In a swift move to cut millions in expenses, Media General, the Richmond-based newspaper and TV giant, told its employees Thursday that they must take 15 unpaid days between now and the end of 2011. Media General owns the Richmond Times-Dispatch.
The news was announced to employees in a letter Thursday afternoon from Media General CEO Marshall Morton. BizSense obtained a copy of the letter, and Media General spokesman Ray Kozakewicz confirmed that the announcement had gone out to all company employees via email today.
The furlough days apply to employees at all levels and throughout all divisions of Media General, which includes newspapers, mostly notably the Times-Dispatch, TV stations and websites.
“As we approach the midpoint of 2011, the much anticipated economic recovery continues to be unevenly felt across our markets, and, more recently, the economy has faltered,” Morton said in the letter.
“While new revenue and website growth initiatives have been successful, these efforts have not produced enough revenues to offset declines in our traditional lines of business.”
The furlough days will save the company approximately $9 million, Kozakewicz said.
Such savings are vital for a company that lost $22.6 million in 2010, which was an improvement over its $35.7 million loss in 2009. Revenue at its print products in particular have been in decline as the newspaper industry continues to find its place in the digital age.
“In order to reach our cash flow goal for the year, which has again been lowered from our initial expectations, we must cut expenses in the second half of the year,” Morton said. “One of the fastest ways to flow expense savings to the bottom line, without broad-based permanent layoffs, is a furlough program – something we had hoped we would not need to do this year.”
Media General isn’t the first newspaper company to institute furlough days for its employees. Nor is this the first time Media General has made such a move.
According to Kozakewicz, Media General employees were forced to take 15 furlough days in 2009. The company did pay employees back for two of those days in 2010.
Morton said in the letter Thursday that the company has told all departments to cut discretionary spending and ordered several of its operations to reduce their employee counts.
“Unfortunately, the expense reductions implemented to date are insufficient to meet our cash flow goal,” Morton said. “Compounding this situation is the fact that the economic outlook for the second half of the year continues to be uncertain.”
Morton ended his letter with some words of encouragement.
“Next year is not far off, and it’s one that is expected to be strong for Media General, with political advertising, the Summer Olympics and continued success with new revenue initiatives. I am grateful for your diligence as we bridge ourselves to better times.”