A few months after publisher Joseph Pepe arrived at The Commercial Appeal, he sat down for a candid interview and described the state of that venerable institution as he saw it:
“When I got here, this newspaper was in total cost-control mode,” Pepe told the Flyer‘s Chris Davis in an April 7, 2006, story. “[The management wasn’t] looking for ways to expand markets and grow revenues. They were in total death mode. You’re either dying or growing. You’ve got to pick one.”
Fast forward to March 21, 2007. In an e-mail to employees, Pepe announced a program for a voluntary staff reduction, a cost-cutting measure that was being taken after other steps had proven unable to “stabilize our profitability.” Sixty-four employees — management and rank-and-file alike — who have completed 10 years of service with the company and will be 55 years of age as of April 2, 2007, are eligible. They can decide to take the offer or leave it. The CA has not said what will happen if no one decides to take it.
There were no staff reductions (voluntary or otherwise) in 2006, a welcome respite, considering that there were reductions in 2002, 2003, 2004, as well as in 2005, when a buy-out plan was already in place when Pepe arrived from St. Louis.
To that end, some give Pepe credit for keeping the hounds at bay for just over a year, a period in which the newspaper introduced customizable editions and more advertising zones for Millington, Bartlett, Cordova, Germantown, and Collierville, while attempting to up the ante in DeSoto County. However, the CA also saw a number of reporters and managers exit for a variety of reasons.
So now, with new cost-control measures being undertaken, it’s fair to ask — using Pepe’s words as markers — is the CA dying or growing? Is his strategy failing, or are these latest reductions an inevitable fact of life in a slow-growth industry?
Neither Pepe nor CA editor Chris Peck returned calls seeking comments for this story. The Memphis Newspaper Guild Local 33091, one of the paper’s three labor unions, declined to comment as well. The union has been without a new contract since 2004.
“These are challenging times for the entire industry,” wrote Pepe in his March 21st e-mail. Two other E.W. Scripps papers — the Denver Rocky Mountain News and the Ventura County Star — also announced voluntary staff reductions. At the RMN, 50 employees are eligible; there are 22 eligible at the Star.
“I’ve been in the business 29 years, and I’ve never seen a slump come on as quickly as this one in advertising dollars,” said Star publisher and president Tim Gallagher in the Star‘s March 22nd story on its buy-out offers.
A few weeks ago, Scripps revised its outlook downward for its newspaper division. It expects total revenue to be down 6 to 8 percent in the first quarter of 2007 compared to the same period a year ago; the previous estimate had been a decline of 5 to 7 percent. For the full year, the company expects the percentage decrease in newspaper revenue to be in the low single digits, as previously forecast, the company said.
It also doesn’t help that some Scripps executives ruminated briefly about the potential of spinning off the newspaper division or selling some of its assets. And though executives later denied any sale plans, it has been clear that Scripps is focusing its energies on its high-growth businesses, such as cable TV networks and interactive media units.
So, back to the cost-cutting. At the Star, there’s also a hiring freeze, though that doesn’t seem to be the case at the CA. Several new reporters have been hired in the last few months and other staffers have been shuffled to fill areas of need. And in some cases, like the departure of food critic Leslie Kelly, the CA has partly filled those openings through agreements with free-lancers such as Jennifer Chandler.
In interviews with several CA editorial employees who would qualify for the buy-out, most expressed a reticence to discuss the offer because it’s still unclear what the terms will be.
Though the terms were not disclosed in Pepe’s e-mail, a later brief on the buy-out included an indirect quote from Pepe, who said “they [the offers] are generous enough, including health benefits, to give people close to retiring an incentive to help close the gap.”
Since the Star‘s Gallagher gave a similar appeal to those close to retirement, that paper’s offer could indicate the kind of buy-out being offered at the CA. The Star‘s package includes “a week’s pay for every six months an employee has worked for the newspaper, for up to a year’s worth of pay, and 18 months of health benefits covered by the company.”
Richard Thompson’s Web site, Mediaverse:Memphis.blogspot.com, focuses on Memphis media. He is a former business writer for The Commercial Appeal.
