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The Last Days of P-I

Today won't be the last day of the Seattle Post-Intelligencer as a daily newspaper, as it had been widely speculated. The parent Hearst Corporation said in an e-mail to the P-I staff that: "We are still evaluating our options. Timing of the decision is uncertain."

But make no mistake, the end is near. By all indication, Hearst intends to turn the P-I into an online-only operation with an emphasis on aggregation and blogs. When that happens, the P-I would become the second major U.S. metro daily newspaper to fold following the demise of the Rocky Mountain News on Feb. 27.

As if to perform the last rites, the P-I employees were allowed to pose in front of the paper's iconic rooftop globe yesterday for posterity.

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Ken Lambert, Seattle Times

In the past two weeks, Hearst has courted selected writers and editors for the proposed online-only P-I. Assuming those ranks were filled, the site will continue without a hitch while the print edition shuts down. In any event, the morale in the P-I newsroom could not be lower, with the minds of the employees already elsewhere:

There's also an emotional and group-think element that's making people agree that this week will bring the last-ever print P-I--or, at least, should. First of all, what kind of employer tells a group of 170 competitive journalists that they're about to lose their jobs, then picks about 20 of them to stay employed in an online-only project ..., then throws the chosen back into the general population, and then lets that stew of jealousy and resentment simmer for a week or so? Not a good idea. As one reporter put it last week, the current vibe in the newsroom is: "Put us out of our misery already."

While Hearst cleans out the P-I, it continues to work on saving its flagship San Francisco Chronicle. Management has tentatively agreed to a deal with the guild, with concessions granted to keep the paper operating. A bigger obstacle, however, remains the Teamsters, who represents the non-editorial staffs including truck drivers. Teamsters may yet to decide to scuttle the negotiations and dare Hearst to shut down the paper.

Members of the guild are expected to ratify the agreement, as outlined in the memo below obtained by Media Watch:

BARGAINING UPDATE
SAN FRANCISCO CHRONICLE UNIT
MONDAY March 9, 2009

Tentative Agreement in Chronicle-Guild Talks


Negotiators for the Guild and the San Francisco Chronicle reached a tentative agreement Monday night on proposed changes to the collective bargaining agreement in connection with cost cuts planned by the company.

The agreement will require approval by Chronicle Unit Guild members. A ratification meeting will be scheduled as early as Thursday of this week. Time and place will be announced on Tuesday as soon as a large enough facility can be secured.

In view of the latest terms agreed today, the Guild Negotiating Committee recommends membership approval.

The terms reached late Monday include expanded management ability to lay off employees without regard to seniority. All employees who are discharged in a layoff or who accept voluntary buyouts are guaranteed two weeks' pay per year of service up to a maximum of one year, plus company-paid health care for the severance term, even in the event of a shutdown - which today's agreement is designed to avoid.

Guild membership will remain a condition of continued employment for all employees. However, new hires in certain advertising sales positions will be given the option of membership, even though they will retain Guild protection under the contract.

On-callers will be limited to no more than 10 percent in any classification or department.

Pension changes are not part of this agreement, but are being discussed by pension authorities and must be implemented under terms of the Pension Protection Act, due to the recent declines in investment markets. Because those changes may affect the decisions of many members concerning buyouts, we are attempting to reach some key understandings now as to the nature of the changes and when they will take effect.

A lunch-hour meeting on Wednesday March 11, with our pension plan's lawyer will be held at the Guild Office, 433 Natoma, Third Floor Conference Room.

A bulletin summarizing all the proposed contract changes will be issued Tuesday. A set of the complete proposed amendments will be available on the Guild's Web site (mediaworkers.org) as soon as possible.

Management is seeking to change the union contract as part of an attempt to cut costs and keep the paper operating under the ownership of the Hearst Corp.

The company said Feb. 24 it would sell or close the paper unless the Guild agreed to changes in the labor agreement in effect through June 2010.

Just up the road in Sacramento, the union accepted a severe paycut so the troubled parent company McClatchy may continue to keep publishing the Bee. Nevertheless, McClatchy, which also owns the Miami Herald, Fort Worth Star-Telegram and Kansas City Star, is expected to slash 15% of its workforce, or about 1,600 jobs.

A Glimmer of Hope for P-I?

It may be only days before the Seattle Post-Intelligencer goes the way of the Rocky Mountain News. Its parent Hearst Corporation has set a March 10 deadline to find a buyer or it may shut down the paper.

While no serious buyer has emerged, word is that Hearst may be planning to extend the P-I's existence by making it an online-only entity. A number of P-I's staffers have been offered to stay on to work for the web site.

One reporter who turned down the offer said it came with some strings attached - it would increase his health insurance cost, cut his salary by an unspecified amount, match his 401(k) contributions, require him to forgo his P-I severance pay, reduce his vacation accrual to zero and require him to give up overtime. But Hector Castro said the reason he rejected the deal is because he finds working online "too tech-oriented."

