Attention Mike Reed: The battle escalates

Jul 27, 2016 by

Earlier this month United Media Guild business representative Shannon Duffy sent this letter to Mike Reed, the CEO of New Media Investment Group — the parent company of GateHouse Media and its four newspapers that we represent in Illinois:

Dear Mike,

Thanks for taking the time to meet with Phil Luciano and me at the New Media Investment Group shareholders meeting on May 25.

As we told you in New York City, we are concerned about the future viability of the Peoria Journal Star, State Journal-Register, Rockford Register Star and the Pekin Daily Times in the face of eternal wage freezes and newsroom cuts. Excessive cost-cutting is taking a heavy toll in the workplaces where the United Media Guild represents journalists.

That is taking a toll on the news product which, in turn, will cause premature loss of readers and advertisers.  This is troubling to our members who love their craft, their newspaper and their communities.

Recently the State Journal-Register imposed its “last, best and final” offer on our members at that newspaper, which will extend the current wage freeze to nearly 12 years. That seems an absurd working condition, particularly at a newspaper that has helped fund New Media Investment Group purchases and dividend payments with its positive cash flow.

Your employees have never been more important. Newsrooms must innovate and evolve on the fly to compete in a rapidly changing landscape. The business side must do the same in the face of staggering print revenue decline.

Rather than belabor the fairness issue, I’d like to caution you that maintaining an eternal wage freeze at New Media/GateHouse newspapers could cost the company far more in the long run than a relatively modest re-investment in its employees.

Here are some of the inevitable consequences:

  • Declining morale and productivity – and at a time when employee productivity has never been more important.
  • Accelerated churning of salespersons, journalists, editors, publishers and New Media/GateHouse executives.
  • Increased levels of union activism in various workplaces and communities.
  • Economic actions against individual newspapers, targeting subscribers and advertisers.
  • A national corporate campaign against New Media/GateHouse management targeting analysts and shareholders.

Last year, after you expressed your concerns during our phone conversation, we toned down our rhetoric and tried to reach a fair settlement in Springfield without intensifying our public campaign there. But that effort failed, conditions have now been imposed on our members and so here we are, ready to fight on their behalf through all lawful means.

We believe there is real economic value in labor peace. Now, unfortunately, it appears it will be our job to establish the economic cost of a labor dispute.

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Since then, we have seen another example of what happens when a company takes its cost-cutting too far: The Lakeland Ledger will soon vote on whether to unionize. We are asking all of our members to support and others that could arise in the face of GateHouse’s draconian actions.

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GateHouse declares impasse, extends SJ-R wage freeze for three more years

Jun 30, 2016 by

During our battle for a first contract in Springfield, Ill., GateHouse Media has absolutely, positively refused to negotiate raises.

The company took this hard line even though GateHouse emerged from bankruptcy flush with capital as part of its new parent company, New Media Investment Group.

The company took this draconian stance despite the positive cash flow generated at the State Journal-Register and the company overall.

GateHouse maintained its abusive pay freeze despite massive newsroom cuts that forced surviving journalists to shoulder greater workloads while trying to stem the eroding quality of the SJ-R.

Company negotiator Ali Zoibi even refused to offer bonuses tied to newsroom performance, though our members have done an outstanding job driving digital traffic and fulfilling other company initiatives under increasingly difficult conditions.

His “last, best and final” offer amounted to a pay cut for our members — many of whom had gone 8 1/2 years without  a raise. Not surprisingly, our members voted down that offer.

So the company declared impasse and imposed conditions on our members, essentially extending its wage freeze for another three years. The imposition of these conditions could result in some members going 11 1/2 years without a raise.

That’s eleven and one-half years.

While these imposed conditions includes annual bonuses, the company is jacking up medical premiums from nearly 15 percent to 27 percent, depending on the employee’s plan. This will result in an imposed pay cut for many of our members.springfield3

Meanwhile GateHouse media is vacuuming cash out of Springfield to fund New Media Investment Group dividend payments and acquisitions. By buying more properties, the company is creating greater cash flow — and masking the damage that excessive cost-cutting has done to its existing properties. Readers and advertisers have grown weary of paying more for less.

