Thursday, August 24, 2006

Press Herald for sale? Maine’s largest newspaper could have a new owner in the next two years

Published in the Portland Phoenix

Union officials negotiating new contracts at three Maine daily newspapers — the Portland Press Herald/Maine Sunday Telegram, the Waterville-based Morning Sentinel, and the Augusta-based Kennebec Journal — have begun to assume that the papers will soon be for sale, given the magnitude of the cutbacks sought by management. If the union position were substantially weakened, that would make the papers — which are struggling financially — far more appealing to outside buyers.

The papers are owned by the same family-run company that controls a majority interest in the Seattle Times newspaper in Washington state. And it has been a subject of widespread speculation in newspaper circles that the Times was itself up for sale.

The papers are controlled by the Blethen family, of whom patriarch Frank Blethen is the fourth generation to run the Seattle Times, which was bought in 1896 by his great-grandfather Alden Blethen, who was born in Maine but moved to Seattle as an adult.

One hundred and ten years have taken their toll on the Seattle paper, and the eight years of Blethen ownership of the Maine newspapers have been an additional weight on the finances of the company. Both companies are struggling: in Seattle, the Times is fighting a bitter battle against Hearst, the owner of Seattle’s other daily newspaper, the Post-Intelligencer, hoping to close the P-I. The company has stated that it has lost millions of dollars over the past six years alone.

In Maine, where the Blethens’ 1998 purchase of the Press Herald and the other newspapers from Guy Gannett Publishing was heralded by pledges of increased revenues and decreased costs, costs have increased (despite hiring freezes, layoffs, and the shrinking of the physical size of the newspaper) while revenues have, at best, remained flat, according to company statements.

Because the Blethen interests are privately held, it is difficult to predict or speculate on their business dealings, but changes within the newspaper industry have given the family a new way out of a years-long financial mess. That new way effectively requires the sale of the Blethens’ Maine newspapers, despite the company’s longstanding practice of extolling family ownership over what they call “absentee corporations.”

In September 2003, Frank Blethen (who refused to comment for this story) told Press Herald reporter Edward D. Murphy he had considered selling the Seattle Times to raise badly needed operating cash, but was talked out of it by other family members. He said he was frustrated with suffering continued losses. And though the article summed up Blethen’s position as “ruling out” selling newspapers, it did quote him with a telling statement: “You have to ask yourself the question, ‘Can you just keep going?’” The answer three years later: not much longer.

Seeing the light
The Seattle Times Company is run primarily by the Blethen family, who have 50.5 percent of the voting stock, and by voting as a bloc control the direction of the company, sometimes over the objections of the minority owner. Until just a few months ago, the Knight Ridder media conglomerate held the remaining 49.5 percent of the company's voting stock. Last year, Knight Ridder ran afoul of its shareholders, who forced the company to put itself up for sale in mid-November 2005. The company was bought in mid-March to the McClatchy Company, a California-based newspaper chain whose flagship is the Sacramento Bee. (The $6.5-billion deal received the blessing of federal anti-trust regulators in June, in part because McClatchy sold off some Knight Ridder papers in markets where McClatchy already owned a paper.)

A couple months after Knight Ridder announced it would sell itself off to the highest bidder, Blethen representatives at the Morning Sentinel and the Kennebec Journal introduced new proposals into ongoing contract-renewal talks with those papers’ respective unions. The proposals, which are still being disputed by the unions, would give the Blethens permission to take away tasks from union workers and assign them to contract or freelance workers. But the move that really upset union representatives was a provision that would let the company move those tasks back to full-time workers who would not have to be members of the union.

To union members, that means a person could be laid off, their job taken away and given to a contractor, and the company could later hire the contractor as a full-time staffer who would be outside the union. Over time — some estimate about 10 years; others worry it could be far less — the union would just wither away. It’s a move negotiators have called “union-bashing,” and company representatives have told the unions to expect the same provision to be demanded during next year’s contract-renewal negotiations with the union at the Portland Press Herald/Maine Sunday Telegram. (At all three papers, the unions represent not only reporters and lower-level staff editors, but also workers in layout, printing, advertising, circulation, and distribution.)

The move reversed the position the Blethen family had taken toward unions eight years ago, when buying the Maine papers from the Guy Gannett company: though they were not required to do so by any law or business rule, the Blethens agreed to honor pre-existing contracts with unions. Now, the lawyer for the Portland Newspaper Guild, John Richardson (yes, the one who also serves as Speaker of the Maine House), speculates that the anti-union shift is an effort “to make the papers as presentable as possible for a future sale.”

