Vote Brings Boston Globe to Brink (Update) - TheStreet

Vote Brings Boston Globe to Brink (Update)

The Boston Globe's biggest union rejects a proposed pay cut, calling the New York Times' bluff.
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Updated from 10:21 a.m. EDT

If the

New York Times'

(NYT) - Get Report

threats were anything more than a scare tactic, the

Boston Globe

may have moved a step closer to the end of its 137-year life.

On Monday evening, the

Globe's

biggest labor union voted to call its parent company's bluff by rejecting pay cuts and other concessions that the paper's owner, the

New York Times

, had indicated were necessary for its survival. The margin for the naysayers was a slim 12, with 277 voting no to the proposed contract and 265 voting yes.

The union in question, the Boston Globe Newspaper Guild, represents mostly reporters, editors and business-side administrators and ad salespeople. The

Globe's

other six unions -- for pressmen, delivery truck drivers and mailers, among other groups -- had already agreed to concessions.

But these cuts were a bitter pill, and had come to epitomize the life-threatening problems -- and subsequent tough choices -- facing the newspaper business today.

The Times

, which acquired the

Globe

16 years ago for a then-whopping $1.1 billion, had said that it needed $20 million worth of savings to come out of the

Globe's

union contracts in order to keep the paper -- New England's largest daily -- in business, with half that amount coming from the Newspaper Guild.

The proposed contract would have cut employee pay by 8.4% a year, instituted a mandatory five-day unpaid furlough (which amounts to another 1.9% in salary reductions), and suspended contributions to retirement plans.

The

Globe's

bosses in New York have made a very public point recently of saying that closure of the Boston daily has always remained on the table. But the cost of shutting the paper down would be high, both financially and politically, and many have questioned the

Times

wherewithal to follow through on the threat.

Closure aside, the more immediate repercussions of the Guild's rejection is a 23% pay cut for its member employees. In a statement released Monday night, Globe management said it would introduce the cuts next week. "We regret this action," the statement read, "but have no financially viable alternative."

Catherine Mathis, a spokeswoman for the

Times

said, "What we needed to do was get those cost reductions, and with the 23% cut we've achieved that."

The Guild has previously said that it would challenge the legality of the 23% reduction on the grounds that it is being made unilaterally.

The union -- and presumably many of those members who voted nay -- expect negotiations with management start up again, despite fairly pronounced indications from

Globe

and

Times

bosses that the jib is up. The financial situation is so dire, they say, that no further time can be spent on talks.

The

Globe's

problems are legion, though how much of that is the wretched business climate for newspapers in general, and how much might be attributed to mismanagement by the

Times

, remains unclear.

The

Times

has said that it expects the

Globe

to lose $85 million in 2009. In 2008, it lost $50 million, according to the

Times'

financial statements, a heavy burden to bear for the parent, which posted an overall loss in 2008 of about $41 million -- meaning that the

Globe

played a large role (if not

the

role) in dragging the debt-weighted

Times

into the red last year.

The guild's members grew increasingly irate as the vote approached, saying that their concessions haven't been on par with those in the

Times'

executive classes, most of whom have taken a temporary 5% pay cut. (The

Globe's

pay cuts would be permanent.) The head of the Boston Newspaper Guild, Daniel Totten, has also criticized

Times

bosses for receiving bonuses in February.

Shares of the

New York Times

cllosed slightly lower Tuesday afternoon, changing hands at $6.28, down 6 cents, or about 1%.

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