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Updated: Boston Globe Reports Death Threat — Its Own

Facing what it says are expected losses of $85 million this year, the New York Times Company (NYSE: NYT) is threatening to close the Boston Globe if unions don’t agree to $20 million in cuts immediately, according to the Globe. The paper reports the threats came in a 90-minute meeting Thursday with executives from the paper, its parent company and the unions, just a few days after the most recent batch of layoffs took place at the paper.

Daniel Totten, president of the Boston Newspaper Guild, told the paper the suggested concessions, to be negotiated separately with each union, include pay cuts, an end to company pension contributions and the elimination of the lifetime job guarantee for some veteran employees. (More than 400 union members have that guarantee.) The Guild represents more than 700 employees across the newsroom and the business side of the paper. Overall, the Globe employs more than 1,700 union workers.

NYTCo acquired the Globe and various assets for $1.1 billion in 1993, and as the NYT notes, it was lucrative for many years. But New England’s economy started contracting even before the national recession; that plus the changes in classified advertising and other issues made the Globe the NYTCo’s canary in the coal mine.

Losses mount: NYTCo execs told the unions the paper lost roughly $50 million last year and will lose $85 million this year without concessions. A “Globe employee” told the paper is asking for the concessions because it can longer subsidize the paper’s losses. Hit by the ad slump and various charges, NYTCo lost $57.8 million in 2008 compared with $200 million in net profit in 2007.

Update: Officials at the paper and parent NYTCo have refused comment since news of the threat started to spread Friday night. The unions have yet to hear full details of the company’s concession demands for each — that’s due this week — but <a href="" title="union members tell the Globe“>union members tell the Globe they’re willing to take more hits. The caveat: they want management cuts, too. Nonunion managers have already been affected by company-wide cost cutting. NYTCo imposed a 5 percent pay cut for most management that took effect April 1 and runs through 2009; in exchange, they can take up to 10 additional days of paid vacation. Pension benefits were cut earlier this year for current managers while new hires only get an enhanced 401(k). Retiree benefits for nonunion employees were eliminated, too.

Holding on too long: NYTCo had at least one well-publicized suitor for the Globe in 2006, a group headed by former GE CEOJack Welch; then, it was reported to be valued around a half-billion dollars. Fast forward to Q308, when the company took a $166 million impairment charge for the New England Media Group, which includes the Globe, and the Worcester Telegram & Gazette, because it concluded its problems weren’t fleeting.

4 Responses to “Updated: Boston Globe Reports Death Threat — Its Own”

  1. The blinkers that so many of you Americans wear, simply amaze the rest of the world. Unfettered Capitalism (aka Greed) got the world into this mess, and it sure won't get us out!! If as the artilcle states that the New England economy was faltering before the world collapse and the election I guess how does Obama's policy lead to a down turn in advertising? I thought it was due to two things, the economy as a whole tanking and reducing demand -> output -> need for advertising and two the growth of the on-line news business. The second is probably more salient to the decline of any old world print media than anything else.
    NOte that Capitalism in many forms most with more regulation than in America exists all around the world and guess what – we still advertise!!!

  2. Well that's too bad, and Chris has a wonderful point as I feel the same that Obama was merely a media darling that everyone cashed in on.

    You know I really like photo-journalism online so I hope that portion doesn't go away. Maybe they will only resurrect that portion in the form of a new web site if they go under.

  3. Oh, the angst that must be roiling at all of the major dailies. Almost universally, Obama is 'their guy.' They all championed and coddled him to nomination and election. Hooray for our Dear Leader! But our 'Dear Leader' decided that capitalism was evil and needed to be demonized. 'Pitchforks at the gate' was a favorite buzz-term to portray capitalism and the private sector as evil and bad while propping up socialism and Liberalism as the 'best road to follow.' The dailies dutifully championed that cause in editorials.

    But an interesting thing happened. The death of capitalism took a hostage: advertising. The lifeblood of any media operation is advertising. Without it, you die. And what do you think fuels all the advertising that media is not now getting? Capitalism! Talk about throwing the baby out with the bathwater! If you demonize capitalism, you destroy much of the advertising that The Globe, The NYT, Time Magazine–all of them—depend on! Talk about poetic justice of the best kind! File under, 'Be careful what you wish for.' All those Obama worshipers in the media are finding that there is a cost to all that blind idolatry.