Sulzberger speaks

Even as a third prospective buyer has emerged for the Boston Globe — and even as the New York Times Co. has finally acknowledged that the Globe is for sale, something that’s been clear for months — the company’s top two executives have broken their silence to say, well, not so fast.

In a story and interview in today’s Globe, chief executive Arthur Sulzberger Jr. (photo) and president Janet Robinson express the hope that the paper is back on the road to health, adding that they won’t sell unless they can find the right deal — both financially and with regard to “the impact of a potential sale on the community,” as Sulzberger puts it.

They also defend their record as stewards of the Globe since 1993, when the Times Co. purchased the paper for $1.1 billion. (The paper is thought to be worth barely a fraction of that today, though that’s also true of the newspaper business in general.) “I think this company has supported the Globe during a very, very difficult financial period. It has supported its journalism, it has supported its business-side operations,” Robinson says.

Sulzberger gets off the best line. Asked whether company officials regret having bought the Globe, he replies, “How far back should we go? Maybe we regret in 1896 that we bought the New York Times.”

My nickel’s worth: I think the Times Co. was a reasonably good steward until about a year ago, when the company’s own troubles, and fears about the fate of its flagship, the Times, led it to start treating the Globe — and Boston — with contempt.

There have, of course, been deep cuts, including the first layoffs in the Globe’s history earlier this year. But the Globe is hardly alone among large regional newspapers in losing its foreign bureaus and in scaling back most of its national ambitions. It remains just about the only paper in its weight class to have a fully functioning Washington bureau.

Still, the lack of communication on the part of the company — most definitely including Sulzberger and Robinson — during the months-long crisis over union concessions led to a sense that management was not willing to share in the sacrifices being asked of its employees. The $20 million in concessions, including $10 million by the Newspaper Guild, the paper’s largest union, were truly draconian, even if they were necessary.

The question, at this point, is how much credibility the Times Co. has left with the community. The best answer is to put out a good paper every day, and the Globe has risen to that challenge. Still, I have to believe that a new start under a new owner would be the best outcome, provided the owner wants to get into the business for the right reasons.

Like everyone else, I’m intrigued by the notion that Partners HealthCare chairman Jack Connors and Boston Celtics co-owner Stephen Pagliuca might lead the Globe into some sort of non-profit ownership arrangement, which Jay Fitzgerald explained in the Boston Herald earlier this week. But Connors is a walking conflict of interest. No one knows if he could separate his own interests from those of the Globe’s journalistic mission.

In other news, the Boston Phoenix’s Adam Reilly has obtained a memo from the Guild reporting that publisher Steve Ainsley has told union official that the paper is heading in the right direction.

And the Herald’s Christine McConville reports that Ainsley told the Guild that the paper will soon start charging for access to the paper’s Web site, Boston.com, confirming earlier remarks editor Marty Baron made in an appearance on “Greater Boston.”

Guild e-mail paints dark picture

The Boston Newspaper Guild’s insurance consultant, Bonnie Hanisch, has sent an e-mail to Guild members at the Boston Globe showing that they could bring home slightly more money if they approve a package of concessions totaling $10 million when they vote on July 20. (Media Nation obtained a copy earlier today.)

The cost, though, is high: a brutal reduction in health-insurance and retirement benefits. In fact, the consultant’s math is based on an assumption that the average Guild member would choose to reduce her or his 401(k) contribution from 10 percent of salary to 4 percent if the package is rejected, as a similar package was on June 8. Hold the 401(k) contributions steady, and employees would actually make less money with a “yes” vote than with a “no” vote.

So why would anyone vote yes? If the concessions are approved, salaries will be cut by 9 percent (including eight unpaid days off). If they are rejected, the 23 percent pay cut implemented after the “no” vote remains in place.

The e-mail has led to some speculation that the Guild is quietly pushing for another “no” vote, the Phoenix’s Adam Reilly reports. Poynter Institute business analyst Rick Edmonds describes the situation facing Guild members as “a choice between a punch in the gut now or being slapped upside the head later,” with a “yes” vote merely deferring some of the pain.

Yesterday I had a chance to talk with a few Globe staff members about the vote and whether they think the concessions will be approved this time around. The rough consensus: yes, but there is deep anger at the New York Times Co. over its highhandedness and lack of straightforwardness in communicating with Globe employees.

Look for the vote to be close once again.

The full text of Hanisch’s e-mail follows:

The Executive Committee, along with the Governing Board, has asked that I reiterate some of the questions that came up this weekend, along with an example of how you could mitigate the 23% if the contract is not ratified.

