Tag: Boston Globe

It wouldn’t be fair to call this a direct connection. But follow the bouncing money.

The New York Times today runs a profile of Lisa Maria Falcone, a socialite who just gave $10 million to the High Line, an elevated railway in New York that’s been turned into a garden. Falcone’s husband, Philip Falcone, is the founder of Harbinger Capital, which owns 20 percent of the New York Times Co. The Times Co. is demanding that the Boston Newspaper Guild, the Boston Globe’s largest union, deliver $10 million in concessions.

To be clear, the Falcones are not legally, fiscally or ethically responsible for either the Globe or the problems the Times Co. is having in running it. But there’s a parallel here that’s too striking to let go unmentioned.

This is already floating around the intertubes. But since Media Nation obtained its own copy earlier this morning, I will post it here in full — a company-wide e-mail from New York Times Co. chairman Arthur Sulzberger Jr. and president Janet Robinson. Enjoy.

June 25, 2009

To Our Colleagues,

The month of May came and went and, contrary to the prediction of one writer, we did not stop printing The New York Times. But given all the speculation and incorrect information that has been reported about our Company, we think it is important to create a regular letter written so that you get the facts directly from us — on the record. In the first of what we expect will be frequent e-mails, we’d like to talk about recent events at The Boston Globe. Future letters will discuss financial transactions, advertising, circulation, costs and the digital challenges we face as well as other issues as they arise.

All of you know, only too well, that this has been a difficult time for the economy, the industry and our Company. The recession has amplified the downward secular trends in our business and caused steep declines in advertising revenue, particularly in the recruitment, real estate and automotive categories.

The Globe was one of the first metropolitan newspapers to be deeply affected by the secular and cyclical forces that are now roiling the entire media industry. Revenues at the New England Media Group (which includes the Globe, Boston.com, the Worcester Telegram & Gazette and its Web site) have declined from $700 million in 2004 to $524 million last year.

In the fall of 2008, the Globe and Boston.com developed a strategic plan to deal with their operating loss, which earlier this year was projected to be roughly $85 million in 2009. The plan has several components to increase revenues and lower costs. Here are the strategic steps we have taken:

• We have just completed the consolidation of printing facilities in Boston, which is expected to save $18 million a year.
• In the last month, we significantly raised prices on newsstand and home-delivered copies of the paper.
• The compensation of the Globe’s managers and other nonunion employees were significantly reduced in 2009/2010 through a salary reduction and elimination of their annual incentive plan.
• The Globe’s labor contracts are being restructured in order to save $20 million in annual operating costs — essential to our turnaround plan. We had reached agreements with seven unions that provided slightly more than $10 million in savings. Yesterday we reached an agreement, which is subject to ratification, with the Boston Newspaper Guild, which would provide us with another $10 million in expense reductions.

There will be still more to come but with these steps the Globe is on a path to a more secure financial future. We are deeply grateful to all of our colleagues in Boston for the hard work and sacrifices they have made to put the Globe on a stronger financial footing. In future letters, you’ll hear from us about other things we are doing to strengthen our Company and prepare us for the future. These are tough times and we recognize that all of you are working very hard to make tomorrow better than today.

Thank you, we deeply appreciate it.

Arthur & Janet

An observation: What “incorrect information” are Sulzberger and Robinson referring to? I see nothing remarkable in here — nothing new, no correcting of errors. The Times wouldn’t run a letter accusing it of inaccuracies without specifying what they are. So what are Sulzberger and Robinson talking about?

The tentative deal between the New York Times Co. and the Boston Newspaper Guild over wage and benefit cuts at the Boston Globe (here, here and here) comes in the midst of unprecedented economic turmoil.

Oddly enough, that may be a positive sign for the future of the Globe, because it demonstrates that the newspaper industry’s problems can’t be attributed solely to the Internet.

