By Don Miller
Associate Editor
Money Morning
The relentless advertising slump in the newspaper industry threatened to take down one of America's oldest and most respected bastions of journalism Monday, when the Boston Globe's largest union narrowly rejected $10 million in concessions that parent New York Times Co. (NYSE: NYT) said were needed to keep the paper operating.
The 137-year-old newspaper's demise would be another blow to an industry struggling to compete with the power of the internet, as 1,400 daily papers continue to suffer from declining advertising revenue.
By a narrow margin of 12 votes, members of the Boston Newspaper Guild voted not to accept the concessions including an 8.4% pay cut, one-week unpaid furloughs and other cuts.
The vote came after 6 of the 7 unions at the Globe agreed to half of the $20 million in concessions the Times Co. had proposed to keep the paper operating after the company projected losses of $85 million by year-end. But those concessions were contingent on the Guild passing the additional $10 million package.
In a statement released a little more than an hour after the union released the results of the vote, the Times Co. said it intends to declare an impasse and will cut union member pay by 23% next week to get the savings that it needs.
"We have told the Guild that we are available to meet any day this week to review implementation of the pay cut," Globe spokesman Robert Powers said in a statement. "We regret having to take this action, but have no financially viable alternative."
"This is hardball of a degree that we may not have seen at any point before," Tom Fiedler, dean of Boston University's College of Communication and former Miami Herald editor told Reuters. "Is The New York Times willing to... be in a position of shutting down one of the great newspapers in the country?"
The Guild and the Times Co had agreed on the terms of the cuts a month ago, which also called for the end of lifetime job guarantees and the elimination of matching 401(k) contributions to retirement plans.
The pay reductions are also higher than the 5% pay cuts that other Times Co. employees agreed to earlier this year.
Despite the closure threat, sentiment among union members to reject the company's offer recently increased as the perception grew that managers continued to thrive financially despite the sacrifices of lower level workers, according to The Wall Street Journal.
Some employees said the pay cuts would be hard to swallow if they were implemented as the Times Co. outlined in its statement.
"I figured I could absorb a 10% pay cut plus a reduction in benefits. There's no way I can absorb a 23% pay cut," Erin Ailworth, who joined the Globe as a reporter in 2007 and voted for the concessions told The Journal. "It's not like I or any of my colleagues are living exorbitantly."
Ailworth said she will abandon her apartment and move in with a roommate to make ends meet.
If the Globe closes, Boston would be down to one newspaper, the Boston Herald, a smaller tabloid-sized daily.
The newspaper industry's travails have worsened this year as the jobs of thousands of employees have been eliminated, while others have taken pay cuts or endured forced furloughs. The difficulties have already shut down many dailies around the country, including such venerable stalwarts as The Seattle Post-Intelligencer and Rocky Mountain News.
News and Related Story Links:
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Reuters:
Boston Globe union rejects cuts, Times to slash pay
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Wall Street Journal:
Boston Globe Union Rejects Wage Cuts