Raleigh N&O to cut 78 or 11% of force

The Raleigh (NC) News & Observer Publishing Co. this afternoon announced it is cutting jobs, cutting pay and requiring unpaid furloughs for its staff as it contends with steep declines in advertising revenue.

The newspaper company, which also owns community publications such as The Cary News and The Herald in Smithfield, will eliminate 78 positions, or 11 percent of its work force. The equivalent of about 27 full-time positions in The N&O newsroom are included.

The N&O will require remaining workers to take a week off without pay between May 1 and Oct. 31.

And it will cut salaries from 2.5 percent for lower-paid employees to 10 percent for the higher paid. Those making less than $25,000 a year won't see a pay cut.

"We are making our way through difficult times by making difficult decisions," N&O Publisher Orage Quarles III wrote in a memo to employees. "It is never easy to say goodbye to so many of our friends and colleagues, but we must make these additional cuts to sustain our company and adjust to new competitive and economic realities."

The cuts were expected and have been telegraphed for weeks after The N&O's parent, The McClatchy Co. of Sacramento, Calif., said it had to pare its business. The newspaper chain is wrestling with a severe drop in revenue as it tries to pay down debt.

McClatchy's borrowings jumped in 2006 after its $4 billion purchase of larger rival Knight Ridder. It has worked to pay down that debt and now owes about $2 billion. But with revenue falling precipitously, it risks violating bank covenants if it can't keep expenses in check.

During the past year, the company has eliminated its dividend, outsourced operations and required several rounds of cuts at its newspapers, which also include The Sacramento Bee and The Miami Herald.