Here’s a hot one we found on the Romenesko journalism business blog: A reader is suing The News & Observer, McClatchy’s paper in Raleigh, North Carolina, for cutting staff and the size of the paper.

Keith Hempstead, a Durham lawyer, filed the suit last month in Wake Superior Court. He says he renewed his subscription in May just before the paper announced on June 16 the layoffs of 70 staff members and cuts in news pages. The paper, he says, is now not worth what he signed up for and therefore the cuts breached the paper’s contract with him.

Hempstead — a former reporter at the Fayetteville Observer — told Friedman that he likes the paper, but hates all the staff cuts that he says hurts their quality and is antithetical to the way the newspaper business ought to be run. He is seeking unspecified damages and attorneys’ fees, but added that he’s in it for the love, not the money.

N&O Executive Editor John Drescher has quite the witty riposte:

“We’ve had some really good papers recently, and they’re worth more than the 36 cents a day that Mr. Hempstead is paying us,” Drescher said.”In fact, he owes me money,” Drescher continued. “So when he gets a lawyer, he can work with my lawyer and figure out how much he’s going to pay me for the excellent coverage he’s been getting recently.”

It may be nothing more than a way to raise awareness, but if Hempstead wins, he may end up killing the paper.

McClatchy is cutting about 10 percent of its 14,000-strong staff in a bid to trim costs as advertising revenue, the lifeblood of its business, declines. Still, the stock market is killing the company and other newspapers. How badly? Today, the stock is down 5 percent. At $5.05, it’s at half the price it was three months ago, and has lost 81 percent of its value in the past year. You could argue that they need every penny they have at this point.

It’s one of the big weeks for advertising (well, in terms of parties and sunshine), so we couldn’t pass up the opportunity to check in on Cannes. More than 12,000 advertising types have gathered in the South of France to toast the industry — and perhaps even collect an award.

This is an interesting year for Cannes, where a lot of the chatter at parties and meetings will likely be about either the recession or the rise of online advertising, Reuters notes.

The festival, in its 55th year, awards excellence with the so-called Lions trophies and hosts seminars and workshops. In a sign of how crucial the Internet has become to advertising, the Film Lions awards now includes films for Internet and mobiles.

The $40 billion online advertising market remains a bright spot in a global industry facing dire times with soaring oil prices and an economic slowdown denting clients’ budgets.

Even though Cannes gives a nod to new media these days, AdWeek writes that the event is nonetheless struggling to keep up with the times. Like the industry itself, Cannes is ”an old institution struggling to reinvent itself in a new-media environment.” 

In many ways, Cannes is a perfect reflection of the ad industry. The city itself is glamorous and beautiful, yet downright gauche and a little scruffy at times. The week of seemingly non-stop events and parties is inspiring and fun, while at the same time depressing in its ephemeral hedonism.

As for economic worries, well, ad executives won’t let those stop them from having some fun, AdAge tells us.   

Skyrocketing gas prices, credit crises, procurement officers: none of these can stop the ad-world extravaganza that is Cannes. This year’s festival will be the biggest ever, complete with more entries, more delegates (especially more marketers), more agencies planning beach bashes or lavishly catered parties, and an even bigger presence — and yacht — for Microsoft.

The Australian also noted that the hot ticket of the week is no less than its boss, News Corp Chairman Rupert Murdoch and Chief Operating Officer Peter Chernin.

Meanwhile, USA Today points out that the first batch of winners on Monday “illustrate more than ever that agencies are crossing into each other’s areas of expertise as mediums continue to converge.”

The top direct advertising award went to JWT India for a print ad in The Times of India. While it was an ad promoting the newspaper, it was also the launching pad for a campaign, which included TV, mobile, video and outdoor, urging people to get involved and “lead India” in honor of the country’s 60th anniversary of independence.

In sales promotion, HBO won the Grand Prix for a multimedia campaign by BBDO, New York.

Keep an eye on: 

• One of Walt Disney’s biggest jobs is uncovering talent that appeals to 8- to 12-year-olds “tweens” so it can keep flowing the pipeline of clean-cut Disney Channel stars (WSJ.com)
• The U.S. newspaper business still has not seen the bottom of a persistent deterioration in advertising revenue, and growing Internet revenue will not compensate for the declines, McClatchy Co Chief Executive Gary Pruitt said after the publisher cut about 10 percent of its work force (Reuters)
• NBC Sports is investing in World Championship Sports Network, a small TV network that broadcasts Olympic sports year-round (The Hollywood Reporter)

(Reuters photo of seafront in Cannes)

You can say one thing for Gary Pruitt , McClatchy’s CEO and perhaps the most ardent defender of the newspaper business — he knows what we all want.

Here’s his comment from the analyst call he did today to discuss McClatchy’s first-quarter earnings :

We want to make sure we maintain our ability to generate revenue.

Who could ask for anything more?

Pruitt also showed off his lighter side in an exchange with Goldman Sachs’s Peter Appert. When the analyst said he was going to ask an unfair question, Pruitt responded, “That’s because I’m going to give you an unfair answer.”

Cue laughter, then cue crying because Appert’s question is at the heart of what most newspaper people want to know: Isn’t there a point where you can’t cut your way to profitability anymore?

Pruitt’s answer:

We feel we have no choice. Given the revenue trends, we’re simply going to have to reduce costs. We do believe that we can sustain a good record on costs throughout this year. We face increasing newsprint prices later in the year and that will work against us. But on the other hand, we are looking at further efficiencies throughout the company and we suspect that when you exclude any severance costs and the effect of newsprint pricing, we should be able to sustain a double-digit run rate on expense decline.

(Photo: Reuters)