The California newspaper business continued its precipitous descent into an ever-growing pool of red ink last week, beginning with news of further layoffs.
Sacramento-based McClatchy Co., publisher of the Sacramento, Fresno and Modesto Bees and other papers ranging from Florida to Alaska, advised the Media Workers Guild at its flagship paper that “massive layoffs” were coming.
Word also leaked that more layoffs were also due at the Los Angeles Times, the biggest publication in the Tribune Co. chain.
And both McClatchy and MediaNews, which publishes most of the newspapers distributed in the Bay Area were reported in danger of default on their bonds, with McClatchy’s downgraded to junk status.
In a federally required warning to the Media Workers Guild, Sacramento Bee Human Resources Director Linda Brooks warned, “We need to reduce very quickly ... the number is going to be big.”
In the same announcement McClatchy attorney Bob Ford dropped the “d” word: “The newspaper industry is in a depression, and this company is part of it.”
The bad news came eight days after the company notified the Securities and Exchange Commission (SEC) that it was no longer in conformity with the New York Stock Exchange’s listing conditions.
That notice had been triggered the same day when share prices hit 98 cents, two pennies below the dollar minimum for listing. The company has until Thursday to consolidate existing shares if it hopes to keep its listing on the nation’s premiere stock market.
Bond rating service Morningstar notified its clients that ongoing cutbacks at McClatchy papers “will inevitably compromise the quality and content of its publications, placing its iconic mastheads at risk of a further acceleration in the erosion of readers and advertisers.”
McClatchy stock hit an all-time low of 55 cents a share Friday, a week after ratings companies Standard & Poor and Fitch had downgraded the stock into CCC range, deep into “junk” territory.
Shares had peaked on March 22, 2005 at $76.05.
McClatchy has announced a freeze on employee pensions, warning the union that efforts to fight the freeze could result in more layoffs.
One apparent bright spot came from the Guild’s negotiations with the Bay Area News Group-East Bay (BANG-EB), a subsidiary of Denver media tycoon Dean Singleton’s MediaNews.
When Singleton bought the McClatchy-owned Contra Costa Times and San Jose Mercury News, he carved off his east Bay holdings, which include the Oakland Tribune, Fremont Argus and other unionized papers and merged them into a group with non-union papers dominated by the CoCo Times.
His union-busting move failed, when the new group’s newsrooms voted to the Media Workers Guild.
Union representatives announced this week that they hope to have their first contract with the group by the end of the month.