Wow!
That word boiled down the immediate reactions to yesterday’s announcement that Oahu Publications, owner of the Honolulu Star-Bulletin, has reached an agreement to buy the larger Honolulu Advertiser. Word spread quickly following a 4:15 press release and meetings in both newsrooms.
Hats off to David Black for pulling off one of the industry’s biggest upsets.
Now things get confusing. Black says an attempt will be made to sell the Star-Bulletin. If it doesn’t sell, and he doesn’t expect a successful sale, there will be a “consolidation” of the two newspapers.
MidWeek, which has been the money maker for Black that offset at least some of the S-B’s losses, is not being offered for sale, and it seems virtually impossible that a new buyer could emerge for a stand-alone Star-Bulletin.
Black wins in the deal, but are Star-Bulletin staffers on the chopping block and again at risk? Or do they also emerge as winners?
The current Newspaper Guild contract covering Star-Bulletin employees is between “The Honolulu Star-Bulletin” and the union, and expires on March 14, 2010. However, the contract specifies that its terms (and protections) remain in force during negotiations.
According to state business registration records, “Honolulu Star-Bulletin” is a “master trade name” registered by Oahu Publications, Inc. The Star-Bulletin does not appear to be incorporated as a separate legal entity.
This appears to mean that the contract covering Star-Bulletin employees will remain in force during any “consolidation” since Oahu Publications, which operates under the trade name “Honolulu Star-Bulletin”, will be the surviving entity that is buying and consolidating the assets of the Gannett’s Honolulu Advertiser.
On the other hand, at least according to published accounts and information provided by the Guild, the Advertiser contract will terminate at closing of the sale, although the Guild will still represent and negotiate on behalf of Advertiser employees.
According to the Guild’s advice to Advertiser employees:
Until the acquisition is complete, your contract continues in place. However, after that date, which has not yet been set, according to Gannett the new owner will not honor our wages, our vacation, or our seniority. Presumably the new company, Oahu Publications Inc. will set new working conditions. According to labor law, once the new owner sets new conditions, the owner can change them only by bargaining with the union. Your union will continue to represent you.
So my informed guess is that Star-Bulletin employees come out of this with more of a claim on the positions in a future merged newsroom, although it’s fair to say that uncertainty still prevails.
Black says he hopes to retain two editorial voices, and there is at least one precedent for doing just that. Following the merger of the Chattanooga Times and Chattanooga News-Free Press, an unusual arrangement retained competing editorial pages. This was defended as a way to retain the distinct regional political views formerly represented by the competing newspapers. However, I don’t know that the editorial policies of the Star-Bulletin and Advertiser have been distinct enough to warrant this kind of arrangement.
If you’ve been through it before, you know there’s nothing like that sinking feeling of the sudden news that your workaday world and potentially your career in journalism has a life expectancy of just six to eight weeks.
And the confusion over the meaning of this complicated transaction and how it will affect employees of the Advertiser and Star-Bulletin makes the emotional turmoil worse for those involved in both ends of the transaction.
No one can be totally surprised that Honolulu finally proved unable to sustain two competing daily metropolitan newspapers, given the economic turmoil of the last decade, beginning with the post-9/11 crash to the collapse of global financial markets.
But the survival of the Star-Bulletin after the 1999 announcement of its imminent demise gave hope that Honolulu could buck the industry trend and remain among the dwindling ranks of two newspaper cities.
Rumors have periodically run their course, but few really believed that Gannett’s deep corporate pockets would not, in the end, provide enough financial momentum to leave the Advertiser as the last newspaper standing.
In a column published this morning, Black say he began looking at options of either closing the Bulletin or attempting to buy the Advertiser about a year ago.
A year or so ago, we began searching for possible solutions, including closing our door or purchasing the Advertiser. Closing would mean cutting our losses and pulling out; purchasing the Advertiser would mean an additional, major investment in Hawaii. As believers in Hawaii, despite taking on additional financial risk, we felt a rational market consolidation was warranted.
At that time, Black’s company and majority, Black Press, had just reported losses of $26.3 million in 2008. Layoffs and cutbacks were the order of the day, and rumors about the possible demise of the Star-Bulletin were flying, prompting the Newspaper Guild to war, “Beware of rumors and how they spread.”
And here we are, a year later, with the surprise announcement that Gannett is giving up and selling out to Black.
Wow.
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From the OPI Q&A:
Q: Will Oahu Publications offer to sell all its businesses?
A: No, only the Star-Bulletin newspaper will be offered for sale. We will continue to operate MidWeek, the military papers and the commercial printing business.
