OBSERVER CUTS: The New York Observer laid off 11 people from the business side of its overall media group on Friday, it said, as part of a reorganization of its sales team. They are the most significant cuts at the weekly since June 2009, when about 15 employees were let go, including at least ten in the newsroom.

This time it was the business side that was hit. The entire classifieds department was scrapped, and two ad directors were let go, including Michael Woodsmall, a former managing editor who had moved to the sales staff to develop the group’s real estate titles, like the Commercial Observer.

This story first appeared in the April 8, 2013 issue of WWD. Subscribe Today.

In brief remarks to reassure the newsroom, Ken Kurson described the layoffs as a matter of efficiency. He tried to put an upbeat front on a difficult day. “It’s still a good news Friday,” he said, according to someone present. He finished his bullpen pep-talk on a positive note. Robert De Niro is editing a section of the paper during the Tribeca Film Festival.

The newsroom found out about the cuts through a cryptic e-mail sent by the chief executive officer of Observer Media, Joseph Meyer, brother-in-law of owner Jared Kushner, Friday afternoon. Collectively, the media group owns the weekly, as well as some small-distribution glossies and the recommendations newsletter Very Short List.

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Meyer, who was named to the post in late January, wrote he had put into effect a reorganization of the business and combined the digital and print sales teams. “The reorganization is intended to eliminate redundancies and create a clear understanding of individual focus,” he said. There was no mention of staff cuts.

He also said he was studying which “businesses have the most potential and which distract our organization from maximizing growth opportunities,” which some took as a reference to the Observer’s titles outside of the core weekly newspaper. But it doesn’t seem like those titles would be affected, for the time being anyway, by the business restructure. Asked for comment, a spokesman deferred to the staff memo.

In 2011, the weekly turned a nominal profit, allowing then-editor Elizabeth Spiers a small budget bump. Few believe that pattern has continued. Sources familiar with the company say only Yue, a glossy for Chinese tourists, and the Commercial Observer title, which covers real estate, continue to be profitable, though its margins are unclear. Profits might also have been helped by a smaller overhead as the Observer, while recently making a number of young hires, has lost staffers over the years and laid off others.

Kushner disputes the Observer loses money. At the paper’s star-studded anniversary party at the Four Seasons, he boasted to a crowd that included Mayor Michael Bloomberg and Rupert Murdoch of shaking up “an old media organization that was very stuck in its ways.

“We started a lot of new businesses and we tripled revenue in the last seven years,” he said.