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The New York Times Company [NYT
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] has been struggling with its plans for the Boston Globe; last night members of its newspaper guild rejected pay and benefits cuts, putting the paper one step closer to closure. The New York Times Co. threatened to shut down the 137-year-old paper if it doesn't find $20 million in annual savings. Yesterday reporters and editors at Boston's paper of records voted to narrowly reject $10 million in concessions in the form of a 8.3 percent wage cut plus cuts to health care and retirement benefits. But what's coming now will be worse. The Times Co. now plans to impose a 23 percent pay cut.
Why would guild members reject a pay cut knowing a higher cut was coming? Many guild members have big problems with the disparity between cuts demanded by the guild and less drastic cuts to management. And the New York Times parent company has been accused of bullying. (What else would you expect in this economic environment?) And now the "no" vote could mean bad news for the Times as well. Union officials will go to the National Labor Relations Board to fight the across-the-board 23 percent cut, with hope of opening a new round of negotiations, and perhaps fining the Times millions of dollars.
Bottom line: another battle is brewing.
The story of the Boston Globe epitomizes the decline and fall of the newspaper industry. The New York Times bought the Boston Globe for $1.1 billion in 1993, figuring that it couldn't lose by buying a historied, definitive source of New England news. But the paper has been suffering the decline in ad revenues as viewers shift online or simply disappear: its operating losses came in at $50 million last year and it's on track to lose $85 million this year.
Meanwhile the bankrupt Tribune Company continues its restructuring; now it's likely to emerge without famed investor Sam Zell. The company filed for bankruptcy in December 2008, but kicking Zell out is the ultimate indication that Zell's investment in Tribune was an abject failure. When Zell led a buyout of the company in December 2007, leaving the Tribune with $12 billion in debt, everyone asked if the distressed real estate genius had some special insight into the future of newspapers. Zell didn't have any insight, he was just wrong to expect to be able to save the business. Now Zell will likely lose control of the company to a group of banks and investors that holds its debt.
Sad to say, neither the industry veterans at the New York Times nor the savvy outsiders can squeeze new money from this old model.
Correction: In the original post, the story's headline incorrectly suggested that Zell had left the Tribune Company.
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