Gannett Continues Compulsory Furloughs
McLEAN, VA.: Gannett is repeating the money-saving strategy of one-week furloughs in the upcoming quarter. The company employs around 31,000 people, who were required to take a week without pay during the first quarter of the year, saving the company a reported $20 million.
“We are about to begin the second quarter without any real relief in sight from this unprecedented economic downturn and its challenge to our company,” Gannett CEO Craig Dubow told employees in a memo carried by the Rochester, N.Y. Democrat and Chronicle, a Gannett newspaper. “Despite all of your truly remarkable efforts to reverse the trend, our revenue numbers continue their downward slide and we have been faced with more difficult decisions… more layoffs or another round of furloughs. We chose, for most employees, a furlough program.”
Higher paid employees were notified of a salary freeze effective for a year as of April 1, and might be hit with a second furlough or a salary reduction, Reuters reported. Dubow’s pay was already reduced by 60 percent in 2008 compared to the previous year, and he also had to take the 1Q furlough.
The furloughs cut across the Gannett (NYSE: GCI) properties--85 daily newspapers, 900 non-dailies, 23 TV stations, an 8,000-screen digital signage business, and numerous Web sites. The company continues to struggle with debt it took on to repurchase stock last year, exacerbated by the effects of the dwindling ad market.
In preliminary 2008 results, the TV stations posted revenues of $773 million, down 2 percent from 2007. Operating income was $313 million, down less than 1 percent. The combined operations of all platforms generated nearly $6.8 billion for GCI in 2008, compared to $7.4 billion in 2007. Impairment of $2.5 billion drove Gannett to a 2008 net loss of $6.65 billion, compared to income of more than $1 billion in 2007.
Gannett shares closed Friday at $2.14 and opening this morning at $2.30 on wider market enthusiasm over an anticipated government injection in the financial sector. -- Deborah D. McAdams