Union trouble | Is a labor contract threatening the sale of Blethen Maine Newspapers' assets?
The parent company of the Portland Press Herald is doing whatever it can to dismantle the newspaper union, which it claims is blocking it from selling the Press Herald and its other Maine papers.
But this isn’t a typical battle between management and labor. Instead, at issue is a clause in the Portland Newspaper Guild’s contract that ensures the contract’s existence after a sale, something the publisher, Blethen Maine Newspapers, says has turned potential buyers cold.
Blethen Maine’s lawsuit to dismiss the union, filed June 17, may become a matter of survival: The company says it urgently needs to sell its papers, real estate, presses and other equipment to avoid defaulting on bank loans.
Blethen Maine Publisher Charles Cochrane says the sale is “likely on hold” until the union issue is resolved. And if Blethen cannot sell the papers, it warns in its lawsuit that more cost-cutting measures lie ahead.
Since March, the Press Herald has already trimmed more than 60 jobs in two rounds of layoffs, voluntary buyouts and unfilled vacancies. The paper also slashed its regional coverage, shuttering news bureaus in Augusta, Bath, Biddeford and Washington, D.C.
The legal wrangling and cutbacks come as Blethen Maine’s parent company, The Seattle Times Co., struggles to avert financial disaster as advertising revenues dry up and newsprint and energy costs climb higher. In March, the company announced it would sell its Maine assets, which it had purchased from Guy Gannett Communications in 1998 after borrowing $213 million, according to the Seattle Times. Those holdings include the Press Herald/Maine Sunday Telegram, Kennebec Journal in Augusta, Morning Sentinel in Waterville, the Coastal Journal in Bath, The Maine Switch and MaineToday.com.
But newspaper industry experts say The Seattle Times Co. will not get close to the estimated $230 million it paid for the Maine properties 10 years ago, just as print revenues began to fall as readers turned to the Internet for news. Tom Bell, a business reporter at the Press Herald, says the final price for the Maine properties will likely be less than $100 million.
Newspaper broker Larry Grimes, owner of W.B. Grimes and Co. in Gaithersburg, Md., says it’s not unusual for publishers and unions to fight when a paper is for sale. “I am not criticizing the union at all for achieving the contractual arrangements they were able to achieve,” he says. “But what it does do, it tends to scare off certain types of buyers who like to come in and put their stamp on the situation.”
Rick Edmonds, a media business analyst with The Poynter Institute, a journalism think tank in Florida that owns the St. Petersburg Times, says, too, that the current economy is exerting pressure on the situation. “It’s certainly fair to say that the difficult economic circumstances of papers might be bringing up that question more forcefully than is usually the case,” he says.
“With due care”
Included in the guild’s collective bargaining agreement, which is set to expire May 2011, is what’s called a “successor clause,” meaning the contract would stay intact even if the Press Herald is sold to another company. (The contracts for unions at the Kennebec Journal and Morning Sentinel do not contain successor clauses, although the editorial staff at the Sentinel is covered by the Press Herald contract, Bell explains.)
Bell says Press Herald employees are worried that the absence of a union contract means a new owner could fire all employees and ask them to reapply for lower wages and fewer benefits. “That is a nightmare scenario of an asset sale,” he says.
That’s why guild members say they won’t back down from the successor clause. And while they say they will comply with arbitration, they won’t be hurried. (Blethen Maine has told the guild it will also seek arbitration. “We are pursuing all avenues available to us to get to a timely resolution to the disputed issue,” says Cochrane.)
The guild’s recalcitrance has landed it in U.S. District Court as The Seattle Times Co. tries to speed up a resolution on the union’s post-sale fate. “They asked us to agree to expedite the matter, and we said no,” says C.J. Betit, the administrative officer for the Portland guild. “It is a complicated issue and we need to go about it with due care.” (The guild on July 8 filed a request with the court to dismiss Blethen’s case based on its lack of merit.)
Jim Schaufenbil, an international representative with the national Newspaper Guild-Communication Workers of America, the parent labor union to the Portland guild, wonders if The Seattle Times Co. is willing to break the union to make more money on the sale. “It is not a matter of whether they can find a buyer, it is a matter of how much the paper is worth,” he says. “If a new owner doesn’t have to honor the contract, then maybe it’s a higher price.”
The guild points to a similar union fight at The Stamford Advocate in Connecticut, which was sold along with the Greenwich Time by Tribune Co. in 2007. Gannett Co. had wanted to buy the two daily papers for $78 million, according to an arbitration document, with the presumption it could dissolve The Advocate’s union. However, an arbitrator found the union’s successor clause couldn’t be erased. Gannett consequently backed off, and the papers were bought by Hearst Corp. for $62.4 million, according to news reports at the time.
Although Blethen Maine has not revealed any bidders, Crosscut.com, an online news site based in Seattle, has reported that Gatehouse Media, based in Fairport, N.Y.; Wilkes-Barre Publishing Holdings in Pennsylvania; and Black Press, of Victoria, B.C., all have taken a look at the chain’s financials. Cochrane says this list is inaccurate but did not divulge more information.
Bell says, too, that the guild also is interested in employee ownership of the paper.“We’re still hopeful that a bidder will come to us and work with us on it,” he says.
Meanwhile, Bell describes the staff as nervous and sad. In late June, nine newsroom employees accepted voluntary severance packages, leaving 19 full-time reporters on staff. “None of the reporters have jobs waiting for them. Several don’t even have a plan for what they are going to do next,” Bell says. “They just want out.”
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