Take a look at today’s Globe. The state’s landmark universal-health-insurance program is being cut, and state treasurer Tim Cahill is calling for even deeper cuts. Homeless families are crowding motels. Harvard University is laying people off. The Twin Rivers casino in Rhode Island is heading for bankruptcy. (Take note, Gov. Patrick.) Housing prices continue to drop. Local merchants are hoping to rescue the bankrupt Faneuil Hall Marketplace. And on and on it goes.

In a perverse sense, though, these are all good signs for the Globe. In recent months we’ve heard a lot about the hopeless situation faced by major metropolitan newspapers. Much of their readership has moved online, but advertising hasn’t. And though charging readers for online content would surely be a boon, there are many good reasons to think people won’t pay.

But underlying the pessimism has been an unspoken assumption that current downward trends in print readership and ad revenue will continue until they converge at zero. That’s not going to happen. Somewhere there’s a stabilization point. Boston Herald publisher Pat Purcell has proven that it’s possible to get small enough to break even or earn a small profit. Surely the Globe can do the same. With a readership and ad base considerably larger than the Herald’s, the Globe also should be able to preserve most of its core mission, which is to cover the city and the region as aggressively and thoroughly as possible.

One person who should be feeling very good today is Guild president Dan Totten. As New York Times media reporter Richard Pérez-Peña reported on Monday, Totten has been criticized, rightly so, for keeping his members in the dark. And following the narrow defeat of the first deal a few weeks ago — a defeat that Totten encouraged — the phrase you most often heard about Totten was “in over his head.”

Today, though, Totten can rightfully be said to have gotten a better deal for his members. Yes, it still adds up to a $10 million giveback, and it still means the end of lifetime job guarantees for nearly 200 Guild members. But the total pay cut is lower (about 8 percent when a mandatory furlough is figured in, as opposed to about 10 percent in the first deal), which members will presumably find more palatable, even though cuts in benefits are deeper.

Neither side blinked. But Totten’s instinct that it was worth the pain of forcing management back to the bargaining table proved to be right.

Finally, the Globe’s report today includes some crucial numbers that have been missing from most of the coverage — that Globe reporters earn between $40,000 and $70,000 under the current contract. So let’s consider the impact of these various proposals on, say, a youngish reporter with a bit of experience, making $50,000.

• Under the proposal that the Guild rejected, her salary would drop to $45,000.
• Under the 23 percent pay cut that management unilaterally imposed after the “no” vote, she’d be making $38,500.
• And under the 8 percent total cut now being proposed, she’d make $46,000.

The agreement will be put to a vote on July 20, and though predictions can be futile, it’s hard to imagine that it won’t pass. I also wouldn’t be surprised if there’s a deal to buy the paper very shortly thereafter.

Overall, a very good day for the Globe, for its employees and for Boston.

More: The new deal is an improvement if you think that one of the messages coming out of the “no” vote was that folks would rather take a smaller pay cut even if it meant a larger cut in benefits. I should have acknowledged that that’s likely to be a controversial proposition. The Phoenix’s Adam Reilly is soliciting comments on that very point.

Photo (cc) by blyte1 and republished here under a Creative Commons license. Some rights reserved.

Could members of the Boston Newspaper Guild wind up as co-owners of the Boston Globe? A Media Nation reader sends along this link from the Financial Times. The story, posted last Thursday, doesn’t seem to have gotten a lot of pick-up.

But according to an anonymous source, one of the potential buyers, Boston Celtics co-owner Stephen Pagliuca, is reportedly willing to work out some sort of deal with the Guild that would result in employees owning a share of the paper. As the Financial Times notes:

Working with the Boston Newspaper Guild could help remove one of the biggest obstacles to a deal — negotiating a reduction in operating cost that could prove prohibitively expensive to return ownership to local control.

Such an arrangement would be similar to the one recently struck in Maine involving the Portland Press Herald and several smaller papers. Employees now own 15 percent of the company.

