Times parent Tribune Co. will reduce its company-wide workforce by 400 to 500 people, including 100 to 150 jobs in L.A. (40 to 50 of those in the newsroom). Times Publisher David Hiller said the cuts will be made through a combination of attrition, voluntary buyouts and, if necessary, layoffs. An LAT story posted this morning said the folks affected would be out of the company by the end of March. This cutback is not a surprise; if anything, the 2 percent Tribune-wide cut seems a bit low, given the terrible state of the newspaper business. The Chicago Tribune is cutting 100 positions.
The cash to finance the buyouts will come from the overfunded portion of Tribune employees' cash-balance pension plan. Hiller said that Tribune officials have determined that the defined-benefit plan has about $300 million more than it needs to meet future obligations to retirees. Rather than leave that cash "just sitting there," Hiller said, Zell is making use of it to fund the buyouts and -- in a program he announced Tuesday -- to make a one-time, cash contribution of 2% of employees' salaries to a new cash-balance plan early this year. Zell said the money would help compensate workers for the annual profit-sharing contribution that Tribune traditionally had made to their pension accounts.
The news was delivered in a memo to employees by billionaire Sam Zell, who took Tribune private last year and is chairman and CEO. He said the "weak economy and significant declines" in newspaper advertising have hurt cash flow. The reductions, he said, are the result of Tribune Co.'s "significant debt levels and financial covenant obligations" (so much for his public pooh-poohing of all that extra debt). "I can't turn this ship from its course of the past 10 years within just a few months," Zell said. "Further, while I will do everything in my power to drive, pull and drag this company forward, I can't promise we won't see additional position eliminations in the future, if we continue at our current rate of cash flow decline. But, make no mistake. This is not my ultimate strategy for our company. I believe we can achieve greatness. I have staked my reputation on it." Sounds like they're in for a bunch more cuts. (Chicago Tribune)
Here's more from Hiller in his memo:
As Sam related, the revenue picture continues to be bad, and well worse than was forecast at the time our going private transaction was completed. We had been planning to find savings over the course of the year, primarily through eliminating positions as they became open, but these current trends require that we act sooner.