December 4, 2020

The Media Equation: At Gannett, Furloughs but Nice Paydays for Brass

After explaining that revenues at the newspaper giant continued to be soft and the outlook was uncertain, Robert J. Dickey, Gannett’s president of U.S. Community Publishing, said, “I know furloughs are very hard on you and your families and I thank each of you for the continued commitment and great work.”

Mr. Dickey made it clear that not only did the company’s executives feel their pain, they would share the sacrifice, noting that he too would take a furlough and that Craig A. Dubow, the chief executive, and Gracia C. Martore, the president and chief operating officer, “each will be taking a reduction of salary that is equivalent to a week’s furlough.”

But as it turns out, the buck stopped just short of Mr. Dubow and other executives. Mr. Dubow had agreed to lower his salary by 17 percent through 2011, but then again, last month he received a cash bonus of $1.75 million for 2010 and Ms. Martore received $1.25 million. For 2010, they were also awarded stock, options and deferred compensation that would bring their combined packages to $17.6 million if the company and its stock hits certain targets.

A company spokeswoman pointed out that 70 percent of their compensation was noncash and dependent on future performance. In fact, the top six executives at the embattled publishing company would receive 2010 compensation packages of more than $28 million if the company does very well, which seems unlikely, but the symbolism remains.

The savings from two years of mandatory furloughs for the rest of Gannett employees: $33 million. Well, that didn’t go very far, did it?

This is not a story about incompetents feeding at the trough, although a lot of Gannett employees would say that is precisely what the story is about. Yes, revenues have declined at the company four years in a row and the stock price is down more than 70 percent, but even divine intervention could probably not fix all that is wrong with Gannett and publishing in general. The company has 23 television stations, but with 82 newspapers, many of them dailies in small and medium-size cities, the company was bound to be clobbered by a recession on the one hand and a systemic flight from advertising in newspapers.

Gannett’s flagship, USA Today, is a once-robust national newspaper but has lost 20 percent of its circulation in the last three years. About a week ago, I was at the Marriott in Detroit, and as I stepped over the newspaper at my door as I usually do, I then wondered why. It occurred to me that everything in that artifact that would be useful for me — scores from the teams I follow, a brief on big news and a splash of entertainment coverage — I had already learned on my smartphone and tablet before leaving the room. Gannett is aware of the challenge and has moved aggressively into mobile, with six million downloads of its apps, but those marginal revenues will not fill the hole created by challenges to its core business.

In terms of financial engineering, Mr. Dubow and his crew have done a good job with a bad hand. Last year, revenue was down only marginally, and according to the company operating cash flow was $1.3 billion, up 19 percent from 2009, while debt was reduced by $710 million, to $2.35 billion.

That’s a testament to what the Street would call “aggressive cost management.” But out in the rest of the world, we know that generally means dumping bodies overboard, and Gannett is a high achiever when it comes to downsizing. In the five years that Mr. Dubow has run the company, its work force has gone from 52,000 employees to just over 32,000.

Most of its employees are nonunion, so the leadership is free to manage as it sees fit, including telling some people their careers are over and telling the people that remain not to come to work.

“It has been incredibly galling to watch them lining up for these big compensation packages while they have squandered every opportunity to make the kind of changes necessary for the company to survive,” said an employee of USA Today. (She and others I spoke to said that there would be retaliation if they spoke for attribution.) “Meanwhile, we have had furloughs three years in a row, so you can’t help but feel exploited and angry.”

E-mail: carr@nytimes.com;
Twitter.com/carr2n

Article source: http://feeds.nytimes.com/click.phdo?i=ccf8fd6e18aa64bb8abd828b389a7b40

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