GateHouse Media Restores Pay at New England Papers

By: E&P Staff Claiming that its cash flow is strengthening, GateHouse Media Inc. is reversing the pay cuts it imposed at its New England newspapers this summer.

In a memo to employees, New England unit CEO Rick Daniels said most non-union employees who took pay cuts in July would receive their full salaries starting with their Oct. 23 paycheck. Pay cuts taken by unionized employees will be reversed according to terms of the contracts, Daniels said.

GateHouse cut salaries at its New England papers in June and July by between 7% and 15%, depending on salary level. The Fairport, N.Y.-based chain said at the time the pay reductions avoided shedding 100 jobs.

"We are in a position to restore the cuts because GHMNE (GateHouse Media New England) is again generating sufficient cash flows to be clearly and safely in the black," Daniels told employees. "If you remember, when we announced these cuts, I said there were two kinds of companies: Those that produced positive cash flow, and those that didn't, and we could not allow ourselves to be among those that didn't."

But Daniels warned the newspapers, which include The Patriot Ledger in Quincy, Mass., are still hurting from the economy. Advertising in particular is not "improving all that much," he noted, and advertisers are struggling.

Further cost-cutting is likely as the chain continues to "evaluate all aspects of our operations" to ensure efficiency, he suggested.

"For the most part, most of our cash-flow improvements are being generated by very stringent spending reductions, NOT a rapid return to great revenue performance -- although there has fortunately been some strengthening in revenue comparisons vs. the year over year declines we experienced earlier in the year," he said.

But restoring the pay cuts was a "major relief" for the company and its employees, he added.

"Ending these cuts is not only a major relief for all of us, but it's also an important affirmation of our business model, and an affirmation of the quality and effectiveness of our collective efforts, and the results we have been able to generate," Daniels wrote.