Union Concessions Save the Chronicle—For Now

By Richard Brenneman
Wednesday March 11, 2009 - 07:13:00 PM

By Richard Brenneman 


America has lost another major urban daily paper while newsroom downsizings and cutbacks continue at an unprecedented pace, but the Bay Area’s most famous masthead will stay in print—at least for a while. 

The latest fatality is Denver’s Rocky Mountain News, which closed Feb. 27, leaving the Mile High City a one-newspaper town, with only Dean Singleton’s Denver Post still standing. 

And if the Hearst Corporation follows through on its threat to close the San Francisco Chronicle, Singleton could become the Bay Area’s reigning media king, with Denver media mogul Phillip Anschutz’s San Francisco Examiner, once the flagship of the Hearst media empire, offering the only daily rival to the MediaNews colossus. 

Hearst had threatened to shut or sell the Chronicle unless it received major concessions from the newspaper’s two unions. 

The agreement announced Tuesday night by the paper and the Media Workers Guild may have delayed the Chronicle’s demise, but at a price: the guild agreed to terms that include significant reductions in seniority protections in coming layoffs.  

The guild represents 483 workers at the Chronicle, including 218 in the newsroom. The concessions mean the loss of up to 150 of those positions, a 31 percent cutback. In addition, workers who keep their jobs will be working an extra two and a half hours every week. 

The proposal, which the union is recommending to members, would also exempt some new hires in advertising from mandatory union membership, though they would still be represented by the union in disputes and contract negotiations. 

The company also wants concessions from the Teamsters union, which represents 420 workers.  

The privately held Hearst Corporation concedes that it has lost money on the Chronicle since 2001, and the paper reported Tuesday that last year’s losses had reached $50 million. Venture capital consultant and former Chronicle executive Alan D. Mutter, who blogs at Reflections of a Newsosaur (newsosaur.blogspot.com), reports that actual losses are probably closer to $70 million. 

Hearst bought the Chronicle for $660 million in 2000 in a deal that required the company to subsidize the Examiner for three years after selling the smaller paper to San Francisco’s Fang family. The Fangs transformed the afternoon daily into a morning tabloid and later sold it to Anschutz.  

Northern California’s other major home-grown media chain, Sacramento-based McClatchy, announced a major downsizing move of its own this week that will strip the company of 1,600 jobs, including 128 at the flagship Sacramento Bee. The layoffs become effective April 11. 

In a similar strategy to Hearst’s, the publicly traded McClatchy negotiated the downsizings with the Media Workers Guild after first announcing the need for drastic cutbacks in the wake of devastating financial losses. 

In addition to layoffs, McClatchy employees are also taking pay cuts. At the Sacramento Bee, the guild agree to a 6 percent reduction for those earning $50,000 or more a year, 3 percent for those earning between $25,000 and $50,000 and none for those earning less than $25,000. 

The media guild announced that layoffs at the Sacramento paper meant that 19 jobs would be saved in the editorial and advertising departments. 

McClatchy CEO and Chair Gary Pruitt is taking a 15 percent pay cut, while other executives will take a 10 percent dock. Pruitt declined his bonus for last year and for the current year. Other corporate executives weren’t offered bonuses for last year and won’t receive any this year either, the company announced Tuesday. 

As a publicly traded company, McClatchy files detailed financial statements, unlike Hearst or Singleton’s MediaNews. 

Singleton’s Bay Area News Group (BANG) and Hearst have already undergone several rounds of newsroom layoffs. 

Members of BANG’s East Bay Media Guild unit agreed to take a week of unpaid leave during February and March to forestall further layoffs. 

Even with the cuts and MediaNews’ capture of the Denver market, Moody’s Investors Service reports that Singleton’s company is one of four newspaper publishers among the 283 companies they rank at “high default risk and weak liquidity.” 

Another California company also made the list, Orange County based Freedom Communications. A third company with a leading Golden State publication has already defaulted and is in bankruptcy court for reorganization, the Chicago-based Tribune Co., publishers of the Los Angeles Times. 

The Moody’s report is available online at www.moodys.com.  

According to Paper Cuts (graphicdesigner.net/papercuts), a blog that tracks newspaper layoffs, at least 3,938 newspaper jobs have been lost in 2009 as of Tuesday afternoon. That compares with 15,633 logged in all of 2008, putting this year’s reductions on track to top last year’s record figures. 

Hearst has also announced that it plans to close the 146-year-old Seattle Post-Intelligencer, though it hasn’t given a date for the final print edition. Reports have also surfaced indicating that the company may opt for an online-only publication. 

The company has notified employees that their jobs will end between March 18 and April 1, according to a report published by the paper. 

KGO television, the local ABC affiliate, reported on the Berkeley Daily Planet’s own struggles to survive in a rapidly downsizing media world in their Monday night newscast, which can be seen at abclocal.go.com/kgo.