PITTSBURGH, September 14, 2006 – The Pittsburgh Post-Gazette announced today that it is facing serious financial issues that must be rectified by reaching new labor contracts to ensure the viability of the newspaper under its current owners.
Saddled with growing losses and existing labor contracts that fail to address economic pressures facing the Post-Gazette and the newspaper industry, the Post-Gazette is urging the unions representing more than 1,100 of its employees to agree to new contracts that would reduce costs significantly, streamline staff and change restrictive work rules to enhance efficiency and performance. The unions have not responded substantively to contract proposals they received from management last March, even though the Post-Gazette's financial problems are growing worse.
The Post-Gazette has suffered operating losses totaling almost $23 million since 2003, including a loss of nearly $12 million in the first eight months of this year. Overall, the Post-Gazette is on track to report a record loss in 2006, which will be its fourth consecutive year of losses.
"The Post-Gazette's financial condition reflects, more than any other factor, the failure of current labor contracts to address the issues of rapidly rising costs and declining revenue," said David Beihoff, president of the Pittsburgh Post-Gazette. "To ensure the viability of the Post-Gazette under its current owners, the unions must be willing to negotiate new contracts that would restructure the Post-Gazette to lower costs significantly, streamline staff and change existing work rules that currently inflate staffing and compromise efficiencies."
The Post-Gazette emphasized today that the unions need to begin constructive labor negotiations as soon as possible because the current owners are prepared to put the newspaper up for sale if the unions fail to reach new contract agreements by December 31. The current contracts are with 14 unions representing a total of 954 full-time and 172 part-time hourly employees of the Post-Gazette.
At management's invitation, the Post-Gazette opened its financial records for inspection by union auditors two weeks ago. The union auditors had been invited nearly a year ago to review the Post-Gazette's financial data but they did not do so until August. Management has been updating Post-Gazette employees and union leaders for months about its financial issues and the need for new contracts that would enable the Post-Gazette to reverse operating losses and to generate profit margins in line with industry averages.
Newspaper companies in the United States are facing enormous challenges due to competition from the Internet, television and other media, resulting in a wave of restructuring and mergers throughout the industry to lower costs and enhance productivity. But because of the Post-Gazette's costly and restrictive labor contracts, the problem in Pittsburgh is even worse.
The Post-Gazette has been profitable in just six of the past 13 years and its last annual operating profit was in 2002. The percentage of employee costs to revenue at the Post-Gazette is nearly 70% while the average at newspapers of comparable size is approximately 40%, according to one study. While the Post-Gazette has lost money in recent years, most newspapers have an average operating profit margin of 19%, as recently reported in The New York Times and The Wall Street Journal.
"We urge union leaders to work constructively with us to reach agreements that would make the Post-Gazette a better, more cost-effective newspaper under the current ownership, a goal we all want to achieve," Beihoff said. "We are committed to resolving these financial issues in the best interests of the Post-Gazette, our employees, our readers, our advertisers and the entire community."
The Post-Gazette has a long and abiding tradition of treating unions and its employees with fairness and integrity. Founded in 1786, the city's leading daily newspaper is marking its 220th anniversary this year.
The Pittsburgh Post-Gazette is Western Pennsylvania's largest newspaper and www.post-gazette.com is the region's most visited web site. Together they reach more than one million people every week. The Post-Gazette has served the Pittsburgh community, its readers and advertisers as the region's indispensable source of news, advertising and information for more than two centuries. As an established, branded extension of the Pittsburgh Post-Gazette, www.post-gazette.com has been an online resource for the region since 1997.