Drop in Rev., Cut Fees Cited for AP Staff Reduction

The Associated Press will trim 10 percent of its work force over the next year as a cut in fees paid by member newspapers and a declining economy take their toll, Chief Executive Tom Curley said Thursday.

The staff reduction will amount to a loss of more than 400 positions from a global staff of 4,100, and Curley said the cuts will include some of the news cooperative’s 3,000 journalists.

Curley told the staff in a meeting webcast to AP offices globally that he hopes most of the cut will be achieved through attrition, but he did not rule out layoffs.

Asked if the cuts would include newsroom jobs, Curley noted that 75 percent of the staff are journalists. “Everybody’s going to participate,” he said.

The AP is still profitable, but cash flow is expected to decline from $95 million this year to $66 million in 2009, largely due to a $30 million reduction in fees paid by newspapers facing unprecedented financial hardships.

The remainder of the AP’s cash will be spent funding the pension plan, taxes and capital equipment, and the staff cuts are meant to prepare for a possible further economic decline, Curley said. The staff reduction is intended to save $25 million a year.

“Part of it is to get to the 2009 budget and part of it is to think that 2010 might produce other issues,” Curley said in an interview Thursday. “We don’t know how far the economic setback is going to go.”

Revenue for 2009 is forecast to fall 5.5 percent to $705 million from an estimated $746 million this year.

The cooperative also faces rising competition, including from Time Warner Inc.’s CNN unit, which is forming a wire service it intends to market to newspapers.

More than 100 AP member newspapers also have threatened to quit the service, including the Los Angeles Times, the Chicago Tribune, The Columbus (Ohio) Dispatch and the Star Tribune of Minneapolis, Minn.

The company instituted a hiring freeze in October, and Curley said its effectiveness will be reviewed at the end of the first quarter.

Curley told the staff he was “terribly opposed” to buyouts but would keep an open mind.

The news organization also announced the location of two regional editing centers: One in Phoenix will cover the Western United States, and one in Chicago will cover in the Midwest. The first such hub launched this year in Atlanta will cover the south. Another, based in Philadelphia to cover the Eastern United States, is in the works.

The cooperative intends to shift 91 editor positions from its New York headquarters and U.S. state bureaus to the new centers through 2009.

The staff reduction announcement comes amid bargaining with the News Media Guild, a Newspaper Guild local that represents about 1,400 journalists, technicians and non-editorial staff at the AP. Their three-year contract is set to expire Nov. 30.

“It’s good that the company is being forthright with some of its financial and economic concerns,” said union president Tony Winton, who added it was the first time a number had been attached to the cutbacks. “To an extent, it wasn’t a surprise.”

AP is a global news company founded in 1846. It serves about 1,500 newspapers and 5,000 radio and television station members in the United States.

About 1,300 of them are full members and more than 4,000 are associate members — generally weekly newspapers and broadcasters.

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