Thursday, January 15, 2009

Gannett furlough could save 600 jobs

“The Gannett furlough is the crowning blow in making us look like the auto industry,” said the distinguished newspaper editor who retired to his reward as the dean of a prominent journalism school.

“Don’t be too hard on Gannett,” I told my pal Jerry Ceppos, the former vice president of news for Knight Ridder who now helms the Donald W. Reynolds School of Journalism at the University of Nevada in Reno. “The company has come up with a constructive way to save several hundred jobs.”

Gannett said yesterday that it would require most of its employees to take off a week without pay before the end of March. The alternative to the shared pain – and I recognize that it will be a pain in more ways than one – would be for the company to eliminate approximately 600 more jobs than the roughly 7,000 positions it has scrapped since 2007.

Gannett declines to discuss the economics of the initiative, but here’s how I estimated the number of saved jobs:

Assuming Gannett’s payroll is equal to 20% of its $7 billion in revenues in the last 12 months, then one week’s payroll is worth about $27 million. If the salary of the average employee is $45,000 per year, then the company would have to eliminate some 600 jobs to achieve the same level of savings as the furlough.

With all due respect to Jerry Ceppos, Gannett’s furlough plan is a better deal for the company than what an automaker could achieve.

When Detroit tells people to stay home because no one is buying cars, most unionized employees get so-called “supplemental unemployment benefits” from the Big Three that pay them almost as much as they would have made if they were actually working.

The fact that this is a good deal for Gannett means it is a bad one for its staffers. Because most Gannett employees are not unionized, they will have no choice but to accept the furlough – and they won’t be paid anything for the time they have lost.

On the other hand, one hopes, they’ll still have their jobs when they get back. And a week worth of unanswered email.

17 Comments:

Anonymous Anonymous said...

Here's what else will happen:

--Thousands of employees who live on low wages at smaller (most) Gannett properties, and who live paycheck to paycheck by necessity, will face real financial hardship of the kind unknown by the people who made this decision.

--Many qualified journalists (and others) who can leave, will leave, nudged out because they are being treated like an assembly line worker (only without the pay and benefits).

--The quality and usefulness of Gannett properties will continue to decline and even fewer people will read/watch/listen to Gannett products, perpetuating this self-defeating cycle.

Gannett is being managed to fail. At that, if nothing else, it is a success.

--

11:38 AM  
Blogger Lives in Washington DC said...

As Ceppos did, I recently jumped from journalism into academe, and I was greeted with a stiff state budget cut furlough of similar length after only two months on the job. But there is remarkably little grousing about it, because the team ethos of everyone sacrificing a bit for the sake of the entire university is strong here. (And our president tacked an extra day of furlough on his own period in a demonstration of how to lead from the front.)I think it's much better than some of the insane staff layoffs that have ruled at other organizations.

11:52 AM  
Anonymous Anonymous said...

I'm sure MediaNews and others would have just cut pay and have employees show up for work. At least Gannett employees get time off to spend with family or just to get away. That said, money is tight and this will be hard for many.

12:17 PM  
Anonymous Anonymous said...

I bet academics make more than newspaper staffers.
Also, what's to stop this from happening every quarter? That's an entire month off without pay! If it were just once, that might be tolerable. But four times a year?

12:20 PM  
Anonymous Anonymous said...

I worked for Gannett in Westchester NY in the early 1990s when a decree came down to cut budgets across the board. Other departments let people go, but in the newsroom, then-Exec. Editor Larry Beaupre came up with a plan by which everyone would take two furlough days a month, and no one would lose their jobs. Yes, getting by on less money was hard, but at least we had jobs. (And most of us - editors, anyway - just worked those two days without pay).

The big difference between then and how, though: In 1991, we had reason to believe the economy (and newspapers' place in it) would improve. As I recall, the pay cut lasted 6 months, or maybe a year, But it ended as ad sales came back. People being asked now to take the unpaid days off don't have the luxury of that expectation.

12:52 PM  
Anonymous Anonymous said...

Last year on the Gannett blog there was a posting of Gannett newspapers and their profits through the first quarter of the year. With the exception of Detroit, all of the newspapers were making profits - some of them significant.

Certainly Gannett isn't making the kind of profit today it was making in the first quarter of last year. But the question is, chain-wide, is it doing really poorly? Or is this an effort to keep the stock price and dividend high?

