Mercury News publisher resigns

The Silicon Valley newspaper, one of 32 daily papers in the Knight Ridder chain, has seen its advertising and classified revenue shrink as part of the technology industry's sharp downturn.

San Jose, Calif.-based Knight Ridder, which also owns the Detroit Free Press, The Philadelphia Inquirer and the Miami Herald, announced Monday that it was lowering expectations for first-quarter earnings for the second time.

The second-largest U.S. newspaper publisher after Gannett, Knight Ridder said it expects first-quarter earnings to decline by 15 cents to 20 cents a share from a year earlier because of stalled advertising. Ad revenue fell 2.7 percent in February compared with February 2000, the company announced, with the biggest shortfalls in San Jose, Philadelphia and Detroit.

Other newspaper publishers, including The Wall Street Journal publisher Dow Jones, have also warned of lower profits in the first quarter because of the nationwide advertising crunch.

Knight Ridder stock closed Monday down $1.13, or 2 percent, at $54.36. The stock is down 9 percent since the beginning of March.

As the paper of record for the Silicon Valley, the Mercury News has published articles about cutbacks and layoffs at media outlets ranging from The New York Times on the Web to San Francisco-based online magazine Salon.com.

Knight Ridder's own online arm, KnightRidder.com, announced in December that it would lay off 68 employees, or 16 percent of its work force, as part of a reorganization aimed at achieving profitability by 2002.

But Mercury News employees seemed shocked to learn of layoffs or cutbacks within their own ranks.

In an open letter last week to co-workers and Knight Ridder Chief Executive P. Anthony Ridder, three Mercury News journalists said they were "worried" about the newspaper's future because of the prospect of layoffs.

"We can't speak to the economic realities that you are facing, but here is our thinking on the prospect of layoffs: They will wreck the newsroom and ruin the paper's ability to cover the community," wrote Pete Carey, Eric Nalder and Rick Tulsky. "Newsroom layoffs are not a self-cauterizing form of surgery--the bleeding continues as morale declines."

The letter was in response to earlier memos from Harris. On March 5, Harris sent a memo to employees informing them of a "complete re-budgeting process" that would result in cutbacks and an undetermined number of layoffs.

In his missive to Mercury News employees Monday, Harris warned that a memo regarding his resignation was "a letter I never thought I'd be writing to you." He said he had sent an official resignation letter Monday to Ridder and Steve Rossi, head of the Knight Ridder newspaper division.

A Mercury News representative confirmed that Harris sent the letter to employees but would not comment beyond that. Harris and Ridder could not immediately be reached for comment.

"It saddens me to (leave), and yet I do so with my heart at peace, my conscience clear and high hopes for the paper's future--and mine as well," Harris wrote. "We all know we must make significant adjustments in the face of the currently severe economic downturn. But so far, we have been unable to find a way to meet the new targets without risking significant and lasting harm to the Mercury News--as a journalistic enterprise and as the special place to work that it is."