Boston Globe agreement could attract buyer, but may not be cure-all for struggling newspaper

Boston Globe labor agreement could help lure buyer

BOSTON — A new contract agreement between The Boston Globe and its largest labor union could make the newspaper more attractive to potential buyers, but is not close to a cure-all for the Globe as it struggles with readers and advertisers shifting to the Internet, analysts said Tuesday.

The Boston Newspaper Guild overwhelmingly approved a new contract Monday night that gives the Globe’s owner, The New York Times Co., $10 million in annual concessions, including a salary reduction of nearly 6 percent, unpaid furloughs, a pension freeze and the elimination of lifetime job guarantees for approximately 170 employees.

The agreement followed months of turmoil at the Globe, during which the Times Co. threatened to shut down the 137-year-old newspaper and the Guild rejected one proposed set of givebacks. In addition to the concessions now obtained from the Guild, six other unions had already agreed to give up another $10 million in wages and benefits.

Shortly after the Globe reported last month that the Times Co. had hired investment bank Goldman Sachs to manage the newspaper’s sale, a list of potential buyers surfaced, including Boston Celtics co-owner Stephen Pagliuca, Partners HealthCare chairman Jack Connors and Stephen Taylor, a former Globe executive whose family sold the newspaper to the Times Co. for $1.1 billion in 1993.

None of the men returned calls seeking comment Tuesday. A spokeswoman for the Times Co. declined to comment on a potential sale.

While settling the labor dispute may make it easier for the Times Co. to attract potential buyers, a sale remains far from a sure thing. Analysts have estimated the price could be anywhere from just a few million dollars to $100 million.

Like other newspapers, the Globe has watched its circulation and advertising revenues decline as more people get their news online and advertisers find less expensive options on the Internet. The Globe had $50 million in operating losses in 2008 and was on track to lose $85 million this year.

“A newspaper that is forecasted to lose $65 million this year instead of $85 million isn’t exactly that much more attractive,” said Fitch Ratings media analyst Mike Simonton.

“This is really the first baby step toward reconfiguring their cost structure into something more sustainable, something that reflects the reality of the prospects for newspapers going forward,” he said.

Tobe Berkovitz, a professor of communication at Boston University, said the elimination of lifetime job guarantees makes the Globe “potentially sellable” because any buyer could now have an easier time making staff cuts.

“I think the Globe will be sold. … The question is, how bad a beating will The New York Times take? And more importantly, how bad a beating will the current staff at the Globe take?” Berkovitz said.

Bob Powers, a spokesman for the Globe, said the newspaper has taken other steps to reduce costs, including closing a printing plant in Billerica last month and increasing its newsstand and home delivery prices.

Powers would not comment on a potential sale, but said there is a “fair amount of relief” that the Guild labor contract has been settled.

“I think the feeling here is a great desire to move forward and focus on what is our core mission — great journalism and service to our advertisers,” he said.

Some analysts said the Globe might still attract a local buyer because of its strong reputation.

“The Boston Globe is very important to Boston, and I could see a group of community leaders trying to attract a private equity firm, or people just going in together to buy it,” said Gary Chaison, a professor of labor relations at Clark University in Worcester. “There are risks involved, but I think the collective bargaining agreement takes one of the major risks off the table.”