Boston Globe reaches tentative deal with largest union - Update

(RTTNews) - The New York Times reported that the Boston Globe reached a tentative deal on wage and benefit concessions with the paper's largest union early Wednesday morning. The deal is seen as helping avert the closure of the 137-year-old newspaper by the parent company, the New York Times Co. (NYT | Quote | Chart | News | PowerRating).

Terms of the contract were not immediately available. Meanwhile, the Boston Globe reported, citing sources familiar with the deal, that the Guild agreed to a substantial pay cut and unpaid furloughs in addition to modifications to lifetime job guarantee provisions that protect almost 200 employees in the union.

The job guarantee provisions were widely seen as a roadblock to any potential sale of the Boston Globe. The elimination of the job guarantees is envisaged to grant the Times Co. substantially more flexibility in reshaping the newspaper and shrinking its staff in the face of declining advertising revenues. The Times Co. now has the $20 million in concessions that it demanded a month ago, the report noted.

Guild president Daniel Totten said, "These negotiations have concluded and we have a proposal to bring before the members of the Boston Newspaper Guild. Out of respect to our members, we will not disclose any details until we meet with membership."

The Globe management released a statement saying, "We have completed negotiations with the Guild but have agreed not to release any details until the leadership speaks with Guild members on Thursday, May 7."

The Guild was the last of the Globe's major unions to agree to concessions with the New York Times. Negotiations between the Times Co. and the Guild have been contentious since the company early last month threatened to close down the money-losing paper unless unions agreed to major financial and contract concessions within 30 days.

The Times Co. had set a deadline of midnight Sunday to reach an agreement with the Globe's unions to make $20 million in cuts or close the newspaper. The company reached tentative deals with the Globe's six other unions by Monday morning, leaving only the Guild, the largest bargaining unit, which represents more than 600 Globe employees in the newsroom, advertising and other departments.

The Times Co. had demanded monetary concessions from the Guild worth $10 million a year, and the elimination of contract provisions on job security, making it easier to save more money in the future through layoffs. In particular, the company wanted to end lifetime employment guarantees for about 190 Guild members who had worked at the paper for more than 17 years. The company is seeking $10 million in concessions from the Guild, $5 million from the mailers, $2.5 million from the drivers, and $2.2 million from the pressmen.

The Guild had responded with a combination of a 3.5 percent pay cut, benefit cuts, unpaid furloughs, the elimination of retirement contributions, a longer work week and other give-backs that it said were worth more than $10 million a year, but had strongly resisted the elimination of job guarantees. The unions have resisted giving up job guarantees, arguing that they paid for the same with major concessions in years past.

Similar to many newspapers in the U.S., the Globe has been hit hard by readers and advertisers turning to the Internet for their needs, amid the recessionary period. The Globe is set to lose $85 million in 2009 if the cutbacks that it seeks are not reached, the New York Times has said.

Advertising revenues for the Times Co.'s New England Media Group, dominated by the Globe, fell more than 30% in the first three months of 2009, the Globe noted. The Boston Globe was bought by the New York Times in 1993 for $1.1 billion.

In Wednesday's regular trading session, NYT is trading at $6.20, up $0.04 or 0.65% on a volume of 0.25 million shares. The stock has been trading in a range of $3.44-$20.05 in the past 52 weeks.

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