GateHouse reaches new low, proposes “catch up” premium increases

Nov 17, 2016 by

Just when you think you’ve seen everything in contract negotiations, GateHouse Media surprises you with something even more draconian.

This week GateHouse offered its most onerous proposal to date at the Rockford Register Star: Retroactive medical and dental insurance premium increases or, if the employee chooses, a corresponding salary reduction instead.

Medical and dental insurance premiums for United Media Guild members at the Register Star have been frozen since the union was voted in, due to “status quo” labor law protections that remain in place during negotiations.

Since GateHouse steadfastly refuses to offer raises — even though some employees have endured an eight-year wage freeze — we’re still at the bargaining table.

According to company calculations, a UMG member with the Basic PPO-Family has been spared more than $5,000 in medical premiums from 2014 through 2016. An employee with family dental coverage has saved about $1,500.

(Most UMG members insured through the Register Star are on either the single or the employee-spouse plan.)

With a straight face, company negotiator Ali Zoibi said GateHouse wants that money back with “catch-up” increases. Moving forward, GateHouse also wants increases for 2017, up to nearly $2,000 for family medical and nearly $500 for family dental.

And, of course, GateHouse is offering no raises to offset any of his. As a result, several UMG members would lose between $4,000 and $9,000 in take-home pay in 2017.

Mind you, this is the same company that has slashed the newsroom operation to a fraction of its former size, making surviving journalists shoulder a much more challenging workload.

Destroying employee morale makes it easier to cut labor costs, so GateHouse works extra hard at being a terrible employer. Why else would it propose a $9,000 pay cut for veteran journalist trying to support a family?

By running off veteran journalists, it can hire younger employees at much lower pay scales. So what if the newspaper product suffered? Vulture capitalists own GateHouse Media and they are playing the asset-stripping game.

The whole point is to vacuum as much money out of each operation as possible to fund stock dividends, bankroll more newspaper purchases and keep the game going.

But GateHouse really outdid itself with this proposal.

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Nominations sought for Terry Hughes Award

Nov 10, 2016 by

Terry Hughes was 36 when she died of breast cancer on July 22, 1991.  A columnist for the St. Louis Post-Dispatch, her writing was clear, witty and descriptive, with a flair for portraying society’s underdogs.  Some of her columns chronicled the bouts with cancer that she and others faced.  One column was credited with helping persuade the Missouri Legislature to approve a bill forcing insurers to pay for mammograms.

One of the many readers who wrote to the newspaper after her death described her work this way: “Her columns were full of real life stories that touched us all and even changed our way of thinking or even our lives.”

The United Media Guild has established a writing award in the name of Ms. Hughes.  The award is intended to honor a journalist whose writing shows the talent that she displayed.

Any journalist in the metropolitan St. Louis area who has written for a daily or weekly newspaper, a magazine or an on-line publication is eligible.

Single articles of extraordinary merit will be considered.  Preference will be given to entries of between three and ten articles that display the writer’s range of talent.

Articles must have been published in 2016.  There are no formal applications.  Anyone may submit a nomination by sending copies of articles to:

The Terry Hughes Award Committee

United Media Guild

1015 Locust St.

Suite 735

St. Louis, Mo.  63101

The deadline for applications is Wednesday, January 4, 2017.  The panel of judges is comprised of previous award winners. The award will be presented by the United Media Guild at its quarterly Local Meeting in late January or early February.

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New Media CEO Michael Reed still mystified by his faltering stock price

Oct 28, 2016 by

Once again New Media Investment Group CEO Michael Reed argued that his company’s stock is undervalued.

“We believe the dividend increase speaks to our optimism around the outlook for the company,” he told analysts Thursday on his third quarter earnings call. “Obviously I think our equity is undervalued given where the share price is today and think the strategy and what we have done is currently misunderstood.”

Wall Street was unmoved by that pitch. Friday afternoon the stock plunged back toward $14 per share after briefly rising past $15.60. Remember, this was a stock that drew a $42 target price from one well-respected analyst when the company initially went public back in 2014.

The company’s game plan has been well-established. The price of newspaper properties keeps falling due to the collapse of print advertising revenues. One by one, smaller operators are getting out of the business. So New Media is able to swoop in and get them for good prices.

