Gannett Blog

Golden parachutes? The answer is: $79 million

2008-07-20T07:54:00.007-04:00

That's what Gannett's stockholders would potentially pay to CEO Craig Dubow and three other top executives, if they're canned within two years of what's called a "change in control," according to the most recent proxy report to shareholders, filed in March with the U.S. Securities and Exchange Commission. The relevant section starts on page 40. The chart detail, above, is from the document. I've reproduced it in full, below.

Dubow's payout would be the biggest: $36.3 million, the document shows. That includes an excise tax gross-up, another legal term meaning the company would pay $8.8 million in excise taxes, so Dubow, 53 (left), wouldn't owe the Internal Revenue Service anything on the value of his package.

My $79 million total doesn't include nearly $19 million for now-retired newspaper division chief Sue Clark-Johnson. That figure is listed in the document, but it's not clear she'd be entitled to the loot after having left the company.

The document defines a change in control as:

an investor's buying 20% or more of the company's stock
a shift in the board of directors, where the incumbent members are forced out of a majority
a sale or merger of the company
Gannett's complete liquidation or dissolution

Perversely, it appears, the lower Gannett's stock goes, the more likely Dubow & Co. get these eight-figure payouts. That's because the company grows more vulnerable to a takeover as the stock falls -- an example of the absurdity of golden parachutes.

Here's a screenshot of the full chart, showing payouts after a change in control; click on the image for a bigger view:

Earlier: Retired Chairman and CEO Doug "McCorky" McCorkindale's super-sweet retirement package. (Hint: He and his spouse don't pay a dime for their health insurance.)

Please post your thoughts in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Credits: Hat tip, to Gannett Blog readers for helping with my research; Gannett SEC schedule 14A, March 13, 2008]

Calling Detroit: How many applied for the buyouts?

2008-07-19T17:21:00.006-04:00

The deadline has now passed for employees to apply for 150 buyouts at the Detroit Free Press, The Detroit News, and at the joint operating agency publishing the two dailies. Freep recruiter Joe Grimm, who says he's getting one, writes: "We seem likely to accept everyone who volunteered."

I don't know whether that means all 150 have been taken. There might be more -- or less, which was the case at USA Today late last year. The paper sought 45 volunteers, but wound up settling for 43. (I was one.)

So, Detroit: How about an update? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Earlier: Poynter blogger says next buyouts won't be so generous

[Image: today's Freep, Newseum]

How big are Dubow & Co.'s golden parachutes?

2008-07-19T05:01:00.005-04:00

Please see this July 20 update: The answer is $79 million

CEO Craig Dubow and his hapless sidekicks will likely get multimillion-dollar payoffs known as "golden parachutes'' if they leave Gannett unwillingly. Corporate raider Carl Icahn, now dueling with Yahoo's management, wrote about them yesterday on his blog.

"A golden parachute is a binding agreement between a company and an employee (most often a CEO but in some cases all the employees) detailing considerable benefits for the employee if the employee is terminated or retires," Icahn writes. "The overwhelming flaw with this system is that they may secure an egregious level of compensation regardless of performance. This is absurd."

In an e-mail, one of my readers says: "If I read Carl's blog right, the golden parachute is established when the individual is hired -- not when they leave. I wonder if shareholders can get access to all details of the contract, including the parachute Craig stands to earn upon his departure. And I agree with Carl: these are ludicrous given the significant size of the annual salary and bonuses."

Contemplating Dubow's exit strategy isn't just wishful thinking: The company's steep quarterly losses Wednesday sent GCI shares into a tailspin, adding to the billions of dollars in lost equity over the past year. The company's stock is now down nearly 70% from a year ago.

