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Newspaper union brings in mediator

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PHILADELPHIA (AFX) - In a sign that union contract negotiations aren't making much headway, a federal mediator stepped in this week to find common ground between the new owner of the city's two major daily newspapers and its unions.

With contracts expiring on Oct. 31, unions representing employees at The Philadelphia Inquirer and Philadelphia Daily News are negotiating on a slew of issues that include layoffs and a proposal to merge the two newsrooms. A federal mediator is called in when communication breaks down.

"In the name of wanting flexibility, they have not been willing to negotiate," said Henry Holcomb, president of the Newspaper Guild of Greater Philadelphia and an Inquirer reporter.

Jay Devine, a spokesman for Philadelphia Media Holdings LLC, said management's goal is to settle contracts with all its unions by the end of October. Of the company's 12 unions, four have struck tentative deals with the new owners, an investment group led by Brian Tierney.

Holcomb said management is proposing to freeze and take over the pension fund, which the union believes would diminish retiree benefits. Management said in a negotiation bulletin that employees enjoy a better-than-average pension fund. If benefits are left untouched, the new owners' pension obligations could rise to as much as $13.8 million in 2010.

"Unfortunately, the company just cannot support these costs if we are to survive long term," according to the bulletin.

Other issues under contention include sick day benefits, worker seniority and use of freelance writers. Holcomb said a plan to merge the papers' newsrooms hasn't been well thought out.

John Morton, an independent newspaper industry analyst in Silver Spring, Md., said newsroom mergers are common when one owner has two newspapers in the same city.

"Merging news departments was typically the first step to going down to one newspaper," Morton said.

Last week, management told employees that layoffs are unavoidable because advertising revenue is down and the owners need to cut costs to meet bank obligations. Cash flow fell from $100 million in 2004 to $76 million last year and is project to dip below $50 million for 2006.

Management and union officials don't yet have a count of proposed job cuts. The company has 2,460 employees. Through buyouts last year, the Inquirer reduced its editorial staff by about 15 percent, from 500 to 425, and the Daily News cut its editorial staff 19 percent, from 130 to 105.

An investment group made up of Tierney, luxury homebuilder co-founder Bruce Toll and other local investors bought the two dailies, their Web site and sister properties from McClatchy Co. in June in a deal valued at $562 million.

Devine, a spokesman for Tierney, said advertising environment has gotten worse.

Morton agreed, saying it's "undeniable that the newspaper business, starting in July, has really gotten worse."

"It has to do with retailers apparently being concerned that retail sales aren't as strong as they could be. ... It has put almost all newspapers under some pressure," Morton said.

One area management wants to beef up is online -- there's a proposal to boost pay of Internet journalists. That's part of a trend too as papers seek good talent, said Colby Atwood, president of Borrell Associates in Portsmouth, Va., a firm that helps media companies with Internet strategies.

In March, McClatchy announced it would acquire Knight Ridder Inc. but sell 12 papers, including both Philadelphia dailies, largely because they were not located in rapidly growing markets. Copyright 2006 Associated Press. All rights reserved. This material may not be

Copyright 2006 AFX News Limited. All Rights Reserved.

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