspaper is “very close” to its goals in circulation.

Circulation is being cut in some cases "by design” in order to reduce “unprofitable circulation,” he said.

“We are experiencing advertising losses greater than any of us have ever seen in our history. As the economy declines, so do our revenues,” Quarles said in a Monday memo to N&O employees.

“We understand how disruptive the last several weeks have been and how announcements by other McClatchy papers increase concerns about the future," he said in the memo. "We apologize for the delay, but want to make sure we carefully review every option before making final decisions. We anticipate communicating these decisions to you over the next couple of weeks."

McClatchy, which is based in Sacramento, Calif., said before the markets opened Monday that cutting 1,600 jobs was part of a plan to reduce expenses this year between $100 million and $110 million. It also cut its dividend by 90 percent.

The salaries of Chairman and Chief Executive Officer Gary Pruitt and other executives also are being cut by 10 percent.

Quarles wouldn't say whether his salary was reduced.

McClatchy is burdened by more than $2 billion in debt dating to its 2006 acquisition of the Knight-Ridder newspaper group.

Layoffs and cost cuts have already occurred at several McClatchy newspapers. Last week, for example, The Sacramento Bee announced plans to cut 34 of the 268 Newspaper Guild-covered positions in the editorial and advertising departments. Another 19 jobs would have been in jeopardy, but union members agreed to take pay cuts to save the positions.

In February, Fitch Ratings and Standard & Poor's Ratings services lowered their ratings for McClatchy. S&P said its action reflects a belief that the company is likely to violate the terms of its credit facilities at the end of 2009.

In addition to the daily papers, McClatchy has about 50 non-dailies and direct marketing and direct-mail operations.