With a financial crunch rapidly approaching, the struggling Seattle Times Co. told some 500 management and non-union employees at its flagship Seattle Times newspaper today that they would each have to take a one-week unpaid furlough by the end of February to help the company raise as much as $1 million.
The mandatory furlough comes on top of three rounds of layoffs at the Times in the last 12 months, including a reduction of 150 jobs this month. The company is also seeking to raise cash by selling five acres of downtown real estate and its Blethen Maine newspaper chain. The Times Co. owes its lenders at least $91 million and is being pressed by a banking consortium led by Bank of New York Mellon to sell both the Maine papers and real estate in South Lake Union to pay down the debt.
'êThere are very few areas remaining in which we can pursue necessary savings,'ê Times senior vice president Alayne Fardella said in a memo to Times staffers. 'êHowever, we must continue to take steps to offset our dire economic situation.'ê
At a morning meeting with Seattle Times managers and non-union employees, Times officials told the group that the South Lake Union real estate sale has not been completed as anticipated. Separately, Richard Connor, who heads Maine Media Investment, which last month agreed to purchase the Blethen Maine chain, told Crosscut that his group is still lining up financial backers and may not be able to meet an end-of-the-year deadline set by the Times to complete the purchase.
The Times Co. had been hoping to save millions in taxes by offsetting a taxable gain from the real estate sale in Seattle with a loss from the Blethen Maine sale, according to people involved in the Maine negotiations. The Times Co. bought the Blethen Maine chain a decade ago with $230 million in borrowed cash and still owes a portion of that debt and additional cash it had to borrow last year to settle a legal dispute with the Hearst Co., owner of the Seattle Post-Intelligencer.
But Connor, who is publisher of the Wilkes-Barre, Pa. Times Leader, said his group is still seeking backers for the Maine deal. So far, he said, Maine Media Investment has received informal commitments from two Maine banks to take on senior debt for the financing and is seeking backing from a third local bank and a private lender located outside the state. Connor said 'êthe hill was made steeper'ê by recent developments in the newspaper industry, including a bankruptcy filing this month by the Tribune Co., owner of the Los Angeles Times, Chicago Tribune and other large dailies, and news that The New York Times had borrowed against its recently completed New York headquarters to raise cash. 'êThe credit markets are so unstable and volatile right now,'ê he noted. 'êWe still like our chances" of meeting the year-end deadline, Connor said, 'êbut this thing is going to go right to the wire.'ê
Connor'ês investment group 'êhas no plan B'ê if it doesn'êt meet the deadline, he said, but would continue to negotiate to purchase the chain from the Times Co. The group includes former Defense Secretary William Cohen, Robert Baldacci, brother of Maine Gov. John Baldacci and a local developer, and is supported by the Portland Newspaper Guild, which represents about 350 Blethen Maine employees. 'êWe like the position we are in,'ê Connor said.
Times Co. officials have warned they might have to shut down the Maine papers, which include the Portland Press Herald, the state'ês largest paper, and dailies in Waterville and Augusta, if it cannot complete the sale. That could work to the Connor group'ês advantage since a shutdown and sale of the Blethen Maine chain would allow the group to purchase the chain'ês assets, sell its real estate, and re-open the papers without existing union contracts, which have three more years to run.
In her memo, Fardella told Seattle Times staffers the company is in 'êa long and difficult fight for our survival.'ê She said the Times had considered reducing pay and more layoffs but had chosen one-week unpaid furloughs as its best option to cut costs. Fardella said Times employees would be required to take the time off now because 'êthe company needs to achieve the cost savings'ê¦in the first part of the year.'ê Fardella said Times officials will be discussing additional cost-cutting measures with the company'ês unions after Jan. 1.
A Times Co. spokeswoman was not immediately available for comment on the furloughs.