Will New York Times Co. shut down Boston Globe?
CHICAGO — Now that the largest union representing employees of the Boston Globe has rejected management's final contract offer, observers wonder if the parent New York Times Co. will make good on its threat to shut down the 137-year-old Globe.
"It's clear the Times doesn't want to go that route," said Ed Atorino, newspaper analyst at Benchmark & Co. But if the Globe is on a pace to lose $85 million in 2009, as has been reported, it will be tempting, he said.
"They would substantially cut their losses by shutting it down. Now, there may be major costs related to shutting it down, but if you close a business that's losing that kind of money, it can't hurt," Atorino said. "It's just a very unfortunate situation."
New York Times Co. threatened earlier this year to shut down the Globe unless it could get $20 million in concessions from the paper's unions. Last month, the Boston Newspaper Guild and the Globe had reached a tentative deal that on a proposal that included a substantial pay cut, unpaid furloughs, and modifications to the lifetime job guarantee provisions that protect almost 200 employees.
However, in a 277-265 vote on Monday, the guild turned down the Globe's proposal, the union said on its Web site.
In a statement, the Globe said that because the offer was rejected, it has put on the table an "alternative" last proposal that cuts wages by 23 percent for all members of the guild.
Because the two sides are at an impasse, the Globe said it would implement the wage cuts next week. "We regret having to take this action, but have no financially viable alternative," the newspaper said.
Dan Totten, head of the Boston Newspaper Guild said Monday's vote sends the message that New York Times Co. "must do better" in dealing with its employees.
The Boston Globe, which New York Times acquired in 1993 for $1.1 billion, has been in a downward spiral for many years, with steep declines in retail and classified advertising that are even worse than the national average during a time of great difficulty for the industry.
In the first quarter of 2009, ad revenue plunged 32 percent at the New England Media Group, which includes the Boston Globe.
More broadly, New York Times Co.'s newspaper properties posted a loss of $54.3 million, primarily because of the dismal results in New England.
New York Times shares closed at $6.28 Tuesday, down nearly 1 percent.