First, our medical plan renews on May 1st of each year. Our premiums increased from Harvard Pilgrim by approximately $500,000. At that time, there was an estimated $300,000 in the Taft Hartley Health Fund, and we were expecting an additional $200,000 of new health fund quids that had been negotiated in the last bargaining negotiations. Hence, there was no rate change/contribution changes to the employees.

On April 7th, we began the $10 million concession meetings with the company. Ultimately, part of the concessions was approximately $1.3 million in health care quids that had been negotiated over the past 20 years.

What this means to you — whether the contract is ratified or not, your health insurance contribution rates will increase next May 1, 2010. Based on our estimates, if the contract is ratified, we need $2.5 million of employee contributions. If the contract is not ratified, we need $1 million of employee contributions. (Health care increases are based on the medical claims of this group and those that are participating. These estimates are based on the same health care costs, and an estimated 5% increase.)

If the contract is not ratified, here is an example of how to reduce your costs:

If Ratified
Average Salary: $58,000
Family Health Insurance: -$ 5,492
401K Deductions (Average person in BNG is 10%): -$5,800
Taxes (FICA, FUTA, SUTA, Fed; est. 30%): -$14,012
8 Furlough/Unpaid Days: -$2,231
TOTAL: $30,463*

If Not Ratified
Average Salary: $44,660 (23% reduction)
Family Health Insurance: -$1,170
401K Deductions (change to 4%): -$1,786
Taxes: -$12,511
Zero Furlough/Unpaid Days: $0
TOTAL: $29,193

Difference of $1,270 or $24.42 per week.

If the contract is not ratified, you keep the $1.3 million of quids; you keep the pension plan; you keep the retiree health insurance; you keep the 401(k) match, etc.

If anyone has any questions, please feel free to contact me at xxx.

Thank you.

Bonnie M. Hanisch, CEBS
President
Boston Insurance Group

*As alert Media Nation commenter Tony points out, Hanisch’s math is a bit off — the number should be $30,465.

Globe publisher distributes Q&A

Boston Globe publisher Steve Ainsley has distributed a Q&A inside the Globe in advance of the Boston Newspaper Guild’s upcoming July 20 vote on the latest concessions negotiated between the Guild and the New York Times Co. Media Nation obtained a copy earlier today.

Dear Colleagues:

We thought it might be helpful to provide information about the components of the tentative agreement with the Guild, which is scheduled for a ratification vote on July 20th.

We have prepared a short list of Q&A’s for those elements that are different from the contract proposal of June 8th.

We also provide a link to the Q&A’s (previously distributed) for those components that have not changed from the June 8th contract proposal.

You’ll also find a link to the information about the wage mitigation, which is posted on Compass.

[Compass is an internal system for Globe employees. I do not have the links. — DK]

If you have any additional questions, please let us know.

Thank you.

— Steve

Guild Employees Q&A

New Elements of the Contract under Tentative Agreement

Q. What are the new elements of this proposal?

A. The major elements that have changed are outlined below:

  • A lower wage reduction: 5.94% vs. 8.388%
  • The elimination of retiree health insurance, going forward (post
  • 65 supplemental plan only)
  • 2 Vacation days and the Birthday holiday will be taken without pay
  • A further reduction of ‘quid pro quo’ for health insurance fund

Note: The last three items above, along with the partial wage mitigation, amount to exactly the savings needed to lower the wage reduction and maintain the $10 million in total savings necessary.

Q. What elements in this proposed agreement have remained the same?

A. Major elements that have remained the same include:

  • 2% wage reduction for Tier 2 positions
  • Five furlough days per year
  • Elimination of overtime unless employee works 40 hours in a week
  • Elimination of banked vacation accrual
  • Freeze pensions at current levels, and eliminate company’s
  • contributions
  • Elimination of company’s contributions to 401(k) accounts
  • Reduction of ‘quid pro quo’ payments for health insurance fund as
  • provided in the June 8 proposal
  • Elimination of tuition reimbursement, eye care, life insurance,
  • retiree death benefit
  • Modification of the lifetime job guarantee
  • 1% profit share program
  • Matching wage increase, up to 5%, if management’s 2009 wage cut is restored.

Q. What is the length of this contract?

A. Through the end of 2010.

Q. Date of ratification vote?

A. Monday, July 20, from 8am to 8pm at the Globe.

Q. Why not vote earlier?

A. The Guild’s bylaws require 30 days notice.

Q. What happens to post-65 retirement health benefits?

A. Going forward, all Guild members will not be eligible for retiree heath benefits through the company after age 65. What this means is that at age 65 you become eligible for Medicare and you would need to purchase a Medicare Supplement Plan on your own rather than it being provided by the company. There are many choices available on the market including plans from Blue Cross, Harvard Pilgrim and Tufts. (This is consistent with the change in benefits for managers and exempts instituted in March, 2009.)