As a result of all this, the United Media Guild has no choice but to escalate its public campaign in Springfield. It will also join other NewsGuild locals across the country in a concerted corporate campaign against the vulture capitalists at GateHouse/New Media.

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UMG awards scholarship to outstanding student journalist

Jun 30, 2016 by

One of the United Media Guild’s core missions is promoting the craft of journalism during this critical time in our industry and in our society.

At the recommendation of UMG vice president Joe Kenny, our executive committee voted to restore its scholarship offered in conjunction with the St. Louis Press Club and the Journalism Foundation of Metropolitan St. Louis.

Kenny, a reporter at the St. Louis Review, serves on the Press Club’s scholarship selection committee. He has long advocated Guild currentoutreach to student journalists.

This year’s UMG scholarship recipient is Kat Riddler, a graduate student at the University of Missouri-St. Louis and a graduate of St. Charles High School. As editor in chief of The Current student publication, she has led the newsroom and reported on a variety of issues critical to the school and the surrounding community — including the civil unrest in Ferguson, a neighboring community of the UMSL campus.

She and the other scholarship winners were honored by the Press Club during at Thursday luncheon at the International Photography Hall of Fame. Lynden Steele, director of photography for the St. Louis Post-Dispatch, gave a presentation on the craft of photojournalism and the Pulitzer Prize-winning work the UMG-represented photo staff.

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The harsh truth about newspaper company consolidations

Jun 21, 2016 by

The consolidation of the newspaper business continues. Gannett hasn’t given up on purchasing Tribune Co. as part of its ongoing expansion.

The money guys behind New Media Investment Group/GateHouse, Fortress Investment Group, remain in “buy” mode they can maximize the management fees they collect.

Prices have dropped for newspaper properties, making them more attractive targets. Companies like Gannett and New Media/GateHouse have centralized production facilities, so they can “gain efficiencies” with properties they acquire.

That is a nice way of saying “fire a lot of people to increase profits.”

The expressed New Media/GateHouse plan is to maximize cash flow at its properties, then use the money to pay dividends and to buy more properties, cut more costs, generate more cash flow, pay more dividends, buy more properties . . . you get the idea.

Revenues are sinking for newspaper properties and will continue to sink. New digital initiatives like New Media/GateHouse’s Propel Marketing generate some new revenues, but not nearly enough to offset all the decline.

And bleeding these properties for cash flow speeds causes newspaper and websites to   deteriorate, which accelerates the loss of readers, advertisers and, of course, revenues.

CBNC commentator Kevin O’Leary noted the ongoing consolidation of newspaper companies will not solve the core problems.

“The best analogy is two smaller ice cubes melt faster than one bigger block of ice,” he said during a report on Gannett’s bid for the Tribune Co. “These are both melting.

“This is a just long end game of cutting costs, banging together all the ice you can, consolidating, slashing costs The long trend is to zero.”

He did not see the wisdom in Gannett’s bid. “This sounds like a business plan that is handed to you when you finally descend into hell and you know you have to live there in perpetuity,” O’Leary said. “Who would want this challenge? I mean, it is brutal.

“I’d like to have a moment of silence for the money that’s going to die in this project because it deserves that respect.”

What would an honest description of a consolidation plan sound like?

“Sometimes you have to say, ‘Look, it’s going to go to zero eventually. I am going to milk as much cash as I can out of it on the way by combining all the zero candidates together and put them on life support, try to make the refrigerator a little colder so the ice melts a little slower and suck out every dollar out before you turn out the lights.

“Listen, let’s tell the truth. That’s what’s going to happen.”

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Wanted: Full time copy editor

May 19, 2016 by

                                                              Full-Time Copy Editor

Truthout is looking for a full-time copy editor to edit articles and other content in our fast-paced virtual setting. This editor will also assist in determining style guidelines, writing headlines and article summaries, and preparing material for publication on our website. The ideal candidate is hard-working, detail-oriented, deadline-driven, politically savvy and kind.

