Troubled Sacramento Union Lays Off 22

The Sacramento Union, the state capital’s financially troubled second newspaper beset in recent weeks by a pay dispute with employees, laid off 22 of its staff Tuesday to cut costs. President and Chief Executive Alan Ewen then promptly resigned.

The events left the paper, which has been distressed since a circulation scandal two years ago, in a state of uncertainty about its financial future.

“It seems like the place is falling down around our ears,” said one reporter, who wished to remain anonymous.

The current crisis began about two weeks ago when the newspaper’s management asked employees to accept a second consecutive year without the annual 5% pay increase called for in a union contract.

Newspaper management said the pay freeze, which would have saved the company about $272,000, was necessary to help the company out of financial problems stemming from the discovery two years ago that the newspaper had inflated its circulation figures and then overcharged advertisers, whose rates are based on such numbers. The paper later agreed to repay advertisers $2 million.

After agreeing to the pay freeze last year, however, union representatives this time refused, believing, according to one union member, that the financial situation was improving. Sacramento Union circulation, for instance, rose 15% in the last year, according to figures as of last September from the Audit Bureau of Circulations.

Following rejection of the pay freeze, management on Friday privately informed the union that it then would lay off 22, including 10 reporters and photographers.

In a statement issued Monday, the Newspaper Guild, which represents more than 200 of the paper’s 350 employees, said it estimated that the layoffs would save the company about $729,000 a year--more than the pay freeze--and thus it suspected that the paper would have laid off workers anyway.

Late Tuesday, after employees were notified one by one of dismissal, a memo was circulated announcing that Ewen was leaving the paper to join a Sacramento real estate firm.

Ewen, who had joined the paper following the circulation scandal, was unavailable for comment.

While Ewen was chief executive, the paper was owned by Richard Mellon Scaife, who holds the title of chairman.