Does anyone have access to Dubow's employment contract, with details of his severance agreement? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Earlier: GCI's market value has now dipped to $3.8 billion. Plus: Progress -- GCI stock on Dubow's third anniversary

[Photo of Dubow: Gannett]

Unity '08: GCI cuts cast doubt on diversity goals

2008-07-19T04:10:00.003-04:00

The News-Press' retrenchment yesterday includes the shuttering of its Spanish-language weekly; the Saturday business-news section, and a Friday features section. The Fort Myers, Fla., daily also laid off 36 workers and axed another 10 unfilled jobs -- about 6% of the workforce, the paper says today.

The print version of Gaceta Tropical, the Spanish-language weekly published since 2004, will die after next week, although some copy will continue online at Gacetatropical.com. The timing -- on the eve of a high-profile national minority journalism conference starting Wednesday -- couldn't be worse for Gannett. The company is a major sponsor of Unity '08 in Chicago, and comes when CEO Craig Dubow has been making a major push for more minority hiring.

Fort Myers is at least the second GCI paper to eliminate a Spanish-language section. The Home News Tribune in East Brunswick, N.J., recently dumped its version -- plus one in Hindi. That sparked an angry letter to Corporate from its former editor, who noted that she wouldn't be part of the company's delegation to the big Unity '08 minority journalists conference in Chicago, starting Wednesday.

"I personally find it very difficult to reach out to Latinos when my newspaper closed its Latino and Hindi publications and all the layoffs in our newsroom were minorities,'' the former editor wrote, according to one of my readers.

Earlier: At Unity '08, the color of sponsorships is green

Has your paper eliminated a minority-focused publication or program? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Layoffs cont'd.: Fort Myers paper slashes 36 jobs

2008-07-18T19:02:00.012-04:00

Either the jobs cuts are accelerating, or my readers are getting better at sending me tips. This just in from Florida's Gulf Coast:

Comparing the local economy to the 1929 stock crash, Publisher Carol Hudler said today that The News-Press would shrink to staffing levels last seen in 1995-2000. "Sadly," she said in a memo, "we're losing some good people with this workforce reduction. It is very painful, but it's necessary."

Hudler's memo suggests the job cuts will be outright layoffs -- rather than buyouts. If true, the News-Press would be at least the second GCI paper this week to take that more draconian route. That's more evidence that Gannett Chief Financial Officer Gracia "The Knife'' Martore has been redlining budgets.

Corporate says the News-Press has 650 employees. Hudler said the paper would "share resources'' with other Florida papers, and "embrace new processes and technologies to help us accomplish more in our workday."

Earlier: Phoenix in second buyout round; Honolulu cuts 54. Plus: Brevard editor Eberle moving to Fort Myers

[Image: today's News-Press, Newseum]

CJR columnist: Gannett needs to cut its dividend

2008-07-18T18:30:00.001-04:00

What could the newspaper business do with a spare $311 million? That’s how much Gannett paid out last year in dividends -- and about how much it will this year, Columbia Journalism Review columnist Ryan Chittum writes today.

GCI is Chittum's featured example in a piece about the insanity of newspaper publishers refashioning themselves into technology companies -- while simultaneously paying crazy-high dividends. (Gannett's yield climbed to 9.5% today, after the stock closed at $16.87, down 2.3%.)

News Corp. CEO Rupert Murdoch (left) said of Dow Jones & Co. before buying the Wall Street Journal publisher last year: "A year ago, they made $81 million after tax and paid $80 million in dividends, and you can’t grow a company that way."

GCI's top brass ought to listen to Murdoch. After all, he had the smarts to bet nearly $600 million on social network MySpace -- an investment now worth billions. (GCI's notion of an edgy bet was to invest a reported $8 million in social-network Cozi.) Craig Dubow needs to grow a pair: Take that $311 million and start acting like a real entrepreneur -- instead of a Wall Street lapdog.

Earlier: GCI's Connell says no dividend cut in the works, but . . .

How could Gannett put $311 million to better use? Please post your thoughts in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Newsquest editor quits Scottish paper after losses

2008-07-18T13:54:00.002-04:00

Charles McGhee (left) surprised colleagues early today by quitting his post at Glasgow's Herald after Gannett's big second-quarter profit and revenue fall, the Guardian says.

