McGuire on Media

Asset sales should be worrying workers in union towns

In 1986 McClatchy Newspapers purchased the Tacoma News Tribune in what was called an “asset sale.”  McClatchy bought the “assets” of the newspaper negating the union contracts. That forced employees to reapply for their jobs under new conditions posted by McClatchy.

This little note from 22 years ago should be far more than a historical tidbit for the pressmen of Minneapolis, the craft unions in Newark and every other newspaper employee blissfully working with perceived long-term contracts.

In July, while I was off frolicking in Minnesota Mark Potts wrote a fascinating blog entry on the vultures circling newspapers.

Potts’ predictions were dire. He wrote: “But professional bottom feeders aren’t stupid. They’re not going to buy these troubled companies as going concerns. The fundamental businesses are too damaged. Instead, they may look at purchasing newspaper companies on the cheap and doing surgery on them that will make the current run of layoffs and cutbacks look like benevolent ownership. Journalism be damned: To survive, these companies may have to be essentially strip-mined, broken up for parts, transformed to run as cheaply as possible. And you thought newspaper managements already were cheap.”

What the astute Potts did not say in that blog entry is that the ticket to such callous “strip-mining” may be the “asset sale.”  I talked to media business guru Alan Mutter Friday and he is very aware and very knowledgeable about this mechanism some buyers and sellers might use.

I am not a business law expert, and I don’t pretend to totally understand why and how asset sales work. Mutter agrees with me that companies can purchase presses, name, circulation lists and other hard assets, but contractual obligations are not purchased. That’s my memory of what happened in Tacoma in 1986.

That makes the game of chicken being played by the pressmen in the Teamster Union at the Minneapolis Star Tribune and other unions around the country extraordinarily scary.  Union officials are usually smart and understand the game several steps ahead, but I have to wonder if the possibility of asset sales  is being seriously considered.

It seems pretty clear to me newspapers like the Star Tribune and the Star-Ledger have one value if they carry their union contracts with the, and a substantially higher value without those contracts. If I am a pressman that scares the heck out of me. As a lover of newspapers it scares me too, because I don’t think editorial excellence would be words that would resonate for “asset” buyers.

I think Potts is right about the vultures, and they are not going to care for a minute whether or not it is honorable to respect union contracts. If they can avoid or void them they will.