Friday, November 10, 2006

Update: MediaNews Outsources Jobs to India, Lays Off Dozens of East Bay Staffers

By Robert Gammon
Fri, Nov 10, 2006 at 3:24 PM

MediaNews revealed on Friday that it had told its advertising production staffs at the Contra Costa Times and its ANG Newspapers chain -- which includes the Oakland Tribune -- that the company is outsourcing their jobs to India. According to one source, an estimated 35 jobs are to be eliminated in the East Bay over the coming weeks and months. Ad production staffers design and make newspaper ads. In addition, Denver-based MediaNews fired dozens of employees at its East Bay papers on Friday; disclosed plans to slash another 64 union positions at the San Jose Mercury News in the coming years; and began laying off advertising and business staff members at ANG and the CC Times. MediaNews plans to require this last group to reapply for their jobs at the company's new "shared services center" in San Ramon.

MediaNews intends to ship the ad production jobs to Express-KCS, a U.S. company with operations in India, according to a memo sent to all ANG and CC Times employees by publisher John Armstrong. "Based on our current timetable, this will result in the phasing out of production artist, typist and proofreader positions between December 8 and March 30," Armstrong wrote. The move came as a shock to some ANG employees who thought the ad production jobs also would be moved to the new center at Bishop Ranch Business Park in San Ramon. MediaNews, meanwhile, also is studying whether to outsource its ad production staff at the Merc, according to a memo from the San Jose Newspaper Guild, the union that represents Merc reporters, photographers, editors, and ad staffers.

In addition, MediaNews began terminating dozens of workers -- management and non-union employees -- on Friday. "The job eliminations came in all divisions, at many locations," Armstrong said in his memo. "Eliminated positions include Vice President/Advertising (ANG), Vice President/Editor (Contra Costa), Vice President/Circulation (ANG) and a number of middle management positions at Contra Costa and ANG." ANG also plans to layoff eight newsroom union members on Monday.

It was unclear Friday how many -- it not all -- of the advertising and business staffers at ANG and the CC Times will be laid off and forced to reapply for their jobs at the San Ramon center. However, according to one source, some of the layoffs have already begun. "One ad person told me, 'They're handing out pink slips like candy,'" the source said. In an earlier memo to employees, George Riggs -- who is Armstrong's boss -- said advertising and business staffers who are rehired at the San Ramon center will receive the same pay and benefits they had at their old jobs. However, MediaNews intends to downsize the total number of jobs at the center, as part of the cost-savings plan it developed after purchasing the CC Times and the Merc in August.

Kevin Keane, executive editor for ANG and the CC Times, now known as the Bay Area News Group, declined to comment on the day's developments. In his memo, Armstrong blamed declining ad sales, plummeting circulation, and competition with Internet sites for the outsourcings, firings, and layoffs.

The disclosure of additional union job cuts at the Merc, meanwhile, came during negotiations yesterday. The company told union officials that it hopes to save $4.8 million by eliminating another 64 union positions at the Merc that would "duplicate the work of other MediaNews properties," according to a union memo. Those 64 job cuts would be on top of the 101 total Merc staffers -- including 69 union members -- that MediaNews plans to layoff next month, plus another 116 total Merc staffers -- including 35 union members - it plans to let go in March.

On Thursday, union officials asked the company to share its financial records so they could examine for themselves why MediaNews needed to eliminate so many jobs. The company refused.

Here is the John Armstrong memo:

    Dear Colleagues:

    As I have noted in recent messages to you, a darkening revenue picture has caused us to urgently look for ways to reduce our operating costs.

    In the July-September quarter, our combined revenues at Contra Costa and ANG newspapers were down more than 3% from the same period a year earlier due to declines in both advertising and circulation. The outlook for the current quarter gives us no reason to believe these trends will improve.

    To the contrary, much of our current revenue problem stems from permanent changes in the marketplace or economic downturns that figure to be with us for a while. The former refers to migration of ad dollars to the Internet and the continuing slippage in newspaper readership across the country while the latter refers to the sudden and steep decline in the Bay Area real estate market.

    We had seen most of this coming, of course, and over the past several months we reduced our operating costs by eliminating unnecessary spending and reducing the size of our workforce through attrition.

    But those steps have not been sufficient. Our operating profit in the July-September quarter was 5% below that of the same quarter in 2005.

    With that as background, I write to inform you of two important actions we took this week.

    We informed our advertising production staffs yesterday that we have decided to outsource their work to a company called Express-KCS, a U.S. company with operations in India. Based on our current timetable, this will result in the phasing out of production artist, typist and proofreader positions between December 8 and March 30. This is being done to reduce the expense of producing ads so we can offer print rates that are more competitive with low Internet rates.

    Additionally, today we informed a number of employees that their positions were being eliminated. The job eliminations came in all divisions, at many locations. Some of these departures were voluntary.

    Most of the job eliminations stemmed from our need to reduce operating costs, but some came as a result of reorganizations implemented in the Advertising and Circulation divisions. People directly affected by the Advertising and Circulation reorganizations were informed of those changes earlier this week.

    These reorganizations, and one announced some time ago in the Editorial Division, reposition us in the East Bay to not just survive but to thrive in a very challenging environment.

    Job reductions have been spread across the company and up and down our two organizations. Eliminated positions include Vice President/Advertising (ANG), Vice President/Editor (Contra Costa), Vice President/Circulation (ANG) and a number of middle management positions at Contra Costa and ANG. As I noted earlier, we relied on attrition as much as possible.

    There are more changes in the offing as we migrate business operations to the new Shared Services Center in San Ramon, streamline production, abandon unnecessary office space, develop new offensives to build our revenue base and reposition ourselves to be a more powerful force on the Internet.

    We already have had some notable revenue successes as the new Bay Area News Group, through the increased cross-sell of advertising among our newspapers and Web sites and working together on special sections (such as Valley Life), niche publications (Fronteras) and new initiatives (a virtual job fair on the Internet). You will learn more about our revenue initiatives in the weeks ahead.

    In the meantime, we ask for your understanding and support as we cope with great changes that no less an authority than the dean of the Graduate School of Journalism at Columbia University describes as amounting to a "revolution" and "huge shift" in our business.

    As always, your comments and questions are welcome.

    John Armstrong

Here is the San Jose Guild memo:

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