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Mercury News Plans to Shrink Newsroom
by 52 Jobs

16% reduction ends week of newspaper industry buyouts and layoffs
Cuts are 'painful,' says editor, but the paper will survive

By Michael Stoll
Grade the News

Saturday, September 24, 2005

The San Jose Mercury News said Friday that it would reduce its staff by 60, including 52 in the newsroom, first with buyouts but with layoffs if necessary.

The announcement capped a week of steep newsroom reductions at major metropolitan daily newspapers across the country, including 500 jobs from the New York Times Company and 100 jobs from the two Knight Ridder newspapers in Philadelphia. The prior week, the San Francisco Chronicle accepted 90 resignations through a disputed buyout program, and will soon cut 30 more jobs, voluntarily or otherwise.

The entire Mercury News staff gathered at 4 p.m. in the newsroom and on conference call from bureaus to hear Publisher George Riggs explain that a particularly disappointing third-quarter earnings statement from Knight Ridder, the paper's parent company, made swift reductions necessary.

Executive Editor Susan Goldberg told the staff that the newsroom reduction to 280 people -- the lowest level in at least a decade -- would require a "reorganization" of the paper's journalism operations, but that the paper's high standards and core areas of coverage would survive.

But Luther Jackson, the executive officer of the San Jose Newspaper Guild, the union representing journalists and other employees, called the cost-cutting "a stunning blow" to both journalists and the community.

"It's a tragedy for our members and it's a tragedy for the readers who will get less in the paper," Mr. Jackson told Grade the News. "And ultimately it's a tragedy for the shareholders."

The mood in the Mercury News newsroom was somber on Friday, said Griff Palmer, the paper's database editor, who is also secretary and treasurer of the Guild. "It's going to mean that journalism is going to be practiced very differently at this newspaper," he said.

The newspaper whose newsroom topped 400 people at the height of the dot-com economic boom in Silicon Valley could not avoid downsizing to reflect a local economy that never recovered. But the larger problem, Mr. Palmer said, is that the stock market offers no slack to news organizations in less profitable years.

"It's not just in journalism," he said. "Wall Street is demanding the same kinds of sacrifices throughout the American economy -- the insatiable demand for ever-greater profits irrespective of economic conditions. A lot of it is that there are market forces at work."

The announcement of staff cutbacks was the second in a week for Knight Ridder. On Tuesday it announced that it would offer buyout incentives to 75 employees at the Philadelphia Inquirer and 25 at the Philadelphia Daily News.

Later that day, the New York Times Company announced it would shed 500 jobs through buyouts and layoffs; newsroom losses will include 45 at the Times and 35 at the Boston Globe, which the Times owns.

Two weeks ago, the publicly traded Knight Ridder, the nation's second-largest newspaper chain, announced that earnings per share would fall 20%, which it attributed to higher paper costs and health insurance premiums.

After the cuts were announced in Philadelphia, Walker Lundy, the former editor of the Philadelphia Inquirer, told National Public Radio that newspaper companies "are eating their seed corn."

"I fear for their future because you just can't save your way into profit increases every year," he said. "If you're running a steak house, you still have to serve them steak."

Mr. Jackson, the San Jose union officer, echoed Mr. Lundy's critique: "Any company can cut into its R&D to achieve a one-time dividend, but it's not a great long-term strategy."

But Ms. Goldberg, a former reporter and USA Today editor, said executives at the Mercury News realized that "we have to operate in the economic reality of our time."

"None of us wanted to do this, but we are at a painful place in our business," she said. "We held off making this announcement for five years, trying through attrition and deep sending cuts to avoid this. Our only option is to reorganize in the very best way that we can to continue to put out an excellent newspaper.

"Realistically there are going to be some things we can't do anymore," she said. "We have been getting smaller over a number of years. This will cause us to really look again at what our priorities are. The coin of the realm is exclusive local coverage. Specifically, as it relates to technology, and covering the diverse segments of our community."

Management has been sending out notes to Mercury News employees for months urging them to trim costs by conserving office supplies.

Yet Knight Ridder has invested a significant amount of money on experiments in Bay Area journalism this year. In February it purchased the free tabloid Palo Alto Daily News and its four sibling publications for an undisclosed sum, and in May launched an East Bay edition.

Then this summer the Mercury News orchestrated a thorough redesign, folding the local news section into the main news section. But that effort lasted only a few weeks, as readers who liked the paper the way it was threatened to cancel their subscriptions.

The Mercury News is offering departing employees a severance package of two weeks' pay for every year of service up to 44 weeks' worth; that's in addition to two weeks for every year up to 60 weeks' worth. Extended health benefits range from six months for junior employees to two years' full coverage, or five years' partial coverage, for early retirees.

The buyout offers will come on Monday. Employees have until Nov. 10 to apply.

The Guild said in a memo on its Web site, that the recent cuts are only the latest in a series over the last five years that will harm its members and journalism. In 2001 the paper bought out 38 employees.

This time, it may be more difficult, some employees said.
"It's just sad to see the Mercury News shrink," said Lynne Dennis, a copy editor and past president of the Guild. "It was a really impressive place when I came to work here 14 years ago and it still has some great people. I don't think they'll find 52 people who want to bail out of here."





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