Globe: New Herald Owner Is a Double Whammy

Today’s Boston Globe has a two-fisted reaction to the result of this week’s Boston Herald bake sale (which, by the way, was rubber-stamped by a Delaware bankruptcy court this morning).

Begin with the piece by Jon Chesto and Andy Rosen in the Globe’s Business section.

Digital First’s playbook suggests more cuts at Herald

Solid profit targets and shareholder returns called key

Digital First Media hasn’t yet made its vision for the Boston Herald public, as it goes before a bankruptcy judge Friday for approval of its $12 million purchase of the struggling tabloid.

But industry experts and former employees said that if the company sticks to the playbook it uses at many of its other newspapers around the country, the Herald should brace for more cost-cutting beyond the 60 or so positions that are expected to be eliminated when the sale closes later this spring.

If that was a jab, Joshua Benton’s op-ed is the haymaker. The Nieman Journalism Lab director went smashmouth on Digital First Media, “the nom de pillage of what used to be known as the Journal Register Co. and MediaNews Group.” Digital First is owned by the hedge fund Alden Capitol Group, which gets a good beatdown by Benton.

Alden’s methods fall under the rubric of what some call vulture capitalism: Buy up papers, sell off whatever assets you can (like their offices downtown), and cut costs to the bone. The end game is to be sold off, or just shut down. To be owned by Digital First is to be gutted.

Read the piece all the way to this end: “[S]hort of setting the place on fire, being bought by Digital First is about the worst outcome possible. It’s less the Herald being saved than the Herald being stripped for parts.”

The death watch begins . . . now.

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Three’s a Cloud Over Boston Herald Auction

Part One: New News

Boston Herald stalwart Brian Dowling is out with a report today that Digital First Media, which last week was kicking the tires at Fargo Street, is ready to make an offer.

Third bid’s in for Herald

Bankruptcy auction is Tuesday

Newspaper chain Digital First Media has put in the third bid for the Boston Herald, which will be sold off next week in a court-organized bankruptcy auction.

Lawyers for the Herald confirmed the bid was made by MediaNews Group, the corporate name for Digital First. A representative from the Herald’s bankruptcy law firm Brown Rudnick said the bid is being reviewed to determine whether it qualifies the company for Tuesday’s bankruptcy auction.

No details of the bid are public, but Dowling says that to qualify for the auction, “a new bid must come in at least $600,000 over either of the two existing offers for the paper.”

As our kissing’ cousins at Two-Daily Town previously noted, however, what’s even more crucial than how much is bid, is how the bid has been configured.

Revolution is offering $3 million cash for the company, agreeing to honor $750,000 of paid time off for employees who join the company, and is pledging to pay out $2 million in severance.

Crosstown at the Boston Globe, Jon Chesto reminds us what the deal is with GateHouse.

“GateHouse proposed paying $4.5 million in cash, as well as at least $500,000 in assumed liabilities, including paid time off owed to employees.”

Unless our math skills fail us, that means Herald owner Pat Purcell gets $1.5 million less from a sale to Revolution, while employees at the shaky local tabloid get $2.25 million more.

Let’s see whose pot is sweetest when – if – the details of Digital First’s offer emerge.

Part Two: No News

Dowling also reports today that this week’s auction will be invitation only – and he’s not getting one.

The Herald is refusing to admit one of its reporters to the newspaper’s bankruptcy auction next week, calling the court-organized sale a “private process,” while the paper’s largest union is worried the presence of a reporter could “chill the bidding.”

That rare instance of union-management accord says a lot about what a highwire act this sale has become. Apparently, Dowling now represents the net both sides are willing to work without.

More Monkey Bidness at the Shaky Local Tabloid

For those of you keeping score at home, there’s now another suitor – and potentially more ominous news – for the beleaguered Boston Herald.

Brian Dowling reported in today’s edition that a possible third bidder is kicking the tires on Fargo Street.

Digital First may put bid on paper

Digital First Media is interviewing editors at the Boston Herald in connection with a potential bid to buy the newspaper.

Mike Burbach, an editor at the Pioneer Press in Minnesota, a Digital First publication, told managers at the Herald yesterday in an email from his newspaper account that he and other representatives of MNG-BH Acquisition LLC will be “coming to your offices” this coming week to conduct interviews.

Dowling also notes that “Digital First owns two daily newspapers in Massachusetts: the Lowell Sun and the Fitchburg Sentinel & Enterprise.”

That would be the same Sentinel & Enterprise the Boston Business Journal just reported is going virtual.

Fitchburg daily newspaper to eliminate brick-and-mortar newsroom

Next month, for the first time in 180 years, the daily Fitchburg Sentinel & Enterprise may no longer have a physical office in Fitchburg.

