Portland newspaper guild to vote on concessions for Blethen sale

by David Hench, Portland Press Herald

Leaders of the largest union at the Portland Press Herald/Maine Sunday Telegram have agreed to contract concessions that could pave the way for the sale of Blethen Maine Newspapers to an investment group led by Bangor native Richard Connor.

The Portland Newspaper Guild announced to members Friday in a hastily called meeting that Connor has secured the financing to make the purchase, and that a package of wage concessions and other changes would be voted on next Friday.

There is some urgency in the union vote, guild leaders said, because a 2 percent wage increase for members is scheduled to take effect June 1. Friday's vote will determine whether that wage increase is suspended and whether to put in place a new contract that will meet the demands of those financing the purchase.

The new contract calls for a 10 percent pay cut, a suspension of retirement and 401(k) contributions by the company and a two-year wage freeze.

In exchange, employees would be part of an employee stock ownership plan, or ESOP, that would give them a 15 percent stake in the new company.

The union's executive board voted unanimously in favor of the tentative agreement with MaineToday Media Inc., a collaboration between Connor and HM Capital, a private equity firm in Dallas.

Connor currently is editor and publisher of the Times Leader newspaper in Wilkes-Barre, Pa.

He has been trying to buy the Blethen Maine properties since last summer. Blethen owns three daily newspapers, the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal in Augusta and the Morning Sentinel in Waterville. The company's Maine Today division produces several Web sites and print publications, including The Coastal Journal in Bath and The Maine Switch.

The Portland Newspaper Guild, which represents about 300 workers at the Portland Press Herald/Maine Sunday Telegram and roughly 50 at the Morning Sentinel, would be awarded two of the seven to nine seats on the company's board of directors. A third seat would be allocated to a representative from the company's other unions.

The new guild contract, brokered over months of talks between union leadership and members of Connor's group, comes at a time of unprecedented challenges in the newspaper industry.

Daily newspapers have folded, media companies have declared bankruptcy, and others have demanded employee wage cuts and other concessions to survive. Readership has shown declines in many markets, but the most serious problems have been the result of a huge drop in classified advertising and the overall slowdown in the economy, particularly in the real estate and automotive industries, which are vital advertising sectors for newspapers.

Connor, however, said he is confident the newspapers here can prosper. He has invested some of his net worth in the venture.

"There is usually an opportunity for an entrepreneur and an entrepreneurial team such as the one I plan to build here to make a difference in a business when they can make all the decisions on the spot, locally," he said.

"We're not afraid to try new things and try them quickly. That's somewhat different than how the industry works currently."

Regarding the progress of the sale, Connor said: "What's happening every day now is ... we are literally checking off a list of things that have to be done to complete the sale, and a number of things were checked off that list (Friday) that bring us one step closer to completing the acquisition," he said.

Connor said the group is trying to acquire the Blethen Maine properties by next Friday, the day of the guild vote, but the legal paperwork might not be in place until after that.

"We also had very good discussions with the bank (Friday). We have the money raised. Right now, everything has to be put in proper legal form," Connor said.

Among other tasks, the prospective owners have been determining which employees not in unions will be retained after the sale, Connor said. Under terms of the sale agreement, non-union employees who are laid off would have their severance paid by the current owner.

"We need to streamline the organization," Connor said, adding that he does not plan to remove people to make room for his own team. "We have not hired anybody to take over any key positions at the newspaper."

Guild President Tom Bell said he expects the sale to take place in early June. If guild members vote in favor of the concessions but the sale does not go through by June 30, the suspension of the 2 percent raise would be rescinded and the raise would be retroactive, he said, which likely would lead to layoffs.

Robert Bickler, president and chief executive officer of Blethen Maine, could not be reached for comment Friday night.

Parent company The Seattle Times Co. placed the Blethen Maine properties up for sale in March 2008.

Connor's proposed agreement with the guild would allow for contract talks after one year to determine whether raises or company contributions to employees' 401(k) retirement accounts could be resumed.

The stake in the company for employees could offer some retirement benefits for workers. If the company increases in value, that increased value would be used to help fund employee retirement, Bell said.

"The benefit of this is it allows us to modernize our contract in line with economic conditions and get something in return," Bell said.

The agreement also calls for creation of a new labor-management committee that would be charged with developing ideas to make the company more profitable.

"The design of this agreement is to change the way employees view the newspaper, to make employees feel like entrepreneurs," Bell said. "For this industry to survive, we need to have everyone thinking of new ideas and get their ideas to the decision-makers."

Much of the guild's existing contract would remain in place, including company contributions to health insurance, severance benefits, length of work week and seniority – protections that have been eliminated at papers elsewhere, Bell said.

In spite of the concessions, the guild still expects significant layoffs once a sale is completed. Bell could not say how many union members are likely to lose their jobs.

Bell said he anticipates that the proposal will pass. He said it was well-received at Friday's meeting, although there was some opposition. Many members working at the company's South Portland facility were unable to attend the meeting because of the late notice. Bell said separate presentations about the package are planned in South Portland.

Charles Toppi, vice president of the Graphic Communications Union representing pressmen, said his unit is still ironing out some details and has not voted on a proposal with Connor's group yet. He said the terms are similar to those agreed to by the guild's leadership, and he expects it to pass.

Although it has been in the works for months, the Connor-guild deal came together at the last minute, moments before the executive board met at 4:30 p.m. Friday, Bell said.

The newspaper guild charter requires five days' notice in advance of a vote. Workers were briefed orally on the plan Friday and should receive written materials Tuesday, Bell said.

"This is also good news for our readers," Bell said.

"Taking a 10 percent pay cut and a freeze on pension contributions allows the newspapers to stay in business and continue to serve our readers and advertisers."

article originally published at Portland Press Herald.

The media's job is to interest the public in the public interest. -John Dewey