Stuck in the mud
Some industry analysts say the union-busting attempt is not necessarily an indicator of a pending sale. Rick Edmonds of the Poynter Institute says management simply doesn’t like unions, even though organized labor is weaker because both unions and companies are less financially able to endure long strikes, unions’ ultimate weapon.

Most media companies don’t like unions, agrees Lou Ureneck, a 20-year Press Herald veteran now chairing the Boston University journalism department. “Unions increase costs and reduce flexibility for management,” he says.

“Flexibility” is exactly the buzzword the Blethen Maine Newspapers negotiators are using. An assistant to Blethen Maine CEO Chuck Cochrane returned a call to his office, saying the company would not comment on labor negotiations, which the company feels are “best resolved at the bargaining table.” In response to calls seeking comment on other aspects of this story, the assistant explained Cochrane “does not give interviews” as a general practice.

But representatives of the Portland Newspaper Guild were happy to talk. “We don’t understand their need to take everything away from our contract,” says Darla Pickett, chapter chairman at the Morning Sentinel.

The unions have asked for the company’s justification, and have gotten the response that the company wants “flexibility.” The company says “they have no plan . . . but they just want it,” says Mike Sylvester, the union’s executive director.

He believes that constitutes bad-faith negotiations on the part of the company, recalling an October offer by the union to re-negotiate a side deal to help the company reduce health-insurance premiums. But the company, he says, accepted the offer by demanding the union waive all rights to negotiate over healthcare in the future. The side deal was ultimately worked out, without the waiver of future rights, but “We had to fight them to save them hundreds of thousands of dollars,” Sylvester says.

In Seattle, the Times’s union staffers are embroiled in a bitter dispute that some fear could bring a repeat of the last negotiations, when for seven weeks in the winter of 2000-’01, newspaper workers struck, a move that cost the Times as many as 30,000 subscribers, according to Seattle union president Yoko Kuramoto-Eidsmoe, who also says the Blethens took that dispute “personally.”

All of this was happening before Knight Ridder was actually sold, so the position on unions of the future buyer was not certain, but the industry has been moving away from unions for some time.

In 2003, Seattle Times freelancer Bill Richards, hired under a special contract to report independently on the JOA, reported — to loud Blethen denials — that the Blethens’ financial picture may not be as bleak as they have long claimed. But in the intervening three years, across the industry, expenses have only climbed, and revenues have been flat or declining. So if the Blethens’ picture was rosier than they said then, it has only worsened. In 2004, the Times sold six acres of downtown Seattle land to Microsoft billionaire Paul Allen for $31 million, in a deal Frank Blethen told his newspaper would allow him to avoid major cutbacks throughout the company.

The Maine papers’ picture is worse still: in 1998, the Blethens’ Seattle Times Company officials told the Press Herald they would have to increase revenue and cut costs to make a profit in Maine. But between 1999 and 2003, there were two rounds of layoffs at the Press Herald, by far the largest of the three Blethen-owned Maine dailies. In mid-October 2005, the Press Herald announced a hiring freeze, and a week later said it was laying off 15 workers and eliminating six vacant positions, blaming flat revenues and dropping circulation.

In 1998, the Press Herald’s circulation was 74,500, and the Maine Sunday Telegram’s was 124,500, according to the press release announcing the sale to the Blethens. In April 2006, daily circulation was at 68,100, and Sunday was at 106,750, according to publisher’s statements on file with the Audit Bureau of Circulations, an independent agency that monitors newspaper circulation. That’s a nine percent drop in daily circ, and 14 percent on Sundays.

Where to go?
The anti-union efforts in Maine (as well as powerful anti-union negotiations in Seattle this year, including a demand for Times employees to accept a two-year wage freeze) will come to a head by the middle of next year. The Press Herald/Sunday Telegram contract expires in May 2007, the same month the arbitrator’s decision is due in the Seattle JOA case.

Even if they win the JOA case, if the Blethens suddenly unveil hidden riches, they will only be inviting another legal battle over allegations they misled everyone in the dispute. And if they lose, with no land left to sell to raise money and limited prospects for improving newspaper revenue, their options will be limited.
One of those options — indeed, one of the best — is to sell a newspaper or a group of papers. Frank Blethen has repeatedly said he would not sell the Seattle Times or the Maine newspapers, citing family connections to the two regions.

The family can’t — or won’t — sell the Times, mainly because Hearst has a right-of-first-refusal agreement to buy it if the paper ever goes on the block. Frank in particular has spent years of time and gallons of ink badmouthing big-corporation ownership of media companies. (And in 2001, the family turned down a buyout offer of $750 million from Knight Ridder, including assuming $250 million in company debt. The family must have known it was the best offer they would see for many years to come.)

