Anthony Schoettle, The IBJ
aschoettle@ibj.com
Officials of the union that represents about 200 Indianapolis Star staff members last night agreed to what amounts to a 12-percent pay cut this year in contract negotiations with the newspaper's struggling parent company, Virginia-based Gannett Co.
An official with the Indianapolis Newspaper Guild told IBJ that nine union leaders agreed - by a slim margin - to accept terms of Gannett's most recent two-year contract offer.
Guild leaders have been negotiating with Gannett management since January, and were told if they didn't agree to wage cuts, there would likely be more layoffs.
The full union membership is expected to vote on the contract within the next 60 days.
The contract includes an 8-percent pay cut to be instituted July 1 and another 4-percent pay cut to be instituted Oct. 1.
In addition, the positions of two design editors, a calendar editor and a business editor will be eliminated. Merit raises will be frozen for two years and certain sports beat writers and columnists will not be eligible for overtime.
The Star has laid off at least 178 workers across all of its departments since August.
In exchange for their concessions, Gannett management promised - though not in writing - that there would be no more unpaid furloughs and no more layoffs for the next two years.
"The union has only had parts of two days to digest this plan, but our representative from The Newspaper Guild in negotiations, Jay Schmitz, believes that given the current economic climate and the state of the newspaper industry, it is unlikely - without an intense, vocal mobilization campaign - that prolonged negotiations will result in an improved deal," Guild leaders said in a statement on their Web site.
Gannett, the nation's largest newspaper publisher, reported a 60-percent drop in first quarter profit compared to the same period a year ago. Gannett management blamed the drop on decreased advertising revenue. Gannett revenue fell 18 percent, to $1.38 billion, during the quarter.
The company, however, surprised some Wall Street analysts by meeting projections for the quarter. Analysts hailed the company's cost-cutting measures, and its stock price briefly rose this morning as much as 20 percent.
"They did a good job managing costs because their revenue was down pretty significantly," Edward Atorino, a New York-based analyst at Benchmark Co., told Bloomberg News today. "Gannett's results weren't worse than expected and, in this environment, that's a good thing."