The New York Times (NYT) and the largest union at The Boston Globe have reached an agreement that will almost certainly keep the paper operating, but that could change sometime next year.
The Times reports that the Guild, which represents 700 employees at the Globe, has agreed to pay cuts of almost 6% and changes in job security for senior employees.
The deal will only keep the paper open for so long, unless the Times can find a buyer. The new arrangements with labor will save about $20 million, but the Times says the paper will lose over $80 million in 2009. The number could balloon up if advertising revenue does not recover next year.
The Times company has several hundred million in debt, much of it due in 2011. The firm has razor thin margins and may start posting significant losses if advertising sales continue to slide. The company has hoped that revenue from its Internet businesses would offset problems at its print properties, but the advertising recession has begun to shrink online sales. The Times is painted into a corner.
It will remain a puzzle, perhaps forever, as to why the Times did not dump the Globe and its regional papers two or three years ago when the newspaper industry began a sharp decline that has caused many properties to shut down and others to make huge staff cuts. The Times has made a number of mistakes, but sticking to its diversification strategy instead of focusing on its flagship paper is by far the most significant of them.
Douglas A. McIntyre
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