Star Tribune bankruptcy imperils 1,400 Minnesota jobs

Reposted from Workday Minnesota
MINNEAPOLIS – The Star Tribune’s move to file for Chapter 11 bankruptcy puts 1,400 local workers’ jobs in limbo. About two-thirds of the workers at the state’s largest newspaper are union members.

The eight unions at the Star Tribune face the likely prospect that the newspaper will use bankruptcy proceedings, filed on Jan. 15, to persuade a judge to impose concessionary contracts, union leaders fear.

The newspaper remains profitable, but has been unable to keep up with debt payments taken on when New York’s Avista Capital Partners bought the newspaper two years ago in a highly leveraged deal — borrowing 80 percent of $530 million purchase price.

‘The debt’s dragging them down, not us,’ said Mike Bucsko, executive officer of the Minnesota Newspaper Guild, whose just under 300 members are the largest bargaining unit at the newspaper.

Three different Teamsters locals represent the newspaper’s mailers, drivers and pressmen while four additional unions also represent smaller groups of workers.

‘We’re trying to work together as much as possible,’ Bucsko reported.

The eight unions’ contracts have staggered expiration dates, one factor that’s hampered united efforts in the past. The Newspaper Guild settled a three-year contract last summer, yielding $2.4 million a year in concessions.

Weeks before filing for bankruptcy, the newspaper sought additional concessions that would bring the total to $10-12 million, Bucsko said.

Buskso faulted Avista. ‘They borrowed all this money to make the purchase… We have to pay the price for it.’

Buckso added: ‘The community is in danger of perhaps losing the biggest newspaper in the state.’

‘Newspapers are too much of a community asset to allow companies to come in like this and destroy them,’ he said.

‘Our goal is to make sure the Star Tribune survives and the community continues to be served by the newspaper,’ Bucsko emphasized.

Despite falling circulation, the Star Tribune Sunday edition is the 10th largest newspaper in the U.S. and the newspaper’s daily circulation makes it the 15th largest.

Like newspapers across the country, however, the Star Tribune has experienced a precipitous drop in advertising sales, driven in part by the recession and in part by the era of the internet.

‘What’s important to recognize is that like many other industries across America, newspapers have gone through wrenching dislocations through the years,’ said Graydon Royce, who co-chairs the Newspaper Guild’s Star Tribune unit.

Royce, who grew up in Minneapolis, is a 29-year veteran at the Star Tribune and currently works as fine arts writer and theatre critic.

‘We’re in a generational change in how people use newspapers,’ he noted. ‘The newspaper unions are caught in that.’

‘The nature of a newspaper, the way a newspaper is made, whether it’s even going to be on paper, is all up for grabs in the next five years,’ he said. ‘This is going to bring enormous pressure on newspaper unions.’

For the Star Tribune’s Newspaper Guild members, the pressure already has been enormous. The unit has lost 100 jobs in the past two years — that’s about 25 percent of its membership.

Reporters and photographers are being asked to do more. Instead of meeting a daily deadline, they’re now driven by the 24-7 deadlines possible on the internet. ‘As the product moves onto the web, we’re expanding into webcasts, podcasts and video features,’ Royce reported. ‘We’re doing a lot more for no more pay.’

‘All that goes back to the idea that we’re really committed to the survival of the newspaper,’ Royce said. ‘We’ve lost jobs, we’ve made concessions, we’re working harder to try to keep the newspaper alive.’

The traditional big city daily newspaper now faces a host of on-line competition from new, sometimes highly-opinionated sources. ‘That’s the battle,’ Royce said. ‘What we bring is credibility, a long tradition and the fact that we believe we are the best journalists and the best news-gatherers in the area.’

‘That credibility should count for something when people consider a news source,’ he said.

Some people see a bleak future for newspapers but Royce views the challenges differently. ‘There’s a future — in a different way,’ he observed. The newspaper, he maintained, has the opportunity to respond to change and move into a new era. ‘We’re still a news provider. We’ve got to keep our eye on the ball.’

In the short run, in the meantime, all eyes will be on the Star Tribune’s bankruptcy proceedings, how the newspaper will pay its bills, how its debt might be restructured, and whether union contracts will be honored or rewritten by the bankruptcy court.

One interesting development in the story: Wayzata Investment Partners — a private equity investment firm based in Wayzata, Minnesota — has been revealed as Avista’s largest creditor in documents disclosed as part of the bankruptcy filing.

Labor Review and Workday Minnesota readers may remember learning about Wayzata Investment Partners last fall, when the Twin Cities labor community rallied outside Wayzata’s offices to support visiting Steelworkers from Oregon. Wayzata had purchased Cascade Pacific Pulp, a longtime union paper mill in Halsey, Oregon, and sought to impose dramatic concessions in workers’ wages and benefits (See story on Workday). The workers later settled a better contract.

The Star Tribune, however, did not cover that story.

Steve Share is editor of the Minneapolis Labor Review and a Minnesota Newspaper Guild member.