The Blethens’ reputation in Seattle is in part based in its opposition to companies such as Hearst. The family “literally think that everybody is out to crush them and their legacy of family ownership,” says Elizabethe Brown, administrative officer of the Pacific Northwest Newspaper Guild, which represents employees at both Seattle dailies. To sell their flagship newspaper to the company they have accused for years of being an “absentee owner” would be a dramatic reversal of course
He could sell some of the smaller papers in Washington, but if he’s keeping the Times, it would certainly be useful to have some regional partners with which to share news and advertising.

What’s left are the papers in Maine, to which the family has sentimental (and thin historical) ties. The Blethen family is well ensconced in the Seattle area; it seems unlikely they would all uproot and move east, though one of the rumors in Seattle is that “Maine is the exit strategy,” according to Brown.

The family has been reducing its presence in Maine of late. The only Blethen family member still working in Maine is Robert Blethen Jr., a member of the “fifth generation” who works in circulation at the Press Herald. (There are other members of the family on the board of directors of Blethen Maine Newspapers, but they are required to come to Maine only once a year, for the company’s annual meeting.)

What then?
Though it would be hard to recoup the $200 million purchase price of the Maine papers, some estimates peg the McClatchy stake in the Seattle Times Company at $300 million, and one analyst has estimated McClatchy paid $150 million for that share, based on accepted formulas for calculating the purchase price of a newspaper asset.

If McClatchy sold its 49.5-percent share of the Seattle Times Company to the Blethens in exchange for the family’s Maine dailies, the Blethens would win on two counts. Not only would they have disentangled themselves from the Maine papers’ union fights and uncertain financial futures, but they would also fulfill a longstanding plan regarding the Seattle paper — namely, to be its sole owner. In March, the Press Herald reported, Blethen executive Chuck Cochrane said in a memo to that company’s Maine employees, “The Blethen Family is committed to retaining its majority ownership of the Seattle Times Company . . . and, if the opportunity ever presented itself, to acquire the minority interest.”

But McClatchy, which kept from the Knight Ridder deal papers in markets averaging 11.1 percent growth in number of households, would likely look at Maine’s projected population growth of 0.5 percent through 2020, and refuse a trade, preferring either to sell its share outright, or keep drawing meager dividends (which in 2005 gave Knight Ridder $3.7 million). That would leave the Blethens to find another buyer.

A self-congratulatory editorial on August 13 in the Maine Sunday Telegram paraphrased Frank Blethen as saying his family will not “take part” in the “jostling and realignment” of newspapers that has come after the Knight Ridder sale, suggesting the papers are not for sale.

On the same day (and also inspired by the 110th anniversary of the Seattle Times), Guttman wrote in her column that the family ownership of the Maine papers is the reason “so many of our journalists and employees have chosen to be at the newspaper.” She did not address the ongoing and looming labor disputes, but paraphrased Cochrane telling staffers “there is no corporate office in our company. There are no corporate directives or missives. At our newspaper, Maine people call the shots.” (That, presumably, includes such “Maine people” as Cochrane, who came here from Washington when the Blethens bought the papers, and Guttman, who started her career in California and came to Maine in 1994.)

Guttman wrote about how “values” and commitment to community are what drive the Press Herald/Sunday Telegram, rather than finances, saying “our goal is loftier than making record-higher profits quarter to quarter, year to year.” (That must be a relief, given the dark financial position the Seattle and Maine papers are in.) She wrote about the “freedom” that family ownership gives to a newspaper. And she quoted a memo from Frank Blethen on the occasion of the company’s 110th anniversary: “We are proud of the dedicated employees . . . We are pleased that we could keep Portland, Waterville, and Augusta away from the sorry fate of the faceless investor ownership which has fallen on most newspapers.”

Who else would be interested in buying? The Costello family, who own the Lewiston Sun Journal, have been expanding their holdings in Southern Maine in recent years, buying the weekly Forecaster chain in 2003, and in 2005 adding the Rumford Falls Times and the Norway Advertiser-Democrat. They, too, are a privately held family newspaper company with years of presence in Maine. There’s also the Warren family, who own the Bangor Daily News.

Chris Harte, a former publisher of the Press Herald/Sunday Telegram (when they were owned by Guy Gannett), who also used to be a Knight Ridder executive, was part of a group that bid to purchase the Philadelphia Daily News and the Philadelphia Inquirer, which became available as part of the McClatchy-Knight Ridder deal, but ended up not being the winning bidder.

