Rumbo Founder and Publisher Edward Schumacher’s Letter to Staff

Dear Rumbo Colleagues:
Attached is a press release that will go out later today with important news that affects all of us. I would have wanted to meet with you all personally this morning, but logistics make that impossible, so please let me write this note as a poor substitute for now. I will meet with as many of you as I can in San Antonio today, and will go to Houston and the Valley over the course of the week.
We are distributing the press release first to you, because you deserve to be the first to know. Each of you also will be meeting with your managers this morning. The short of it is this: We will transition the Houston and San Antonio Rumbos to weeklies, beginning this week. Today's paper will by the last Monday one, there will be no Wednesday paper, and the new weekly will begin Friday/Saturday. The Valley weekly will continue as is.

The new publishing schedule will mean a reduction in jobs. That is the hard, and sad, part. Part of that reduction will be at the executive level, too. I will leave, as will General Manager Giovanna Rueda, once we see this transition through, probably by March 1. Lynne Cook will become publisher. The advertising department will continue to report directly to her, as will marketing. Carlos Puig will take on the additional duties of executive vice president, overseeing most other operations, as well as continue as editor. Carlos will report to Lynne.

In a related other move, CFO Jose Rego has accepted a major personal opportunity for him that allows him to be close to his aging parents in Portugal. We are hiring a less senior controller to replace him. We will base the controller in Houston, and over the coming months move our headquarters there, though we will always maintain a strong presence and some central functions in San Antonio, our birthplace.
The press release and a Q&A explains most of the changes and the reasons for them in greater detail. But I want to write this personal explanation directly to you, as I founded this company and have led you until now. I believe totally and wholeheartedly in Rumbo, in Lynne and Carlos, and in the new weekly structure going forward.

We – all of us, including you – tried something very bold, beginning with Spanish-language dailies, and then the three-day-a-week format in Houston and San Antonio. In an amazingly short time, we built an extraordinary product – many of our peers recognize that Rumbo's editorial is the best in the country among Spanish language papers – and we built an extraordinarily efficient internal machine, beginning with editorial and extending into distribution, production, IT and administration. Most newspaper chains in English, built as a series of local fiefs, can only wish they could emulate that efficiency. Finally, we built very solid financial backing, with a great set of investors who are expert in media and in the Hispanic market.

So, why then the change? We were ahead of our time. The advertising market for Hispanic media has grown as we had hoped, but not fast enough to justify the expense. Our competitors launched new products that, while not as good as Rumbo, further divided the pie. Weeklies are the standard in the Hispanic publishing industry, and most major advertisers still just advertise once a week. This change we are announcing today in Houston and San Antonio builds on the success of our own weekly in the Valley. What will not change is the quality of our product and the sophistication and efficiency of our internal operations.

So, why then am I leaving? Like most major decisions in life, there are a number of reasons that come together. Some of these apply to greater or lesser extents to Giovanna and Jose, though I suggest you speak directly with them should you want.
First, I am not totally leaving. After seeing through this transition, I will remain an advisor to the board and a major individual shareholder. Let me assure you that there is total continuity here. There is absolutely no internal division or upheaval behind the scenes. The plan and the management going forward was proposed by me, in collaboration first with Giovanna and Jose, and then with Lynne, before we took it to the board.

A company of three weeklies, under our efficiently integrated systems, simply does not need the size of management structure we have. I have largely accomplished what I set out to do. The primary goal going forward continues to be growing sales, and Lynne is exceptionally suited to that. She has 23 years of publishing experience, was vice president for sales at the Houston Chronicle and our sales vice president for the last year. Lynne also is from Houston, our main market, our new headquarters and home of one of our leading investors, Pinto Partners.


Then there are the personal reasons. My wife and family still live in New York. My wife didn't want to move her business to Texas because the original Rumbo plan to was to keep growing and there was no telling where I would end up. The plan is still to keep growing, but instead of launching new papers, we will more likely do it through a merger or alliances, and it hard to say when. I had built what I wanted to build, we have arrived at a perfected model in the weekly format, we had the right management succession in place, I thrive on taking on new challenges, I wasn't really needed anymore, I could still be available as an advisor and so it seemed like the right time to go home.

And there is a final reason. Please don't let me get too melodramatic, but it is true. We have had to cut jobs twice before as we sought to perfect our model. This third time I couldn't face people, many of whom I have worked with for the past three years and have come to know and love, and say they would be losing their jobs without considering losing mine. I have been honored to have been in the trenches with them. I will be honored to go with them.

To those of you who are leaving: you did nothing wrong. Al contrario: you did everything right. No one is being laid off for reasons of performance. The choices of which jobs to cut were excruciating to make and came down to slots and the complimentary skills needed to go forward. We will do all we can to help you find new jobs, and will give everyone the highest recommendation. You have every reason to feel proud. You were pioneers, and performed exceptionally well.

To those of you who are staying: Rumbo has a strong future, and I have complete confidence in it and in you. Lynne and Carlos are battle-tested leaders. The company, and the legacy of what all of us have built, will be in great hands. More importantly, you are an extremely talented group, across all departments. On behalf of your departing colleagues, I do ask that you do all that you ethically can to push the business and push sales, with a sense of urgency, as a team, working together. Our spirits are with you.

Un abrazo fuerte a todos,
Edward Schumacher Matos
January 15, 2007

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