Execs err, employees are supposed to pay
The publisher of the Minneapolis Star Tribune, Chris Harte, is outraged that the 116 members of the now flabby, right-leaning newspaper's pressman's union have thus far refused to agree to major cuts in pay and work rule changes that would significantly weaken their protections against overwork, forced overtime and similar abuses.
Avista Capital Partners, a New York investment (read financial speculation) firm that bought the Star Tribune in 2007, put the paper into a Chapter 11 bankruptcy a couple of months ago. It now is asking the federal bankruptcy court to cancel the pressmen's labor contract on the grounds that the union has failed “to enter serious negotiations for concessions needed because of a sharp decline in advertising revenue as well as debt from the 2007s acquisition...”
So the Strib's own reporter, David Phelps, said in a Nov. 20 story in the publication's business section.
In truth, the Avista move, and Harte's outrage -- Phelps called it “frustration” but the stronger feelings came through in the story -– are new, but hardly unexpected, examples of outrageous, jaw-dropping arrogance on the part of the lords of the universe class.
It is right up there with the chief executives of auto manufacturers flying to Washington on separate, hugely expensive private aircraft to beg for government money to hold off self-created ruin. It easily matches $100,000 office rugs and million dollar office redecoration for sheer, stupid gall.
Those guys, too, are angry because anyone dares to question their right to such goodies.
Harte's snit demonstrates, with no chance of misunderstanding, the sense of entitlement and superiority ingrained in the minds of the Avista speculators and corporate strippers.
The country is teetering on the edge of a depression that may exceed the misery of the 1930s. The great majority of the population is hurting financially and millions of people are falling into desperate straits, but the Avista guys think others should pay the cost of their stupidities.
To fully understand, the public needs to know some things that weren't in Phelps' story.
Avista bought the Strib from the McClatchy Company for $530 million. Avista borrowed most of the purchase price. It is what the business world, never fond of straight talk, calls a leveraged buyout.
Nobody among Avista's principals had ever before been involved in the news business, and it was clear none of them had any interest in journalism.
The almost-clearly-stated goal of the Avista crowd and Harte, who owns slightly more than 4 percent of the Strib, was to strip the newspaper company of major assets, such as real estate –- sell off the land, buildings and anything else with cash value –- and reduce operating costs by slashing staff, then sell what is left of the poor old rag to some sucker who wants to try running a newspaper.
If the Strib were a stand-alone business it would be profitable today. It reported an operating profit of $31 million for 2008. That's before taxes and other payments, so without Avista and Harte, as a stand alone business, its net profit would have been less than that -– but it would have shown a net profit.
What put it into Chapter 11, and what may put the Star Tribune out of business, is the enormous debt that Avista stuck it with. The company is strangling on those loan payments.
Harte and the rest of the Avista crowd miscalculated as badly as the boobs who run the big banks and brokerage houses. Like those other bozos, the Avista geniuses assumed that the money would just keep rolling in and their speculations would go on floating forever on tainted air.
Now Harte, and no doubt the rest of the Avista crowd, are outraged, yes outraged, that the pressmen don't much feel like cutting themselves out of the middle class to rescue the fools who put their livelihoods, and what was one of the country's best newspapers, in jeopardy.
I'm truly sad to say it -– I loved the Strib most of the years I worked there, and for most of my life before I worked there –- but it may be the best thing for everybody, including the beleaguered employees, if Harte and Avista go under, even if they take the Strib with them.
After all the moaning and whining, the United States will have newspapers. Minneapolis will have a newspaper. The Strib soon will be little more than a shell anyway, and it's outright collapse probably will hasten the day that someone who actually knows how to run a newspaper will show up.
As for Harte and his money-playing partners:
Really, they should shut up and take what's coming to them without trying to squeeze more out of the newspaper's dedicated employees, who are hurting badly enough but will hurt much more before this is over.