Union: Philly papers' owners threaten liquidation

Union: Owners of Philadelphia's 2 newspapers threaten liquidation unless new contracts reached

Associated Press

PHILADELPHIA (AP) -- The owners of Philadelphia's two major newspapers have threatened to liquidate or sell the company's assets if they can't get new labor contracts by Friday, according to the union representing journalists.

Local Newspaper Guild leaders were meeting Thursday with executives of Interstate General Media LLC, the group that owns The Philadelphia Inquirer, Daily News and its joint website, Philly.com.

The Guild notified its members last week of the alleged threat, saying the company was demanding new agreements with all 11 unions. Ten unions have been working without contracts since October; the current Guild contract expires next October.

Owners are seeking $8 million in concessions from Guild members alone, and the union does not want to reopen their agreement.

"We will not be held out as scapegoats, to be blamed for not bargaining a new agreement while we have one standing," Guild president Dan Gross wrote in a Jan. 12 letter to members. "The owners are smart businessmen who do not leap into business deals or investments blindly."

Several powerful local business leaders formed Interstate General Media to buy the financially troubled newspapers in April for about $55 million. It's the fifth company to own the media outlets since 2006.

Bill Ross, executive director of the local Guild, said in an email Thursday morning that the meeting with management was in progress. A spokesman for Interstate declined to comment.

Gross, a gossip columnist for the Daily News, stepped down from his union position Wednesday after being approved for a buyout. He leaves the company Feb. 1.

Teamsters Local 628 President John Laigaie, which represents newspaper delivery drivers, did not immediately return a call on Thursday. Laigaie told the Inquirer last week that while the possibility of selling assets or liquidation had been raised during bargaining talks with his unit, he hadn't been notified that Friday was a deadline for such a decision.

For years now, the newspaper industry has been savaged by rising costs and declining advertising revenue as readers increasingly consume news for free online.

The Philadelphia newspapers have endured especially tumultuous times. Owner Knight Ridder sold them to McClatchy in 2006, and a group of local investors shelled out a whopping $515 million to buy the properties from McClatchy a few months later.

That company, Philadelphia Newspapers LLC, filed for bankruptcy in 2009. Creditors paid $139 million for the papers at a bankruptcy auction in 2010, and Interstate paid less than half that to acquire them nine months ago.

In April, the newest owners pledged patience and an extra $10 million for newsroom operations even as they conceded the company hadn't made money for years. They said overall revenue had dropped from about $500 million six years ago to half that, while costs had not declined nearly that much.

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Follow Kathy Matheson at www.twitter.com/kmatheson

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