California paper cuts 1/4th of newsroom

The Palo Alto (Calif.) Daily News laid off six of its staffers yesterday including five from the newsroom, according to the San Francisco Peninsula Press Club. Given that the free daily only had a newsroom of 20, the cut represents a quarter of the paper's news department.

In addition, the seven-day paper will be reduced to six; its Monday edition will be eliminated. The paper's satellite edition in San Mateo, which lost its Monday edition two years ago, will stop printing on Tuesdays as well.

The Monday edition most recently was 28 pages, according to the Press Club's account. Three years ago, it ranged from 52 to 64 pages.

For several years, the Palo Alto Daily News was seen as one of the most successful free daily newspapers. It was based in Palo Alto, the wealthy home of Stanford University some 35 miles south of San Francisco and 11 miles north of San Jose. Starting in 1995 with an initial eight-page edition, the paper was profitable in nine months and eventually grew to dominate its market area despite competition from traditional dailies and healthy community weeklies. The Daily News branched out and started sister papers in the neighboring towns of San Mateo, Burlingame, Redwood City and Los Gatos. The five papers comprised a company that was known as the Daily News Group.

Owners Dave Price and Jim Pavelich sold the Daily News Group in 2005 to Knight Ridder for $25 million, which is probably a record for a free daily newspaper. The acquisition provided some breathing room for Knight Ridder's San Jose Mercury News, which had been struggling to sell ads in the Palo Alto area due to the Daily News.

MediaNews Group, headed by cost-cutting CEO Dean Singleton of Denver, acquired the Daily News Group when his company bought the San Jose Mercury and a handful of other Knight Ridder papers in 2006 for $1 billion.

Since the original sale, the Daily News has gone through a series of editors and its been redesigned. The paper's emphasis on local news changed. A recent edition contained only three locally bylined stories but more than two dozen wire service articles. And the Palo Alto Daily News literally moved out of Palo Alto to an office park in Menlo Park.

The changes apparently prompted previous owners Price and Pavelich — once their noncompete agreements had expired — to return to the market with a new paper, the Daily Post, which premiered May 27. They opened their offices in the building the Daily News abandoned when it left town. Their bet is that the readers and advertisers still want a local free daily.

The Daily News hasn't said what prompted yesterday's cuts, whether it was problems in Palo Alto or at its parent company. It should be pointed out that other MediaNews papers in San Jose and Walnut Creek, Calif., were laying off employees last week as well. Credit rating agencies say the company is at risk of defaulting on its loans.