Boston Herald Held Hostage, Day One

Digital First Media (slogan: “Where Newspapers Go to Die”) officially took possession of the Boston Herald yesterday. As the redoubtable Dan Kennedy noted at Media Nation, the takeover was preceded by this memo last week.

Nice, eh?

Now come the reports of the takeover in the local dailies, and the one in the soldy local tabloid sure reads like a press release – and not just because it’s bylined “Herald Staff.”

Digital First Media takes the helm of the Boston Herald

Digital First Media, one of the largest publishers of locally based print and online media in the United States, completed the acquisition of the Boston Herald yesterday.

The Boston Herald’s roots date to 1846, when it was a single two-sided sheet of news published by a group of Boston printers. In more recent times, the media company has been anchored by the 64,500-circulation Herald, known for its eye-catching Page 1 photos and headlines, with a loyal online following at BostonHerald.com.

“DFM is pleased to have the opportunity to be a part of the Boston Herald through the next chapter of its storied history. The Herald is integral to the fabric of the great city of Boston,” said Guy Gilmore, DFM’s chief operating officer.

That last part remains to be seen. The rest of the puff piece is pretty standard boilerplate , except for this ominous note: “[Digital First’s] Adtaxi Digital agency is an in-house, client-centric digital agency that brings scale, precision and sophistication to digital marketing. Adtaxi helps advertisers solve complex marketing challenges with custom, performance-driven solutions.”

Ads in sheep’s clothing, in other words.

Crosstown at the Boston Globe, Jon Chesto has – not surprisingly – a very different take.

Herald in hedge fund firm’s hands

Digital First completes purchase, more cuts feared

 

When Pat Purcell acquired the Boston Herald in 1994, the deal came with the hopes that local ownership would ensure the long-term survival of Boston’s No. 2 daily newspaper.

That survival will now depend on a new owner, a New York hedge fund firm, and not the man who led the Herald for much of his career in the news business.

Digital First Media, which is owned by Alden Global Capital and also does business as MediaNews Group, completed its acquisition of the Herald Monday after beating rival GateHouse Media last month with a nearly $12 million bid in a bankruptcy auction.

Chesto also had a very different number for the Herald’s circulation. “Nearly two-thirds of its roughly 45,000 daily print sales are single-copy purchases as opposed to subscriptions, according to Alliance for Audited Media data.”

That’s a pretty big drop from the 64,500 “in more recent times” the Herald piece claims. Is two or three years ago really “recent”?

Regardless, we wish the Heraldniks all the best, or certainly better than their new brethren at the Denver Post, which Digital First is currently dismantling in slow motion.

If it’s lucky, the shaky local tabloid just might dodge that bullet.

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American Prospect: Boston Herald Prospects Dim

Since last month’s announcement that Digital First Media had won the Boston Herald auction bakeoff, there’s been a steady drumbeat of prebituaries for the shaky local tabloid.

The Boston Globe’s Jon Chesto and Andy Rosen predicted a rolling thunder of staff reductions, while Nieman Journalism Lab director Joshua Benton said flat-out “to be owned by Digital First is to be gutted.”

Now comes this piece (tip o’ the pixel to MASSterList) in The American Prospect by Hildy Zenger, which is the pen name (Hildy for Hildy Johnson, Zenger for John Peter Zenger) of “a writer who works for a newspaper owned by a private equity firm”).

Hello Digital First, Goodbye Boston Herald

Just before Robert Kuttner and I filed our American Prospect article on the rape of the newspaper industry by private equity predators in December (“Saving the Free Press from Private Equity”), the prime nemesis of our story, GateHouse Media, bid $4.5 million to buy the 171-year-old Boston Herald, which declared bankruptcy the same day. The deal was conditioned on voiding union contracts and deep-sixing legacy pension, health, and other obligations. “Major layoffs in the newspaper’s 120-person newsroom are a certainty,” we wrote, in the context of GateHouse’s dismal record of gutting editorial staffs at its 770 daily and weekly newspapers.

But GateHouse was then elbowed aside by Digital First Media, whose $11.9 million bid won the February 13 bankruptcy auction in Boston, indicating that the DFM bean-counters have calculated a more profitable but probably even bloodier endgame for the venerable Herald, whose days are now surely numbered, according to industry observers.

The estimable newspaper analyst Ken Doctor “predicted that DFM would get its money out of the deal within three years at most, then declare bankruptcy and sell off the emaciated remains of the business for whatever they can get for it.”

So now the Herald’s plight has gone national. Not a good sign, people. Not a good sign at all.

Also . . .

From our newly minted Hexit Watch™

The inevitable exodus from Fargo Street has mostly proceeded under the radar, but here’s a significant departure: Former Deputy Managing Editor for News and Multimedia Zuri Berry has hied himself to Charlotte, NC. From his Twitter feed:

Best of luck in the Tar Heel State, Zuri.

Digital First’s Boston Herald Rx: Apply Internally

When last we met, the sadreading staff noted two ominous takes on the future of the Boston Herald under the new ownership of Digital First Media.

First, the Boston Globe’s Jon Chesto and Andy Rosen made this prediction: “[I]ndustry experts and former employees said that if [Digital First] 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.”

On the Globe’s op-ed page, Nieman Journalism Lab director Joshua Benton was even more bleak, citing the dismal track record of Digital First’s parent company, Alden Global Capital.

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.

Ouch.

Especially considering this full-page ad in today’s edition of the shaky local tabloid.

Despite its best efforts, that ad looks an awful lot like ave atque vale. Because who knows how many of those “wonderful people” will be around a month from now.

From Greg Ryan at the Boston Business Journal:

Herald’s new owner to begin making job offers next week

The soon-to-be owner of the Boston Herald will start making job offers to current Herald employees next week, according to a letter sent to workers on Thursday, with the newspaper’s staff expected to be cut by more than 25 percent from its levels at the end of 2017.

Denver-based Digital First Media won a bankruptcy auction on Feb. 13 to acquire the Herald’s parent company from Pat Purcell for just under $12 million, beating out GateHouse Media and Florida private equity firm Revolution Capital Group.

Digital First has committed to offering jobs to 175 current Herald staffers . . .  Employees have been interviewing to keep their jobs since last week.

But here’s the kicker: “At this point, it is not known whether those employees who are hired will receive their current salary.” Never mind sick time, vacation time, and healthcare plans, all of which are still undetermined.

And pensions? From all the evidence, that’s another ave atque vale.

Double ouch.

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.

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.

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.