The New York Times is finishing up a new round of buyout packages for veteran employees, but with the report that the paper is paying $15.4 million to remove former chief executive Janet Robinson and a look at how much the paper has paid for a prior round of buyouts, it seems a tough way to trim costs. The Times is keeping mum on the details so we don't know the precise dollar amount for the buyouts, but Reuters broke the news of Robinson's exit package on Wednesday. It's a stunning figure -- some people did the math that it amounts to 1.3 percent of the company's entire market cap -- especially for a company that is trying to contain costs by eliminating jobs. But those buyout packages are pricey, too. Based on our reading of their past financial statements, the company just spent over $3 million to eliminate 13 jobs.
On Friday, the Guild published an open letter to Times Company chairman and interim CEO Arthur J. Sulzberger that raised some serious doubts about The Times's idea of financial discipline: "The last 24 hours have brought stunning news about several recent decisions by Arthur -- moves that have angered and dismayed those of us who work for the Times and care about its direction." This isn't the first time that Times executive pay has ruffled the feathers of its associates. During the layoff spree of 2009, both Sulzberger and Robinson took heat for laying off employees and cutting salaries while they paid themselves over $12 million that year. Once again, it would appear that Times executives are taking a lion's share of the compensation budget.
As frustration with Times executive pay simmered once again, we pulled up the company's quarterly earnings reports and made an educated guess about the hard number behind this month's buy-outs in the newsroom -- you know, where the regular old journalists sit. As we already mentioned, it's a big one: $3.2 million. Who knows? It could work out terrifically and save the company $32 million down the line, but in the short term, it's looking like cost-cutting at The Times is a very expensive endeavor. All things told, we estimate The Times Company just shelled out nearly $20 million to eliminate 13 newsroom jobs and one executive.
When The Times's editors offered its entire newsroom to apply for a buyout package in October, they were explicit about the reasoning behind the reasoning behind the efforts: "financial discipline." In their own carefully phrased words, the editors' October memo announcing the new round of buyouts reads:
As you all know, the company has consistently chosen to protect the journalism, even while cutting production and other business-side costs and continuing to demand exacting financial discipline in the way the newsroom itself marshals its resources and controls its spending. Even now, we field a newsroom staff about the same size as it was a decade ago, and continue to invest in new opportunities and new platforms for our content.
Executive summary: Despite several waves of buyouts and layoffs over the past four years, The Times still needs to slim down. The best way to do this, according to common sense and the list of journalists the Times will pay to leave, is to cut well-paid, senior-level staff. On Monday The New York Observer's Foster Kamer produced the first wave of names on that list, and Capital New York's Joe Pompeo followed up Tuesday with a few more. All but one in the group that we'll call the Buyout Baker's Dozen have worked at The Times for at least 20-years (and the full list is at the bottom of this post).
This brings us to the formula we used to calculate how much those 13 buyouts cost The Times. In the infamous 2009 rounds of layoffs, The Times paid for 74 buyouts for newsroom staffers; this number makes up the majority of the 100 newsroom jobs the company cut in the News Media Group. That year, The Times Company reported $24.6 million in total severance costs for the News Media Group, and the company's grand total for severance cost was just short of $54 million. In 2010, the News Media Group suffered a much lower blow of $4.4 million for severance. (While that group also includes The Times Company's New England and Regional Media Groups, we didn't find any reports of sizable layoffs or buyouts in the fourth quarter of 2009 when the The New York Times reported its layoffs.)
$24.6 million divided by 100 cut jobs means that the company paid an average of around $246,000 to cut each of those jobs in 2009, whether with a buyout or a layoff. Multiply that by the 13 jobs being cut this year, and we arrive at a total of $3.2 million. The reason the buyouts are so expensive is because of the terms that give up to two years of salary for Guild members and one year for non-members (that is managers), based on seniority. This is how the editors explain the terms:
For excluded staff members, the buyout formula effectively works out to two weeks of pay per year of service, with a maximum of one year in salary. The existing formula for Guild members in general provides for three weeks of severance per year, capping at a maximum of two years worth of salary.
In other words, in order to get the maximum two years of salary as severance, a Guild member needs to have worked at the company for 35 years. For the non-Guild members to hit their one-year cap, it's 26 years. And, as Kamer reported, many of those who took up the company on its buyout offer had been with the paper for around that length of time. They might not have all received $246,000 -- there are probably other costs associated with severance aside from the payout -- but it's easy to see how the costs add up quickly.
When we asked our press contacts at the newspaper and its corporate parent, The New York Times Company, both declined to comment on the specifics of the buyout packages as well as the thinking behind paying Janet Robinson so much upon her retirement. If our estimate is correct, The Times is on schedule to spend much more on severance this year than it did in 2010 (only $6.8 million) and, if you include the cost of Robinson's exit, perhaps comparable what it spent in the infamous cost-cutting spree of 2009 ($24.6 million for the News Media Group).
But wait, there's more. As Kamer and Pompeo both reported, more than one of the Buyout Baker's Dozen will continue to work for The Times as paid freelancers. It's unclear how many, but the agreements that have been made public sound less like a once-in-a-while deal and more like a you're-basically-still-a-full-employee-but-without-the-tricky-and-expensive-Guild-rules situation. Henriques announced her deal in an email to friends and colleagues that she had "accepted a contract to work as a contributing writer – same email, same phone, same address, an NYT cubicle, etc." Similarly, Haberman will continue to write his regular column on the Cityroom blog three times a week.
So, in effect, what the The Times has done is replaced full-time staffers with contract writers. The Newspaper Guild of New York is not happy about the strategy. "We don't think it's right," Guild president Bill O'Meara told The Atlantic Wire, adding that the deal could jeopardize the pensions of those who take a deal. "We don't like the idea of people just working as contractors; it takes the place of regular employees."
The Buyout Baker's Dozen
- George Vecsey, Sports columnist, 30-year veteran
- Clyde Haberman, Metro columnist, 34-year veteran
- Andrea Stevens, Arts reporter, 27-year veteran
- Andy Port, executive editor of T Magazine, 20-year veteran
- Sam Dillon, National Education reporter, 20-year veteran
- Nicholas Wade, Science reporter/editor, 29-year veteran
- Barclay Walsh, News Research supervisor, 24-year veteran
- Donald Parsons, News Design editor, 29-year veteran
- Diana B. Henriques, Business reporter, a 20-year veteran
- Eric Dash, Business reporter, an eight-year veteran
- Bob Harris, Deputy editor for The Times Book Review, 29-year veteran
- Katy Roberts, "High ranking" editor, 29-year veteran
- Jody Alesandro, Arts columnist, 23-year veteran arts reviews