New Media then slashes operating costs at the acquired properties, stripping them down for maximum cash flow. Some of that cash is used to fund hefty dividends and some helps fund more acquisitions — which leads to more cost-cutting, more cash flow and more money for dividends and acquisitions.

This strategy has had a debilitating effect on five Illinois newspapers represented by the United Media Guild: The Peoria Journal Star, Pekin Daily Times, State-Journal Register, Rockford Register Star and Freeport Journal Standard. We have spent a lot of time talking face-to-face with readers, civic leaders and advertisers in those communities about what this New York-based company is doing to their newspapers.

Reed ran through the his playbook for analysts Thursday, offering no surprises. New Media still hopes to:

  • Offset its ongoing circulation decline by jacking up prices and making diehard subscribers pay for special sections.
  • Replace the loss of print advertising with more digital advertising.
  • Keep buying properties at favorable prices to build total revenue and expand the reach of Propel Marketing.
  • Build Propel into a bigger piece of the revenue pie.
  • Invest more in the “business-to-business” properties that aren’t as vulnerable to print advertising decline.

That latter step is a wise choice, given the company’s history of accelerating the erosion of local newspapers. Revenues at those operations will continue diminishing as increased digital advertising fails to offset the losses on the print side.

It is worth nothing that GateHouse Media leadership, working under the New Media umbrella, finally improved the look and functionality of the previously dreadful newspaper websites. So there’s that.

Reed keeps promising to turn the corner and generate actual growth, but there is no sign of that at its properties — which limp along with smaller and smaller news-gathering operations and disillusioned sales forces, offering readers and advertisers less while charging them more.

Morale is worsening across the chain, prompting increased unionization. When newsrooms in an anti-labor state like Florida vote to join the Guild, you know employees have no faith in corporate management.

For now, anyway, the stock is paying nice dividends. The United Media Guild appreciates that, since we own New Media stock and can use that investment income to better serve our members.

But how long will that last? And what will become of the news-gathering operations and the communities they serve?

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St. Louis Press Club to honor Post-Dispatch columnist Bill McClellan

Oct 27, 2016 by

Long-time St. Louis Post-Dispatch Bill McClellan will receive a Lifetime Achievement award from the St. Louis Press Club at its 25th Awards Gala Nov. 30.

Bill McClellan

Bill McClellan

McClellan has been a strong Guild member throughout his tenure at the newspaper. Time after time he rallied behind co-workers in our fight for fair contracts and fair treatment from the company. We are thrilled to see him add still another award during his illustrious career.

Another strong Guild member, Post-Dispatch artist Dan Martin, is among the four Media Person of the Year honorees. The others include recently retired television news anchor Tom O’Neal, veteran TV reporter Sharon Stevens and sportscasting legend Jay Randolph.

KMOX radio will be honored as the media institution of the year.

This event, which raises money for journalism scholarships and endowments, will be held at the Edward Jones Headquarters, Atrium and Theater, at 12555 Manchester Road in Des Peres. The reception begins at 5:30 p.m., followed by the dinner at 6:30 p.m. and the awards ceremony at 7:30 p.m.

Tickets for the event are $150. To order tickets or learn more about the event, visit the St. Louis Press Club website.

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New Media Investment Group stock flounders as mismanagement continues

Oct 24, 2016 by

Back in October, 2014, Citi analyst Jason Bazinet was bullish on New Media Investment Group stock. The parent company of GateHouse Media was selling at better than $18 per share at the time and Bazinet set a price target of $41.00 on the stock.

Two years later the price was down below $15, slightly more than where the stock opened as a spin-off of Newcastle Investment Group in February, 2014.

The analysts saw this coming earlier this year:

So what happened?

Obviously New Media operates in a distressed industry facing year-over-year revenue declines. But it exacerbates its challenge by demoralizing journalists — who create the product the company is selling — along with the sales force and managers with its quarter-to-quarter quest to maximize cash flow.

