McClatchy to slash 1,600 jobs, cut executives' pay

Chairman and Chief Executive Gary Pruitt, will also see his base salary cut by 15 percent, while other executive officers' salaries will be cut by 10 percent, McClatchy said on Monday.

The publisher of 30 daily newspapers, including The Miami Herald, Sacramento Bee and Anchorage Daily News, has been under pressure to reduce costs to meet heavy debt payments from its purchase of newspaper chain Knight Ridder Inc in 2006.

It warned in a regulatory filing last Tuesday that it may broaden its previously announced cost savings plan due to the worsening outlook for advertising revenue. Shares of McClatchy fell to a new low of 35 cents a share that day.

"The effects of the current national economic downturn make it essential that we move even faster to realign our workforce and make our operations more efficient," Pruitt said in a statement.

"We previously discussed a plan to reach a targeted level of cost savings, but given the worsening economy, we must do more. I'm sorry we have to take these actions, but we believe they are necessary."

McClatchy said it expects to incur $30 million of severance costs in connection with the job cuts, which will start by the end of the first quarter through severance programs, attrition and further consolidation and outsourcing some businesses. The cuts would affect nearly every area of the company, it said.

U.S. newspaper publishers, from the New York Times to the Los Angeles Times, are cutting thousands of jobs to pare costs as advertising sales plummet in the economic recession and readers increasingly seek free news online.

Most publishers have laid off hundreds of employees at a time, though USA Today publisher Gannett Co Inc said last August it would eliminate 1,000 newspaper jobs and in October announced a second round of cuts amounting to 10 percent of its workforce.

On February 5, McClatchy posted a quarterly loss and said it planned to cut up to $110 million in additional costs, bringing total savings from a restructuring plan to $300 million a year before layoff expenses.

The company said on Monday that no bonuses would be paid to any executive officers this year. It also reduced the cash compensation, including retainers and meeting fees, paid to directors by about 13 percent. The directors also declined any stock awards for 2008 and 2009, McClatchy said.

Shares of McClatchy closed at 68 cents on the New York Stock Exchange last Friday, compared to a year high of $11.21 in April 2008.

(Reporting by Tiffany Wu and Euan Rocha; Editing by Derek Caney)