"McGhee's revelation sparked speculation that he quit after being told that Herald owner Newsquest was seeking even deeper cuts in staffing and budgets at the paper,'' the Guardian says. "Over the past few months, McGhee has forced through several waves of cuts and voluntary redundancies, provoking angry complaints from staff and unions. The most recent cuts were in May, with 40 posts across the Herald group axed, including 20 editorial staff."

The Herald's circulation has dropped, contributing to Newsquest woes that last month spurred Gannett's planned $3 billion writedown. The paper sold an average 63,951 copies daily in June, the Guardian says, down almost 8% from a year ago.

Earlier: U.K. workers strike over 'Dickensian' conditions

[Photo: Guardian]

Blog etiquette 101: Correct a post, or take down?

2008-07-18T13:30:00.002-04:00

Some readers spanked me today after I wrote about a certain suntanned, treehouse-dwelling, retired millionaire media mogul in Cocoa Beach, Fla.

"Jim is a hack," one reader declared flatly.

Then, lightning fast, another reader wrote: "How about simply changing the headline or removing the erroneous item entirely?"

I followed past practice, updating the post to reflect new information. Here's why: I read on the Internets that some bloggers consider it poor form to take down a post that's incorrect -- as opposed to fixing it, and leaving the original text in place. In an age of journalistic transparency, I don't want to hide my boo-boos.

Now, what do you think? Please post your thoughts in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Photo of eraser: About.com chemistry]

USA Today's secret formula for going 'green'

2008-07-18T07:20:00.003-04:00

Add this to the shrinking daily's list of 11 "environmentally sound features" at the McLean, Va., complex that also houses Corporate:

No. 12: Laid-off employees use less electricity

Earlier: May the force be with me at the Death Star

GCI's Connell: No dividend cut in the works, but . . .

2008-07-18T05:27:00.007-04:00

. . . the company's chief flack wouldn't rule it out either, Dow Jones says, as Gannett's stock dividend nears a sky-high 10% yield. "When it comes to paying dividends, paying down debt and paying for acquisitions, we're constantly evaluating all our options," Tara Connell told the news service.

CEO Craig Dubow has said that maintaining the dividend is one of his top priorities. Any concession would likely send GCI's stock even deeper into the toilet.

The Dow Jones story warns investors that the days of rich dividend payouts for newspaper publishers could be numbered. "These stock prices are declining, and the market is sending a signal that these dividends are not sustainable," Morningstar analyst Tom Corbett says. "When you have a company with declining profitability paying out above-average dividend yields, investors need to ask themselves how long this will be sustainable."

Gannett's yield surged to 9.3% after the company reported dismal quarterly earnings, crushing investors' hopes for a shift in its strategy. GCI shares dived to new 20-year lows.

Earlier: Testing new lows, Gannett stock tumbles 2%

Three N.Y. papers consolidate online, ad sales

2008-07-18T05:05:00.004-04:00

Gannett's cost cutting spread yesterday to central New York, where newspapers eliminated top management and other jobs in a reorganization of online operations and advertising sales. The papers are the Press & Sun-Bulletin in Binghamton, The Ithaca Journal, and founder Frank Gannett's first title -- the Star-Gazette in Elmira.

The Central New York Group's shifts follow a second round of buyouts this week at The Arizona Republic, and layoffs at The Honolulu Advertiser, amid a steep plunge in Gannett's second-quarter profits.

Binghamton Publisher Sherman Bodner didn't disclose the exact number of jobs cut in the e-mail he sent to staff about 5 p.m. "The economic climate for our industry remains challenging, and we continue to explore changes that provide economic or strategic advantages,'' Bodner said. "We made staffing reductions in our information centers, in our building/facilities departments and in information technology.These were difficult choices, made only after close consideration of other options."

His e-mail says one manager will now be in charge of the three papers' online operations, and the number of online-only staff is being reduced, and based at Binghamton. Also, ad sales at the three papers will now be run by a single sales director, Bodner's note says.

