April 2 (Bloomberg) -- Hearst Corp., the publisher of the Houston Chronicle, asked all of its newspapers to reduce costs by 20 percent annually through job cuts and other measures as ad sales plunge.

“Ad revenue is down across the board significantly,” Steve Swartz, president of Hearst’s newspaper division, said today in a presentation to analysts in New York. “Our industry is largely overstaffed and we are working hard to adjust our cost base.”

Publishers have been slashing costs, shuttering newspapers and selling assets to help cope with sliding circulation and declining spending on print advertising. Since December, five publishers have sought bankruptcy protection.

Hearst turned the Seattle Post-Intelligencer into a Web- only publication. The New York-based company is negotiating job and compensation cuts at the San Francisco Chronicle, which it said it may close or sell after the newspaper lost more than $50 million last year.

Industrywide ad sales may decline 22 percent this year, according to Barclays Capital. They dropped 17 percent in 2008.

The privately held publisher is considering withholding from the Web some content from its printed newspapers and, to trim costs, may consolidate copy-editing and design duties and outsource printing, Swartz said in the presentation.

Internet Advertising

Hearst is trying to boost revenue from Internet advertising and circulation sales to more than 50 percent of the total from about 33 percent this year, Swartz said.

Paul Luthringer, a Hearst spokesman, said in an interview the publisher is making progress toward its goal as the Albany Times Union, San Francisco Chronicle and Houston Chronicle have already begun reducing costs.

The publisher is studying ways to charge for applications on Apple Inc.’s iPhone and other handheld devices and is working on a device of its own for reading news content and carrying advertisements, Swartz said.

About 120 newsroom employees that accepted voluntary severance to leave the San Francisco Chronicle have through tomorrow to change their minds. The California Media Workers Guild said Hearst may make 30 or more additional job cuts from the newsroom.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

Last Updated: April 2, 2009 17:59 EDT