Consolidation key to recovery, Media General says
Job cuts and outsourcing aren’t the only cost-saving strategies Media General Inc. looks to employ at its major newspapers, including The Tampa Tribune. The company also expects to consolidate and centralize some of its operations.
"We have taken, and are taking, prudent and necessary steps to improve performance in Tampa," said Marshal N. Morton, president and chief executive of Media General (NYSE: MEG) at the Deutsche Bank 2008 Media & Telecom Conference in New York Tuesday. "Last year, we cut more than $8 million in costs in Tampa, on an ongoing basis, and eliminated approximately 200 positions, mostly at The Tampa Tribune."
At the same time, the company outsourced its circulation, customer service and telemarketing while eliminating some of its outlying distribution markets, according to a release. Media General also closed three distribution centers.
"Unfortunately, the reductions of last year in Tampa were not enough, as we’ve seen additional deterioration in the market," Morton said in the release. Media General already announced that 750 positions will be lost across all divisions, except interactive, which will see 60 new positions added. The cutbacks will equate to an annual savings of $40 million and a severance expense of $5 million in the second quarter of 2008.
Tribune publisher Denise Palmer told the Tampa Bay Business Journal last week that the paper planned to outsource its advertising production work to India through Express KCS LLC cash advance loan.
Newspaper printing sites also will be consolidated while advertising call centers, ad production, photo toning and other operations will be centralized. On the broadcasting side, graphics production will be centralized for its CBS and NBC stations, including WFLA-Channel 8, an NBC affiliate, as well as its remaining ABC affiliate.
Media General expects to reduce capital spending for 2008 from $45 million to $25 million, deferring much of it until later in the year.
Much of the company’s new focus will be on the interactive divisions, including TBO.com locally, according to Reid Ashe, executive vice president and chief operating officer, and a former publisher of the Tribune.
"Local advertising is our fastest-growing online revenue growth category, driven by new forms of targeting and rich media," he said during the conference call. "We’re cultivating relationships with major accounts and agencies, and successfully pursuing multimedia and multi-market sales."
Media General reported a loss of $20.3 million, or 91 cents per share, in the first quarter of 2008 ended March 30, compared to $6.5 million loss, or 27 cents per share, the company reported the year before. First quarter revenue was down from $218.3 million in 2007 to $194.5 million in 2008.
Filed under: economics by Wolf