Together, the three papers employ fewer than 800 workers.

Job cuts at your GCI business? Please post a note in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: today's Press & Sun Bulletin, Newseum]

Lost and found: One columnist named Big Al

2008-07-18T05:03:00.014-04:00

Updated at 8:23 a.m. ET: In fact, his column appears in print; it wasn't online when I first checked. It's now here.

Earlier: My favorite retired Gannett CEO's weekly column in USA Today wasn't published today -- odd, given Al Neuharth's expressed reluctance to take a vacation. I've searched USAT's website, but can't find any mention of his absence. I've e-mailed two people at the No. 1 printed daily, plus one of his associates -- but no replies yet.

Earlier: Plunging stock prices can be fun!

Reader: Phoenix buyouts just one week per year

2008-07-17T19:07:00.004-04:00

Regarding The Arizona Republic meeting to brief news staffers on a second round of buyouts, a reader says: "These are NOT two weeks pay per year worked. We wish. The Republic is breaking new ground in skin flintedness by offering only week of pay per year worked. Health insurance is being extended to about three years, which is certainly important, but one week per year? Really? WTF? . . . The mood in the Republic newsroom is pretty grim right now."

Join the debate, in the original post.

Earlier: Phoenix, tell us about today's buyouts. Plus: Poynter blogger says next buyouts won't be so generous

Dept. of Screw-Ups: Comments are 'open' again

2008-07-17T12:04:00.008-04:00

They should now publish immediately. Still having trouble? Please e-mail yours truly at gannettblog[at]gmail[dot-com].

Rochester union said finally winning new contract

2008-07-17T07:57:00.007-04:00

The Newspaper Guild says: "After nearly 16 years of difficult and sometimes stalled negotiations the union that represents approximately 90 reporters, photographers, copy editors, multi-media journalists and artists at the Democrat and Chronicle reached a new labor agreement with the newspaper’s parent company."

Earlier: What I think about the Newspaper Guild & Co.

Batter up! Des Moines Register sex issue's got juice

2008-07-17T06:33:00.024-04:00

Outgoing Indianapolis Star Publisher Babs "Dominatrix" Henry isn't the only one pitching kinky sex in Gannettland. "Check out the Des Moines Register's alternative weekly, Juice,'' a reader says. "This week's Sex Issue includes the usual extremely explicit Q&A about sex, but also the 'sex diaries' of some anonymous local women and a photo gallery of the cover-photo models in various positions and states of undress. And all of this is promoted, of course, on the Des Moines Register's home page -- not just on the Juice site." Plus: there's a sex survey!

I wonder what the Cowles family is thinking?

Earlier: Rochester's Kane named new Indy Star publisher. Plus: Ooh, la, lah! Rochester 'threesome' a surprise hit

[Photos: Register; Peak Agency models Jordan Nemitz and Jamie Struve, both 24, struck some sexy poses at a local diamond]

Traffic report: Where are Gannett Blog's readers?

2008-07-17T06:32:00.001-04:00

The District of Columbia -- about 12 miles from the headquarters of Gannett and USA Today -- leads a list that roughly reflects where readers work. That's based on a new Google Analytics report for the past 30 days' traffic.

GCI's market value has now dipped to $3.8 billion

2008-07-17T06:01:00.007-04:00

That's down from nearly $9 billion just eight months ago. This latest dive in Gannett's market capitalization follows yesterday's worse-than-expected quarterly earnings report. Plus: Why you should care.

Calling Phoenix: Tell us about today's buyouts

2008-07-17T05:04:00.002-04:00

['Real estate-centric' -- a satellite photo of downtown Phoenix]

The Arizona Republic briefs newsroom staff this afternoon on a second round of buyout offers now being rolled out. Top Editor Randy Lovely (left) leads the 4 p.m. meeting.

