Knight Ridder plans layoffs, cutbacks

Knight Ridder Inc., the second biggest U.S. newspaper group, plans job cuts, benefit reductions and smaller editions to boost profit margins, United Press International reported Tuesday.

The company, which put itself up for sale last year under shareholder pressure, is telling private-equity investors of plans to trim costs, the Wall Street Journal said Tuesday.

KRI executives plan to increase annual earnings before interest, taxes, depreciation and amortization to about $825 million over the next 18 months, up 20 percent from 2004.

The 32-paper company reportedly has made presentations to MediaNews and Texas Pacific Group.

Editor and Publisher noted on Wednesday that the San Jose Mercury-News had confirmed a report in the Wall Street Journal that Knight Ridder is telling prospective buyers that its profits can be sharply increased by cutting jobs and benefits and reducing the size of some of its 32 newspapers.

Pete Carey, reporting for the Knight Ridder-owned Mercury-News, writes, "All interested parties have signed confidentiality agreements. But leaks of the company's projections already have begun.

"The figures Knight Ridder is giving potential buyers are similar to those in a Morgan Stanley research report published in November. The report, by analyst Douglas Arthur, said an outside buyer could reduce costs by $150 million a year through a 5% reduction in the workforce, cutting labor costs and chopping corporate overhead."

Knight Ridder spokesman Polk Laffoon told the San Jose paper that KR's financial advisers had prepared "a wide array of information about the company, including its cost structure. ... They reflect various options reviewed with people who have expressed interest in possibly bidding on the company. These options offer a variety of approaches to operational issues,'' he said.

"Whatever actions are taken would very much depend on the individual bidder, and any savings achieved would not be achieved overnight," Laffoon told the paper.

See the UPI report

The E&P story

The San Jose report