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 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, Boston.com and the Worcester Telegram & Gazette, because it concluded its problems weren’t fleeting.