Somber memo warns of cuts ahead for Times

The Seattle Times faces "the most difficult and painful downsizing" in its history next year as millions of advertising dollars continue shifting to the Web, Times Publisher Frank Blethen told employees Thursday in an unusually blunt internal memo.

Mirroring declines at newspapers across the country, The Times expects to see its print revenue drop a total of $33 million for the years 2007 and 2008, Blethen wrote.

Senior executives have found ways to shave $21 million in costs for the coming year, but another $6 million in expenses will have to be cut, the memo said. Blethen did not say how those cuts would be achieved.

"With the company at bare bones, these cuts will hurt deeply going into 2008 and the remainder of the decade," he wrote.

Despite the financial challenges, Blethen wrote, his family is committed to continuing its ownership role.

The options are selling the paper, closing its doors or transforming the business "to a smaller, more focused organization. ... "

"For better or worse, my family has chosen door number three," he wrote.

Times spokeswoman Corey Digiacinto said next year's budget decisions are still being finalized and no details would be announced until after the first of the year.

"There will likely be some difficult cuts, but this is a temporary situation until we can realign our business model to match the changing revenue picture," she said.

Blethen said he would not comment on a message intended only for Times employees.

Last week, the Pacific Northwest Newspaper Guild, the largest union at the paper, raised the question of content and staff cuts in a message to its members.

It said members were hearing that potential cuts being considered "include consolidation of the East and North news bureaus into office space at the Bothell printing plant, as well as potential elimination of the South King County and Washington, D.C., news bureaus."

The Guild, whose contract with the Times expires next year, said on its Web site Thursday that Blethen's "message is no doubt a way of preparing the troops for operational and content changes."

The memo "might be a way of softening the blow," said union President Yoko Kuramoto-Eidsmoe, a Times desk editor. She speculated layoffs are ahead.

"The industry hasn't had a particularly good year financially," she said. "The positive note is that Frank is telling us he and the family are committed to journalism."

The Times' revenue from print advertising will fall below $200 million for 2007, down 9 percent from 2006, Blethen's memo said. It added that he expects a similar decline next year. Print advertising is the main source of revenue for major newspapers.

The continual drop in print-ad revenue "has had the most dramatically negative impact on the value of newspapers and potentially their economic viability since the Depression," Blethen added.

Online advertising, while growing fast, is still only 10 percent of what The Times earns from print ads, he wrote.

The Blethen family owns 50.5 percent of The Seattle Times Co., while the McClatchy newspaper chain owns the rest.

Blethen said he anticipated a "difficult and radical transformation" to a more nimble organization that provides print and online news, information and advertising based on a foundation of journalism and community service.

"We must adapt or die and it isn't an easy challenge."

Kristi Heim: kheim@seattletimes.com