Estimated read time: 1-2 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
PHILADELPHIA (AFX) - The new publisher of The Philadelphia Inquirer and the Philadelphia Daily News told employees Friday that layoffs are "unavoidable" because advertising revenue is down and the owners need to cut costs in order to meet their bank obligations.
"We must reduce our work force so that it is in line with our reduced revenue," wrote Brian P. Tierney, chairman and chief executive of Philadelphia Media Holdings LLC, which bought the newspapers in June. "To the extent we don't get the savings, those layoffs will be larger."
Philadelphia Media Holdings -- an investment group made up of Tierney, luxury homebuilder co-founder Bruce Toll and other local investors -- bought the two dailies, their Web site and sister properties from McClatchy Co. in a deal valued at $562 million.
Tierney expressed optimism after the sale was announced, saying he wanted to invest in the newspapers to ensure their continued growth.
But in his letter, he said the investors needed to make changes. Citing contract negotiations with the newspapers' unions, he said the company needs to restructure labor contracts and the work force.
"We need to reach agreements that allow us to achieve the savings to meet our loan obligations, and to reinvest in and to grow our business," he wrote.
Cash flow dropped from $100 million in 2004 to $76 million last year and is estimated to be less than $50 million for 2006, Tierney said.
Jay Devine, a spokesman for Philadelphia Media Holdings, said the financial picture has changed dramatically in the last few months.
"We also were optimistic about the end-of-the year quarter," Devine said of the group's initial hopes. "That, too, now looks very grim." Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.