Morning News Publisher Discusses the "Unfortunate Coincidence" of Belo Bonuses and Charging for Online Content
On Friday, A.H. Belo Corporation announced that it would, yet again, lay off about 500 more workers at all of its properties, among them The Dallas Morning News and The Providence Journal. At the same time, Belo managers, in the newspaper group and in the corporate offices, were receiving bonuses promised to them at the beginning of 2008 if they hit "quantifiable financial targets," says A.H. Belo executive vice president Jim Moroney III today. Moroney tells Unfair Park the timing was indeed "unfortunate," which is why he has been meeting with unhappy News employees ever since -- to explain why the bonuses were given, and to insist that no further bonuses will be handed out for the foreseeable future.
After the jump is a Q&A conducted this afternoon with the publisher and chief executive officer of The Dallas Morning News, in which he addresses the bonuses, the profitability of Dallas's Only Daily and whether or not it will begin charging for some online content in the near future. This is "hand-to-hand combat," Moroney says in between meetings with employees. "I don't think there's an industry, except maybe grocery stores, being spared in this economy. But we were hit earlier and deeper."
I understand that on the day layoffs were being announced, bonuses were given to A.H. Belo executives. How did that happen?
Well, first off, these were managers at different levels. "Executives" almost sounds too exclusive. There were bonuses paid to managers across the operating companies and our corporate staff based on quantifiable targets communicated individually to any employee who had the opportunity to earn a bonus at the beginning of 2008. And if those audited financial targets were achieved, a bonus would be paid. In every case where the quantified financial target was met, those bonues, according to the document those individuals got at the beginning of '08, was paid accordingly. And it's completely quantifiable. There were no discretionary bonuses paid to anybody. In fact, it's not even set up that way.
What were the bonuses for?
They were all financial targets based on financial results, and that's what it is.
Were they tied to revenue-generating or cost-cutting measures?
There were components in the opportnity of both of those things, and the only thing paid, of course, was based on expense management performance.
Were any of those bonuses given out based upon the money saved by laying off 500 employees last fall?
No, these are all ... There are two ways of answering that. Are people making layoffs to hit financial targets? No. Cost-saving targets? No. Those targets are set up based on what the expense plan for the year is. That plan for 2008 was set up in December of the prior year [and] no layofffs were contemplated in the '08 plan. So you didn't make layoffs in order to hit some expense plan. We were controlling expenses without that. The layoffs were due to the deteriorating advertising environment affecting your paper and mine and every other newspaper.
You put a plan together for the year, and bonus targets are based on the plan. There were no layoffs contemplated when the plan was put together. God knows if there were, we wouldn't have waited till September to do them. We plan before the year, so those targets off of which the bonus is calculated didn't include any layoffs in them. We were managing our expenses, each of the operating companies, to the plan without the need to do layoffs. [Layoffs] occured only because the revenue was worse than originally planned. Bonues weren't paid based on revenue. Maybe Providence made money based on revenue, but not The Dallas Morning News.
How much do the impending layoffs, then, have to do with keeping alive such properties as The Press-Enterprise [A.H. Belo's paper in Riverside, California]?
That's not the case. The issue is, you can be profitable ... Let's say the average major metropolitan daily in the U.S. is down in ad revenue by 17 percent. So, if you don't think things in '09 are going to be better than they were in '08 and you plan for a similar kind of revenue environment [as you did for the previous year], then you'll be taking a whole lot of revenue out of '08. So if it's going to decline by something similar, if you think that's going to happen -- and I don't think many people think things will be better this year -- and you want to remain profitable, you'll have to do something with expenses unless you can afford to take a 17-percent hit and remain profitable.
Did you think the timing -- announcing layoffs and handing out bonuses -- was, to put it mildly, bad?
Yeah. Obviously, the bonus thing gets put into the sequence based on approval by the board and getting it into the payroll cycle, and once you decide to make announcements, you don't want to sit on that either. I would say it was unfortunate coincidence. If you could have control over all these things better and see farther into the future, yeah, you could have tried to separate them. But I don't think the fundamental question would change: They'd still say, 'Should they have been paid?' and 'Why were they paid?' even if we'd waited two weeks.
This could not have made employees very happy.
I am holding meetings with employees, 50 at a time, and it's come up. I've had two meetings, and it's come up in both of them. And I get cards ... People don't always raise their hands at meetings, and I want them to say what's on their minds. So, out of 10 comment cards, two or three of them ask about the bonuses.
The timing's unfortunate on so many levels, especially considering how the word "bonus" has become an national epithet at a time when so many people are losing their jobs.
I can tell you there are no bonuses planned for anyone in Belo Corporation in 2009. The same letters that went out last year did not and will not go out, and no money is in the plan to pay for bonuses in 2009. You can argue all day whether a company should make good to employees and whether we should have told people in this envroment, 'Well, we're sorry, we promised you a bonus, but we'll have to take this back.' The point is, we have a choice to make for '09, and in this environment, there will be no more bonuses.
Rumors have circulated for a while that perhaps The Dallas Morning News will begin charging for at least some of its online content. How likely is that at this point?
Two years ago, I would have told you that asking people to pay for content on the Web is a ridiculous notion. Today, I will tell you it's almost imperative we experiment with it to see what the consumer will respond to. We know the consumer is paying for newspapers on Kindle. So there's that example. Maybe it's something like $5.95 a month. But somebody's willing to pay for it for some reason. That's a discussion I would bet most newspapers, including this one, are having in a way where, two years ago, they didn't.
For us, I wouldn't have thought we'd be having the discussion. I was convinced it wasn't possible. I am not so certain about that any longer, and some experimentation will happen. The consumer will tell us if it's a bad idea. We can try anything we want, but, ultimately, the consumer will tell us if it's a good idea or not, and if we find out not enough make it worth doing, then, obviously, whatever experiment we're doing is not a path to go down.
And with that, Moroney was off -- to another meeting with Belo employees with questions of their own.