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Debt-laden Times may close Globe

WHEN it bought the Boston Globe for a record US$1.1 billion in 1993, the New York Times Co added one of the nation's most acclaimed and profitable newspapers to its empire.

But analysts say the 137-year-old Globe has been a money-loser in recent years, and the Times, now US$1.1 billion in debt, is threatening to shut down Boston's pre-eminent paper unless it gets US$20 million in union concessions.

Faced with the global recession and declining revenues, the newspaper business is reeling - one major paper has already folded this year and several others are seeking bankruptcy protection. But the threat to the Globe, announced on Friday on the Globe's Website, has shocked some industry insiders, who say it shows no one is safe.

"It is a huge warning shot across the bow of the newspaper industry. If this can happen to the storied Boston Globe, pretty much nothing is safe," said Boston University communications professor Tobe Berkovitz.

Of the major dailies that have gone down, none has the cachet of the Globe, Berkovitz said.

The threat to close the paper "sends a very clear message to all employees and unions of surviving newspapers - that this is not business as usual," said Ken Doctor, a media analyst with the research firm Outsell. "This is uncharted territory."

The Times bought the Globe in 1993 for US$1.1 billion - the highest price ever for a single American newspaper - getting one of the country's most respected papers. The Globe has won 20 Pulitzer Prizes and has been lauded for some of its work, including its coverage of Roman Catholic clergy sex abuse scandal.

Circulation falls

But since its purchase, the Globe has gone through several rounds of layoffs and buyouts. As readership shifts to online news, the newspaper's average weekday circulation fell 10 percent to 323,983 for the six months ended on September 30, compared to the same six-month period in 2007, according to the Audit Bureau of Circulations.

Advertising revenues industrywide have plunged by more than 16 percent in 2008, according to the Newspaper Association of America.

Newspapers all "have a sword over their heads," said Doctor. If the industry wants to survive, he said, "everyone has to give some blood."

The Globe reported the Times' demands a day after executives from the Times delivered its ultimatum to leaders of the Globe's 13 unions. Boston Newspaper Guild President Daniel Totten told the Globe the concessions could include pay cuts, the end of company pension contributions and the elimination of lifetime job guarantees. The guild is the Globe's biggest union, representing more than 700 editorial, advertising, and business employees.

But some say the Times' threat may be a negotiating tactic as it strives to shed its debt, which stood at US$1.1 billion at the end of 2008. It recently sold 21 floors of its new midtown Manhattan headquarters building for US$225 million, asked most employees to accept a 5-percent pay cut through the end of the year and secured a US$250-million infusion from a Mexican billionaire by agreeing to pay an abnormally high interest rate of 14 percent in addition to giving him potentially valuable stock warrants.

"We're a long way from a newspaper that needs to be shut down. I think it's a bargaining strategy," said Alan Mutter, a former journalist-turned-entrepreneur who writes a blog called Reflections of a Newsosaur. He said he doesn't think the Globe is in imminent danger of folding.

Doctor said the Times' threat to close the Globe parallels what Hearst Corp did with the money-losing San Francisco Chronicle, threatening to shut it down barring concessions. Chronicle staffers took 120 buyouts last week, but the paper's seeking 150.

Elsewhere, Scripps Co stopped publication earlier this year of Colorado's oldest newspaper, the Rocky Mountain News, in Denver. Major newspaper companies that have filed for bankruptcy protection in recent months include the owners of The Philadelphia Inquirer, Minneapolis Star-Tribune, the Chicago Tribune and the Los Angeles Times. Newspapers like the Seattle Post-Intelligencer and another venerable Boston publication, The Christian Science Monitor, stopped daily publication in favor of online news.

Matt Storin, who was the editor of the Globe when the Times purchased it, said he was shocked and saddened when he saw Friday's headline. The threat to close it "is obviously a negotiating tactic, but one that has to be taken seriously," said Storin, who now teaches journalism at Notre Dame University.

"I do think it's obvious that the Times would like to get the Globe off its books," he said. "It's possible they're trying to reduce costs because they have a prospective buyer who is negotiating on that basis."


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