D-G tightens belt UPDATE | Arkansas Blog

Tuesday, August 12, 2008

D-G tightens belt UPDATE

Posted By on Tue, Aug 12, 2008 at 9:08 PM

I got a tip late Tuesday that the Arkansas Democrat-Gazette, the state's dominant medium, may not be immune to what's currently ailing daily newspapers nationwide. Some indication of that had already been seen in new D-G publications to create new revenue streams. Last year, it was their free faux alt weekly. This year it's Arkansas Life, a slick monthly magazine aiming to take some of Soiree's business. It will be mailed free to rich folks (po' folks will be able to buy it).

Anyway, the story is that a memo circulated at the newspaper Tuesday about rising newsprint costs, the increased costs of gas for carriers and the short-term necessity to adjust through a temporary wage and hiring freeze to be re-evaluated Jan. 1. Sounds plausible, but I can't attest to the tip's accuracy at this moment. Anybody have a copy of the memo?

UPDATE: Ask and you shall be given. The memo from D-G president Paul Smith is on the jump.

Also, Arkansas Business followed up our report with an interview with Smith.

PAUL SMITH MEMO

Arkansas Democrat-Gazette employees:
Most businesses are experiencing intense pressure due to very unstable economic conditions. Many banking companies, auto dealers, real estate firms and retailers of all kinds are struggling to maintain their operations.

More than 80% of the Democrat-Gazette's revenue comes from advertising. When our advertising customers are dealing with reduced revenue, it impacts the amount of money they allocate for advertising. As a result, we are experiencing advertising revenue declines for the second consecutive year and the newspaper industry as a whole for the third year in a row.

We have 1,132 newspaper carriers under contract. These carriers, along with our bundle haulers, drive more than 1.6 million miles per month to deliver our newspaper to our subscribers. As a result, few businesses have been impacted as much as we have from the high cost of gasoline.

Our current cost for newsprint is 24% higher than at the same time last year. This increase, if it doesn't go any higher, will add more than $4,000,000 to our costs.

We have 1,316 employees. While many newspaper companies have had several rounds of layoffs during the past several years, we have resisted doing this and we hope we can continue to do so, but we must keep our payroll costs from going higher. In an attempt to do this, we are eliminating salary increases for the remainder of this year. We will also try to reduce costs through attrition so we will temporarily not replace departing employees unless absolutely necessary. These polices will apply to all employees in all departments throughout the newspaper. We will evaluate our situation and these policies again at the first of next year.

We have many things going for us at the Democrat-Gazette. We have a higher Sunday penetration in the City Zone than any newspaper in America in markets with more than 100,000 households. More people in Central Arkansas read the Democrat-Gazette on a typical day than watch the Super Bowl, television's highest rated program.

We realize our employees are responsible for much of our success. Knowing that makes this decision even more difficult. However, if if we don't act prudently now the cost to our employees could be greater.

Sincerely
Paul Smith
President

From the ArkTimes store

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