The New York Times has completed the first step: admitting it has a problem. The internal memo is out, confirming today's rumored pay cuts (and layoffs). This is big news.

The key info: "The salaries of all employees at The New York Times Media Group (with the exception of the IHT, which is working on other cost reduction measures), The Boston Globe, and Corporate in New York will be rolled back by 5%, starting this April, and these employees will receive 10 additional days off to use before the end of the year."
[Another internal memo that we just received reveals that the company is laying off "100 employees on the business side of the Times." That's serious].

It's been clear to everyone for quite some time—including, we're sure, the paper's management—that the NYT just cannot continue to spend and operate as it historically has. Still, those same execs stubbornly waited and denied and stayed silent as things got worse.

The reason is that the New York Times regards journalism as a religious undertaking. There's nothing wrong with that per se, except for a bit of elitism. The problem is that they see their newsroom budget as the means to accomplish their holy mission, and that, therefore, cannot be touched. Before the recession hit, the company's financial mistakes included building an expensive new skyscraper, keeping its dividend too high for too long, and throwing billions down a black hole by buying back its own, now dirt-cheap stock.

More recently, it's cut its dividend down to zero, mortgaged off its own fancy new headquarters for cash, and borrowed $250 million from a shady Mexican billionaire at subprime rates. Its ongoing ad revenue decline make its quarterly reports bleak pits of despair. The company is looking to sell off assets, but it's a terrible time to be doing so.

Strangely, the newsroom budget has remained mostly unscathed through all this. But not any more. Like Conde Nast, the Times is starting out with 5% cuts, which are too small. Thirty percent would be a more realistic figure, if the goal is to get expenditures back in line with revenue projections.

So, baby steps. The bad days are starting for NYT journalists (worst part: you know you're going to have to work through your "10 additional days off"). But at least the company's finally touching the untouchable.

[BONUS: The paper is also going to save a few million in newsprint by doing away with that crazy three-page "index" in the front of the A section. Good lord that thing was dumb.]