Advance to possibly sell Star-Ledger

July 31, 2008 6:00:49 PM PDT
Advance Publications Inc. will sell The Star-Ledger of Newark unless 26 percent of staff accept buyouts by October, the company told employees in a letter Thursday. Star-Ledger publisher George Arwady said that if 200 of the paper's 750 full-time employees do not apply for a buyout by Oct. 1, and if the company does not get new agreements from unions representing its mailers and drivers, the New Jersey paper will be sold.

"The situation is critical - we are currently on life support," Arwady said in the letter, a copy of which was obtained by The Associated Press.

The paper has posted losses for at least three straight years and is on pace to lose between $30 million and $40 million in 2008, Advance Chief Executive Donald Newhouse said.

Advance will also sell sister paper The Times of Trenton unless 25 staff accept buyouts, the paper's publisher, Richard Bilotti, said in a separate letter to staff.

It is unclear how many people work at the smaller paper in the New Jersey capital.

"Although we have implemented a variety of plans to reduce expenses and create new sources of revenue, our financial picture continues to deteriorate. We simply have been unable to offset the unprecedented and continuing steep decline in advertising revenue," Arwady said in the letter.

He said the paper had already retained JPMorgan Chase to "help us plan a sale."

The Star-Ledger is cutting costs in other areas, which, together with the cuts announced Thursday, "should place the newspapers by 2009 in a position where they are no longer leaking red ink," Newhouse said.

"We certainly hope that we will get the voluntary buyouts we are asking for," he said. He did not say how much the buyout would cost or how much money the paper expected to save.

The Star-Ledger is not threatening layoffs because of a pledge in the employee handbook that says as long as the paper is published daily, no nonunion employee will be fired for corporate financial reasons. The paper has about 300 non-represented newsroom staff.

"Everybody is a little bit edgy, a lot of people are huddled talking about what they want to do," said one newsroom employee who spoke on condition of anonymity because she was not authorized to speak publicly.

The person said the newsroom was "dead quiet" when Arwady made the announcement.

"It's grim," she said, "But it's a newsroom, so there's lots of gallows humor, too."

Across the country newspapers have made almost daily announcements of job reductions, production cuts and subscription price increases as publishers try to trim costs to offset steep declines in revenue.

The buyout would pay severance equal to an employee's 2007 annual pay plus one year of health benefits. Those terms would apply to all staff, regardless of seniority.

Star-Ledger staff do not pay for health care, and have both a defined-benefit pension and 401(k) retirement plan.

"They've been remarkably good to us," the Star-Ledger employee said.

Earlier this week, the publisher said it will close the Newhouse News Service in Washington in November.

Advance, controlled by the Newhouse family, owns 26 daily newspapers, including The Oregonian in Portland, Ore.; The Plain Dealer in Cleveland; and The Times-Picayune in New Orleans. It also owns Conde Nast Publications, the second-biggest magazine publisher in the country.

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