Truthout offers a competitive salary, benefits, and a friendly and open work environment. Applicants should have at least two years of experience copy-editing for a journalistic publication. Please send resume and cover letter to jobs@truthout.org, as well as one writing sample. People of color, women, and queer, trans and gender-nonconforming people are encouraged to apply.

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More doubts raised about New Media/GateHouse stock

May 3, 2016 by

After GateHouse Media was reborn as part of the larger New Media Investment Group, analysts were bullish on the stock’s potential.

The company has plowed forth on a buying spree, becoming one of the few big players left in the newspaper industry. On his 2015 fourth quarter earnings call with analysts, New Media CEO Michael Reed said the company could spend up another $360 million on acquisitions in 2016. The purchases keep coming.

Even after giving a glowing 2016 first quarter earning report and paying another healthy dividend, though, New Media stock dipped back below to $16 per share in early May — well below its 52-week high of $24.32 and about one-third of the long-term price some analysts initially predicted the stock should reach.

In a note to investors, Citigroup Inc. downgraded New Media stock from “buy” rating to neutral and lowered its target price for the stock to $17.

What’s with the stock? In an earlier piece for Poynter.org, Rick Edmonds observed:

Some commentators have doubted whether New Media’s strategy will work as well at bigger papers it bought in Columbus and Providence as it has with earlier additions of smaller papers.

In the conference call with analysts, Reed argued that the market undervalues New Media. The newspaper sector, he said, is “out-of-favor and fragmented,” and that leads to New Media being “misunderstood.”

But is it really misunderstood? Or is the market wary of a newspaper company that buys and plunders properties, seeking maximum quarter-to-quarter cash flow while risking accelerated erosion of readership and advertising revenues? At some point, doesn’t the company have to grow the bottom line?

New Media puffed up its fourth quarter numbers with a $54 million cash infusion from flipping the Las Vegas Review-Journal to casino magnate Sheldon Adelson, who bought the newspaper to pursue a personal agenda.

That was a nice windfall for the company, but raised serious questions about its commitment to credible journalism. First New Media/GateHouse tried to get reporters at the Review-Journal to do Adelson’s bidding by investigating Las Vegas judges. Then company executive David Arkin tried to get journalists at its Sarasota newspaper to investigate the judges.

New Media/GateHouse has since scaled back its management agreement in Las Vegas and backed away from the mess, but not before its egregious ethical lapses drew extensive national coverage in both the industry and the mainstream media. The controversy triggered rumblings of an unhealthy rift between Reed and Kirk Davis, the New Media COO and GateHouse CEO.

It’s no wonder the company felt compelled to assemble its editors for an April meeting in Chicago.

Reed touted Sarasota’s Pulitzer Prize-winning work in his 2016 first quarter earnings call with analysts, but he made no mention of the company’s controversial attempt to deploy those same reporters to do Adelson’s bidding.

Oh, and Davis had to move quickly to squelch ethical concerns about the company’s bid for a marketing deal with the city of Quincy, Massachusetts — home of GateHouse’s Patriot Ledger newspaper.

Of course, New Media/GateHouse management is creating even greater concerns of interest to investors. Let’s run down the list:

Core product deterioration. New Media/GateHouse has cut newsroom operations to a fraction of their former size. Even after emerging from bankruptcy flush with cash, it continued running off veteran reporters, photographers and

Providence Journal protest in face the of GateHouse cuts.

Providence Journal protest in face the of GateHouse cuts.

editors and hiring entry level replacements — often at less than a living wage. The company even churns publishers at key properties like the State Journal-Register in Springfield. The constant cutting and churning keeps diminishing the “strong and trusted local brands” the company touts to investors. Outsourcing copy editing functions to its Austin design center has further diminished content quality, since ever-changing workforce there is far removed from the communities New Media/GateHouse newspapers serve. In many cases editors have little knowledge of the people, places and issues in the stories they process. As a result, more obvious errors end up in print.

