The Star Tribune asked its unions Tuesday for another $20 million in annual cost savings beginning in January in a bid to have lenders forgive some of nearly $400 million in long-term debt.
The request comes amid sharply declining revenues at the Star Tribune and at other newspapers around the country.
In a written statement to 1,400 employees, Chief Executive Chris Harte said the company plans an additional $10 million in savings over and above the $20 million that it seeks from about 900 contractual workers. Without help from the unions, Harte said, the company may have to file a Chapter 11 bankruptcy petition.
In Chapter 11 a company can ask a judge to impose new pay rates and work rules.
The financial squeeze affecting the Star Tribune is playing out in newsrooms and publishers' offices around the country. The stocks of some of the biggest publicly held newspaper companies, such as Gannett and former Star Tribune owner McClatchy, are trading at historic lows despite layoffs and other cost-cutting measures. Creative Loafing, an owner of alternative weekly newspapers in Atlanta, Chicago and Washington D.C., filed for bankruptcy earlier this year.
Broadcasters have not been spared the decline in revenue and audience. Some stations have resorted to laying off reporters and notable personalities.
The Star Tribune has one of the biggest newsgathering staffs in the Midwest. The $30 million in cuts sought by Harte would be in addition to $50 million he said the company has achieved since 2007 through attrition, layoffs, buyouts and other expense reductions.
"Our secured lenders, who have already lost hundreds of millions of dollars on the value of their loans, have made it very clear that the company must take immediate action to bring its expenses in line with its greatly reduced revenue before they will agree to restructure the company's debt," said Harte, who declined comment beyond the prepared statement. "We very much hope to reach a consensual solution that will allow our company to adjust our labor expenses to affordable market rates and avoid an expensive and difficult court-supervised reorganization [in bankruptcy]."
