A story in today’s Philadelphia Inquirer bore some mildly disturbing news: Onex Corp., a Canadian investment company that is one of at least six bidders for the Inquirer and Philadelphia Daily News, “has floated plans for deep cuts in the newsrooms at both papers.”
In an enterprising piece, Joseph N. DiStefano reported that Onex approached Teamsters union leaders seeking “assurance that drivers, pressmen and mailers, in exchange for preserving their own jobs, would not oppose attempts to eliminate hundreds of newsroom jobs.” Onex, DiStefano added, has an “interest in cutting the newsrooms,” which currently employ about 525 journalists, “by half or more.”
In other words, if Onex (bidding with Canada’s Black Press Ltd. and others) gets its hands on the papers — which were already submitted to a wrenching round of job cuts last year before being acquired by McClatchy, which is now looking to sell them again — anyone who cares about Philadelphia journalism might as well throw in the towel.
In a way, that might have become more unlikely, if McClatchy is listening, thanks to DiStefano’s story.
Fortunate for the Inquirer and Daily News‘ reporters and editors, as well, is the gumption that Teamsters leaders showed in refusing any such back-channel deal proffered by Onex. Joseph Molinero, the director of the Teamsters’ newspaper division, told DiStefano that Onex “got the message that all the unions are together” when it comes to dealing with the papers’ new owners. Which is a little surprising all by itself, given the on-again, off-again history of tension in Philadelphia between the Teamsters and the Newspaper Guild, which represents newsroom staffers. Perhaps the Teamsters got pragmatic and concluded that the way to help themselves is to help the newsroom. If the print papers can remain robust, both financially and journalistically, even as they move more and more onto the Web, those Teamsters pressmen and drivers will actually have a product to produce and deliver.
For their part, Onex officials declined to comment. In a letter to the Teamsters following their refusal, however, “Onex managing director Seth M. Mersky wrote that he ‘can’t fully appreciate’ the Teamsters’ concern ‘for colleagues at other collective bargaining units,'” while thanking them for their “candor.” Referring to the Inquirer as the “Enquirer,” Mersky also tried to reassure the union that he wanted to improve the two papers, writing “That is my singular goal.”
Addressing shareholders at the company’s annual meeting yesterday, Onex CEO Gerald Schwartz said that newspapers are “under attack” but could still be good investment opportunities, a story in Canada’s Globe and Mail reported:
“The case for buying a newspaper is that you have to have a situation where there is an opportunity for that paper to do much better than it has in the past, even though it is facing an overall decline,” Schwartz said. “There are some newspapers in the U.S. that are under-managed, that have specific issues that if they could be solved could be turned around.”
But with Onex itself not doing so hot financially — more than 90 percent of its profits last year came from the sale of investments, according to DiStefano, while five of the six groupings of companies it invests in lost money — it is singularly difficult to see what improvement could come from its apparent strategy of massive cost-cutting, other than milking the assets of the Philly papers for all they’re worth.
If metro daily newspapers are to save themselves, they will do so through owners who will invest in them for the long haul. That means settling (in the short term) for the still-substantial profits papers are capable of bringing in, while discovering new ways to boost online revenues — and it means growing the product that newspapers can offer readers and advertisers, not gutting it.
Bids for the two papers are due Tuesday, with Ronald Burkle’s equity firm Yucaipa Companies, MediaNews Group, the New York Daily News‘ parent company and a Philadelphia investor group all reported to be in the running.
“We care who we sell to,” Gary Pruitt said on the day in March when McClatchy announced its purchase of Knight Ridder’s 32 papers and revealed that it would promptly resell 12 of them. “We think newspaper companies are out there that can do well by these papers.”
We believed Pruitt when he said that — but based on what we now know, it would be all but impossible to believe him if he seriously entertains an offer from Onex to buy the Inquirer and Daily News.
Gut-check time, Gary.
Edward B. Colby was a writer at CJR Daily.