Harte, an heir to the Texas-based Harte-Hanks newspaper fortune who lives in Cumberland Foreside and has an office in downtown Portland, is a major investor in the rapidly growing Current Publishing weekly-newspaper empire in Southern Maine. He told the Inquirer in March that he “might look at some of the other” papers Knight Ridder had held as well, though he says he is not likely to be interested in buying the Maine papers.

Kirsten Terry contributed to this report.

Wednesday, August 23, 2006

Law to address state ethics shortcomings: Baldacci responds to abuses first revealed in the Phoenix

Published in the Portland Phoenix

Three weeks after the Portland Phoenix first reported that Maine Turnpike Authority officials had been treated to a $1342 dinner at a posh Portland restaurant by a Turnpike consultant, Governor John Baldacci has asked all so-called “independent” state agencies to adopt a code of ethics if they do not already have one.

Though it was not illegal, the dinner had drawn criticism from the governor in the Phoenix’s story, in which a statement from Baldacci’s indicated he would “support legislation to apply the same financial ethical standards to independent authorities that apply to state government.” (See “E-ZPass on Ethics,” by Lance Tapley, August 4.)

The Maine Turnpike Authority has no code of financial ethics, according to agency spokesman Dan Paradee. Other agencies covered by the new edict include the Finance Authority of Maine (which handles student-loan grants, business-development loans, and other state-subsidized financial efforts), and the Baxter State Park Authority.

Baldacci, who cannot order other agencies to take specific actions, has also asked officials in his administration to develop a proposed law that would require each “independent” agency to develop a code of ethics, which are not now mandatory, though some authorities do have them.

Proposed Code of Ethics and Conduct:

• Be guided by the highest standards of honor, personal integrity, and fortitude in all public activities in order to merit the respect of other officials, employees and the public. Strive to inspire public confidence and trust in Maine State Government and its related institutions.

• Serve the citizens of the State with respect, concern, courtesy, and responsiveness, recognizing that government service means service to the people of Maine; keep the Legislature and public informed on pertinent issues.

• Strive for professional excellence and encourage the professional development of associates and those seeking to enter the field of public administration in order to provide effective and responsible government to the citizens of Maine. The primary role is to provide the best possible and most cost effective service to the citizens of Maine.

• Approach organizational and operational duties with a positive attitude and constructively support open communication, cooperation, creativity, dedication and compassion.

• Avoid any interest or activity which is in conflict with the conduct of official duties. Serve in a manner as to avoid inappropriate personal gain resulting from the performance of official duties.

• Respect and protect the privileged information to which there is access in the course of official duties.

• Use discretionary authority to promote the public interest.

• Accept as a personal duty the responsibility to be informed of emerging issues and to administer the public’s business with professional competence, fairness, impartiality, efficiency and effectiveness.

• Support, implement, and promote programs of affirmative action to assure equal opportunity in the recruitment, selection, and advancement of qualified persons from all elements of society.

• Respect and value the work done by the employees of Maine State Government and its related institutions.

Maine author reviving Marvel character

Published in the Portland Phoenix

The Son of Satan is being reborn in the brain of a Maine writer.

Alex Irvine, a former Portland Phoenix staff writer now teaching English at the University of Maine at Orono, is doing what he calls a “reboot” of Daimon Hellstorm, a character in the Doctor Strange section of the Marvel Comics universe.

The new comic, the first in a five-part series, will be out in October. Irvine has a short-story collection, Pictures from an Expedition, coming out in the next few days, and a novel about Batman, called Inferno, being released by DC Comics shortly, too. (That one includes a new villain, but that’s all we can tell you.)

Irvine landed the Hellstorm gig while on a visit to New York to read a short story at a bookstore, after which his agent introduced him to a Marvel editor, with whom Irvine “kicked around” some ideas for characters to work on.

“The Hellstorm thing dovetailed really nicely with a story idea I’d had in my head for a long time,” Irvine says.

He says the process of creating a comic is “completely different from writing fiction,” involving illustrators and colorists as well as editors. It’s Irvine’s first comic, though he says “I actually wanted to write comics before I wanted to write fiction,” and is talking with Marvel about doing more after this series.

In this story, which Irvine calls “horror-noir-ish,” Hellstorm is “much less super-hero-y,” and is instead depicted as a son struggling with his own independence as well as how to please his father, Satan — a congenital liar who stands for evil but who gets his son’s admiration all the same.

The basic plot involves “an infestation of demons in post-Katrina New Orleans,” which Hellstorm discovers, along with “a woman who appears to be Isis,” the ancient Egyptian goddess whose main task is to reassemble the body of Osiris, the judge of the dead and the granter of life, to resurrect him.

