Author: Dan Kennedy

GateHouse official announces pay cut

Media Nation just received a copy of an e-mail sent out to GateHouse employees in Eastern Massachusetts from Rick Daniels, the CEO and president of GateHouse Media New England. Bottom line: a 7.75 percent pay cut. Here is the full text:

A MESSAGE FROM RICK DANIELS, CEO/PRESIDENT GHMNE

As we all know too well, the road out of the horrendous economic and advertising slump has been extremely difficult, and yet we have a lot to be proud of on how we have responded. We are still bringing valuable and unique local news, information and advertising to our huge print and digital audiences. Together, we have taken many tough actions that have preserved — and often enhanced — our capabilities, while substantially decreasing GHMNE’s structural costs.

Regrettably, we need to share some tough news: Beginning June 1, we will implement a temporary reduction of our salaries and wages. The average GateHouse Massachusetts employee will see a reduction of about 7.75%. If this were to last through the remainder of 2009, the effect would be to reduce 2009 salaries by about 4% — given it is not starting until June. Rates will vary, and will be “progressive” — meaning that higher earnings will be reduced at higher rates. Your supervisor will share your amount with you. All publications and units in Massachusetts are affected by this step. We are sitting down — today — with representatives of our unionized colleagues to start negotiations on this issue. We expect participation from all — fully and soon.

Why are we taking this step? Why now? It’s really pretty simple: As much as we have done everything in our collective power to blunt the negative effects the economic crisis has had on advertising, virtually ALL major metropolitan markets have been hit by advertising declines that have soared to the mid-twenties to mid-thirties percent (compared to prior year months) since early January. These revenue declines have dramatically hit the cash flows of most publishers.

We are NOT — thankfully — in the kind of trouble that we never want to be in — producing lots of red ink, HOWEVER, if we don’t act soon, and decisively, we could see advertising trends reduce our revenues to a point where we could no longer cover our cash expenses with any margin of safety. Common sense tells us that when companies start suffering from negative cash flow, there is NOTHING good that happens, and these days, with lenders and vendors on short strings themselves, the “bad stuff” happens quickly. We seriously considered a wage reduction earlier this year, but given the obvious difficulties a pay cut creates for each of our family’s finances, we decided to make sure we were not going to see an advertising rebound that could allow us to avoid this painful step. We also considered the possible use of additional staff reductions to generate the almost $2.5 Million of savings this pay cut will generate for the remainder of 2009. Such cuts would have to be about 100 positions, and we did not believe we could continue to operate and deliver the high levels customers value were we to quickly cut this many positions.

We are hardly alone in taking this step. In fact, a great many publishing companies have already taken steps to reduce their single biggest expense — compensation, using furloughs, pay cuts, or even both. While we might be a bit “late” vs. our peers, it’s not too late for us given the many aggressive cost reductions we have already made. At this point, GateHouse Massachusetts is the only GateHouse region that is implementing pay reductions, because we, being in a major metro market, have seen substantially greater losses in advertising expenditures. Because no one can predict the economic future, we can’t reasonably predict when revenues and cash flows will strengthen to the point where there is little concern about cash flows being stable and safe (i.e. positive) levels. Obviously, the sooner we can end this temporary reduction, the better — for all.

Some might ask: Aren’t newspapers dead anyway? Are we just prolonging the inevitable? As a consumer and advertising medium, newspapers that deliver truly unique news and information are still very much in demand, although some very important parts of the business model, including the need to be fluently digital, are changing. One of the largest advertising agencies in the country visited us recently with a very simple message: Large local newspaper companies, with some changes, will be the major beneficiaries of the newspaper industry restructuring. Our industry IS going through wrenching changes, but a great many of the changes that are bedeviling major Metro papers are poised to benefit us — as long as we remain economically sound in the near term. We will keep you informed about our challenges, AND our victories.

The senior management team and I will be conducting employee information sessions at a great many of our locations in early to mid June, we look forward to updating you further at these meetings. Thank you — in advance — for your willingness to support personally difficult steps during these times that WILL allow us to grab the opportunities that arise out of adversity.

Richard Daniels
President and Chief Executive Officer
GateHouse Media New England
Publisher, The Patriot Ledger and the Enterprise

Early word out of GateHouse

I’m hearing that GateHouse Media has imposed an 8 percent pay cut for managers and will be talking with the unions next. The only union shops among GateHouse’s 100-plus papers in Eastern Massachusetts are the Patriot Ledger of Quincy and the Enterprise of Brockton*, so I don’t know what this means for the vast majority of employees who work for non-union papers.

The Ledger is also cutting back on its coverage area from 26 cities and towns to 12, according to one of my reliable informants. Among the towns being cast out of Ledgerland is the fast-growing community of Plymouth. Supposedly the Ledger will continue to run press releases but will no longer have town reporters in the communities from which it’s pulling back.

*Correction: The Herald News of Fall River is also unionized. See follow-up item.

More GateHouse angst

Two weeks after GateHouse Media laid off perhaps a dozen or so people at its Eastern Massachusetts papers, I’m hearing from sources that a mandatory, company-wide meeting has been called for Thursday at 10 a.m.

No idea what it’s about, but folks are bracing for bad news.

8:57 p.m. update: Another source has heard nothing about a meeting Thursday. For what it’s worth.

Kazakhstan Internet update

If nothing else, free-speech activists in Kazakhstan have a nice sense of the absurd.

According to the Asia Pulse Data Source, about which I know nothing, advocates are pushing for a law to crack down on fences — as in white-picket, stockade, barbed-wire, etc. — in order to protest a proposal that would subject Internet communications to heavy-handed regulation.