12:54 PM  
Anonymous Anonymous said...

Your calculation doesn't include benefits, which add another 40 percent to the cost of employment. So the real number of jobs that would have to be eliminated is probably shy of 600.
Of course, as those of us already hit by downsizing know, there are "certain one-time expenses" that reduce the immediate savings to media companies that lay off workers.

3:39 PM  
Blogger Newsosaur said...

IN re the above post:

I did not include the cost of benefits because I presume the company will continue to pay medical insurance and most other benefits for the furlough week (though it would save on payroll taxes).

Also, the benefits burden probably is no greater than 20%, not the 40% mentioned in the above comment.

4:31 PM  
Blogger tom said...

If anything, 20 percent more for benefits is probably too generous, given Gannett's track record.

12:54 AM  
Anonymous Anonymous said...

Has anyone wondered how Gannett papers are staggering the furloughs? With so many newsroom staffs already working with skeleton crews, having a handful of people gone at any time puts added stress on those still working to put a paper out/update the web. I foresee slapped-together content so that deadline, enforced quotas (web postups and story counts) are met, which we all know doesn't help the quality of a product. Glad I got out of Gannett two years ago.

8:39 AM  
Blogger tom said...

The real reason for the furloughs: Gannett cut staffs so much during the boom time to fatten their bottom line that now there's literally no place left to cut and still call the product a newspaper.

12:25 PM  
Anonymous Anonymous said...

“The Gannett furlough is the crowning blow in making us look like the auto industry.” -- Jerry Ceppos

Gannett certainly is not perfect. But with all due respect to Ceppos, how is his former employer handling the downturn in the economy these days? Oh, that's right: Knight Ridder doesn't exist anymore. At least Gannett is trying something creative -- though not untried by others -- and with a sense of urgency. Maybe if the KR brass had acted as creatively, decisively and boldly as Gannett, KR might still exist today. Does anybody else see the irony in his comments about Gannett's course of action when as VP news he had a seat at KR's leadership table and had a fiduciary responsibility to act in the same manner, with the same conviction and sense of urgency?
RIP KR.

1:23 PM  
Anonymous Anonymous said...

I like the idea so much I may use it at my company, but I'd make it one day or one-half day per week or pay period and spread it out a little more.

3:15 PM  
Blogger Daniel Hunt said...

As a Gannett employee, I am glad to be furloughed instead of being shown the door. Does it suck? Yes. Should they cut the dividend instead? Perhaps. Will I be working harder? Sadly, yes. I love what I do, and I know there isn't much time left. So I'll take what they give me today and hope for a better tomorrow.

3:53 PM  
Anonymous Anonymous said...

I work for a major newspaper. For the past 15 years I've made one major observation. Staff reporters and many editors are completely spoiled and fairly lazy. They waste an unbelievable amount of time socializing. There is no skeletal staff even after layoffs. Newspapers should freelance out nearly all of their content. People should be paid per story/photograph. Editors should be required to do actual work instead of sitting in the newsroom wasting time for 90 percent of their day! There have been a few exceptions of course, some hardworking leaders. Sadly, one I know passed away at a young age, probably from the stress. But as far as this talk of skeletal staff...maybe that's because of the lack of productivity. It makes me ill. And as far as not getting paid... maybe spend your week off doing other paid work. It's a free market. If you are talented, you can make the money you need. Don't be such pansies.

5:13 AM  
Anonymous Anonymous said...

Anonymous, not sure where you work, but it must be the one newspaper where they can afford to have the extra staff fluff, (which seems impossible today). I worked at two mid-size, two major and one small paper in my career and too much staff "socializing" was never the case. I do agree with your idea of the furloughed staffers taking in some freelance work, etc. during their furlough. It may help pad their portfolio when the axe finally falls.

7:00 AM  
Anonymous Anonymous said...

Unfortunately because of already short staffing levels due to recent layoffs, taking the whole week at once is not really an option for the majority of employees. It's being spread out over the next two months, at least at the paper I work at.
I can understand them doing this once, if it saves more jobs. Not that they could really cut anyone else here..we are already a skeleton crew. But if they do this again next quarter, they could be looking at a mutiny.

5:31 PM  

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