 PHILADELPHIA - The new publisher of The Philadelphia Inquirer and the Philadelphia Daily News told employees Friday that layoffs are "unavoidable" because advertising revenue is down and the owners need to cut costs to meet their bank obligations. "We must reduce our work force so that it is in line with our reduced revenue," wrote Brian P. Tierney, chairman and chief executive of Philadelphia Media Holdings LLC. "To the extent we don't get the savings, those layoffs will be larger."
| I suppose it could have something to do with the drop in quality of the newspapers. The Inquirer of my youth was a rather cerebral, moderately liberal paper. The Daily News was the feisty tabloid. Last few times I've bothered reading the Inquirer it was awful — trite, predictably liberal, and not very well written. It's not just the politix, it's the quality. |
Philadelphia Media Holdings — an investment group made up of Tierney, luxury homebuilder co-founder Bruce Toll and other local investors — bought the two dailies, their Web site and sister properties from McClatchy Co. in June in a deal valued at $562 million. Tierney expressed optimism after the sale was announced, saying he wanted to invest in the newspapers to ensure their continued growth. But in his letter, he said the investors needed to make changes. Citing negotiations with the newspapers' unions, he said the company needs to restructure labor contracts and the work force. "We need to reach agreements that allow us to achieve the savings to meet our loan obligations, and to reinvest in and to grow our business," he wrote.
| The old "we need to shrink our business in order to grow it" routine. I learned that one back in MBA school, too. |
Cash flow dropped from $100 million in 2004 to $76 million last year and is estimated to be less than $50 million for 2006, Tierney said. Jay Devine, a spokesman for Philadelphia Media Holdings, said the financial picture has changed dramatically in the last few months. Investors initially had thought they needed to save $20 million a year going forward, but now they believe they will have to save more, he said. "We also were optimistic about the end-of-the year quarter," Devine said of the group's initial hopes. "That, too, now looks very grim." |