Gannett’s Game Plan
Virginia-based media empire Gannett said it will send its entire workforce home without pay for one week, and freeze wages for the year, to avoid cutting jobs. The payless period is supposed take affect during the first quarter of this year. Gannett (NYSE: GCI) has more than 31,000 employees; 3,000 cuts were announced last August. Craig Dubow, chairman, president and CEO of Gannett, is taking the furlough as well. The media company’s unionized workers will be asked to take the week off voluntarily. A pay freeze was implemented at its flagship newspaper, USA Today, yesterday.
“We are doing this to preserve our operations and continue to deliver for our customers while confronting the issues raised by some of the most difficult economic conditions we have ever experienced,” Dubow said in a companywide memo, obtained by former Gannett editor Jim Hopkins. “After much consideration, we decided a furlough program would be the fairest and least intrusive way to meet these fiscal challenges in the first quarter, which is traditionally the lightest time of the year. We sincerely hope this minimizes the need for any layoffs going forward.”
In an FAQ, also issued to employees, Gannett officials said the furlough was considered less detrimental to the quality of the media produced than further layoffs would be, e.g., they’ve already cut to the bone. The various operations--85 dailies, 900 non-dailies, 23 TV stations and an 8,000-screen digital signage business, plus countless Web sites--will be skeleton-crewed at various times throughout the quarter. Some exceptions will be made for essential staff, but not for financial hardship.
Just how Gannett’s operations will time the furlough’s remains to be seen. Editor and Publisher posted an e-mail from a managing editor in Gannett’s Washington news bureau: “We can’t have a deserted newsroom, so the whole bureau can’t go out the same week. Plus, you may want to figure out whether it's worse for you personally to have a smaller paycheck in February or in March.”
The TV stations, Web sites and newspapers will need all hands on deck next week during the inauguration. Congress takes a break Feb. 15, giving the newspapers a break, but that won’t work for TV stations unless the Feb. 17 analog end date is moved.
Gannett was hardly rewarded on the news. Its shares fell from an $8 close on Tuesday to a $7.50 this morning at 10 a.m. Gannett is reported to be struggling with debt related to $3.44 billion spent to buy back shares over the last four years. The company had $3.91 billion in long-term debt as of last September, and drew on an unsecured revolving credit facility in October to pay down its fixed-maturity commercial paper, Bloomberg reported in December. Gannett also offered 95 cents on the dollar for $750 million in notes due in May; around 14 percent of holders accepted.