The Bay Area News Group (also known as BANG) will be reducing staff through buyouts from its subsidiaries before layoffs will take place in the coming months. The impacted divisions include The Mercury News and the East Bay Times. The Bay Area News Group is owned by Digital First Media Inc., which is owned by Alden Global Capital LLC, a hedge fund.
The impacted employees will have two choices. The first is to volunteer and receive a buyout. Employees that do not qualify for a buyout or choose not to leave the company willingly could possibly receive a layoff notice.
To be considered for a buyout, an employee must have worked for BANG for at least 25 years. Individuals that elect this method of leaving the company will receive 26 weeks of salary and an additional five months of healthcare insurance benefits.
The company is using this buyout method to keep morale high and reduce the number of layoffs. After the buyouts have been completed, the management team will reassess the employee landscape and then start to hand out layoff notices to employees.
The exact number of positions that will be eliminated due to buyouts or layoffs was not announced. The only insight into the matter is a quote by the executive editor, Neil Chase, who said there would be a “significant reduction in the news staff.”
The reason for the reduction in staff members is because of revenue declines, specifically with newspaper advertising revenue and print media. Just two years ago in 2016, the management team went through a similar method of reducing the headcount.
Another reason for job cuts is to make the company much more efficient and have a greater digital presence online. This simply means the goal is to increase revenue and lower business operating costs, which requires fewer employees.
BANG has continued to see revenue declines since 2000; this is right around the time that the Internet began gaining traction. Job cuts are not just a BANG issue but an industry-wide problem; The New York Times and the San Francisco Chronicle recently reduced their workforce. This was due to a lack of growth in the industry.
Recent California Newspaper Layoffs: Southern California News Group Cut Jobs in January, Reduces Staff Again
Just a few months ago, in August 2017, Southern California News Group (SCNG) eliminated positions at 11 newspapers that it owns and operates. This occurred after there were buyouts by the company in the previous year. This is a business division that is also owned by Alden Global Capital.
SCNG is once again looking to cut its staff headcount. It is looking to cut the number of employees within five of its publications in the coming months. An exact number of how many employees could be let go has yet to be announced, but the number has been labeled as “significant.”
Another company that went through downsizing is Tribune Media Services, which emerged from bankruptcy in 2012. Tribune Media Services is the parent company of the Los Angeles Times.
The reason why this is very frequent in the industry is because of the declining revenue and advertising in newspapers. However, a major reason for the job cuts occurring within the industry is because hedge funds are scooping up newspapers and cutting as many costs as they can. The intent behind this move is to have an efficient business that could one day be sold for a profit.
Having hedge funds as owners is great because they come with financial backing. However, the downside is that these investors look to reduce as much cost as possible, which then results in there being a lack of investment for industry growth.
Conclusion on Bay Area News Group Layoffs
There is no secret that old business models are not working as well as they once were. This results in there being new business strategies and investments, such as digital business strategies. This allows the business to compete on a more relevant playing field in the industry. However, this means fewer employees are needed in order to operate this type of business. With that said, it’s possible we could see more Bay Area News Group layoffs in the future, due to the changing business environment.
“Buy-Outs and Layoffs Hit East Bay Times and Other Bay Area News Group Papers,” East Bay Express, January 30, 2018.
“OC Register and other Digital First Media newspapers face ‘significant’ layoffs,” Los Angeles Times, January 15, 2018.
“Mercury News, East Bay Times to face ‘significant’ layoffs,” The Daily Californian, January 31, 2018.