Q: What happens if the Star-Bulletin sells?
A: If the Star-Bulletin newspaper business is acquired by a third party, the Star-Bulletin will be transferred by Oahu Publications to the new owner, and Oahu Publications will then operate the Honolulu Advertiser, as well as MidWeek and the other businesses. We expect any new buyer would need to hire most of the existing Star-Bulletin employees not required by Oahu Publications to continue to publish a quality paper.
Q: Will the Kaneohe plant continue to operate?
A: If the Star-Bulletin sells, the buyer will need a press and will likely take over the Kaneohe plant and mailroom. The Urbanite press line would remain in the plant, and we would move the community press line elsewhere to accommodate our commercial printing business. Any new consolidated daily newspaper eventually will be printed at the Kapolei plant.
Thanks. I just dug down to those Q&As.
Why would Gannett sell?
This is from the June 19, 2009 The Deal Magazine:
“Because of the credit crisis, an unfortunate bunching of credit maturities and a debilitating number of so-called negative-basis trades featuring credit-default swaps — all in addition to the industry’s secular and cyclical downturns — Gannett as we know it will be lucky to last through June 2011. “They painted themselves into a corner,” the distressed-debt expert says of Gannett management. “They have to raise more than $400 million between now and the middle of 2011 in a market where, frankly, many of their bondholders would rather they default.”
http://www.thedeal.com/newsweekly/features/gannet-default-option.php
Again, one word: Wow!
The Advertiser is the profitable venture here, so why would Black dismantle what is already a known working company in favor of one that failed? Let’s not kid ourselves, the Star-Bulletin failed to ever become viable, which caused this move. The Advertiser workers know how to run the operation; displacing them with Bulletin workers adds cost and risk.
What would be the purpose of trying to break the Advertiser union contracts, only to end up keeping the Bulletin ones, which would be used as examples in negotiations for the new contract? Keep an eye on what the company is doing with the 3rd-party “management company.” I think everyone is going to be screwed here, and if I’m a Bulletin worker, I’m not at ALL optimistic about my chances.
I realize you have a partisan viewpoint, but this isn’t good for anyone at either paper. A lot of people are going to lose their jobs and the Bulletin is going to die.
I’m not sure how you think I’m being partisan trying to think through this transaction.
I just have tried to consult the respective contracts.
If you have an understanding of how Oahu Publications can get out of its contract with employees working at the Star-Bulletin, it would be important to share that.
I’m not taking sides.
I’m just trying to understand what’s happening. The contract is a document where it was possible to start.
Any pointers are much appreciated.
Are you missing the part where the Bulletin isn’t going to survive this? The Bulletin is not going to continue.
This is the equivalent of the Bulletin shutting down.
As I said earlier, I’ve just been trying to piece together the legal situation.
It looks like you could be right, and the existing contract and any protections it offers may disappear if the Star-Bulletin ceases publication, as expected, and is replaced by a new operating entity that merges the two newspapers.
I’m just posting another update on this topic.
I am among those who are completely taken aback at this development. My heart is with my former comrades at both papers. Ian, I started reading this blog when you were inside “the building”. Really takes me back to that time.
Mahalo Ian for your informed view on this. I kept checking to see what you thought…as is so often the case on complex and important matters, I appreciate your thoughtful deliberative reflection and informed, impartial perspective.
I don’t think “Reality” knows David Black.
One way I could see the Star-Bulletin’s labor agreement — and the protections that come with it — going up in smoke is spinning it off in a sham transaction to a straw buyer and then closing the doors and filing Chapter 7 liquidation bankruptcy. Or, if Black can’t sell it, he could close it, albeit subject to the “plant closing” law.
In either case, the Adverttiser labor agreement having died with the sale, Black could hire former S-B staff that he wants to “retain” at the Advertiser and have a clean slate from which to begin labor negotiations anew. Frankly, while I am at risk of being downsized out of a job myself, keeping the best of the two staffs and moving on from the others (retirement incentives, perhaps?), has a certain appeal to it. I know it’s less than charitable, but there are voices at each paper (cough, hack, er, Borreca, hack, cough, er, Shapiro, gak) I would not miss.
But dueling editorial boards? What is that, “JOA Lite”? Better to put the resources into some real news gathering, as much as we need TRULY competing voices in this town.
It seems very unlikely that Honolulu will have more than one daily paper at the end of this year. On the other hand, maybe this will motivate our favorite news bloggers (hint, hint) and online news outlets (along with perhaps the Honolulu Weekly) to work together to create a strong alternative online daily.
I can dream, can’t I?