The Blog

Grim news Friday afternoon from Sun-Times editor in chief Michael Cooke in this memo e-mailed to the staff:

This afternoon the Sun-Times News Group issued a press release stating its intention to cut operating costs.  Among other things, this will eliminate newsroom positions at the Sun-Times. It is not clear yet how deep these cuts will be.

We have no choice. Advertising and circulation revenues continue to decline and, in the case of the Sun-Times, the drop is way outside the industry average. We have worked hard to minimize the effect on journalists. You will have noticed over the past few weeks how much smaller the paper is. As well as newsprint, we are also cutting wire and freelance costs.

This action, among other cost-saving moves, gives us a future. I am hoping you will join me in focusing our energies on that future, on minimizing the distress that this development will cause everyone, and in maintaining the cherished tradition of excellence at this newspaper we all love.

I know this is a time of great anxiety. I want to answer all your questions and my door is open. However, I cannot yet tell you the answers to the three most pressing questions: How many? Who? And when?

We will proceed with planning and implementation quickly, respecting the Guild contract, and I will communicate to you further as often and as much as possible. -- Michael

In the newsroom, they're saying about 40 jobs will be lost, a quarter of the editorial staff. And that's from a paper that had no fat to begin with.

Cooke's memo followed by nine minutes a more expansive notice to all employees of the Sun-Times New Group employees from CEO and publisher Cyrus Freidheim:

As you know, 2007 has been a tough year financially for our company. While the Conrad Black trial is behind us and we have settled our tax bill with Canadian revenue authorities, the company's financial results for the first nine months of this year have been well below plan and unprofitable. The decisions I must share with you today have all been difficult, but are essential to realizing our No. 1 goal:  to ensure the long-term viability of Sun-Times News Group properties."Yesterday our board of directors endorsed the broad strokes of a plan to reduce our operating costs by $50 million next year, as we announced in a press release today. This is by far the biggest cost-reduction effort in our company's history. We are still working out the details of the plan and will communicate specifics during January. Those actions will include a reduction in staff, further outsourcing of selected activities and reformatting of our products. The plan will begin in January and should be completed by the end of June.

The turnaround plan put into place earlier this year included a number of objectives that were achieved. However, one of our most important goals was not: to slow and eventually stabilize the decline in advertising revenue. The market for print advertising has been terrible. We did make good progress with online advertising revenue (up more than 50 percent) and we performed better than our Chicago competitors in print advertising in the third quarter of this year -- but it was not enough. Simply put, we have to accept that the print advertising market may never again reach the levels of the past.  Consequently, we must scale our organization to meet that reality."Other sizable issues remain as well, including a large potential tax bill from the Internal Revenue Service for tax decisions made between 1999 and 2003. We hope to resolve this matter soon, but the settlement will likely require financing, which we cannot obtain reasonably unless our operations are profitable.

Our costs and revenues must be in balance and yield a positive cash flow. Virtually every newspaper company in America is facing similar pressures.  We've made several important changes already, including consolidating printing plants from five to three, outsourcing our newspaper delivery to Chicago Tribune Company, combining papers to create the SouthtownStar, reducing our newsholes to be in better balance with advertising, and outsourcing our customer service call center. Our investments in New Media are paying off.  We have a robust agenda for enhancing our New Media capabilities and will continue to invest.  Much more, however, must be done to meet our future financial obligations.We are proud of the quality of our products, the strength of our franchises and the energy and capabilities of our team.  We are fighting a tough market and are burdened by legacy issues that continue to cost us time and money.  At the same time, we are moving rapidly into a new world of news and information with different channels, different competitors, different economics, and excellent opportunities. We are in the midst of a tidal transformation in our industry. Yes, print accounts for most of our revenue and we are not abandoning print, but the growth in this business is online. Leadership in online local news and information and advertising is ours if we will grasp it."To confront these realities we need to take bold actions - some of which are painful, but I see no alternative.  We cannot guarantee a smooth ride, but we can look to a future with promise and opportunity and impact on our society.

Please know that we are committed to providing you with more specific information beginning in January.

NOTE: After the above was posted I received an e-mail from Michael Cooke, who said, "Even if the 40 number was true, that would be less than a fifth of the newsroom, not the percentage you give in your blog. And I don't know for sure what the number will be."