Print advertising vulnerability. New Media/GateHouse is not the only newspaper company fretting about the future of print advertising (22.1 percent of New Media revenue in 2015) and “preprint” advertising (nearly 14 percent). The company reported double-digit declines in both categories in its fourth quarter statement, which was typical in the industry. But the company’s increasing desperation to slow the decline has led to heavy management and salesperson churn. The implementation of new non-compete clauses has prompted experienced salespersons with strong advertiser relationships to leave the company rather than limit their future employment opportunities.

Classified advertising vulnerability. The company has stemmed decline in this area by inflating the cost of obituaries to families through multiple means, including blowing up the font size of the obits. This is still another short-term fix with potential long-term ramifications.

Digital advertising/Propel “growth levers.” While the company is making some digital strides, many of the New Media/GateHouse markets are too small to value Propel and the company’s bigger markets feature heavy competition from similar products. Propel remains an insignificant revenue source (2.6 percent) for the company. Desperate to grow digital advertising and Propel, the company’s ever-changing management team devises aggressive sales plans that often overreach — causing long-standing local print advertisers to spend nothing instead of more.

Circulation revenue vulnerability. Circulation produced 31.6 percent of the New Media revenue. Its percentage of total company revenue keeps growing. While circulation is plummeting at many properties, the company offset that decline by raising subscription and newsstand prices and making subscribers pay extra for “premium sections” that are essentially advertorial fluff. That, in turn, causes potential for further readership erosion. How long can New Media prop up this category?

Union-directed subscriber and advertiser boycotts.  Even while spiraling into bankruptcy in its earlier incarnation, GateHouse Media maintained reasonable relationships with its unions. After its rebirth as the cash-flush New Media Investment Group, the company has established a more strident tone toward its employees, many of whom have endured wage freezes of eight or more years.  The company is steadfastly refusing to offer raises during negotiations with various unions. In New Media’s 2015 Annual Report, the company notes that it has 35 collective bargaining agreements with unions at various properties.  Most of its unionized employees work under CBAs that expire in 2017. “We believe that relations with our employees are generally good and we have had no work

Not-so-happy employees in Springfield.

Not-so-happy employees in Springfield.

stoppages at any of our publications,” the Annual Report noted. On the first point, morale is actually terrible and turnover is high at many company properties, due to eternal wage freezes for long-time employees, low pay for new employees, reduced staffing and various administrative snafus related to the company’s rapid expansion.

As for the absence of worker strikes, unions prefer to establish an economic value for labor peace through public pressure and orchestrated boycotts. Convincing local businesses not to advertise in a newspaper is not difficult, since many have been moving away from print anyway. Convincing readers to quit subscribing isn’t hard, either, giving the soaring subscription and newsstand prices and the glaring content reduction. What is hard is regaining advertisers and readers after they leave. At the State Journal-Register in Springfield, Ill., for instance, the loss of just one key advertiser would cost the company far more money than settling with United Media Guild on a fair contract for its members. UMG business representative Shannon Duffy has spoken to many of the paper’s top advertisers, some on multiple occasions. Springfield is well aware of the UMG’s years-long fight for a first contract, thanks to a radio commercial blitz, outreach to community and labor leaders, public demonstrations and direct meetings with some of the SJ-R’s biggest advertisers. This has become a model programs for other newspapers to follow. Public campaigns in markets like Providence, Rockford and Erie could provide more examples of how New Media/GateHouse risks serious long-term damage while trying to vacuum every last nickle and dime from its properties on a quarter-to-quarter basis. Oddly, such potential economic damage was not on the laundry list of “Risk Factors” disclosed to investors in the 2015 Annual Report.

Union-directed corporate campaign. John Levin, chairman and chief executive of Levin Capital Strategies L.P., has provided a blueprint for future shareholder motions at New Media. He called for more independent directors for the companies spun out of Newcastle Investment Corp. to reduce the obvious conflicts of interest. The external management structure of these spin-offs reward the money guys backing the enterprise, Wes Edens and the Fortress Investment Group LLC, while putting shareholders in some peril. Reed is the CEO of New Media, but he is paid by Fortress. Levin notes that Fortress gets paid to build size, not to necessarily create better performance. As Levin noted about another Fortress property, New Senior Investment Group, perhaps a buyer will come along and save the company for the long haul. The same could occur for New Media. Shareholders should either hope that happens or properly time their exit before these executives crash the stock, as they did with GateHouse Media. Either way Fortress would come out fine, thanks to the hefty management fees it collects along the way.