The core problems are the same as we identified back two years ago based on our on-the-ground work with employees at its properties. We made this points back in September of 2014:

  • Relentless cost-cutting has diminished the quality of New Media newspapers. While the company improved its cash flow by slashing newsroom staffing, it also invited readership decline.
  • The debilitating employee churn extends to the very top of newspaper operations. At the State Journal-Register – one of the key properties in the company – publishers have come and gone at a dizzying pace.
  • Aggressive circulation pricing also contributes to readership erosion.
  • Readership decline accelerates the migration of advertising to other media.
  • Digital advertising will keep growing, but not fast enough to offset print revenue declines. More robust websites could speed that growth, but New Media has stripped many of its news operations to the skeleton.
  • Propel Marketing might or might not become a significant revenue source.

Since we raised those issues two years ago, New Media went on a buying spree. By acquiring properties at good prices and slashing the work forces, New Media has been able to maintain strong cash flow.

But underlying problems remain:

  • Constant cost-cutting in the news gathering operations has caused further product erosion, both in print and on-line.
  • This erosion accelerated the decline of print circulation. Raising the price of the print product stabilizes circulation revenue in the short term, but it will ultimately accelerate this decline.
  • While revenues from digital advertising and Propel Marketing continue to rise, this growth can’t offset the rapid decline in print advertising. So the company keeps kicking its top line growth projections down the road.
  • By forcing salespersons to sign non-compete agreement, the company slowed the sales churn by also ran off experienced salespersons with strong client relationships.
  • Acquisitions have dramatically increased the company’s debt load.
  • The company continues to churn journalists, salespersons, publishers and national-level management as morale declines.
  • The company’s major investment in journalism, the GateHouse Media Center for News and Design in Austin, is a big cost-saver. But centralized editing, production and content production weakens the connection between local newspaper operations and the communities they are supposed to serve.
  • Circumstances surrounding the sale of the Las Vegas Review-Journal raised journalism ethics concerns that drew national media coverage. The ensuing fallout raised concerns about the company’s leadership team.
  • Increasingly hostile labor relations have prompted NewsGuild locals to rally public support in key markets like Springfield, Ill., Rockford, Providence and Erie — further impacting circulation and advertising revenue. The company is piling up Unfair Labor Practice charges across the country while galvanizing employee discontent.
  • Relentless newsroom cost-cutting has triggered unionization at newly acquired properties in Lakeland and Sarasota. Guild organizing in Florida was unheard of until New Media bought properties in that famously anti-union state.

That might be the ultimate vote of no-confidence of New Media Investment Group by its employees. As industry analyst Rick Edmonds told the Columbia Journalism Review after the Florida papers unionized:

“I don’t know if this is two in a series of two or two in a series of 12. But it’s not a good thing for your business if your journalists are saying, ‘We can’t really serve our community.’”

So the story is the same as it was two years ago. Every warning we raised about this company has rung true.

Wes Edens and Co. at Fortress Investment Group will keep collecting big money as the external managers of New Media. Shareholders will continue collect dividends . . . while they last.

The individual properties and their product will continue eroding and at some point the reckoning will occur — just as it did for GateHouse Media in 2013 under this same management team of Michael Reed and Kirk Davis.

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UMG scrutinizes Springfield, Rockford hiring as bargaining drags on

Oct 19, 2016 by

The United Media Guild demands to bargain over the hiring of new journalists at the State Journal-Register in Springfield and the Rockford Register Star.

Why would we take such a direct interest in the company’s newsroom management? The short answer is we are fighting to maintain the quality of journalism at these newspapers and the long-term viability of these institutions.

The long answer is, well, pretty long so we’ll walk you through it.

GateHouse Media, which owns these newspapers under the New Media Investment Group, has slashed the news operations to a fraction of their former size. The company maximizes cash flow so it can pay quarterly dividends, buy more newspapers, slash staffing at those newspapers, maximize cash flow, pay quarterly dividends, buy more newspapers, slash staffing, maximize cash flow . . . you get the idea.

Wes Edens

Wes Edens

The money guys backing of all of this, Wes Edens and Co. at Fortress Investment Group, collect huge external management fees for orchestrating this plan. If New Media Investment Group eventually collapses due to shrinking paid circulation and declining advertising revenue, Fortress will be just fine. It will have is money. The newspapers and the communities they once served will NOT be just fine.