Q. How will the unpaid vacation days and birthday holiday be administered?

A. Two vacation days per year will be unpaid. Employees may choose which of their vacation days will be unpaid, but need to schedule them at the beginning of the year. For 2010 they need to be scheduled with your manager by January 30.

For 2009, only 1 vacation day will be unpaid. It would need to be scheduled with your manager by August 15.

Employees are required to take their birthday holiday within the period that’s 2 weeks before or 2 weeks after their birthday. For 2009, only employees with birthdays after the ratification date will not be paid for their birthday holiday. They should schedule the day within the period outlined above.

Scheduling for all vacation and birthday holidays needs to be approved by your manager. In 2010 all unpaid days including furlough days will need to be scheduled by January 30.

Q. When would the pension freeze take effect? I’m close to earning another year of service.

A. The pension freeze will be effective on August 8, if the contract is ratified on July 20th. So, every full-time employee will have earned 1,000 hours this year and therefore another full year of accrual service.

You should have received a notice informing you that the pension plan would be frozen as of August 8th. This is contingent on ratification. There is a requirement under federal law to give employees 45 days advance notice that benefit accruals will stop (a 204(h) notice), which is why the notice was sent out early with knowledge and prior agreement with the Guild.

Lylah Alphonse’s response to Brian Mooney

Media Nation has obtained the full text of Boston Globe staff member Lylah Alphonse’s open e-mail to Brian Mooney. Alphonse favors approval of the Boston Newspaper Guild’s latest deal with the New York Times Co.; Mooney is opposed. Let’s get right to it:

To: Brian Mooney
[email addresses removed]

07/08/2009 11:44 AM

Of course it’s only marginally better than the one voted down June 8. What on earth were you expecting?

“Rejecting their outlandish demands” sounds great. What are you proposing instead, in order to achieve the $10 Million in savings? In all of the “vote no” emails I’ve received since June 8, not a single one has offered up a viable solution the $10 Million problem.

The NLRB route is a crapshoot, at best. In Fiscal Year 2008, just 36 percent of unfair labor practice cases (8,100 out of 22,501) filed in the Regional Offices were determined to have merit and warranted the issuance of an unfair labor practice complaint. In Fiscal Year 2008, the NLRB resolved 68 percent of those “meritorious” cases “by withdrawal, dismissal, or closing upon compliance” within 120 days of filing. A total of 76 percent of the “meritorious” cases were resolved within a year of filing. Which means that a quarter of the cases that the NLRB deemed worth pursuing took more than a year to close.

(Source: http://www.nlrb.gov/nlrb/shared_files/reports/PAR2008/PAR2008.htm)

A no vote will not postpone layoffs — a yes vote locks NYT in to the new contract through the end of 2010, a no vote allows them to do whatever they plan to do sooner than that. And of course layoffs are coming. We’re printing fewer papers. Ad sales are plummeting — they dropped nearly 30% in the first quarter of 2009 and are still dropping (source: http://chiefmarketer.com/advertising/print/0610-newspaper-ad-sales-plummet/). We’re beefing up Boston.com and Globe reader; more readers get their news online. All of that requires less staff, maybe in the newsroom, definitely in advertising, sales, classified, and printing- and distribution-related departments.

A quick NLRB resolution would take, at best, 3 to 4 months. A quick sale would take 4 to 6 months, judging by previous sales here and elsewhere. It would be easy for the union or for the Globe to drag things out, but the longer this drags out, the easier it is for NYT to turn to other options — like bankruptcy.

Bottom line: If you think you can get a better job with another company, now is a great time to go for it. But if you plan to stay at the Globe — or don’t think you can land a better job elsewhere — you’re going to have to deal with what NYT is dishing out: a 23% paycut or a package of cuts that seems to get worse with every negotiation.

Your choice.
Lylah M. Alphonse
The Boston Globe
135 Morrissey Blvd.
Boston, MA 02125

Brian Mooney: Just vote no

Boston Globe political reporter Brian Mooney, an outspoken opponent of the concessions that were voted down last month, is urging yet another no vote — this one on the second deal negotiated by the Boston Newspaper Guild and the New York Times Co.

Adam Reilly has the details, including the full text of Mooney’s message to fellow Guild members. The vote takes place on July 20.

What $10 million will buy

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.

Times Co. honchos “correct” the record

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?

Economic turmoil and the Globe’s future

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.

An employee-ownership option for the Globe

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.