Philadelphia Newspaper Guild negotiators agree to contract terms with wage concessions

Union leaders representing reporters, editors and advertising salespeople at the

Daily News

and

Inquirer

agreed yesterday to accept 2 percent wage cuts and 10 unpaid furlough days after new owners take over in a pending bankruptcy reorganization.

If approved by the union membership of about 515 full- and part-time workers, the Newspaper Guild would be among the first of the papers' 14 bargaining units to agree to contract terms with the new owners, a group of hedge funds and other financial institutions that agreed in April to pay $105 million in cash to buy the newspapers and Philly.com.

Leaders of the Mechanics Union, a bargaining unit of 20-some people who maintain company trucks, also have reached a tentative agreement, and four other units are close, said Bob Hall, chief operating officer and lead negotiator for the new owners.

"We've made good progress," Hall said. "It's hard work on both sides because there are substantial concessions involved. . . . It's a painful situation but one that's needed to get the newspapers out of bankruptcy and put them on a firm financial foundation for the future."

None of the parties have specified any bargaining deadlines, but the newspapers' current chief executive, Joseph A. Bondi, testified yesterday in U.S. Bankruptcy Court that the papers will run out of money in September if the transfer is delayed.

Bondi said the new owners are hoping to complete negotiations with all the unions "in August or sooner."

The proposed agreement between the new owners and the Guild would be a three-year contract, with a possible raise in the third year depending on the company's overall profitability.

Guild members would be protected from involuntary layoffs for the next year, though there could be workforce reductions through attrition.

A group of 26 nonunion workers now employed at Philly.com would become a separate unit with Guild representation.

The 2 percent wage cuts would be effective when the new ownership takes over; the unpaid furlough days would begin in 2011. The agreement would also lengthen the workweek from 37 1/2 to 40 hours.

The new owners would make no contributions to the Guild's existing defined-benefit pension plan, but they agreed to match half of union members' contributions to 401(k) plans, up to 3 percent of total salaries.

In a related development, the federal judge presiding over the Chapter 11 bankruptcy reorganization refused a request from several unions to delay the sale while the unions appeal the handling of projected deficits in union pension funds.

Chief U.S. Bankruptcy Judge Stephen Raslavich approved a confirmation plan last month that would treat most of the unions' pension claims as unsecured debt, to be settled for pennies on the dollar when the new owners take over. The unions claim pension-fund losses of at least $174 million.