United Media Guild leaders brought the concerns of its Springfield Unit – concerns shared by Guild members at other GateHouse properties – to the attention of company officials May 21, 2015, at the first annual meeting of GateHouse’s parent, New Media Inc., in New York City.
My impressions from our visit to Manhattan ranged from optimism to disappointment. As I already have told some colleagues at The State Journal-Register in Springfield, I came away from the meeting viewing GateHouse officials not as evil people, but rather as businessmen and businesswomen living in their own world. It’s our job to convince them that improvements in our world will mean improvements in their world.
This view of the New York skyline, which could be seen from the downtown building where GateHouse Media/New Media held its 2015 annual meeting, includes a section of Central Park.
GateHouse CEO Kirk Davis and New Media CEO Mike Reed told us that journalists have an important role in the health and future success of the company. They say they want to retain talent. But they seem to be detached from the day-to-day world of journalists and their financial struggles.
To give you an idea of how I came to these conclusions, let me describe our visit to the annual meeting. UMG administrative officer Shannon Duffy, Journal Star Guild activist Matt Buedel and I flew out to New York the day before the meeting and stayed overnight in a room at the Hilton Hotel, the same place where the meeting was to be held at 8 the next morning. (Shannon’s description of our visit is available here on the United Media Guild website.)
We had printed up hundreds of flyers to distribute to investors going into the meeting. This being the first meeting, we thought GateHouse had rented a big room in this posh downtown hotel to impress the investment community. But when we checked out the meeting room, it was a big letdown. It was a small room with 20 chairs. I guess GateHouse/New Media wasn’t really expecting many people to attend.
The next morning, Shannon and I showed up at the meeting site about 45 minutes early. We were immediately greeted by a well-dressed security guard. “Who are you?” he asked in a firm voice. We informed him we were stockholders in the company. The guard then left us alone.
Here is the meeting room that GateHouse Media/New Media used for its annual meeting in downtown New York City.
We went through some wrangling before we were allowed in the tiny meeting room. A man working for GateHouse/New Media said we needed to produce something called a “broker’s statement” before being admitted. We didn’t have this document and hadn’t heard of it before, but were given documents by our broker that the broker assured us would be sufficient. Just when we thought we would be locked out of the meeting, Shannon spotted one of the corporate officers, Polly Sack, who recognized Shannon from a previous annual meeting and basically waived us in.
That hurdle cleared, we walked in and sat down. Almost immediately, Kirk Davis walked up to us and introduced himself. We talked for about 15 minutes. He was friendly and polite. Shannon stressed that we weren’t there to disrupt the proceedings but to represent the concerns of workers. Davis talked a lot about how he is fighting to preserve revenue for his newspapers amid pressure for rate cuts from companies that produce newspaper inserts. He talked about the precarious nature of the newspaper industry.
Without being prompted, he said to us, “Your main concern is wages, right?” Yes, that’s right, we said. I described how many young journalists at the SJ-R are paid only about $30,000 a year and are struggling to decide whether they can remain in the business and support their families. Others are struggling after going 7½ years without a raise.
I described how the SJ-R has lost many valued professionals through downsizing and frustrations about pay. He looked down and had a pained look on his face. His expression made it seem like he was almost embarrassed when I mentioned we haven’t had a pay increase for almost eight years. (Of course, Davis and Reed have continued to get high salaries and annual bonuses all that time.) He nodded when I noted that the SJ-R continues to be one of the company’s most viewed papers on the Internet, even after the acquisition of several much-larger papers.
The most telling quote of the day, to me, was his response to our salary concerns: “We have to figure that one out.” After that quote, I would offer another telling reaction. Shannon told Davis that the Springfield Unit consistently receives a certain message from the company at the bargaining table: If you don’t like the pay situation at the newspaper, you should just leave.
Davis bristled at that description. That’s not the message the company wants to send, he said. The company values its employees, he said.
I personally believe GateHouse would gladly give us raises if that act wouldn’t set a precedent and probably lead to other unions at other properties demanding raises. But that’s not our problem. At the meeting, Reed confirmed that the company still plans another $1 billion in acquisitions in the next year or two. Surely, there is room for raises, I thought.
Once the meeting started, I looked around. There were only 10 people in the room. Except for the three of us, everyone else was a corporate official of some kind except for one or two people representing some investors. I didn’t know who they were, and they didn’t say a word during the meeting. We were the only people there representing some of GateHouse’s thousands of employees.
The entire meeting lasted about a half-hour. Reed gave a synopsis of the company’s performance from the past year, which included emerging from $1 billion in debt through bankruptcy, forming the new company and acquiring two groups of newspapers. Reed is a tall, husky man with short, dark-brown hair who was wearing a gray suit, white shirt and striped tie.
He said 2014 was “a pretty monumental year for our company.” He said financial performance has been “OK.” Print ad revenue continues to “struggle mightily,” he said. Depending on the site, there are year-over-year declines averaging 5 percent to 15 percent each month, he said.
He said the company is trying to be “efficient” and trying to switch its advertising customers to a subscription-based arrangement through services such as Propel. Over 6,000 customers companywide are using Propel, he said. This growing trend, he said, is hoped to “bring stability to our business.”
Overall, he said, “We’ve had a successful year” and we have “grown stockholder value.” He talked about the stock price rising from $12 to $24 per share. “We remain optimistic about the long-term future.”
There was no mention during the meeting of all the layoffs that have occurred at the various newspapers GateHouse acquired over the past year, including the Providence Journal, where a Guild local represents employees in the newsroom and other parts of the building.
Reed said the reason for his optimism is that newspapers are “so important” to our customers and the communities we serve. “We feel like we’re positioned for success. We just have a lot of tough work ahead of us,” he said.
When company officials asked if any stockholders had questions or comments, Shannon Duffy stood up. He said the Guild hopes GateHouse is “wildly successful” and that both the union and the company have a joint interest in the company succeeding.
But he said he wonders, from an investor’s point of view, whether the company is proceeding in investors’ best interests when employees haven’t gotten raises in five, six or seven years, experienced journalists are leaving, and the value of many newspapers in customers’ eyes is declining as a result.
“At some point, we think it’s appropriate to reinvest and reward your employees,” Shannon said.
“We’re not here to throw rocks,” he said, but rewarding employees will help make the company more successful.
Reed thanked Shannon for his remarks. Reed said, “You’re partners of ours. We appreciate your concerns.” Reed said the union and the company “need to put our heads together” to ensure the company’s “long-term viability.”
Buedel asked whether money raised for the company’s planned $1 billion in new acquisitions by the end of 2016 will land the company in the same debt problems it struggled with a few years ago. Reed responded that the debt was raised from “equity shareholders,” so it’s not the same kind of debt that got the company in trouble before.
Reed said GateHouse/New Media can “weather the next recession.”
Shannon passed out a two-page flyer that the Guild is distributing to stockholders outlining the Guild’s concerns. The flyer is available online.
The Guild is rallying public support to our cause at savethesjr.com.