The newspaper, which is owned by Denver, Colorado-based Digital First Media, is switching to what it’s calling a “virtual newsroom” model by the end of February or sooner. Jim Campanini, editor of the Sentinel and Enterprise and the Lowell Sun, told the Business Journal in an interview that the plan is intended to save money, but that the paper is in no danger of closing entirely. In fact, he boasted that the paper just hired a new reporter as well as two videographers.

“It’s our time to create this model of innovation,” Campanini told the BBJ’s Don Seiffert. “I look upon this as discovery. We’re explorers, really.”

Swell. But do they have a compass?

Regardless, the redoubtable Dan Kennedy of Media Nation told the BBJ he’s heard worse ideas. “Cutting rent is certainly better than cutting staff,” he said in an email.

The question is, if Digital First buys the Herald, would Fargo Street become a teardown too?

Will Busting Boston Herald Unions Bust the Herald?

For starters, the sadreading staff applauds the Boston Herald editors in general – and reporter Brian Dowling in particular – for birddogging the twists and turns of the shaky local tabloid’s attempt to sell itself to the highest bidder.

The latest drama began last Friday with this piece on the standoff between Herald union members and prospective buyers.

Unions fight Herald’s motion to kill contracts

Lawyers for the Herald’s unions are slamming the company’s bankruptcy plan to dissolve its collective bargaining agreements, claiming the newspaper didn’t negotiate in good faith and issuing a warning the move could spark a strike.

Teamsters Local 25 and the Newspaper Guild of Greater Boston Local 31032 filed objections yesterday to the Herald’s motion to dismiss the union contracts as the newspaper’s bankruptcy case grinds on in Delaware.

The unions want “the fate of the union contracts [to] be decided after the bankruptcy auction and all potential buyers have emerged.”

Nuts to you graf:

“Employees may be left with no choice but to exercise their right to strike,” lawyers for the Newspaper Guild wrote, highlighting the unrest would only worsen the paper’s finances.

Yesterday’s edition of the Herald featured management’s response to the union’s call to action.

Herald says labor pacts must go or paper goes under

The Herald is firing back at union objections to its bankruptcy plan by arguing that if costly labor contracts aren’t axed, buyers will disappear and the newspaper will go under — leaving the paper’s creditors to sell off furniture, computers and other hard assets to recoup little of what they’re owed.

The newspaper, bankrupt since Dec. 8, said it has only attracted suitors for a Feb. 13 auction whose bids are contingent on having the collective bargaining agreements tossed.

“The only other outcome will be a fire-sale liquidation in which all jobs are lost and all creditors receive a fraction of the value currently expected,” the Herald’s lawyers wrote in a filing.

But . . .

Today’s edition of the Herald suggests there’s been a detente.

“The Herald and most of its unions have struck a deal over the company’s contentious plan to dissolve labor contracts that had sparked an exchange of strike threats and dire warnings that the newspaper could be forced to close its doors for good.

“The agreement filed today in U.S. bankruptcy court in Delaware cools tensions as the Communication Workers of America’s News Guild of Greater Boston — representing newsroom and commercial employees — agreed to back off its opposition to the newspaper’s plan to reject their collective bargaining agreements.”

It’s kinda complicated, so you should read the whole piece.  But this Jon Chesto item in today’s Boston Globe has the bottom line: “As part of the agreement with the unions, the successful bidder will make job offers to at least 175 Herald employees and recognize their vacation and severance rights.”

Here’s what hasn’t changed: “Newspaper giant GateHouse Media offered $5 million for the paper, and Los Angeles-based Revolution Media Group offered $5.75 million.”

Except it’s not that cut-and-dried, as our kissin’ cousins at Two Daily Town noted recently.

Revolution is offering $3 million cash for the company, agreeing to honor $750,000 of paid time off for employees who join the company, and is pledging to pay out $2 million in severance.

Crosstown at the Boston Globe, Jon Chesto reminds us what the deal is with GateHouse.

“GateHouse proposed paying $4.5 million in cash, as well as at least $500,000 in assumed liabilities, including paid time off owed to employees.”

Unless our math skills fail us, that means Herald owner Pat Purcell gets $1.5 million less from a sale to Revolution, while employees at the shaky local tabloid get $2.25 million more.

Whichever one gets the paper is now required “to bargain with [the] unions as soon as possible after the closing of the sale.”

Yes well, “bargain” don’t mean agree. Let’s just hope it’s only the sale that closes.

Peter Gelzinis Kisses the Boston Herald Goodbye

One of the two rational columnists at the feisty local tabloid. (Come on down, Kimberly Atkins!)

The heart of the Herald to Howie Carr’s spleen.

