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Citing Weak Economy, Gannett Turns To Job Cuts, Furloughs

With the economy looking a bit weaker than it was at the start of the year, Gannett (NYSE: GCI) has returned to layoffs at its 80 U.S. community newspapers. According to a memo attributed to the division’s president Bob Dickey and obtained by Romenesko, the McLean, Va.-based publisher will cut 2 percent of its workforce, or roughly 700 jobs.

Gannett flagship USA Today, which is not part of the community publishing division, is not affected by this announcement. But unless the print ad picture turns around, it too could find itself hit with more reductions.

On top of of the 700 job cuts, Gannett will once again use mandatory unpaid furloughs for executives over a certain pay level to save money in the face of what Dickey said was soft national and local advertising.

This past spring, Gannett rebranded its logo and through a new image campaign has sought to position itself as a more of a digital information and marketing services company at the center of a sprawling set of broadcast and newspaper holdings.

Nearly a year ago, USAT also went through more of an internal makeover, as that brand was being redirected to be more focused around mobile and digital. The changes at USAT initially resulted in 130 job cuts last August. As Gannett Blog’s Jim Hopkins noted, this is Gannett’s fourth mass layoff in the past three years.

As Gannett struggled through the severe recession, it slashed thousands of jobs at its newspapers throughout 2008 and ’09. The cost cuts helped the company regain profitability. The burgeoning economic recovery in 2010 also helped digital revenues surge regularly by double digits each quarter as print’s ad revenue declines were arrested, although not reversed.

In Q1, Gannett’s profits and revenues were down. The trends in Q2 generally have appeared to worsen, so it’s hard to imagine that the company’s next earnings report, due July 11, will be much different from the previous one. One question that has followed Gannett and all the other struggling newspapers that have made similar cuts to reach and maintain profitability have rested on several questions: how long will the savings from reduced expenses last? How much can a company cut until its product gets weaker?

By shifting resources to local interactive marketing efforts, Gannett believes it can do more with less, especially as it becomes a different company. To be sure, digital does allow that. But the results, though still positive, will still take time to balance out the print losses, as digital represents 20 percent of all Gannett’s revenues.

2 Responses to “Citing Weak Economy, Gannett Turns To Job Cuts, Furloughs”

  1. Traditional media companies seem unable to understand the transition from old media to the internet.  Gannett just keeps laying people off, without developing a new solution to address changing market dynamics.  This spells doom.  However, says that HuffPo is leading the pack during market transition – now having more page views than any other on-line journal – and could be the place to invest in media