Meanwhile, some of the newly unemployed Rocky Mountain News journalists have already found a way back on the web. Tracy Ringolsby, one of the most respected baseball writers who also co-founded Baseball America, has launched a baseball site along with fellow ex-Rocky baseball writer Jack Etkin and editor Steve Foster. It didn't take Colorado Rockies fans long to discover InsidetheRockies.com, which got around 2,100 hits the first day and climbing ever since.

Hearst Makes Demands on Chronicle

As predicted here at Media Watch, after warning that the San Francisco Chronicle might fold, the parent Hearst Corporation made demands on the newspaper guild and other unions for drastic concessions to keep the paper operating. Management and labor likely will have the next 2-3 weeks to work out the givebacks or the paper could be shuttered by the end of the first quarter.

Media Watch has obtained the memo sent to guild members on the highlights of the proposal. There were a few mundane items - such as increasing the work week from 37.5 hours to 40 hours without an increase in pay, trimming four weeks of vacation to three, and loosening existing constraints on management to use freelancers. And there were a few more difficult ones, such as more layoffs and discontinuing pension contribution.

In all fairness, the demands were harsh, but not entirely unreasonable. Partly due to the high cost of living in the Bay Area, and partly due to the fact that San Francisco was one of the strongest union towns, the employees at the San Francisco newspapers have always enjoyed some of the best benefit packages of newspapers anywhere in the United States. While California's escalating taxation is taking its toll on all residents, it's not particularly a burden that Hearst should be forced to carry as its employees are giving away more and more of their salaries to satiate a near-bankrupt state's penchant for spending.

It appears that the guild, after putting up light resistance, would be willing to accept most of management's demands - given the choice of losing their jobs outright vs. losing a few perks, vacation and sick days and freeze in pay. At least Hearst is not asking for direct pay cuts and unpaid furloughs, as a number of newspaper chains have done.

But the ball might be out of the guild's hands. Its other more notorious union brethren representing the composing room, pressmen and truck drivers may be less willing to give in. And this time, if they decide to call management's bluff, they may be making a grave mistake.

Meanwhile, Hearst is exploring other ways to improve its revenue stream as it's losing about $1 million per week at the Chronicle and a bit less at its other 15 papers. The company is contemplating a pay scheme for certain articles on its properties' web sites, including the Chronicle's popular sfgate.com site.

According to the Wall Street Journal, Hearst president Steven Swartz said his company is developing a new digital strategy that may also include a Kindle-like reading device:

Reworking its digital strategy is a part of Hearst's "100 Days" plan to cast a critical eye on longstanding newspaper-industry business practices. Mr. Swartz promised profound changes. "One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today," Mr. Swartz said. "It is equally inescapable that during good times our industry developed business practices that were at best inefficient."

Playing Monopoly in San Francisco

There was a time when the San Francisco Bay Area was the second-best newspaper market in America, behind only New York City. Major metro and suburban dailies, owned by different entities, were all competing in the same high-energy newsmaking environment.

A decade later, the Bay Area is on the verge of becoming a one-newspaper region.

The Hearst Corporation (full disclosure: my former employer) owns the biggest paper - the San Francisco Chronicle - but its ever-dwindling circulation is dwarfed by the Dean Singleton-owned MediaNews Group papers surrounding it: San Jose Mercury News to the south, Contra Costa Times and Oakland Tribune to the east and Marin Independent Journal to the north (the only thing west is the Honolulu Advertiser). The only other paper in the region not owned by MediaNews is New York Times Co.'s Santa Rosa Press Democrat.

And it looks like Hearst is ready to throw in the towel - or at the very least, get into bed with Singleton.

Alan Mutter, a well-connected insider writing on his blog "Reflections of a Newsosaur," revealed that Hearst actually already has a significant stake in the MediaNews operations in Northern California, inasmuch that it helped secure the latter's purchases of Contra Costa Times and Mercury News. As a privately held company, Hearst's books aren't open to the public. But it's believed that it has pumped more than $1 billion into the money-losing Chronicle in this decade.

Against this backdrop, Mutter speculates on what might happen:

With the outlook for the newspaper business now worse than ever, a more radical solution than nipping and tucking the Chronicle to profitability would seem to be in order. And it probably is this:

Folding the Chronicle into the network of MediaNews Group papers that completely surround it - a network, significantly, that Hearst itself played a major role in building.

In that event, the Chronicle's now-independent news, ad sales, production, distribution and administrative staffs would be merged into a single entity managed by MediaNews. Deep staff cuts likely would result in every department, not the least of which would be the already decimated newsroom.

In other words, one newspaper operation in the entire Bay Area, with different banners depending on where they're distributed.

When Hearst bought the Chronicle and folded the Examiner into it in 1999, there were nearly 600 newsroom employees. With annual and now semi-annual buyouts since then, that number has dwindled down to 260. Reliable sources inside that newsroom indicate that the staff size might be close to just 200 by the end of the year.

That is if the aforementioned "merger" doesn't take place.

Back in the '90s, the Department of Justice, with assistance from then-mayors Frank Jordan and Willie Brown, did its part to keep San Francisco from becoming a one-newspaper town. But in today's economic climate, particularly one facing the woebegone newspaper industry, it's doubtful that the DoJ can - or even wishes to - do much of anything.