Boston Newspaper Guild president Dan Totten released an optimistic statement late this afternoon: “The Boston Newspaper Guild continues to have productive discussions with the New York Times Company and Globe management. We feel we are close to reaching an agreement that we can bring to Guild members for a vote.”

A vote has been scheduled for July 20.

With the New York Times Co. and the Boston Newspaper Guild scheduled to resume negotiations today over $10 million in union givebacks at the Boston Globe, the Times’ Richard Pérez-Peña weighs in with some insights.

His lede, focusing on the Guild’s alleged failure to keep its members apprised of what’s been going on for the past year, is telling, and helps explain why talks between the two sides went off the rails this spring. Even political reporter Brian Mooney, who was outspoken in his support for a “no” vote several weeks ago, says, “It wouldn’t have been that hard to make this go a lot better. There’s plenty of blame to go around.”

Yet there are three questionable assertions in Pérez-Peña’s story. One isn’t that important, but two are. Those assertions pop up in one sentence about halfway through the story:

Throughout the long process, the company has publicly said little about the situation, and to this day it has not confirmed last year’s loss, or acknowledged that it had threatened to close the paper.

I’ll deal with the threat to close the paper first. From the moment on April 3 that news outlets began reporting that the Times Co. was threatening to close the Globe unless the paper’s dozen or so unions could come up with $20 million worth of concessions, it was a little unclear precisely where that shutdown threat was coming from.

I’m not going to try to trace it back to the beginning, though, because I don’t have to. Times Co. spokeswoman Catherine Mathis confirmed it, in an on-the-record e-mail to the Phoenix’s Adam Reilly, on June 4. Reilly had asked Mathis why, in the weeks leading up to the “no” vote, talk about a possible shutdown had seemingly stopped, and whether management had in fact taken that option off the table.

Mathis responded: “Closure is a very real path for the Company to take.” So there you have it: a declarative sentence in which a top Times Co. official, speaking on the record, asserts that the company might shut the Globe if it fails to obtain the concessions it has demanded.

As for the Globe’s losses, Pérez-Peña specifically refers to “last year,” when, it has been reported, the Globe lost an estimated $50 million. As with the closure threat, it is hard to find a statement in which that $50 million figure has been directly attributed to an identifiable Times Co. official — or, in most cases, attributed to anyone at all. Maybe one exists, but I couldn’t find it.

Still, there doesn’t seem to be much doubt that management has, in fact, been telling Globe employees that the paper lost $50 million last year. For instance, consider this, from an April 9 Globe story by Robert Gavin:

Without the union concessions and other cutbacks, the Globe is projected to lose $85 million this year, following a loss of about $50 million last year, according to an employee briefed on union discussions.

But it seems to me that the more important figure is the $85 million. Here, too, the company itself has been less than forthcoming — so much so that a few people warned me early on that I should be clear that the origin of that number was suspect.

Fortuitously enough, though, the $85 million figure shows up in the Times Co.’s most recent quarterly report to the Securities and Exchange Commission, filed on May 7. Here’s the language:

Before savings from changes to the union agreements or other cost-cutting initiatives or the effects of any revenue initiatives, we projected that 2009 operating losses at the Globe and Boston.com would be approximately $85 million.

Finally there is the small matter of Pérez-Peña’s claim that “[t]he Globe’s troubles did not explode into full view until April 3, when its Web site, Boston.com, posted an article reporting that the Times Company had threatened to shut the place down unless unions agreed within 30 days to major concessions on wages.”

Maybe it depends on your definition of “full view.” But, in fact, WBUR Radio (90.9 FM) broke the story on its Web site on April 3, followed a very short time later by the Phoenix’s Reilly, who reported both the $20 million giveback demand and the closure threat.

It’s impossible to ascribe motive when doing this type of analysis. And I suppose these discrepancies don’t add up to a whole lot. But, inevitably, when the Times covers the Globe, every sentence and phrase is going to be scrutinized.