Gannett’s Craig Dubow Voluntarily Takes A $200,000 Pay Cut To Show Solidarity With Staff -- Now How About All Those Other Media CEOs Out There?

Philip M. Stone Novermber 5, 2008

Gannett’s Craig Dubow has done the right thing and voluntarily agreed to a $200,000 pay cut in the belief that if staff are suffering as they are, then so should management. Good for him. Now what about all those other media CEOs who are so quick to layoff staff, but ensure their own pay packets don’t get nailed.

It was back in March that ftm criticized Dubow because Gannett’s shares had lost about half their value in the previous 12 months, yet DuBow’s compensation package, including the options, grew 30%. At the time Dubow did ask the executive compensation committee to refrain from increasing his salary or bonus this year in light of the “challenging business environment,” and now with Gannett’s shares barely making double digits (they’re down some 70% over the past year) and the announcement that another 10% of the workforce is to go it seems only right that he and the top staff should suffer along with the rank and file.

But don’t feel too sorry for the Gannett CEO, He’ll still be taking home a $1 million salary plus perks and options – that all comes to just shy of $7.5 million -- so while it’s a 17% cut from salary its about a 3% cut  from overall revenue; it’s not like he’s going to be missing mortgage payments. 

Dubow told staff in an e-mail, “All Gannett employees are making deep sacrifices for their company.” He announced that all of Gannett’s company and divisional officers will have their salaries frozen for 2009 – but it’s unclear whether that means options, bonuses and the like will be affected for that usually is where the big money is.

Dubow volunteered the pay cut and Board presiding director Karen Hastie Williams was quick to accept, saying, “We commend Craig for his leadership in taking this step. The Board is well aware that the company and the media industry generally are experiencing difficult times. The Board believes that the company’s strategic plan has set the right course given the secular and cyclical challenges the company faces. The Board continues to support Craig and his management team and their efforts to lead Gannett into the future.”

How many times have you read announcements from publishers decrying their need to cut back on employees, to cut back on expenses in general, but how many times have you heard one say that as a consequence of what is going on he or she is taking a pay cut? Doesn’t happen very often.

In Dubow’s case the $200,000 is a bit like petty cash – but it’s still enough to pay for three reporters -- but psychologically it’s an important move to show the entire company workforce that they are all in this together, one way or another. Gannett announced last week its Q3 profits fell 32% from the year before. Also last week Citi analyst Catriona Fallon initiated coverage of the newspaper sector "with a deteriorating outlook" -- which makes one wonder why she bothered in the first place – and her only “buy” was Gannett, which she classified as "high risk." 

And it’s not just newspapers that are in such trouble that executive pay is being closely looked at. In radioland, Emmis Communications has announced that all staff earning more than $50,000 will have a 3% pay cut as one of a series of steps to face “the challenge of a struggling media sector and a turbulent economy.” One of those other steps was firing 4% of staff – 29 fulltime and six part-time employees.

Last week, Moody's Investors Service downgraded $744 million of the company's debt because of revenue challenges at stations in its largest markets. Emmis shares have dropped some 80% this year and are around 55 cents each, but the company did manage toreport a $1.2 million profit for its Q2 ended Aug. 31 after three straight quarterly losses.

If it’s any consolation to regular staff, it seems media owners have had a rough ride in the financial turmoil of the past weeks. Rupert Murdoch told his Melbourne Herald just how tough it has been for some. “Who would have thought a year ago that Sumner Redstone and his empire would ever have financial difficulties? Now he is in the process of being called by Bank of America for a billion dollars,” Murdoch said.

“There are a lot of people, otherwise brilliant people, founders and builders of companies who had, say, a couple of billion dollars worth of shares, who borrowed money on margin, and have now lost everything. The first two billion plus the next billion.”

Murdoch said he learned valuable lessons from the financial tumult of the 90s. He really doesn’t trust banks. When times are fine and interest rates are low the banks will do anything to get you to take a loan, but no sooner do things tighten and the banks come down on you like a ton of bricks.

“Every penny we have since borrowed has come from public markets (bonds). Our debt today has an average of 22 years and it is largely balanced by something in excess of $7 billion in cash.”

That’s not to say he and his family haven’t taken a hard hit as News Corp. shares have fallen some 64% this year. Vanity Fair magazine says Murdoch has lost some $4.2 billion on paper because of the lower share price. Other big losers are Sergey Brin, Larry Page and Eric Schmidt of Google, down $14.7 billion; and Steve Jobs has seen his Apple and Disney shares sink $2.2 billion.

Worst hit, according to the magazine, is Warren Buffett, down $18 billion, but not to worry, as the magazine points out he still has another $48 billion left.