Concern over the decline of GateHouse/New Media newspapers has inspired journalists to unionize. Newsroom employees in Springfield and Rockford voted to join UMG and this local also assisted two successful organizing drives in Florida, at Lakeland and Sarasota.

To maximize cash flow, GateHouse Media has refused to bargain raises at all of their Guild-represented newspapers for last eight years. It also refuses to bargain raises in first contracts at newly organized newspapers. The company is also demanding extremely low minimum pay rates ($13 per hour, less than a living wage) for its new hires. The UMG has argued for higher minimums that would help attract better applicants, reduce turnover and protect the institutional knowledge in the newsroom.

Because the company won’t set reasonable minimums, the UMG has taken a direct interest in the hiring process. We can demand to bargain the pay rates of new hires in Springfield because GateHouse declared a bargaining impasse and imposed working conditions. By doing so, GateHouse forfeited its managerial discretion under labor law.

In Rockford, we can demand the right to bargain over changes in the workplaces, including new hires, as part of our quest for a first contract at the Register Star.

To better understand the hiring process, the UMG has requested relevant information such as candidates considered, past hiring practices and prevailing hire-in rates at similarly sized newspapers in the chain. Our goal is not to prevent the hiring of new employees, but to make sure the company is attracting quality journalists to fill these key roles in its understaffed newsrooms.

Rockford Register Star executive editor Mark Baldwin complained about this in a letter to our members. In part, it read:

It seems that the Guild’s strategy is to hurt several GateHouse locations because the union is making the same requests in Springfield and Erie. The union’s national agenda ignores the very real needs of the local properties and local communities, and this I find particularly troublesome. I know for a fact that in Springfield, the union’s stalling tactics have delayed hiring by more than six weeks. Insisting on bargaining and then refusing to meet for weeks, and drawing out the process to make it take as long as possible, is standard operating procedure for this Guild local. It defies common sense that the Guild would invoke that tactic when all the Register Star is trying to do is hire good people once we have the approval to do so. It also bothers me that members of the negotiating team, our colleagues, would want to obstruct hiring in this way — especially given the Guild’s outspokenness about the slow pace of hiring already. The union position is rank hypocrisy.

Actually, accusing the Guild of stalling is rank hypocrisy given the actions lead company negotiator, Ali Zoibi. Year after year he steadfastly refuses to bargain raises to end a pay freeze that has prompted wholesale departures. He refuses to raise minimums to the pay level the company has generally used in Springfield and Rockford. He imposed conditions in Springfield and has reiterated, again and again, that he won’t agree to a contract there that includes raises and an increased minimum.

Along the way, the company has run up legal bills while triggering one Unfair Labor Practice charge after another with the National Labor Relations Board. It chooses to fund endless negotiating stall tactics, but it won’t invest in its journalists and its newspapers through fair contracts. That is all part of the overriding goal of maximizing cash flow without regard to the impact on the news-gathering operations.

The company’s stance is absurd and insulting, even by standards in the distressed newspaper industry. But at least it is consistent. Back when Register Star employees were preparing to vote on whether to unionize, GateHouse executive Brad Dennison personally implored them to vote no. But he also admitted the company must find ways besides raises to rewards its superstars because, well, there would be no raises.

Since then Dennison has left from the company. So have many of the Register Star journalists he tried to sway. Many GateHouse publishers, newsroom managers and journalists from around the country are gone too.

The United Media Guild is still here, still fighting for journalists and journalism. We want to work with conscientious editors like Baldwin to make sure cities like Rockford still have a newspaper worth believing in. If that means will must get involved in the hiring process, so be it.

We would rather just have a fair contract, like the ones we have negotiated with other media companies, but GateHouse is having none of that.

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Retirees and alumni members gather for annual UMG luncheon

Oct 19, 2016 by

More than 50 of our retiree members from the Post-Dispatch, Labor Tribune and KSDK units gathered for their annual luncheon Oct. 18 at Lombardo’s restaurant in downtown St. Louis.

This was a great chance for retirees and alumni to catch up with old fretireeriends — and for the United Media Guild to reconnect with several folks we lost contact with through the years. Several of our retirees and alumni reached out to former co-workers and encouraged them to attend the event. We added several new retiree/alumni members at the luncheon.

