USA Today publisher Gannett Co.’s freezing of its pension plan — boosting its 401(k) program instead — could spur renewed activity in the push for companies to replace traditional plans with improved defined-contribution systems.
But certainly, the action by Gannett is another indication of how struggling newspaper publishing businesses are trying to deal with a precipitous decline in circulation and advertising revenue in the industry. Gannett also operates more than 80 local papers.
Gannett’s changes, effective Aug. 1, will affect virtually all Gannett’s more than 25,000 employees in the U.S., Gannett spokeswoman Tara Connell told the Associated Press. The company figures to save about $90 next year from freezing the pension plan, although that will be partly offset by $60 million in costs associated with the enhanced 401(k) plan, Connell told the AP.
The wire service reported that in an E-mail to employees, Gannett chairman and CEO Craig Dubow was quoted as noting that the company is “not alone in making the benefit changes,” calling attention to “a strong, worldwide trend to limit benefits in pension plans and shift to a more 401(k) based system.” He added that “enhancing the 401(k) plan makes us more attractive to those employees who especially value these portable, self-directed plans.”
If the trend is to get new life with Gannett’s step, the starting place could be among media companies, many of which are still controlled by their founding families. Gannett currently matches 50 percent of existing 401(k) plan contributions, up to 6 percent of salary. Under its enhanced plan, it will provide a 100 percent match in Gannett stock on employee contributions up to 5 percent of salary.
Gannett’s announcement follows by several days its decision to take noncash charges of $2.5 billion to $3 billion for the quarter ending June 29, reflecting impairment of goodwill and other intangibles and assets.
Meanwhile, Washington Post Co. on Tuesday said at the 2008 Deutsche Bank Media and Telecommunications Conference that the estimated expense for the Voluntary Retirement Incentive Program offered to some employees of its Washington Post newspaper and corporate office will be about $80 million. Most of these charges will be recorded in the second quarter of 2008 and funded primarily from the assets of the company’s pension plans, it added in a regulatory filing.