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As The Seattle Post-Intelligencer deathwatch continues, its parent company has a valuable lesson for The Seattle Times down in San Francisco. Last month, Hearst threatened

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The 12 Percent Solution?

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As The Seattle Post-Intelligencer deathwatch continues, its parent company has a valuable lesson for The Seattle Times down in San Francisco. Last month, Hearst threatened to close the Bay Area's dominant but money-losing daily, The San Francisco Chronicle, unless its unions made major concessions.

Last week, the Media Workers Guild gave Hearst what it wanted, as the Chronicle reported: "The terms reached late Monday include expanded management ability to lay off employees without regard to seniority." Severance benefits and buyout packages were limited to one year. Other concessions included "reductions in vacation time, sick leave and maternity/paternity leave; expansion of the work week from 37.5 hours to 40; and the right for the company to subcontract any work."

Did you read that, Frank Blethen...?

Blethen's family-controlled Times Co. recently asked its unions for 12 percent in wage-and-benefit concessions, initially through a two-year pension freeze. Members of the Pacific Northwest Newspaper Guild voted Friday to approve the pension proposal. (See Rick Anderson's report.) March 31 is the date when Times management wants the 12 percent savings to begin. Guild spokeswoman Liz Brown isn't impressed by that deadline: "The other stuff is kind of arbitrary." No other votes have yet been scheduled. Looking ahead, she asks rhetorically, "What's to say the Times won't come back for more?"

In an ailing newspaper industry, that first 12 percent may not be enough to keep the Times afloat. Frank Blethen himself announced in his apocalyptic year-end 2007 memo that the paper would lose $40 million by decade's end. And that was before the banking crisis and recession began. In the same memo, Blethen projected that in 2008, "even a $27 million cost reduction leaves a significant gap with the revenue losses."

How significant a gap? The Times shed nearly 500 staff positions last year, as our Rick Anderson recently reported in his Feb. 24 Post-Post-Intelligencer feature. Blethen has also been lobbying in Olympia for a bill, which passed a House vote last week, that would reduce the Times' B&O tax by 43 percent. His Maine papers, bought in 1998 at the top of the market, remain unsold after a year on the block. Times Co. currently owes $91 million to lenders, according to Bill Richards at Crosscut, and has agreed to bank liens on the Fairview parking lots and land parcels that it might otherwise sell--in a better real estate market--for cash.

Which returns us to staff costs: The San Francisco Chronicle has a daily circulation exceeding 300,000, 33 percent larger than the Times. The Chronicle's current newsroom staff (union and not) is around 275, also about one-third larger than the Times, which hovers around 200. But as the Times is just now reaching the coveted monopoly daily position the Chronicle enjoys, the latter says it's got to be even leaner and meaner to survive.

For Blethen and his employees, this must feel like they've escaped the JOA shipwreck, swum to an island, then discovered the island is sinking.

Brown notes that unlike Hearst, whose Chronicle and P-I are only parts in a media empire that includes 16 dailies and 15 magazines, Blethen's main asset is the Times. Threatening to close it would be too big a bluff. But, she adds, "We've been studying up on Chapter 11. We're getting ahead of the curve by talking to some of the other unions whose papers are in bankruptcy." Those markets include Los Angeles, Philadelphia, Chicago, and Minneapolis, where the Star-Tribune is currently using its Chapter 11 status to escape one of its union contracts.

Though Chapter 11 would be the nuclear option for both the Guild and Blethen (who would risk losing control of his family founded, century-old paper to creditors), says Brown, "We're getting ready, just in case."

 
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