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More layoffs at Blethen papers

There is more bad news for the employees of the Blethen Maine Newspapers - five full-timers and four part-timers are being laid off from the Augusta-based Kennebec Journal and the Waterville-based Morning Sentinel, sister papers of the Portland Press Herald. And it's not the last of the cost-cutting for the year. "Highlights," which really are lowlights, include: total ad revenue has dropped $70,000 since last year, circulation revenue is down $71,000, and third-party commercial printing jobs are down $52,000.

This after last week's strange news. about how Frank Blethen thinks about newspapers.

Here's today's all-staff memo from KJ/MS publisher John Christie:


To:   All Employees
From: John Christie

About a month ago, I spoke to you about the financial state of Central
Maine Newspapers. I explained that when we established the financial goals
for 2008, we recognized this would be a tough year and planned – with the
approval of Blethen Maine Newspapers – to make less money this year than we
did last year.

Despite that very reasonable approach, the year started off behind, with
January results that were discouraging. Although February results were
better, they did not make up for the shortfall in January. Still, we needed
at least one more month’s results before we could project a trend for the
months ahead. It was at that point – when the results of the first two
months were “in the books” – that I spoke with you.

I was asked then if layoffs or other cutbacks were planned. I said, no,
there was no specific plan at that point, but that layoffs were always
possible. I added that we would monitor financial results on a
month-by-month basis and determine at the end of each month whether layoffs
and other expense reductions would be necessary.

March financials are now in and have been reviewed, along with projections
for the rest of the year. They are not good. March revenues were down by 6
percent versus last year and cash flow for the month was 28 percent below
budget. For the first quarter, cash flow was off well more than $100,000
vs. budget and even more than that vs. January-March, 2007.

We cannot sit back and hope things will turn around. We have to take action
now; waiting will just make the hole deeper and require bigger cutbacks.

For that reason, we are today announcing a set of expense reductions,
including some layoffs.

The cutbacks include:

      Layoffs: five full time and four part-time employees. Those affected
         will be notified today and will receive severance payments based
         upon their years of service. The actual number of people affected
         may be smaller because one or two may be able to fill vacancies in
         other, related areas. In most cases (but not all), the layoffs are
         related to a reduction in work in the effected departments. For
         example, there is less commercial print work and fewer classified
         ads and those two areas are among the effected departments.
      Department directors have already or will soon further reduce
         expenses by reorganizing their departments in ways that ensure
         that our work assignments are well aligned with the areas where we
         need to put our best efforts. Some people have already had their
         work assignments modified; others will very soon; and a few
         changes will occur later this year as opportunities arise.

In making these cutbacks, we have been careful not to materially diminish
our service to readers and advertisers. There should be no discernible
difference in our daily and Sunday products.

The reasons for the cutbacks are worth explaining.

First, the expense side:

   Newsprint – the paper we print on – costs a lot more than it did a year
      ago. Between the recent price increases and the ones scheduled for
      the next two months, our costs for newsprint will have risen 15
      percent compared to a year ago.
   Fuel. Our fuel costs include delivery trucks, mileage by reporters,
      photographers, sales representatives, circulation employees and
      contractors and heating oil. Gas is up 18 percent from a year ago;
      diesel and heating oil are up even more.

Second, the revenue side:

   Total advertising revenue is down $70,000 compared to a year ago, mostly
      due to classified and national advertising declines. Retail
      advertising – which comes mostly from local business – is holding
      steady.
   Circulations revenue is down $71,000 vs. last year.
   Commercial print revenue is down $52,000 vs. last year. This is due
      mostly to the Sun-Journal purchasing the Franklin newspapers and
      switching the printing from CMN to their own plant; and other jobs
      switching to presses near their home base in order to reduce
      transportation costs (more fallout from the high price of fuel).

We have avoided layoffs for the past five years, a time when most
newspapers have had multiple layoffs and buyouts. But we could not be
immune forever to the broad forces that caused problems at those
newspapers. Some of those factors, such as a stagnant economy, the cost of
commodities and the effect of the Internet, have damaged our business to
the point that we have to take these regrettable steps or risk having to
take even more drastic steps in the near future.

You will likely wonder if today’s announcement is connected to the fact BMN
is for sale. There is no connection. Declining revenues and rising expenses
would have to be dealt with under any circumstance if we are to sustain our
two newspapers into the future.

Is this the last of the expense cutting for the year? I hope so, but cannot
make a guarantee. Ad revenues, particularly, have become hard to predict.
As I have said all along, we will monitor our finances and make adjustments
as needed.

I thank all of you for your hard work and dedication. That’s what has
allowed us to go this long without major cutbacks and what has allowed us
to keep this reduction narrowly focused.

Keep up the good work, knowing that it is appreciated, especially in these
challenging times to our industry.


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