Updated September 1 at 7:01pm

ProJo buyer has contract leverage

By Patrick Anderson
PBN Staff Writer

The pending sale of The Providence Journal to a sprawling national newspaper chain whose past acquisition frenzy drove it into bankruptcy caused many local observers to scratch their heads.

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UNIONS

ProJo buyer has contract leverage

Posted:

The pending sale of The Providence Journal to a sprawling national newspaper chain whose past acquisition frenzy drove it into bankruptcy caused many local observers to scratch their heads.

If current owner A.H. Belo Corp., another national chain, couldn’t stomach declining circulation and revenue at Rhode Island’s largest newspaper, what would make Gatehouse Media Inc. and its parent New Media Investment Group any different?

But even though Gatehouse won’t take over the Journal until the third quarter and has said little about where it intends to take the paper, ways it might be more valuable to its new owner are already emerging.

In an asset-purchase agreement filed with the federal Securities and Exchange Commission, the new owners indicated they do not intend to honor the existing collective-bargaining agreement between the Providence Newspaper Guild and Belo.

When the sale closes, Gatehouse will choose which current Journal employees it wants to take on and will offer them jobs under new terms, not those spelled out in the union contract, according to the asset-purchase agreement.

Up to 40 existing employees that Gatehouse does not want to keep on at the Journal will be let go under Belo’s ownership and severance plan. Gatehouse will still reimburse Belo for the severance costs of those layoffs, but the employees will be protected from receiving a severance under Gatehouse’s terms, which would presumably be less generous.

Gatehouse’s ability to void the CBA points out an inherent financial advantage new buyers have operating a legacy news operation from longtime holders, and is likely one reason papers have changed hands so frequently during this period of industry decline and upheaval.

The Providence Newspaper Guild’s current one-year contract with Belo ends at the end of the year, but if Belo wanted to extract concessions in the next deal, it would have to negotiate them from the starting point of the existing contract. Throwing out the whole deal completely could bring an unfair-labor-practices complaint.

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