Sunday's edition of The Ann Arbor News.

Ann Arbor News publisher Laurel Champion, visibly emotional, told newspaper employees this morning that the paper would cease publication sometime in July, to be replaced by a different company and online publication.

The news shocked employees, who had anticipated cutbacks but not the decision to fold the company.

Champion told employees that the new entity – AnnArbor.com – will be separate from MLive.com, though details are still being worked out. According to an article about the changes posted on the Ann Arbor News section of MLive, the company will be led by Matt Kraner, former Cleveland Plain Dealer chief marketing officer. Champion will serve as executive vice president. Tony Dearing, who served as head of the News’ Ypsilanti bureau in the 1990s, will be “chief content leader” – the equivalent of the entity’s top editor.

Dearing contacted The Chronicle this morning, saying that AnnArbor.com would be taking a very different approach in terms of reaching out to the community and to other local media. He said that he and Kraner would be meeting for the first time with News employees this afternoon at Campus Inn, where they would talk in more detail about the organization.

In a letter to readers published today, Champion said that she, Dearing and Kraner will be holding two public forums in April to talk to the community about these changes: On Thursday, April 2 at 2 p.m. at Campus Inn, 615 E. Huron St., and on Friday, April 3 at 10 a.m. at Weber’s Inn, 3050 Jackson Ave.  [confirm dates]

At the morning staff meeting, Champion told employees that the new product would also include a print publication twice a week, on Thursdays and Sundays. She said the structure of this new venture was unique to Ann Arbor, and not something that was being rolled out at other publications in the Michigan chain of newspapers owned by the Newhouse family.

When the Ann Arbor News closes in July, they’ll be vacating the downtown headquarters, an Albert Kahn-designed structure at southwest corner of Huron and Division streets. Champion told employees that the building was not for sale at this time, but that the new venture would have offices elsewhere. There was also no word on the status of the News’ printing press in Pittsfield Township, which opened in 2001.

Employees were told that they’ll be able to apply for jobs at the new business, but those jobs will be open to non-News employees as well. Details about the types of jobs, salaries and other information won’t likely be available until mid-April.

News employees who did not accept a buyout offer made last fall will be offered severance – one week for every year served. That amount is half of the most recent buyout offer. People who accepted the buyout still have not been given departure dates, so it’s unclear if they’ll remain working at the paper until it ends publication. Champion also said that pension contributions from the company will be frozen in mid-May.

This news comes just days after the newspaper’s long-time editor-in-chief, Ed Petykiewicz, announced his plans to retire.

Other coverage: Former News sports columnist Jim Carty’s blog, Paper Tiger No More.

Paperwork for the buyout won’t be given to employees until Friday, according to several sources. But in broad strokes, they were told that most employees in the newsroom will be offered buyouts, which will likely include two weeks of pay for every year of service and some kind of health care coverage. Some of the people eligible for the buyout need only have a minimum five years of service. It’s unclear if that will apply to all buyout offers. People who don’t take the offer risk being reassigned to another paper.

Copy editors, page designers and graphic artists – essentially, the production staff – are being told that if they don’t accept a buyout, they’ll have to work from the Grand Rapids Press office. The Press is the largest of the Newhouse papers in Michigan. Advertorial products will be centralized at the Kalamazoo Gazette. Other papers in the group are the Jackson Citizen Patriot, Flint Journal, Bay City Times, Muskegon Chronicle and Saginaw News. The Newhouse holdings also include Michigan Live, which operates an online presence for all the papers, and the Michigan Business Review weekly publications.

Part-time employees are not eligible for a buyout, and do not enjoy the benefit of the job pledge given to full-time staffers, which is essentially a no-layoff policy. If part-timers are let go, however, they apparently will be given severance pay.

It’s unclear how many people will take the buyouts or what the target is for staff reduction. A previous buyout offer two years ago and reductions from attrition have significantly reduced the staff size during that period.

The News also recently announced plans to close its Ypsilanti bureau on Michigan Avenue later this month. And plans are underway to slash newsprint costs by cutting the number of sections in the newspaper, dramatically reducing the number of pages and consequently the amount of content published.

Like other traditional news publications nationwide, The Ann Arbor News has struggled with declining advertising revenue and circulation, coupled with increased newsprint and personnel costs. (I’ve written about the situation and its impact previously.) Because the Newhouse newspapers have maintained a lifetime job pledge for full-time employees – even in a challenging economy – the paper has been buffered to some extent from the epidemic of layoffs and buyouts seen elsewhere, including in the Detroit market.

But knowing that they’re not alone doesn’t make it easier for remaining employees. They’ve been running on fumes for a long time, asked to do more work with fewer resources. It hasn’t been an easy work environment, to say the least – even with the job pledge.

My heart goes out to my former colleagues, many of whom will be upending their lives over the next few weeks in ways they never imagined. As I’ve written and said before, there are many talented, hard-working people at The News – journalists who increasingly will not have the opportunity to reach their potential and help our local print newspaper thrive.

Other coverage: Former News sports columnist Jim Carty is writing about the buyouts on his blog, Paper Tiger No More.