Times Co. says it has $20M in savings and won’t close Boston Globe, but legal dispute looms

Times Co.: 23 percent cut means no Globe closure

BOSTON — The Boston Globe reporters and editors who narrowly rejected wage and benefit concessions awoke to greater uncertainty Tuesday as their employer imposed a pay cut anyway and their union weighed costly litigation to stop it.

The Globe’s parent company, The New York Times Co., said Tuesday it will keep the 137-year-old newspaper open after achieving the needed $20 million in annual savings. But Boston Newspaper Guild leaders said they would try to block the 23 percent pay cut that the Times Co. unilaterally imposed to make up half of those savings.

Labor and media experts say such a protracted dispute could further damage the Globe or increase the risk of its closure. They say the Times Co. and the Guild should instead resume negotiations to avoid what could be months — or years — of litigation and settle what has become an increasingly nasty contract dispute.

“It has to be a major commitment to rebuild the organization and to work together,” said Thomas Kochan, director of the Institute for Work and Employment Research at Massachusetts Institute of Technology’s Sloan School of Management. “They need to reframe the negotiations and they need to face reality.”

The Guild, which represents about 700 editorial, advertising and business employees, voted 277-265 Monday to reject a contract proposal that included an 8.3 percent wage cut, five-day unpaid furloughs, the elimination of 190 lifetime job guarantees and cuts in health care and pension benefits. It would have replaced terms in an existing contract that runs through the end of the year.

The company had said that if the Guild rejected the contract proposal, which union leaders sent to a vote without recommending approval or rejection, it would declare an impasse in the negotiations and impose the 23 percent pay cut.

The Boston Globe followed through on that threat after the vote late Monday, saying wage cuts would take effect Sunday because the parties were at an impasse.

“I have to do everything within my means to safeguard this institution,” Publisher Steven Ainsley wrote in a letter to Guild employees.

Either set of cuts amounted to $10 million in savings annually, which the Times. Co said it needed, as part of $20 million total from all Globe unions, to stabilize the Globe’s finances and avoid shuttering the newspaper.

Six other unions already have accepted concessions, but they were contingent upon the Guild also approving cuts. One other union did reject cuts, but the Times Co. said its decision did not affect the $20 million in savings needed.

Guild president Daniel Totten has said the union would file unfair labor practices charges with the National Labor Relations Board to try to block the wage cuts. The union also could ask a court to delay the cuts until the labor board makes its decision, though courts rarely issue such injunctions.

In a memo to members Tuesday, Totten said union leaders were meeting with legal counsel to decide how to delay or prevent the Times Co. from “punishing our members with this extreme and drastic measure.”

Totten also asked the Times Co. to rescind its declaration of an impasse, saying the company violated contract and legal obligations by doing so.

“The Guild renews its proposal for the parties to engage in mediation prior to any unilateral change,” Totten wrote to Globe Senior Vice President Gregory Thornton.

The Globe reported on its Web site Tuesday that Thornton, in a subsequent letter to Totten, rejected the union’s request to rescind the declaration of an impasse.

The Times declined to comment beyond saying it would keep the Globe open and was “focused on executing the Globe’s turnaround plan.” In its statement after Monday’s vote, the Globe offered to meet with the Guild this week to “review implementation of the pay cut.”

A long legal dispute also could increase the chances of the Globe’s closure, despite the Times Co.’s pledge Tuesday not to do so. Although the company would be saving payroll costs before the issue is resolved, it would be liable for any back pay should it lose. And both sides potentially could spend millions of dollars in legal fees.

Fitch Ratings media analyst Mike Simonton said that by the time the issue is resolved, the $20 million in annual savings might not be enough.

“Profitability is a moving target,” he said. “As revenue continues to decline, the amount of cost reductions required continues to increase. Twenty-three percent today may be a higher number in the future.”

Rick Edmonds, a media business analyst at the nonprofit Poynter Institute, said union leaders risk “sinking the ship as they try to fight for a better deal.”

It makes sense, then, for both sides to do all they can to avoid prolonging the dispute, Boston College law professor Thomas Kohler said. Because the Guild was badly split over accepting the concessions, the Times Co. could try to negotiate a similar deal that would be slightly better for employees while still equaling the $10 million in annual cuts it says it needs, he said. The key would be doing so without upsetting the other unions that had already agreed to deep cuts.

“It might not take very much sweetening for another deal to be voted on. However, it would have to be pretty modest because the other unions have already made major concessions,” Kohler said. “How realistic that is right now, I don’t know. But I can’t see much else in this that is likely to get them past this.”

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