Newspapers' Teamsters reject contract - again

The drivers who deliver The Inquirer and Daily News voted overwhelmingly Sunday to reject a contract offered by Philadelphia Media Network Inc., the prospective new owners of the local papers.

The 191-4 vote by Teamsters Local 628 throws into doubt whether Philadelphia Media will be able to close on its purchase of the papers and the website, Philly.com, by Tuesday's noon deadline. The deadline already had been extended 14 days by Chief Bankruptcy Judge Stephen Raslavich to give the company more time to settle with its unions.

If an agreement is not reached with the drivers, Philadelphia Media has the right to walk away from its $139 million offer for the company. If that were to happen, Raslavich could pursue various options, including ordering a new sale of the papers.

Greg Osberg, chief executive officer for Philadelphia Media, said he was "surprised and disappointed" by the drivers' vote, saying it "put the company at risk."

Lawrence McMichael, lead lawyer for Philadelphia Newspapers L.L.C., the current owner of the papers, said his clients also were "disappointed" by the drivers' vote. He said he was "still hopeful" that a settlement could be reached and that the company could be turned over to Philadelphia Media.

"We want to bring this to closing," he said.

The drivers are the only one of 16 unions not to have reached a contract agreement with Philadelphia Media. Earlier Sunday, the machinists voted, 28-4, to ratify their new contract.

John Laigaie, president of Local 628, said his members remained adamant that the new company continue to participate in a Teamsters pension fund, something Philadelphia Media has declined to do.

"My people are saying, don't mess with my pension," Laigaie said. His members are part of a multiemployer fund covering Philadelphia and the local region, he said.

Osberg defended the company's offer as more than fair. He said the drivers had been offered the opportunity to have a jointly administered defined-contribution plan or to participate in an individual 401(k) program. Under the 401(k) program, the company would match each dollar with 50 cents for the first 6 percent of an employee's contribution.

The company's monthly contributions to either of those plans would equal the current contributions made to the Teamster fund, he said.

Osberg said company calculations showed that the average driver would receive as much or more in retirement under the proposed plan as under the existing Teamsters plan.

If Raslavich ordered a new sale of the property, Philadelphia Media seems determined to make a new offer.

"We are planning to participate in whatever process the court presents to us," Osberg said. "And we will prevail. As a result, the Teamsters will be dealing with us again, but under different negotiating circumstances."

Philadelphia Media is a collection of 16 financial institutions that purchased the local papers and website at auction in April for $139 million. The group includes Angelo, Gordon & Co.; Credit Suisse; and Alden Global Capital. Angelo Gordon and Credit Suisse were among the largest debt holders of Philadelphia Newspapers, the current owner of the papers, which declared bankruptcy in February 2009.

A similar pension dispute occurred in Minneapolis last year, when the Minneapolis Star Tribune, owned by its senior lenders, including Angelo Gordon, was preparing to come out of bankruptcy. As here, the company wanted to withdraw from a Teamsters pension fund.

The conflict was resolved when the Star Tribune agreed to cover 90 percent of benefits that were lost to its drivers by leaving the pension fund.