The proposed law — the one regulating the Internet, not fences — passed the lower house of the Kazakh Parliament on May 13. Free-speech proponents hold out some hope that President Nursultan Nazarbayev may veto the law, lest his international image be tarnished.

Earlier coverage here.

For Jay Severin, every day is Groundhog Day

For weeks now, if you visit the Web site of WTKK Radio (96.9 FM) you’ll find this:

WTKK and Greater Media value an open and vigorous dialogue, but we also adhere to basic principles of civility, common decency and respect for all cultures. We believe Jay’s suspension is the best way to uphold both of these corporate policies. WTKK Management met with Jay Severin and his agent today. He will remain on suspension until further notice.

Like Bill Murray in “Groundhog Day,” every day for Severin is the same day: he gets up, realizes he’s been suspended and sits down for a meeting with management and his agent.

You really get the feeling that station officials are in no hurry to resolve this. And Joe Kahn’s story in the Boston Globe on Monday (I was among those quoted) did nothing to dispel that notion.

All appellate judges are activists

At TPMDC, Eric Kleefeld posts a statement from U.S. Sen. James Inhofe, R-Okla., saying that he’s concerned Judge Sonia Sotomayor might allow her “personal race, gender, or political preferences” to exert an “undue influence” over her decisions as a Supreme Court justice.

You’re going to hear a lot of this in the days and weeks ahead. Conservative critics seem to be oblivious to the fact that white men have both a race and a gender. I highly recommend Jeffrey Toobin’s recent New Yorker profile of Chief Justice John Roberts, who has emerged as a conservative activist judge whose world view is very much informed by his race and gender.

To listen to conservative critics of “activist” judges, you’d think that appellate judges would always reach the same conclusion as long as they are competent and free of bias. But we all know that’s not the case, and that judges are heavily influenced by their personal beliefs.

Sotomayor, for instance, is already under fire for her role in a New Haven affirmative-action case that has been appealed to the Supreme Court. But as Harvard Law School professor Charles Ogletree pointed out on CNN last night, “the Supreme Court will probably decide the case 5-4. Now, she’s going to be wrong. Maybe she is. But four justices on this court right now will agree with her.”

In other words, she’s a liberal, and she’s well within the mainstream of liberal jurisprudence.

It was interesting that President Obama announced the Sotomayor pick on the same day the California Supreme Court upheld a voter-approved constitutional amendment that outlaws same-sex marriage. The vote was 6-1. Earlier, the court had created a right of gay marriage by a margin of 4-3.

The California rulings show just how important the courts are in American life — and how judges, reading the same laws, come to entirely different conclusions. If that’s activism, then all appellate judges are activists.

Obama won the election, which means that we’re going to get liberal activist judges rather than conservative activist judges. That’s the way things are supposed to work.

Another public pension outrage (II)

As Amused notes, Timothy Bassett and his wife, Linda Bassett, have both been caught up in their own public-pension controversies. Bassett chairs the Essex Regional Retirement Board, which is responsible for a decision to lower the retirement age from 65 to 60 for police and fire dispatchers in four North Shore towns.

Sean Murphy reports in the Boston Globe today on Linda Bassett’s ongoing effort to hold on to $20,000 in pension payments that she received for serving on — though rarely attending meetings of — the board of library trustees in Lynn.

And here is an earlier Murphy story on Timothy Bassett, beneficiary of a taxpayer-funded gift from former House speaker Tom Finneran that allows him to collect his $41,000-a-year public pension while getting paid $123,000 by the retirement board.

The Salem News, following up Chris Cassidy’s story, runs an editorial today noting that the board not only has a $123,000 executive director (Bassett) but also a chief operating officer, Lilli Gilligan. The editorial observes that “why this tiny agency needs both an executive director and COO is another question for taxpayers to ponder.”

I so can’t wait for the state sales tax to rise by 25 percent. How about you?

Update: Mrs. Media Nation passes along this link. It turns out that Linda Bassett is a serious foodie and the author of “From Apple Pie to Pad Thai: Neighborhood Cooking North of Boston,” not to mention a columnist for two GateHouse papers — North Shore Sunday and Current River Sunday. (Mrs. B’s bio may be out of date — Current River Sunday does not appear on GateHouse’s list of newspapers.)

She is also “on the culinary faculty at North Shore Community College.” Pension alert!

Update II: I’m told that Current River Sunday is now the Newburyport Current.

Another public pension outrage

In the midst of the worst fiscal crisis we’ve seen in many years, an obscure North Shore agency has voted to lower the retirement age for police and fire dispatchers from 65 to 60. The Salem News’ Chris Cassidy reports:

Thanks to a subtle change in job title, some North Shore emergency dispatchers will be able to retire five years early under new rules approved by the Essex Regional Retirement Board.

By reclassifying police and fire dispatchers as “signal operators,” the board recently allowed the group to retire with maximum benefits at age 60.

The change affects Boxford, Hamilton, Ipswich, Topsfield and Wenham. Naturally, defenders of this outrage say the move was made in order to rectify an injustice. Naturally, the extra cost to taxpayers is said to be negligible. Naturally, we are told that dispatchers work under an incredible amount of stress.

Guess what? I’m feeling pretty stressed right now. In what rational universe are new benefits approved in the midst of a budget meltdown — a meltdown that taxpayers are going to have to fund? The arrogance of this money grab boggles the mind.

Here are the board members.

Let the games begin

President Obama will reportedly nominate Judge Sonia Sotomayor to the Supreme Court. Although none of the candidates on his short list has a reputation for being a liberal fire-breather, Sotomayor is probably the most provocative given her ruling in a high-profile affirmative action case in New Haven.

A ruling Sotomayor made in 1995 ended the eight-month-long major-league baseball strike. So she sounds like a fine choice to me.