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Seattle Times Co. still trying to close sale of Maine papers

Both the Maine sale and some Seattle real estate put on the market fail to meet their goal of closing in 2008. This could produce a very tough January for the local daily.

A new year, but no letup in pressure on the beleaguered Seattle Times Co. Times CEO Frank Blethen and Pennsylvania publisher Richard Connor, who heads of the investment group seeking to buy the Times’ Blethen Maine newspaper chain, recently announced they pushed back the “deadline” to complete the deal to the end of January. In a memo Monday, Dec. 29, to Blethen Maine staffers, they blamed the delay on the holidays and bad weather, but the underlying message was that Connor’s group, which includes former Defense Secretary William Cohen and Robert Baldacci, brother of Maine Gov. John Baldacci, haven’t lined up enough solid financial backing.

Connor told Crosscut in an interview two weeks ago that three Maine banks and an out-of-state private investor had expressed interest in backing his group, Maine Media Investment, but hadn’t made any definitive commitments.

Meanwhile, the Times Co. said that Charles Cochrane, a senior vice president who is chief executive of the Blethen Maine chain, is retiring on Jan. 1 and will be replaced by Robert Bickler, who has been president and general manager of the Portland Press Herald for the last five years. Cochrane, who has worked for the Times Co. for 33 years, will continue to head the Times Co.'s effort to sell the Maine newspapers.

Missing the December deadline set by the Times Co. may also convey another message for the struggling Seattle-based company. The Times, which owes at least $91 million to a consortium of banks, was pressing to complete the sale for a tax loss to offset the slug of cash it expected from selling five acres of prime real estate in South Lake Union. The (sort of) good news for the Times is that if Connor’s group does buy Blethen Maine in January the Times will be able to match the loss from the sale against its 2009 income from the real estate.

The bad news for the Times Co. comes in several flavors. With every passing day, Blethen Maine — which includes three Maine dailies, including the Portland Press Herald, the state’s largest paper, a website, and real estate — loses value. When the sale of the chain was announced last spring, Blethen told the Press Herald he hoped to get $100 million. But the market for newspapers has dropped sharply since then. Hard-pressed media companies have recently put far more attractive papers on the block, including dailies in Miami, Denver and Austin, Tex., and nobody is buying. Connor’s group, Maine Media Investment, has been the only serious prospect for the Blethen Maine chain, which the Times Co. borrowed $230 million to buy a decade ago. These days, according to knowledgable people in Maine, the chain’s value may lie solely in its real estate, which is assessed at $28 million.

Another message buried in the latest Times announcement is that there may not be any taxable gain for the Times Co. to offset a Blethen Maine loss. The Times has been trying to sell its South Lake Union real estate since August and has been relying on the proceeds of that sale, along with cash from the Blethen Maine sale, to pay down its debt. According to Steven Wood, the realtor handling the sale, the company had a buyer for the South Lake Union property in October and planned to announce in December that the deal would be finalized by the end of 2008. No announcement has been made and Wood told Crosscut two weeks ago he had nothing new to report.

With both the Blethen Maine and South Lake Union deals on hold, January could be the toughest month yet for both the Times Co. and its employees. Company officials have told some staffers to expect yet another layoff announcement soon at the Seattle Times because of an impending debt payment. Last month, the company ordered some 500 of its non-union employees at the Seattle Times to take an unpaid week off to cut expenses, then froze their pension contributions. Times’ finances are apparently so tight that the company declined to pay $250,000 in severance promised to some of the 150 union workers laid off in December, prompting threats of more legal action.


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Comments:

Posted Wed, Dec 31, 9:54 a.m. Inappropriate

Ummm...Does anyone edit your stuff?

bigyaz

Posted Mon, Jan 5, 7:53 a.m. Inappropriate

Big mistakes here, as usual, Bill: The Times never "promised" the severance to the laid-off union workers; it said it would pay generous severance, above and beyond the contract, if the Guild would agree not to pursue legal actions related to the layoffs. The union declined, so the company paid out a lesser amount, still above and beyond the contract. Oh, and by the way, it involved fewer than 40 workers, not 150.

Check your facts!

Tony

Posted Mon, Jan 5, 10:27 a.m. Inappropriate


It is just sad that the outlook seems so bad for the Times. We'd be a much poorer region without the Times - but there is such a drumbeat of bad news for them, would think the mid-term outlook for that institution is grim at best.

Today's paper is awfully thin - as the product deteriorates it will be tougher to draw interested subscribers to the paper-version of the newspaper.

Good luck, Times!

Anthony

Posted Mon, Jan 5, 5:45 p.m. Inappropriate


my only hope is that when the times goes, it takes the PI with it !

Posted Tue, Jan 6, 10:20 a.m. Inappropriate

Tony, you need to go back and re-read my post. It says the promise of severance was made to "some", not all, of the 150 layoffs. In fact, according to the union, 31 laid-off employees were eligible for 20 weeks of severance. As for promising that severance, that was confirmed both by the union and by Fardella's own Dec. 29 letter to the laid-off workers, which says, in part, "It has always been our hope to be able to provide a graduated severance package based on years of service for those Guild employees involuntarily affected by the reduction in force." The letter goes on to say, "We had proposed and expected to do more for those affected individuals, but we are not able to do so because it appears we will be forced to waste the available funds in legal procedings defending our existing provisions under the contract with the Guild." In short, the company promised up to $250,000 in severance to the laid-off employees, then pulled the promise when the Guild wouldn't trade the payments for contract concessions and gave them just two weeks of severance. The Guild posted Fardella's letter on its website, noting, "We would hope the Times would honor their original commitment to pay severance because it's the right thing to do." As for bigyaz's comment--yes, my stuff gets edited. But we're always looking for more good editors. Let me know if you are available.
Bill Richards

richards

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