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Boston Globe warned by New York Times Co. to accept cuts or be closed

NEW YORK — When it bought the Boston Globe for a record $1.1 billion in 1993, the New York Times Co. added one of the nation's most acclaimed and profitable newspapers to its empire.

But analysts say the 137-year-old Globe has been a money loser in recent years, and the Times, now $1.1 billion in debt, is threatening to shut down Boston's pre-eminent paper unless it gets $20 million in union concessions.

Faced with the global recession and declining revenues, the newspaper business is reeling — one major paper has already folded this year and several others are seeking bankruptcy protection. But the threat to the Globe, announced Friday on the Globe's Web site, has shocked some industry insiders, who say it shows no one is safe.

"It is a huge warning shot across the bow of the newspaper industry. If this can happen to the storied Boston Globe, pretty much nothing is safe," said Boston University communications professor Tobe Berkovitz.

The threat to close the paper "sends a very clear message to all employees and unions of surviving newspapers — that this is not business as usual," said Ken Doctor, a media analyst with the research firm Outsell. "This is uncharted territory."

The Times bought the Globe in 1993 for $1.1 billion — at the time, the highest price ever for a single American newspaper — getting one of the country's most respected papers. The Globe has won 20 Pulitzer Prizes and has been lauded for some of its work, including its coverage of the Roman Catholic clergy sex abuse scandal.

But since its purchase, the Globe has gone through several rounds of layoffs and buyouts. As readership shifts to online news, the newspaper's average weekday circulation fell 10 percent to 323,983 for the six months ending Sept. 30, compared to the same six-month period in 2007, according to the Audit Bureau of Circulations.

Advertising revenues industrywide have plunged by more than 16 percent in 2008, according to the Newspaper Association of America.

Newspapers all "have a sword over their heads," said Doctor. If the industry wants to survive, he said, "everyone has to give some blood."

The Globe reported the Times' demands a day after executives from the Times delivered its ultimatum to leaders of the Globe's 13 unions. Boston Newspaper Guild president Daniel Totten told the Globe the concessions could include pay cuts, the end of company pension contributions and the elimination of lifetime job guarantees. The Guild is the Globe's biggest union, representing more than 700 editorial, advertising, and business employees.

But some say the Times' threat may be a negotiating tactic as it strives to shed its debt, which stood at $1.1 billion at the end of 2008. It recently sold 21 floors of its new midtown Manhattan headquarters building for $225 million, asked most employees to accept a 5 percent pay cut through the end of the year and secured a $250 million infusion from a Mexican billionaire by agreeing to pay an abnormally high interest rate of 14 percent in addition to giving him potentially valuable stock warrants.

"We're a long way from a newspaper that needs to be shut down. I think it's a bargaining strategy," said Alan Mutter, a former journalist-turned-entrepreneur who writes a blog called Reflections of a Newsosaur. He said he doesn't think the Globe is in imminent danger of folding.

Globe spokesman Bob Powers declined to comment Saturday; Times spokeswoman Catherine Mathis did not immediately return a call for comment.

Doctor said the Times' threat to close the Globe parallels what Hearst Corp. did with the money-losing San Francisco Chronicle, threatening to shut it down barring concessions. Chronicle staffers took 120 buyouts last week, but the paper is seeking 150.

Elsewhere, Scripps Co. stopped publication earlier this year of Colorado's oldest newspaper, the Rocky Mountain News, in Denver. Major newspaper companies that have filed for bankruptcy protection in recent months include the owners of the Philadelphia Inquirer, Minneapolis Star-Tribune, the Chicago Tribune and the Los Angeles Times. Newspapers including the Seattle Post-Intelligencer and another venerable Boston publication, the Christian Science Monitor, stopped daily publication in favor of online news.

Boston Globe warned by New York Times Co. to accept cuts or be closed 04/04/09 [Last modified: Sunday, April 5, 2009 12:26am]
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