Coincidence or cause?
Most of the Knight Ridder dailies McClatchy is selling off are union papers
McClatchy has had a long and tumultuous history with unions, so perhaps it’s not surprising that of the 12 major Knight Ridder papers that McClatchy is selling off, nine have contracts with media unions. Of those McClatchy kept, only one was union represented, and its contract covered only the editorial staff, said Linda Foley, president of the Newspaper Guild, a union covering more than 34,000 members of the media in the United States and beyond.
“They’re not keeping the ones with strong unions,” said Foley.
“I think McClatchy had a long and benevolent relationship with the unions until the late ‘70s,” explained Doug Cuthbertson, executive officer with the Northern California Media Workers Guild. That’s when a strike at the Sacramento Bee fractured the peace and sent the unions and McClatchy management diving to opposite corners. After years of contentious negotiating and accusations of union-busting, the unions and McClatchy reconciled. But the union never regained its former strength.
In a press release, McClatchy attributed the sale of these 12 papers not to union contracts but to simple economics: “McClatchy intends to divest 12 Knight Ridder newspapers, mainly located in cities that do not fit the company’s longstanding acquisition criteria, chiefly involving growing markets.”
But William Dean Singleton, owner of MediaNews Group, claimed to be buying four of those 12 papers because of their growth potential: “Given the growth characteristics of these newspapers … we believe this transaction represents a wonderful opportunity at a fair price.”
“Obviously, McClatchy’s requirements are very different than MediaNews',” said Christina Stenson, McClatchy’s spokesperson for the Knight Ridder deal.
“We do not sit down and say which are union papers and which are non-union papers,” said Howard Weaver, McClatchy’s vice president of news. The company looks instead, he said, at everything from a region’s household growth rate to its retail-sales rate to its education levels when deciding which papers to buy or sell. He said he hadn’t paid much attention to whether the company was selling off union papers because union representation wasn’t a major consideration. “If it’s true,” he said, “that’s an artifact of other criteria.”
If union representation were a deal breaker, then McClatchy wouldn’t have bought its largest paper, the Star Tribune in Minneapolis, said Weaver, where approximately 60 percent of the staff is under contract.
But profit certainly was a priority, as Stenson confirmed, and analysis by Morgan Stanley showed that the union papers had lower profit margins than the ones McClatchy kept. The St. Paul Pioneer Press had an estimated operating profit of 10 percent for 2005; the San Jose Mercury News was estimated at 8 percent.
Before the sale to MediaNews Group, the Newspaper Guild actually had hoped to beat other buyers to the punch and secure the purchase of all 12 papers in a deal that would not only preserve strong union representation but also take it one step further, to employee ownership. The Newspaper Guild hired consultants to find a buyer who could write one big fat check for all 12 papers, explained Luther Jackson, executive officer of the San Jose Newspaper Guild.
“Several months later, employees would be given the opportunity to take a stake,” said Jackson. If enough decided to roll a portion of their 401(k)s into company stock, the new company would earn tax credits, and employees would earn a larger voice in the running of the company. “Maybe even a seat on the board of directors,” said Jackson.
Not all employees embraced this idea. Griff Palmer, database editor for the San Jose Mercury News and secretary-treasurer of the San Jose Newspaper Guild, said there was “a mixed reaction within the newsroom,” with some employees convinced the paper would be “more economically secure under Singleton.”
The Guild’s advisers did find an investor with deep enough pockets to write that one check. Ron Burkle’s Yucaipa Companies started with supermarkets but has expanded over the years. Yucaipa bid $2.2 billion for all 12 papers, according to Palmer, but “had the sense early on that McClatchy was trying to shut them out.”
McClatchy went with MediaNews Group’s $1 billion bid for four papers, including the Mercury