Reading Between the Lines

The observer: Winter ’07
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In September, Block Communications announced that if it’s unable to reach satisfactory agreements with its unions by Dec. 31, the Pittsburgh Post-​Gazette may be sold. News outlets reported it as a provocative salvo in stalled negotiations, but it would be a mistake to view the release as posturing.

Several facts shed light on the situation affecting the paper and, by extension, Greater Pittsburgh’s readers. One is that the newspaper industry nationally has been in a state of siege. Slow, inexorable readership decline has been aggravated by troubles at traditionally large advertisers such as department stores. And since the last recession, national help-​wanted advertising, a former cash cow for papers, has never recovered, due in part to the advent of Mon​ster​.com and the like.

Another fact is that when people say Pittsburgh is a two-​newspaper town, they’re wrong. This metro area has seven dailies — The PG, Pittsburgh Tribune-​Review, McKeesport Daily News, Washington Observer Reporter, Butler Eagle, Beaver Valley Times and Valley News Dispatch — making it one of the most competitive markets in the country. And there are also nondaily newspapers, numerous magazines, radio, television, direct mail, billboards and Internet. Put it together, and you get a tough fight for advertising dollars, which account for 80 percent of a newspaper’s revenue.

The late William Block once instructed one of his negotiators to “err on the side of generosity.” The sentiment fit the man and his era. PG employees publicly wish those days were still here. Wishful thinking, however, can’t mask the numbers. The PG has lost $12 million this year, and no matter how much loyalty the Blocks feel toward their workers, they must dramatically reduce costs. The industry average for labor as a percentage of revenue is 40 percent. At the PG, labor is 70 percent of revenue.

A big part of that is healthcare, especially for retirees. But there are simply too many workers, making collectively too much money at the PG. Too much, that is, for the revenue coming in.

All of this puts union leaders in a tight spot. No one wants to accede to major concessions. Yet any reading of the facts calls for just that if the paper is to survive. A way must be found to help save face for those union leaders brave enough to face reality. The choice for them seems simple and stark: Help make the PG a reasonable business for the Blocks or deal with new owners.

The potential buyer with the biggest economies of scale to gain would be the Trib’s Richard Mellon Scaife. A new buyer would not be bound by old and expired contracts. And with any new buyer, especially a big chain, startling labor cuts likely would be in the offing.

The clock is ticking. And any observer of the failed negotiations between the old Pittsburgh Press and the same unions knows that, as time wears on and rhetoric heats up, things don’t always work out, cooler heads don’t always prevail and in matters of problem solving, pride is seldom a virtue.

PQ Staff

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