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New publisher, same problem at SJ-R

May 2, 2016 by

springfield3The churn continues at the State Journal-Register. Salespersons come and go. So do reporters, frustrated by the eternal wage freeze invoked by GateHouse Media.

Notable departures include Jamie Munks, Maggie Menderski, Dan Petrella, Tobias Wall and Molly Beck.

And this company even blows through publishers. Once upon a time those positions were among the most stable in the media industry. As the Illinois Times notes, the SJ-R employed just two publishers between 1968 and 2005.

But those days are long gone. Rosanne Cheeseman became the sixth SJ-R publisher under GateHouse Media ownership, replacing Clarissa Williams.

Back in 2013 since-departed GateHouse executive Brad Dennison hired Williams to replace interim publisher Michael Petrak, who filled in after Richard Johnson retired after less than a year on the job.

Johnston signed on in 2012 to replace Walt Lafferty, who came aboard in 2010 to replace Scott Bowers. Whew!

Springfield civic leaders need a scorecard to keep up with all the changes atop the SJ-R, an important institution that has eroded due to excessive cutting under GateHouse ownership.

Cheeseman takes over as the United Media Guild moves closer to triggering advertiser and reader boycotts of the SJ-R. GateHouse Media’s last contract proposal to the UMG amounted to a pay cut for many of our members in Springfield.

Veteran journalists at the paper have gone nearly nine years without a raise. This prompted them to organize, vote in the Guild 26-4, and embark on an aggressive public campaign.

Our members have engaged the public in a variety of ways, including informational picketing, leafleting major events, speaking to civic groups, soliciting support from organized labor, manning an informational booth at the Illinois State Fair, gathering support cards and running a radio advertising campaign.

More recently UMG business representative Shannon Duffy met with several of the major SJ-R advertisers face to face, some of them on multiple occasions. AFSCME, which has 35,000 members in the region, has been assisting our efforts.

The UMG isn’t eager to inflict economic damage on the SJ-R — some of which could be permanent — but if GateHouse insists on maintaining its wage freeze, we will have no choice to prove that labor peace has major economic value.

Boycotts could cost GateHouse Media hundreds of thousands in the near term and perhaps millions in the long haul. Regaining lost readers and advertisers can be expensive and, in some cases, impossible.

And odds are we’ll see more churn, more salespersons, reporters and, yes, even publishers heading out the door.

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Labor Tribune ratifies new contract

Apr 29, 2016 by

labortribThe United Media Guild finalized its new collective bargaining agreement with the Labor Tribune, adding to its list of settlements in recent months.

The contract featured 3 percent raises this year and next year for the Labor Tribune’s one full-time editorial employee and $750 signing bonuses for all members.

The contract allows the Labor Tribune to freeze pension benefits for its employees. In exchange, the company will contribute the money that would have gone to the pension into employee 401K plans instead.

Initially that regular 401K contribution will be $51.21 per week for each employee. It will increase 3 percent each year going forward.

Here are some highlights of the other deals:

At the Mid-South Organizing Committee, the new contract codified work rules, spelled out job duties, created a phone policy — employees get reimbursement if they don’t use a committee-issued phone — and enhanced grievance and arbitration language.

The contract also calls for step increases over a two-year span for these fast food organizers, from $32,000 to $40,000. In addition, there is a $150 monthly stipend for Organizer 2s, a $250 monthly stipend for leads-in-training and communication specialists and $350 stipend for leads.

At Truthout, the big battle at this progressive digital program was over disciplinary protections, of all things. We were able to maintain key protections and gain staff raises if certain financial benchmarks are reached.

It also created a mechanism for employees to suggest fundraising improvements at the financially strapped operation.

Last year our members at Missouri Jobs with Justice agreed to a new deal that featured immediate pay increases of up to $4,000, then a 3 percent raise in 2016 and a 2 percent bump in 2017.

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