Gannett's second-biggest newspaper by circulation (USA Today is No. 1) has been especially hard-hit by the nation's mortgage industry meltdown. As a result, Arizona is one of four states that have been a big drag on GCI's faltering earnings. "The struggling economy has put pressure on advertising demand for our publishing segment particularly classified advertising in our real estate-centric markets in the U.S. and in the UK,'' CEO Craig Dubow said yesterday in Gannett's second-quarter earnings report.

The Republic may be GCI's single-biggest employer; it has nearly 2,700 employees, Corporate says. The other three real-estate heavy states: California, Florida and Nevada. Phoenix also is home to KPNX-TV, which employs about 200.

Questions for Republic staffers: How many buyouts is the paper offering? Are departments other than news getting offers? And how do the terms of these buyouts differ from the last round? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Earlier: Tipster says Phoenix lays off 50 in circulation, elsewhere. Plus: a bad forecast in Gannett's war room

[Photo: Google Earth]

Phoenix in second buyout round; Honolulu cuts 54

2008-07-16T19:49:00.031-04:00

As Gannett's quarterly earnings plunged 36%, the hammer was coming down today at The Arizona Republic and The Honolulu Advertiser. This just in from:

Phoenix. Top Editor Randy Lovely has scheduled a staff meeting tomorrow to talk about a second round of buyouts. His memo: "Today, we began to roll out a second round of voluntary early retirement opportunities. Please join me tomorrow for a staff meeting so that I can provide an update and answer any questions you may have. We will gather at 4 p.m. in Sigma-Delta-Chi. We are arranging for the suburban newsrooms to participate through videoconferencing."

Honolulu. Amid bitter talks with unionized workers, Publisher Lee Webber told staff in a memo today: "I must deliver some very difficult news. In light of unfavorable economic conditions leading to lower revenues, the company has determined it must reduce The Honolulu Advertiser's workforce by 54 positions. Affected employees will be notified by there [sic] individual supervisors. This is a difficult action to take, but necessary for the long-term health of the newspaper. It is not a reflection of dissatisfaction with the performance of the affected personnel, and the company will do everything it reasonably can to help those who must be laid off."

Has Martore sharpened her blade?
The Advertiser's job cuts are layoffs, rather than buyouts -- making me wonder if Gannett Chief Financial Officer Gracia "The Knife" Martore is now cutting even deeper. The Advertiser employs about 700, Corporate says, so the layoffs would be 8% of the workforce.

Related: The Advertiser's layoff story. Plus, the Hawaii Newspaper Guild says Gannett returned to talks Monday with a "new and breathtakingly regressive contract proposal."

Earlier: Mediator tapped in Advertiser contract talks

[Image: today's Republic, Newseum]

Ending a wild day, GCI stock closes down 5%

2008-07-16T19:08:00.000-04:00

Recovering from a 15% plunge after a dismaying earnings report, Gannett's shares closed at $16.57, down 4.5%, on extraordinary volume: 16.4 million shares traded vs. the 4.8 million average. Still, the stock is now down 70% from a year ago.

Among those hurt the most: Loyal Gannett retirees with too much of their retirement money invested in the company's stock.

[Data and image: Google Finance]

Rochester's Kane named new Indy Star publisher

2008-07-16T17:43:00.012-04:00

Updated at 5:43 p.m. ET. Gannett just announced that Michael Kane (left), vice president of the company's East Publishing Group and publisher of the Democrat and Chronicle in Rochester, N.Y., has been named Interstate Group president, and publisher of The Indianapolis Star. Kane, 49, replaces Barbara Henry, retiring Aug. 1, after the Friday Afternoon Massacre. Kane joined Gannett in 1992, when he was hired as marketing manager at The News Journal in Wilmington, Del. In comments, below, he's getting good reviews: "Michael is a class act,'' one reader says.

Related: the Star's story, plus the Democrat and Chronicle's

Earlier: the Democrat and Chronicle's school textbook probe

Fun facts about Babs!
The sex-survey lovin' Henry has ginormous feet, according to newspaper division President Bob Dickey, who told the Star today: "Michael has huge shoes to fill."

