Times Co. threatens to shut Globe; seeks $20m in cuts from unions

Paper reported to face $85m loss this year, as recession, Internet economy batter news industry

By Robert Gavin and Robert Weisman
Globe Staff / April 4, 2009
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The New York Times Co. has threatened to shut The Boston Globe unless the newspaper's unions swiftly agree to $20 million in concessions, union leaders said yesterday.

Executives from the Times Co. and Globe made the demands Thursday morning in an approximately 90-minute meeting with leaders of the newspaper's 13 unions, union officials said. The possible concessions include pay cuts, the end of pension contributions by the company, and the elimination of lifetime job guarantees now enjoyed by some veteran employees, said Daniel Totten, president of the Boston Newspaper Guild, the Globe's biggest union, which represents more than 700 editorial, advertising, and business office employees.

The concessions will be negotiated individually with each of the unions, said Totten and Ralph Giallanella, secretary-treasurer of Teamsters Local 259, which represents about 200 drivers who deliver the newspaper.

"We all know the newspaper industry is going through great transition and loss,"' said Giallanella. "The ad revenues have fallen off the cliff. Just based on everything that's going on around the country, they're serious."

Totten said the Times Co. officials wanted the concessions within 30 days or else the paper would be shuttered, but Giallanella said officials did not mention a specific timetable.

Catherine Mathis, a Times Co. spokeswoman, declined to comment last night. Globe publisher P. Steven Ainsley also declined to comment.

The newspaper industry, which had already been struggling as readers and advertisers moved to the Internet, has been hard hit by the recession, and the Globe is no exception. The newspaper's advertising revenues have declined sharply in recent years; once robustly profitable, it is now losing money.

This week, the Globe newsroom completed cutting the equivalent of 50 full-time jobs. But the deteriorating economy has made the Globe's financial outlook much worse. Management told union leaders Thursday that the Globe will lose $85 million in 2009 unless serious cutbacks are made, according to a Globe employee briefed on the discussions. Last year the paper lost an estimated $50 million, the employee said.

The Times Co. is seeking concessions from the unions because the New York company, which is also suffering from the recession, can no longer subsidize the Globe's losses, said the Globe employee who is not authorized to speak publicly and requested anonymity. The Times Co. posted a net loss of $57.8 million in 2008.

In recent months, the Times Co. has taken steps to raise cash. It has been shopping its stake in the Red Sox, and recently sold most of its headquarters in New York, while leasing back the office space. It received $250 million from Mexican billionaire Carlos Slim, agreeing to pay 14 percent interest. It also suspended shareholder dividends to save about $130 million. New York Times shares closed at $5.05 yesterday, up 1.8 percent, but have fallen 74 percent in 12 months.

Several major newspaper companies have filed for bankruptcy reorganization in recent months, and several have threatened to shut down operations unless they receive major concessions from workers. Hearst Corp. of New York in February threatened to shut or sell the San Francisco Chronicle if it could not cut costs. Last year, Advance Publications, controlled by the Newhouse family, threatened to shut the Star-Ledger of Newark if enough employees did not accept buyouts. Enough did.

Last year, Blethen Maine Newspapers said in a court filing it might have to close the Portland Press Herald and two Central Maine newspapers if it wasn't able to sell them, but no timetable was given. The company has still not concluded a sale.

Some companies have already closed unprofitable publications. Hearst recently shut down the Seattle Post-Intelligencer after it failed to find a buyer, and E.W. Scripps Co. shuttered the Rocky Mountain News in Denver.

Lou Ureneck, chairman of the journalism department at Boston University's College of Communications, said he believed the Times Co. is hoping to get the concessions and keep publishing the Globe. But he said the Times Co. management seems to have decided that the flagship New York Times newspaper is its top priority and it will no longer subsidize its New England newspaper group, which has underperformed the company as a whole.

"The New York Times Co. has its back up against the wall, and it's looking at ways to survive," Ureneck said. "The Globe has become a drag on earnings at The New York Times Co. at a time when it can't afford it."

Ureneck said a shutdown of the Globe would be a catastrophe for the community. "It's a crucial part of life in Boston," he said. "This city would be diminished by the loss of The Boston Globe. I can't even imagine it."

The Globe is the 14th-largest paper in the country and by far the region's circulation leader.

Local leaders yesterday expressed shock at the possibility of the Globe's closure and trepidation over a future without it.

"I believe in good government, and I believe good government depends on a strong paper, and the Globe has served that role in Massachusetts for a long time," said Governor Deval Patrick, who had a Globe paper route while a student at Milton Academy. "It's hard to imagine starting the day or doing this current job without the Globe."

Mayor Thomas M. Menino of Boston said the city would lose a vital institution.

"The Globe helped build Boston," Menino said last night. "The Globe holds people accountable on the issues, and that's important. We might not like it sometimes. Sometimes we don't agree. But they ask the tough questions - backed up with real data."

The Boston Globe began publishing in 1872 when a half-dozen local businessmen, led by Jordan Marsh department store founder Eben Jordan, pooled $150,000 to launch the newspaper, according to a company history. The first issue, appearing March 4, 1872, cost four cents.

In August 1873, Jordan hired General Charles H. Taylor, a 27-year-old newspaperman and Civil War veteran, as a temporary business manager. Taylor helped pull the paper out of financial trouble and became a partner with Jordan, the only remaining investor. Taylor was later named publisher, and members of the Taylor family continued publishing the paper for over a century - during which it became the dominant newspaper in New England - until 1999. It was sold to The New York Times Co. on Oct. 1, 1993, for $1.1 billion.

The Globe has won 20 Pulitzer Prizes, including eight under the Times Co. ownership.

In recent years, the Globe, like papers throughout the country, has cut jobs in both newsroom and business operations as print circulation and advertising have declined. Even though many papers, including the Globe, reach more readers than ever through the Internet, newspaper websites are not generating enough advertising revenues to make up for the decline in print advertising.

A number of newspaper companies, weighed down by debt, have filed for bankruptcy protection in recent months. They include the Tribune Co., which publishes the Chicago Tribune, the Los Angeles Times, and the Hartford Courant; Philadelphia Newspapers, which publishes the Philadelphia Inquirer; Star Tribune Holdings, which publishes the Minneapolis Star Tribune; Journal Register Co., which publishes the New Haven Register in Connecticut; and, this week, Sun-Times Media Group, which publishes the Chicago Sun-Times.

Stephen Burgard, director of the School of Journalism at Northeastern University in Boston, said cost-cutting newspapers are moving from job freezes, buyouts, and layoffs to pay cuts and suspension of pension contributions. He said some benefits, such as lifetime employment guarantees, are unusual in the current environment.

"The newspaper is telling the unions that radical changes have to be made or the newspaper is no longer viable," said Burgard. "The question is whether it's a negotiating ploy. In this situation, the request on the part of the management is not unusual or out of the ordinary."

Union leaders said they are taking the threat seriously.

In addition to pay cuts, the Times Co. is also asking to cut its contributions to healthcare and 401(k) plans, according to the employee briefed on the discussions.

Totten, president of the Boston Newspaper Guild, said management should lead by example and take additional cuts in pay and jobs. The Times Co. recently said nonunion managers would take a 5 percent pay cut through December, but receive an additional 10 vacation days this year.

Giallanella, of the Teamsters Local 259, said it will be easier to sell concessions to his members if they see management sharing the burden.

"I don't think we have any choice but to make these serious decisions and do our best to work through this," he said. "Hundreds of jobs are at stake, and the future of The Boston Globe."

Beth Healy and Brian McGrory of the Globe staff contributed to this report. Robert Gavin can be reached at