By: George Garneau
Providence Newspaper Guild members and their supporters marched in the spring in protest of management’s stance in contract negotiations. sp.
A UNION NEGOTIATING with a privately-owned newspaper company has no way of knowing how profitable the company is ? a blindness that weakens the union’s bargaining position.
With that in mind, the Providence Newspaper Guild earlier this year bought a stake ? actually just one share ? in closely held Providence Journal Co. That piddling ownership entitles the union to a wealth of information, everything, in fact, that the company tells shareholders about its performance.
Plus, the union gets the right to attend shareholder meetings, which is just what it did last April when it sent a representative to hear publisher/CEO Stephen Hamblett report on the company’s financial performance to more than 100 other shareholders and company officers.
Gregory Smith, Journal-Bulletin assistant business news editor and Guild treasurer, took notebook in hand and listened to the company’s financial secrets, or at least the basic results the company reports, which is less than publicly traded companies are required to tell the public.
According to company reports, Providence Journal Co. reported a net loss of $21.1 million last year on revenues of $353.7 million. The loss was attributed to the acquisition of a cable company. In 1992 it reported net income of $10.1 million.
The newspaper division, essentially the Journal-Bulletin, posted 1993 revenues of $125 million, up 4% from a year earlier and the third straight annual increase since the 1989-91 recession. The company does not break out profits of operating segments.
Hamblett told shareholders that a small gain in ad revenues would bring the paper back to the heady profit margin’s of the 1980s but that cost control would spell the difference.
“The message delivered behind closed doors by Hamblett at the annual meeting was considerably more upbeat than that delivered to employees, who have been told to tighten their belts,” Smith wrote.
“For years people have been saying we should buy stock in the company but we never had the chance,” said Frank Santafede, an editor and president of the Guild local.
Santafede said the union found out ? through a chance discussion on a bus between a union member and a stock broker ? that 138 Providence Journal Co. shares were for sale for $9,000 each as part of an estate sale. He said the company, which has the right of first refusal, offered about $8,600 a share ? an offer the brokerage refused.
The union negotiated to buy one share for about $9,100, including fees.
For the company ? amid a mounting dispute with the Guild ? it was like the enemy sitting in on a family gathering.
“What a scene it was,” Smith said. The company brought in “extraordinary security” ? including a flotilla of city police and private security guards ? for the April meeting at its downtown headquarters.
Even though the union cleared his attendance in advance, Smith rode upstairs in an elevator with the head of company security.
The company made no effort to deter his appearance or to challenge the union’s stock acquisition, however.
While not a new trick ? the Newspaper Guild international union has for years held stock in most publicly held newspaper companies ? it is the first time Guild research and information director David Eisen could recall a local buying stock in a closely held company. Eisen said stock ownership gives the union corporate intelligence and a voice at shareholder meetings.
“The more information we have, the more effective we can be as a bargaining agent,” Eisen said. “If the CEO gets his salary doubled when our members are getting their wages frozen, that’s worth knowing.”
The union also has used its holdings to push for such reforms as shareholder confidentiality in corporate voting.
The company’s second quarter earnings report shoes its largest segment in terms of revenue is cable tv, followed by publishing and broadcast TV.
The investment paid off immediately in information, but there is another benefit, however small: dividends. The Providence Guild’s share pays $114.40 in annual dividends, or a 1.3% annual return on its investment.