Rochester: What can you tell Indy about Kane? And who's going to replace him at the Democrat and Chronicle? Post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Photo: Democrat and Chronicle]

Progress: GCI stock on Dubow's third anniversary

2008-07-16T13:56:00.006-04:00

[This is progress? Full stock comparison chart, here]

Based on today's quarterly earnings alone, the board of directors should put CEO Craig Dubow on a performance improvement plan -- instead of having rewarded him with a $1.75 million bonus. Yesterday marked the third anniversary of his ascent to CEO. Performance of Gannett, competitors, and the S&P-500 index since then:

GCI: down 76%
New York Times Co.: down 59%
Washington Post Co.: down 34%
S&P-500: up 0.25%

Just how low must GCI go before the board lets him go?

Earlier: Eight words to remember on Dec. 31, 2008

[Data and image: Google Finance]

Reader: Investors must give plan time to work

2008-07-16T12:13:00.003-04:00

Regarding Gannett's new second-quarter results, a reader says: "Yes, total revenue came in even less than expected. But expenses were also lower than expected. So the bottom line was about where everyone expected. I hope investors realize Gannett is a company retooling for the long-term and that it's going to take time for the plan to work and for the general economy to improve."

Join the debate, in the original post.

Breaking: Q2 profits tumble, shares plunge anew; Dubow cites economy's 'dramatic' impact on GCI

2008-07-16T11:26:00.020-04:00

Updated at 5:18 p.m. ET. In a much-anticipated report, Gannett just disclosed that earnings dived 36% from a year ago, on a worse-than-expected drop in revenue. Chairman and CEO Craig Dubow said the near-term outlook is grim. Flagship USA Today's sales tanked dramatically. Shares swooned to new 20-year lows.

The beleaguered company's profits sank to $232.7 million, or $1.02 a share, from $365.7 million, or $1.56 a share, a year ago. Revenue totaled $1.72 billion, down 10% from last year. Wall Street analysts had expected $1.02 a share in profits, but $1.74 billion in revenue, Yahoo Finance says.

Disappointed investors dumped Gannett shares. They traded as low as $14.70, down more than 15%, before recovering late in the morning. GCI closed at $16.57, down 4.5%, on extraordinary volume: 16.5 million shares traded vs. the 4.8 million average.

In a just-concluded conference call with stock analysts, Dubow said sharp revenue declines in June appeared to be continuing this month. "We're seeing probably more of the same," he said. And Chief Financial Officer Gracia "The Knife" Martore, who dominated the discussion, said Gannett planned to use its cash horde to look for more digital deals, such as the recent buyout of ShopLocal.com, and to further pay down debt.

"The weakening economy had a dramatic impact on our results,'' Dubow said in the earnings report. He cited "pressure on advertising demand" for the newspaper division, particularly classified advertising in "real estate-centric markets in the U.S. and in the UK."

Sharp revenue decline in June
In a separate monthly statistical report, Gannett said June revenue fell 12.1% from a year ago, amid further erosion in USA Today's results. The top-circulating paper's revenue fell 27% from June 2007 on 236 paid ad pages vs. 329 last year. The monthly tallies for the company and for USA Today were the worst so far this year. USAT's results follow a big shake-up last month in the daily's advertising sales leadership.

Amid growing pressure from big investors, Gannett this morning did not disclose any big shifts in its strategy -- such as a spinoff of the company's TV division or its digital properties, steps taken by other newspaper publishers to satisfy increasingly restive investors. Boxed in by a failing strategic plan, and a worsening U.S. economy, Dubow's options now look increasingly limited.

With about 46,000 employees, Gannett is the nation's top newspaper publisher, with USA Today and 84 community dailies in the U.S., and 17 in the United Kingdom. It also owns 23 TV stations, and scores of other businesses.

Related: Gannett joins list of newspaper victims

Earlier: What big investors expect this morning

Your reactions, in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: this morning's USA Today, Newseum]