MediaNews Group made big money last year. The company that publishes 57 daily newspapers, including the Monterey County Herald, San Jose Mercury News, and Santa Cruz Sentinel, posted record revenues of $1.3 billion in the fiscal year ending June 30, 2007. This number, according to reports filed with the U.S. Securities and Exchange Commission, was up 59 percent from the previous year. MediaNews’ net income skyrocketed, too, reaching $35.6 million, up from $1.1 million in 2006.

Its debt, however, was a different story. As of June 30, it owed $1.12 billion.

According to the company’s most recent earnings, for the fiscal quarter ending Sept. 30, 2007, MediaNews took a loss. Revenue hit $334.7 million, up from $295.3 million a year ago. But the company also reported it lost $1.01 million in the quarter.

Despite the company’s loss, finances didn’t look so bad for MediaNews chief executive Dean Singleton, who is known more for slashing budgets than publishing top-notch journalism. Singleton’s total compensation was $1.65 million in 2007, including his $1.06 million salary, stock options, bonuses and other perks.

Additionally, MediaNews paid $25 million in cash dividends to shareholders in 2007.

But while Singleton and other top brass were stockpiling the cash, his newsrooms across the country were hurting. Locally the Herald felt the pinch. Last month, the daily stopped publishing its four-page Sunday opinion section. Early this month, the Herald began combining some sections of the paper (like sports and business) and dropping others (like the Monday business news and the daily features sections). These changes and others shrunk the paper. They also saved newsprint and money.

Then, things got worse. On Jan. 18, the Herald fired eight employees, including two editors and one reporter. In a tiny write up, Herald publisher and president Gary Omernick cited declining profits. “A reduction in our work force was unavoidable,” he said.

It was the second round of layoffs since MediaNews bought the Herald and 32 other papers in 2006. In April 2007, the Herald cut eight employees, including one in the newsroom.

“You can see the noose swinging,” says one current newsroom employee. “You can see the guy sharpening the guillotine so you know something is going to happen. But it’s still a shock when the blade comes down.”

In addition to the four newsrooms jobs eliminated since MediaNews took over, five other reporters and editors have left in the past year, leaving nine vacancies.

Staff writer Claudia Meléndez Salinas, chair of the Monterey unit of San Jose Newspaper Guild, says the most recent cuts were announced at 3:30pm on Friday, Jan. 11. “Nobody was expecting this,” Meléndez Salinas says. “We didn’t have any kind of notice. People are still walking around a little numb.”

Compared with the Sentinel and the Mercury News, both of which have been gutted since Singleton took the helm, the Herald has been spared some bloodletting. But the dwindling resources don’t look good for local, daily news coverage.

“The thing that worries me as a journalist: I’m really concerned about the decreasing local coverage,” Meléndez Salinas says. “When you start reducing the number of people gathering information and making sure that it is delivered accurately, the community suffers.”

Herald employees say they anticipate more bad news. But Singleton is probably sleeping easy – he’s guaranteed a minimum annual raise of 5 percent.

Says Herald staff writer Julie Reynolds, “It’s disconcerting that the company is willing to cut from the bottom but not from the top.”