“Always stuck up for poor and working people, and for veterans and active service military” (tip o’ the pixel to @GlobeCullen).

“A solid, compassionate stand up guy” (ditto to @BostonFire).

There are a lot of ways to describe Peter Gelzinis. The saddest one is “gone.”

That’s what he told us in his farewell column in today’s Boston Herald.

A little hand leading into next chapter

Columnist pulled in new direction by grandson

The tiny fingers belong to a beautiful little boy of four months named Jack. They are clamped around a bigger, slightly arthritic finger that belongs to the grandfather who is absolutely crazy about him — me.

That index finger has tapped out maybe 10,000 stories for this paper over the last (gulp) 45 years. And this one will be the last … at least as a member of the staff.

I’ve shaken the hands of rich and poor, famous and anonymous, but none has exerted a more powerful grip on me than this precious little one that pulled me across a generational threshold back in August.

It’s a lovely piece, as befits a writer who could hold his own with the powerful and empathize with the powerless.  Many of them have acknowledged that in a nice sendoff on Twitter today.

But his exit after “[tapping] out maybe 10,000 stories for this paper over the last (gulp) 45 years” is a sad harbinger of what will likely be a slow-motion unbuilding of the shaky local tabloid.

(To be sure graf goes here)

To be sure, there are other potential buyers than the behemoth, budget-obsessed  GateHouse Media. And even if GateHouse does acquire the Herald, it won’t necessarily mean the paper will be significantly diminished in the future.

But it certainly was today.

Bad News: GateHouse Media Gives Boston Herald Vote of Confidence

From our Hark! TheHerald! desk

Let’s start with a vocabulary lesson. Define dreaded vote of confidence: “A chairman saying that he has complete confidence in the manager or coach, ‘dreaded’ because it is almost always followed by being fired.”

Substitute “parent company” for “chairman” and “newly acquired daily” for “manager or coach,” and you have the proper context for Jordan Graham’s piece in today’s Boston Herald.

‘We want the Herald to thrive,’ says GateHouse chief executive

GateHouse Media plans to throw its advertising and promotions muscle behind the Boston Herald and leverage its sports and political coverage if it is successful in acquiring the paper, the head of the national company said.

Boston Herald Radio content could also be in play for a wider audience, said Kirk Davis, chief executive of GateHouse Media.

Here’s the part that might worry all those Heraldniks applying to GateHouse for their jobs: Davis told the shaky local tabloid, “I look at the opportunity to, and I’ll say thoughtfully, consider the portfolio we have in Massachusetts, New England, and figure out which of these writers, beats, innovations — radio and so forth — would be welcomed by our readers in our other publications or on our websites.”

Hard to know what that means, since “Davis declined to lay out his complete vision for the future of the Herald.” But it sure sounds like the survivors will be serving more than one master, eh?

There are still three other potential bidders who might get into the bakeoff when the Herald goes up for auction in February, as the bankruptcy process requires. But there are some hurdles they would have to clear.

For a bidder to beat GateHouse’s $4.5 million deal, the higher offer would need to factor in a $200,000 “break-up fee” and up to $100,000 in due diligence expenses to GateHouse. The companies have also proposed requiring the next higher bidder to beat GateHouse’s bid by $100,000.

Considering that it’s something of a miracle publisher Pat Purcell got even one bid,  odds are the gavel will come down for GateHouse.

And then the hammer will drop on the Herald.

From the Hardreading Staff at Two-Daily Town

The sale of the Boston Herald to GateHouse Media has caused a great deal of consternation among the staff at the scaredy local tabloid and a great deal of confusion among the rest of us, as we detailed in a conversation with Meghna Chakrabarti at WBUR’s Radio Boston.

And now there’s competition, as the selfie local tabloid reports.

Three new suitors surface in sale of Boston Herald

Three additional parties have shown interest in buying the Herald in the days following its declaration of Chapter 11 bankruptcy and $4.5 million sale agreement with publishing giant GateHouse Media.

Herald finance chief Jeff Magram confirmed three inquiries have been made into the newspaper since the announcement last Friday.

“One just surfaced today. It was two as of yesterday. I’m happy there’s more interest,” said Magram, who declined to identify or characterize the inquiring parties in any way.

Can you cover this nut graf:

“For a bidder to beat GateHouse’s $4.5 million offer, the higher offer would need to factor in a $200,000 ‘break-up fee’ and up to $100,000 in due diligence expenses to GateHouse. The companies have also proposed requiring the next higher bidder to beat GateHouse’s bid by $100,000.”

That’s definitely good news for Herald staffers, who face losing severance and pension payments in the GateHouse deal.

Bottom line: We hope the fine folks at the feisty local tabloid get the best deal possible.

And we hope we never have to post to this blog again.