‘Star-Ledger’ Seeks 200 Buyouts, Threatens Sale if Not Reached

By: Joe Strupp

The Star-Ledger of Newark, N.J., today announced what it is calling a “large-scale buyout” for all non-union workers that seeks to cut staff by 200 employees, according to a Web story. The Advance Publications daily also hinted the paper could be sold if the cutbacks are not completed by October.

If 200 employees do not agree to the buyout and if the paper cannot reach agreements with unions representing drivers and mailers meant to reduce costs, the paper will be sold, Publisher George E. Arwady told the paper. The deadline for reaching both of those targets was Oct. 1.

The Star-Ledger has approximately 750 employees. The buyout, to be detailed to staffers this week, includes one year’s salary (based on a staffer’s 2007 income as reported on their W-2) and continuation of medical benefits for one year.

Arwady told employees today that Advance Publications had retained JPMorgan Chase to assist in planning a sale.

“Although we have implemented a variety of plans to reduce expenses and create new sources of revenue, our financial picture continues to deteriorate. We simply have been unable to offset the unprecedented and continuing steep decline in advertising revenue,” Arwady said in a letter sent to staffers.

Advance also threatened to sell its The Times of Trenton unless 25 staffers there take buyouts, that paper’s publisher, Richard Bilotti, said in a separate letter to staff.

The Star-Ledger story adds that “the offer comes at a time when the newspaper industry is reeling from plunging advertising revenues linked to a troubled economy and sea changes in the way information is disseminated.”

The story states the “offer was announced to grim-faced employees by Arwady at the paper’s headquarters in Newark. He characterized the paper as being ‘on life support’ and urged employees to consider the offer for the good of fellow employees.”

“This is a matter of simple survival,” he told the paper.

The buyout announcement comes just days after Advance revealed plans to close its Newhouse News Service in Washington, D.C., in November.

The full text of Arwady’s letter follows:

——–

July 31, 2008

To: Full-time, non-represented employees:

I have communicated with you several times about the heavy financial losses our Newspaper has been suffering. Although we have implemented a variety of plans to reduce expenses and create new sources of revenue, our financial picture continues to deteriorate. We simply have been unable to offset the unprecedented and continuing steep decline in advertising revenue. Therefore, we now have a genuine crisis. The situation is critical ? we are currently on life support.

We have one last chance at survival. Two goals must be achieved. Getting one only will not be enough ? we must have success with both of these objectives:

1. New agreements must be reached with the unions representing the Mailers and the Drivers for the economic and operational relief we have requested; and

2. A minimum of 200 employees must accept the buyout offer summarized below.

It has been decided that if agreement with the two unions and the necessary number of acceptances to our buyout offer are not achieved by October 1st, The Star-Ledger and The Times of Trenton will be put up for sale.

In fact, we have already retained J.P. Morgan Chase to help us plan a sale as well as to evaluate other strategic alternatives.

If a sale occurs, the buyer will likely consider cutting costs sharply by, among other things, laying off employees, reducing pay and eliminating expensive employee benefits. It is also likely, if our Newspaper is sold, that the buyer would not be obligated to adopt the pay, benefit and work rule terms in the current collective bargaining agreements. I strongly urge you to carefully consider the current situation we are in as you review the terms of the voluntary buyout offer.

Our buyout offer is explained in detail in the papers that are being delivered to you this week. In summary, its generous terms include:

1. The amount of your 2007 income as reported on your 2007 W-2; and,

2. Continuation of medical benefits for one year.

After the time for accepting this offer has expired, and if we satisfy the goals outlined above, we will carefully compare our staffing needs with those employees who have not accepted the offer. Then we will make appropriate decisions regarding assignments and scheduling. This means that it is possible that employees will be asked to take on additional duties, transfer to another job or location, work in another department, or work different hours. We will not know the details of how the assignments will work and where the employees will be assigned until we know exactly how many employees accept the offer. Once we have that information, we will review staffing and make appropriate decisions.

Your managers will meet with you individually over the next few weeks to discuss your individual situation.

It is not easy to come to grips with such a bleak situation, but I know you want me to be direct and candid with you. In evaluating your response to the buyout offer, you may want to discuss this situation with members of your immediate family, explaining to them that a decision has been made to sell our newspaper if both of the goals explained above are not accomplished by October 1. Remember, if fewer than 200 full-time non-represented employees accept the offer, and we do not receive the concessions from the unions, no buy-outs will be accepted.

In large part, the future of The Star-Ledger is in your hands.
Sincerely,

George Arwady

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