The demons in New Orleans, Irvine hints, are the key to the final piece of Osiris’s body — what Irvine gently calls the “generative organs.” And, not to disappoint fans, the story has plenty of demons and “bloodshed and gruesome stuff,” he assures.

Thursday, August 17, 2006

Daytime TV turns into a book

Published in the Portland Phoenix

Blame it on Oprah. Her penchant for finding strange but true stories and putting them on daytime television has inspired not only the tele-shrink career of Dr. Phil, but a novel by an Iranian immigrant living here in Portland.

And, though it’s a suspense thriller, the themes and ideas make Ali Alavi’s The Tombland’s Tale (self-published; 269 pages; $12.95) the kind of on-your-toes-but-feeling-good book Oprah might even like. Plus, it’s fiction, so she needn’t worry about any messy disclosures later.

Alavi, an earnestly softspoken USM grad who moved to Portland as an international student at USM in 1995, set his book in his adopted home, the Forest City, and on Peaks Island, using some of his own frequent haunts, like the USM campus and Exchange Street, and other vaguely camouflaged local elements (“the Atlantic Pearl, a floating restaurant” and the “A.P. Warren” paper company )as settings . Released last week, the creepy thriller explores the disappearance of three exotic dancers who work at a Portland strip club.

In this, his first novel, Alavi found a use for a character he had had in mind for a while, a forensic psychologist with spiritual leanings named Rashid Sanjih. Sanjih, a USM professor, plays mentor to Christopher Wayne, a character based on Alavi himself. Wayne, like Alavi at the time he was writing the book, is an engineer beginning to realize that what he thought he wanted to do in life was not making him happy any more . Inspired by a late-night conversation with his mentor, Wayne retreat s to coastal Maine to write a novel.

Alavi, who has written three poetry collections in his native Persian and several short stories, knew that if was going to use his professor as a character, the psychologist would need a narrative conflict.

Alavi was stymied until he saw an episode of The Oprah Winfrey Show devoted to the real-life tale of a man who had abducted several women and kept them imprisoned for year s. Alavi knew that that story — including an on-camera interview with one of the victims — would form the basis of the book’s plot.

Into that mix Alavi threw some of the research he had been doing at USM, studying business administration, focusing on Jungian analysis of decision-making, seeking the subconscious motivations behind business choices. Inspired in part by New Hampshire author Wayne Dyer’s book The Power of Intentions as well as spiritually influenced fiction by Paulo Coelho, Alavi uses his protagonist to survey the concept that a person who puts himself in a positive, open state of mind causes inspiration to come and positive events to occur.

It’s just the sort of concept Oprah credits with her own success. Chalk up another one for the Queen of Lazy Afternoons.

Baxter School tries to ban Phoenix freelancer

Published in the Portland Phoenix

In response to our continued efforts to investigate conditions for students at the Governor Baxter School for the Deaf on Mackworth Island, the school has attempted to ban Portland Phoenix freelancer Rick Wormwood from the island, which is state-owned property, and part of which is a state park.

Wormwood has reported for the Phoenix about the school’s history of abuse (see “Why I Hate Mackworth Island”), and has continued to seek access to public records held by the school. He has previously been refused access to school grounds over the school’s objections to his reporting (see letter, “Past is Passed,” by Superintendent Larry Taub, June 18, 2004), and school officials have, as recently as last month, objected to Wormwood’s assignment to cover the school for the Phoenix.

An e-mail message, sent by Baxter Director of Business Operations Peter Gray to Wormwood on July 25, says, “you are no longer allowed access to Mackworth Island,” and says Gray made the decision “based on a long-standing history of confrontational outburts on the island,” alleging that one took place during Wormwood’s July 21 visit to hand-deliver a Freedom of Access request to the guardhouse on the island. The e-mail offers no specifics of the history.

In a surveillance-camera video recording of Wormwood’s July 21 visit to the island, shown to the Phoenix by Gray on July 24, Wormwood can be seen having a several-minute-long conversation with the guard. But the video, which has no accompanying audio, does not show Wormwood acting violent, threatening, or physically confrontational.

Wormwood replied to Gray’s e-mail in a letter seeking the formal legal grounds for the ban, in reply to which Gray wrote on July 27 that the school is seeking a restraining order.

Officials at the school, including Gray, Superintendent Larry Taub, and Director of Communications Jim Gemmell, did not return phone calls seeking comment for this story.

Assistant Attorney General Sarah Forster, who represents the Baxter School, says state law gives the school and the Department of Conservation joint jurisdiction over access to the island — which she describes as an “unusual” use of state land — possibly without a restraining order, though she says, “someone who was unhappy with that could sue them.”