Digital First plans layoffs (Updated)

High-level executives and high-profile digital projects targeted

Digital First Media, the New York-based newspaper operator that has made a high-profile bet on its digital business, is planning layoffs as it heads into a year expected to see rapid consolidation in the newspaper industry, a person familiar with the matter says.

The cuts are expected to number only about 100 people out of the company’s 10,000-plus employees, but those affected are expected to be higher-level executives and certain high-profile digital projects, the person says.

The person says the cuts are part of an ongoing strategy to take out about $60 million annually in expenses of about $1.15 billion in total costs, while reinvesting in its digital business, investments eventually expected to add $100 million a year to company expenses. The cuts have been under discussion internally for about three months.

It’s not known which executives or projects will be affected.

Digital First has taken a prominent place in future-of-news debates with its outspoken chief executive, John Paton, bluntly calling for his industry to adapt and implementing bold experiments at his own company. One of the most high-profile digital projects, for instance, has been a consolidated national and foreign desk, known as Thunderdome, that gathers non-local news and distributes it throughout the company’s network of local papers.

The move comes three months after the closing of a deal to merge the assets of MediaNews Group, the newspaper chain including flagship Denver Post, co-founded by Dean Singleton, who retired last fall. And in January, the company appointed Steven B. Rossi, a former Media News executive, as chief operating officer, reporting to Paton and responsible, among other things, for controlling costs.

Digital First, a successor to the Journal Register Company, has struggled like the rest of the business with falling print revenues and a digital business that is growing but at a slower pace than its print business is declining. Two years ago, JRC, owned by the hedge fund Alden Global Capital, announced its second bankruptcy, ascribing the filing to legacy costs left from its previous owners, which declared bankruptcy in 2009.

The cuts come as the rest of the industry is expected to consolidate with some companies, including the Tribune Publishing Company, newly emerged from bankruptcy and spun off from its television assets, and Gatehouse Media, also recently emerged from bankruptcy, looking to make acquisitions. Cutting costs is often seen as a way to make a company more attractive to buyers.

A Digital First spokesman didn’t have an immediate comment.

[UPDATE: After I (ahem) broke this story, Ken Doctor and Paul Farhi add considerable detail, principally that it is in fact Thunderdome that is on the chopping block.]

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman. Tags: