A memo to the staff today by L.A. Times Publisher John Puerner — who, incidentally, plays bass in an in-house rock band on the side — explains the paper's soft financial performance. He confirms that voluntary buyouts will be offered to some employees before layoffs are ordered, but there won't be much time for staffers to ponder their futures. All the cuts have to be done by June 30. The memo follows:
June 8, 2004
TO: Times Employees
FROM: John Puerner
SUBJECT: Follow-up to Tribune Announcement
In yesterday's announcement of 5th period revenue for May 2004, Tribune Company reported that advertising revenue growth in the publishing group has been weaker than expected. As a result, significant cost reduction actions have been requested, beginning in the 2nd quarter.
Since the biggest drop in revenue has been at the Los Angeles Times, our slowdown in ad revenues is having a considerable impact on the group's overall financial performance.
Starting in April, our advertising revenue began softening because of a number of market conditions--some unique to Southern California and some unique to the Los Angeles Times. The Los Angeles metro market, specifically Los Angeles County, is recovering more slowly than other regions of the U.S. Job growth is trailing other parts of the country, and disposable income has been adversely impacted by soaring housing costs and gasoline prices.
Although our preprint strategy continues to show solid gains and help-wanted advertising is rebounding, we've experienced a drop in three of our largest advertising categories. Specifically, local major retail ROP has been soft since the beginning of the year and important national categories, such as telecommunications and entertainment, have been weaker than planned. I can assure you that the advertising sales staff is working hard to turn this trend around.
To offset the impact of the soft advertising market, we've been asked to reduce expenses. This situation developed quickly, and therefore we're still evaluating options that will minimize the impact on our momentum. As a result, we are focusing on non-salary expenses as well as voluntary and involuntary staff reductions. The necessary actions will be taken by June 30. We believe these changes will help offset our revenue shortfall and improve our position as we face a full year of recent newsprint price increases and rising benefit expenses in 2005.
One key element of the plan is to offer a voluntary separation package. Details of the plan will be forthcoming shortly. The number of employees who express an interest and are accepted for voluntary separation will then determine the necessity for involuntary reductions.
This is extremely difficult and we take these steps reluctantly. We will provide more information as we move through this process. I appreciate your help and understanding as we deal with the current advertising environment.