Knight Ridder to cut jobs

April 27, 2001: 4:02 p.m. ET

Falling ad revenue, higher costs force No. 2 U.S. paper publisher to cut staff

NEW YORK (CNNfn) - Knight Ridder Inc. said Friday it plans to cut jobs at most of its newspapers, as sinking advertising revenue and rising newsprint costs have cut into the newspaper publisher's profits.

Knight Ridder, the nation's second-largest newspaper publisher, said the number of jobs it would cut at its various papers would depend on "local market conditions." It said it hoped to make the cuts through buyouts and early retirements.

"This is a difficult time in so many ways, but in no way greater than having to disrupt the lives and trust of Knight Ridder people with whom we have worked so closely," said chairman and chief executive officer Tony Ridder. "But I do feel we have no choice."

The San Jose, Calif.-based company, which has about 22,000 employees, said February advertising revenue was down 2.7 percent from the same period last year, March revenue was down 6 percent and April's reduction could be "even more substantial." At the same time, Ridder said, the cost of newsprint was up almost 20 percent in the first quarter.

'The only responsible course'
"I never have seen a fall-off as sudden or as steep as this one. I don't know anyone who is confident of a near-term, or a dramatic uptick," Ridder said.

"The only responsible course is to tighten our operations," Ridder said, "but with maximum sensitivity to assuring the quality of our journalism and the long-term health of our franchises so that we are better positioned to meet the future, whatever the economic environment."

Mike Kupinski, analyst with A.G. Edwards & Sons Inc., said he wasn't surprised by the announcement, since Knight Ridder had hinted at cutting jobs in a recent analyst conference.

Kupinski confirmed April ad revenue was much worse than March and other months in 2001, hurt by the overall U.S. economic slowdown. What was surprising, Kupinksi said, was the fact that newsprint costs rose during that slowdown. The two usually move in tandem, he said.

Knight Ridder (KRI: up $0.36 to $54.51, Research, Estimates) which operates 32 daily newspapers including the San Jose Mercury News and the Philadelphia Inquirer, saw its stock little changed after the announcement.

Last month, the company, which has about 22,000 employees, said it planned to cut jobs at the San Jose Mercury News. Similar job cuts are in the works at Dow Jones & Co. (DJ: up $0.21 to $55.34, Research, Estimates) and the New York Times Co. (NYT: up $0.37 to $42.25, Research, Estimates).

Last Thursday, the company, reported first-quarter earnings that fell 24 percent and missed Wall Street analysts' estimates.