This event also gave us an opportunity to update our data base so we can remain engaged with people who helped build and sustain our local union. Many of them have remained active in the labor and progressive communities.

The UMG owes its ability to represent members — and organize new ones — to those that came before us.

If you used to work at one of the units we represent and would like to become a retiree/alumni member, please contact the UMG office. Annual retiree/alumni dues are $12.

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Journalists stand up to vulture capitalists at GateHouse Media

Sep 21, 2016 by

Across the New Media Investment Group/GateHouse Media empire, journalists are standing up for their craft and the vital role news-gathering operations fill in their community.

Not long after newsroom employees at the Lakeland Ledger voted to join The NewsGuild, their GateHouse colleagues at the Sarasota Herald-Tribune voted to do the same. These are the first two newspapers in the state of Florida to join the Guild.

The United Media Guild assisted in both campaigns. We represent workers at five GateHouse newspapers in Illinois: the Peoria Journal Star, the State Journal-Register, the Rockford Register Star, the Pekin Daily Times and the Freeport Daily Standard.

We are still fighting for first contracts for our members in Springfield, Rockford and Freeport, but we have already gained significant protections for them. Better yet, we have given them a voice in their workplace.

The organizing drive in Sarasota met heavy resistance from Herald-Tribune executive editor Bill Church. In fact, management’s attempts to intimidate our activists there led to an Unfair Labor Practice charge against the company — and strengthened the resolve of the journalists seeking representation.

(Memo to newsroom managers everywhere: If you’ve hired the right journalists, they aren’t going to buckle when you threaten them. They will dig in. Just saying.)

Church subsequently got a big promotion to Senior Vice President for News at GateHouse Media and will move to Austin to oversee the company’s sweatshop, er, Center for News & Design.

It must be noted that the Sarasota organizing drive was never about Church or his commendable leadership of the newsroom, which produced Pulitzer Prize-winning work. It was more about what GateHouse Media and its parent company, New Media Investment Group, have done to great newspapers across the country.

To recap the GateHouse story:

  • Fortress Investment Group bankrolled the formation and expansion of GateHouse Media, ran it into bankruptcy, then re-launched it under the New Media Investment Group umbrella and resumed buying newspapers. New Media is one of several private equity vehicles pouring money into Fortress coffers.
  • The company plan is simple: Buy up properties at a good price in the depressed media marketplace, slash staffing and maximize quarter-to-quarter cash flow. Part of that cash flow pays dividends to investors and part helps underwrite more acquisitions.
  • Under its external management agreement with New Media, Fortress earns hefty fees for raising capital and building scale. If New Media stock eventually crashes, as GateHouse stock crashed earlier, Fortress will still come out ahead.
  • In the meantime, the company hopes to prop up its stock by showing digital advertising growth, expanding the business of Propel Marketing (its one notable “growth lever”), adding more properties and total revene to help offset staggering losses in print advertising . . . and even more cost-cutting.
  • Along the way, the company has churned journalists, ad salespersons, editors, publishers and even high-ranking executives. In Springfield, for instance, the State Journal-Register is on its seventh publisher under GateHouse. As the Illinois Times noted, the SJ-R employed just two publishers between 1968 and 2005.

GateHouse CEO Kirk Davis trumpets Church’s promotion as proof that the company cares about journalism.

“It is essential for GateHouse to have a corporate advocate for its news employees, enterprise-wide, who appreciates the diversity of our markets, who can engage our news leaders in the ‘conversation’ about how we evolve our news organization, and who possesses the ability to communicate effectively and consistently about our journey,” Davis said in a GateHouse memo.

Church’s promotion further cleansed the company of its ugly Las Vegas stain, which involved one of the most egregious lapses in journalism ethics in memory.

Journalists across the company are doubtlessly heartened by this move. But if the GateHouse reality remains the same — eternal pay freezes, staffing cuts, journalists hiring on for less than a living wage — then news-gathering operations will continue eroding and communities will keep suffering as a result.

And more GateHouse newsrooms will organize with the Guild. As industry analyst Rick Edmonds told the Columbia Journalism Review, “I don’t know if this is two in a series of two or two in a series of 12. But it’s not a good thing for your business if your journalists are saying, ‘We can’t really serve our community.’”

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