Star Tribune asks unions for $20M in cuts
Minneapolis — (AP) - The Star Tribune has asked its labor unions to agree to $20 million in cuts by mid-January to address the newspaper's long-term debt.
In a memo Tuesday to the company's 1,400 employees, chairman and publisher Chris Harte said "the survival of the company is at stake."
The $20 million would be in addition to $10 million in cuts the company said it has already started to implement. The company wants to reach an agreement on the cuts with union leadership, which represent about 900 contractual workers.
The Minneapolis newspaper has about $400 million in long-term debt, some of which executives hope lenders will forgive if the company makes some sacrifices.
Since 2007, the Star Tribune has made $50 million in cuts through attrition, layoffs, buyouts and other cost-cutting measures.
Union officers were scheduled to meet Wednesday to discuss the memo.
"Our secured lenders, who have already lost hundreds of millions of dollars on the value of their loans, have made it very clear that the company must take immediate action to bring its expenses in line with its greatly reduced revenue before they will agree to restructure the company's debt," Harte said in the statement.
Harte indicated that without an agreement with the unions, the Star Tribune could face "an expensive and difficult court-supervised reorganization" in bankruptcy.
The company had hoped a steep decline in advertising revenue would bottom out late this year, but Harte said that hasn't happened.
Despite revenue declines, Harte said the newspaper's online audience continues to grow.
"If we can continue to reduce costs, build our new businesses, and maintain the strength of the daily paper, when the economy recovers, we will recover with it as a much stronger, leaner and more modern company," Harte said.
Earlier this fall, the Star Tribune skipped a $9 million quarterly debt payment to senior creditors to save cash as it tried to restructure its debt.
In July, newsroom workers ratified a three-year contract with the Star Tribune that was expected to save the newspaper $2.4 million a year. The deal included a 16-month wage freeze and shifted a greater share of health care costs to employees.
The Star Tribune is owned by Avista Capital Partners, which bought the state's largest newspaper in March 2007. As of March 31, it had daily circulation of 322,362, according to figures from the Audit Bureau of Circulations.
Meantime, WCCO-AM has laid off two on-air reporters as part of a round of station cutbacks.
Sports reporter Dan Terhaar and part-time reporter Roshini Rajkumar were let go by the station Monday.
Mary Niemeyer, the current market manager for Minneapolis CBS radio stations WCCO, JACK and WLTE, would not comment on how many people were laid off, but did confirm there were some changes at the station.
Niemeyer says the moves are designed to "help us better position the business in the current economic climate."
In another change expected soon at the station, Niemeyer will become sales vice president and Mick Anselmo will take over as manager of CBS's local radio operations.
(Copyright 2008 by The Associated Press. All Rights Reserved.)