Star plans more cuts as Gannett profit falls-WEB ONLY

Officials of the union that represents about 200 Indianapolis Star employees have negotiated a contract that seeks to avoid further layoffs at the struggling newspaper in exchange for a 12-percent pay cut for the workers.

The Indianapolis Newspaper Guild bargaining committee last night passed the plan from Star parent Gannett Co. Inc. on to its membership without an official endorsement. However, it told its members that achieving a better deal would be unlikely without “prolonged negotiations.”

An official with the Indianapolis Newspaper Guild told IBJ that the nine-member union committee agreed – by a slim margin – to pass Gannett’s most recent two-year contract offer on for a full vote.

Guild leaders have been negotiating with Virginia-based Gannett’s management since January, and were told if they didn’t agree to wage cuts, there would likely be more layoffs.

The Star has laid off at least 178 workers across all of its departments since August.

The full union membership is expected to vote on the contract within the next 60 days.

The contract includes an 8-percent pay cut to be instituted July 1 and another 4-percent pay cut to be instituted Oct. 1.

In exchange for their concessions, Gannett management promised – though not in writing – that there would be no more unpaid furloughs and no more layoffs for the next two years.

“The union has only had parts of two days to digest this plan, but our representative from The Newspaper Guild in negotiations, Jay Schmitz, believes that given the current economic climate and the state of the newspaper industry, it is unlikely – without an intense, vocal mobilization campaign – that prolonged negotiations will result in an improved deal,” Guild leaders said in a statement on their Web site.

Gannett, the nation’s largest newspaper publisher, reported a 60-percent drop in first quarter profit compared to the same period a year ago. Gannett management blamed the drop on decreased advertising revenue. Gannett revenue fell 18 percent, to $1.38 billion, during the quarter.

The company, however, surprised some Wall Street analysts by meeting projections for the quarter.

“They did a good job managing costs because their revenue was down pretty significantly,” Edward Atorino, a New York-based analyst at Benchmark Co., told Bloomberg News today. “Gannett’s results weren’t worse than expected and, in this environment, that’s a good thing.”

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.