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Star Tribune: Revenue falls 33 percent, or $100 million, in just two years

The Star Tribune, which grossed $303 million in 2007, is expected to bring in a staggering $100 million less this year, according to a bankruptcy court filing.

The paper’s David Phelps broke the story Thursday night, highlighting ownership’s request to abrogate its pressmen’s contract. That Teamsters local has been the most recalcitrant; its refusal to take double-digit wage cuts and changed work rules last summer upended concessions Teamsters drivers and mailers were willing to take. The three locals agreed to hang together on any givebacks.

Looking at the Strib’s survival plan — which would carve out a $30-million-plus profit on a projected $203 million in revenues — it’s not hard to see why the pressman would object. As Phelps notes, the proposal asks them to take $6-$12 wage cuts (roughly $12,000 to $24,000 a year), or between 23 and 50 percent of their salaries.

Unlike other Strib employees, the pressmen have so-called “manning” rules guaranteeing crew size, which makes it harder to cut jobs. (Though not impossible, especially as papers shrink: the Strib laid off 19 workers after the summer concession rejection.)

Assuming ownership isn’t overstating the revenue drop as a negotiating ploy, the paper’s post-bankruptcy profit margin would be at least 15 percent (at least $32 million on that $203 million in revenues). That would be enough to service restructured debt, ownership maintains. (Without union concessions, the Strib says, its profit would be about $3 million.)

But with revenues falling this fast — and the economy getting worse — how long could even this new plan work? Phelps says creditors have demanded an April deadline on labor concessions — but we haven’t yet seen how big a haircut creditors are willing to take. If the paper is truly to survive, the razor should slice close.

Comments (6)

  1. Submitted by scott schultz on 02/20/2009 - 09:02 am.

    Please name me a media in this market that is not seeing significant revenue shortfall in this era. And please use percentages (up or down).

    $100 million is a lot, but the revenues for the newspaper are far higher than other media. It would not be fair to compare the Stribs revenue shortfall to those of smaller media. Even though the smaller media is in the same ‘precarious’ situation. I would focus on Clear Channel radio for starters, as well as ADVO in this market.

    Secondly, newspaper pressmen need to ask themselves this question – who wants them? They can storm out of any negotiations, and let the paper fall. Where they going to go in this economy?

    You can scream that AVISTA assumed too much debt. I thought it was stupid to spend a trillion in Iraq. But there you are. Deal with it. Cutting your salaries to save your job is the right move for now. Go to school for another career. THEN change jobs in a couple of years when the economy changes.

  2. Submitted by dan buechler on 02/20/2009 - 10:30 am.

    scott, you are correct I learned of another 2 former colleagues who were let go and they both were highly educated individuals but made 60% of what a pressman is paid.

  3. Submitted by john smith on 02/20/2009 - 02:57 pm.

    Hey mr.schultz why would i vote myself out of a job.Thats right they want to layoff 24 and im one of them,plus the 19 they laid off in October.They want two weeks of our vacation taken away,our health insurance will go up 350.00 a month on top of the $6.00 per hour pay cut.we are 35 hour work week.pension freeze,no ot until after 40 hours.So that means we can work 2-3 shifts in a row for straight time,with no sleep(real healthy no sleep).If they are losing so much why havent the 13 vps taken a pay cut,they got a freeze,I’ll take that.Just so you know the pressman plan on a pay cut BUT there is than just a paycut.This was there plan in the beginning get rid of the unions,thats why the didnt pay cash.They bought Boston Scientific,cash and Bristol Meyers cash,we are talking billons.Drivers, mailroom they want $13.00-$15.00 hour pay cut,scott you take a 50 percent cut and tell me how well you will survive.AND VOTE YOU OR SOME OF YOU FRIENDS OUT OF A JOB

  4. Submitted by dan buechler on 02/20/2009 - 05:55 pm.

    John, part of me feels for you but when a job is lost you lose 4 weeks of vacation, your health insurance goes up 1500/month, most people don’t get overtime after 35 hours, some don’t get it even after 40. More people than you will ever know have already taken a 50% pay cut. I am not mad at you and wish you the best. I’m not living on a large ranch somewhere I got me a small house
    two kids and a wife. If I or someone could give everyone health care without being indigent I would also pray for their success.

  5. Submitted by Joe Musich on 02/20/2009 - 10:42 pm.

    Are the Strib reported number accurate ?
    What’s the impact of lost readership ?
    If the lost readerhip numbers are high what are the reasons people left as done by survey ?
    Is it all a consumer economy dependency “hitting bottom ?”
    The worker is getting screwed !

  6. Submitted by Richard Parker on 02/24/2009 - 12:44 am.

    Please remember, or learn, that the reason for the manning clause is safety. The pressmen work in an environment where a machine can rip an arm off. They’re expected to coordinate their skills with the extreme speed and efficiency of the presses in getting papers out to the readers. Maybe it’s a moot point whether that’s even worth it anymore (long-term viability of print media), but we don’t want to return to the days when packinghouse workers, coal miners, etc., were expendable, do we?

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