New Philly newspaper owners push to sign holdout unions as close of bankruptcy sale looms

New Philly newspaper owners seek union contracts

PHILADELPHIA — Creditors who won the bankruptcy auction for Philadelphia’s two largest newspapers are trying to settle the last unresolved union contracts before Tuesday’s scheduled close of the $139 million sale.

Drivers who deliver The Philadelphia Inquirer and Philadelphia Daily News are among the holdouts. They belong to a Teamsters unit that voted overwhelmingly this week to reject the offer from new owner Philadelphia Media Network Inc. Members say they are mostly concerned about the loss of defined pension contributions.

The new owners — a financial consortium led by the hedge funds Angelo Gordon & Co., Alden Global Capital and CIT Group Inc. — have instead pledged a 3 percent match of individual 401k contributions.

Reporters, photographers and other members of the local Newspaper Guild agreed last week to concessions that include a 2 percent wage cut and two weeks of unpaid furlough in each year of the three-year contract. They had lost company pension contributions several years ago.

In return for the effective 6 percent wage cut, the new owners pledged to avoid newsroom layoffs for at least a year.

“Our members are definitely going to sacrifice, but we are interested in seeing that the company survive and that these two papers survive,” said Daily News columnist Dan Gross, president of the local guild.

Chief U.S. Bankruptcy Judge Stephen Raslavich has pressed for the sale to close by Tuesday so the company can emerge from Chapter 11 after an expensive, highly contentious 18-month bankruptcy.

Philadelphia Media would like to have all 14 union contracts signed and in hand before the close, and could walk away from the deal without them. A handful of the contracts remained unsigned Monday.

But the owners could also try for another delay or perhaps proceed with the close anyway, lawyers have said previously.

Messages left with Chief Operating Officer Bob Hall and other company officials and lawyers were not returned Monday.

John Laigaie, president of Teamsters Local 628, which represents several hundred drivers and others, also did not return calls.

The sale is expected to leave the secured creditors of Philadelphia Newspapers — a group of local investors who borrowed heavily to buy the company for $515 million in 2006 — with less than 15 cents on the dollar. Unsecured creditors will get nothing.

Fred Hodara, a lawyer for the new owners, has called it “not feasible” for any new owner to take on the pension plan.

The newspapers have 2,000 full-time and 2,500 part-time employees, most of them unionized workers.