Charlie Morgenstern 11 a.m., June 25
U-T Employees Restive Again -- Understandably
Union-Tribune employees are wondering once again just who will own their company, or whether the U-T could be folded into a conglomeration of Southern California papers. Two management missteps fomented the worry. First, the company said early this year that employees who had stockpiled vacation days (as layoff cushions) should bring their cumulative weeks down from 8 to 5 at a modest pace. Then, suddenly, employees were told to get down from 8 to 5 by April. Obviously, there was fear that the company is trying to get cumulative vacations off the books. Second, both employees and retirees who are on defined contribution plans were told without warning that they would be getting their checks from a different bank and should consult a different firm for pension advice. (At least, they were told that there will be no change in pension benefits.)
Platinum Equity, which bought the U-T in May of 2009, is a private equity operation. Such firms buy an asset, claim to improve it (usually changing the accounting), then sell it at a profit. One top Platinum executive stated in 2008 that the company's holding period averages 3 to 5 years. Hmmmm. Freedom Communications, which owns the Orange County Register and emerged from bankruptcy last year, will be auctioned off at some point. Bids were due earlier this month, but the company has not said when it will sort everything out. Platinum Equity is rumored to be interested in all or part of Freedom, which owns 100 papers and 8 TV stations. Platinum is run by Tom Gores, who is worth a reported $2.2 billion. A similar company, Gores Group, is run by his brother Alec, who is worth $1.6 billion. Together, the two brothers bought Alliance Entertainment late last year. On its website, Platinum lists only two media and communications companies: Alliance and the U-T. The brothers failed in a joint attempt to buy Miramax and Platinum failed trying to buy the Boston Globe and Business Week Magazine.
Some say Alec is more interested in Freedom assets than Tom is. But suppose Alec bought the Register and merged it with brother Tom's Union-Tribune? Possibly the Los Angeles Times and other Southern California papers could be thrown into the mix. Consolidation rumors are flying in media circles, and U-T employees aren't deaf to them. Any consolidation of Southern California papers would surely involve deep layoffs.
In a recent interview with SD METRO Magazine, U-T Publisher Ed Moss boasted that the U-T is now profitable. Management has been saying that for some time. But that's what you expect from a private equity firm that lives by gobbling up assets cheap (and it got Copley for well below the value of real estate assets) and then dumping them for a fat profit. Moss also said in the interview that, upon arriving in San Diego, he was amazed to find how slowly things moved at the U-T and in San Diego. But I called the U-T's flak, Drew Schlosberg, twice yesterday, beginning in the morning, leaving messages each time. I heard nothing. Then I called Platinum twice and also emailed it a list of questions, such as whether or not it is in the running for Freedom assets and whether it might be considering some kind of consolidation with other papers. I was told a vice president would get back to me. He didn't.
Slow, indeed. But the working stiffs aren't slow. For one thing, many are rushing to take those vacation days, leaving only a few to do the heavy lifting. Also, previous layoffs (one of the main reasons the company may be profitable) have left a skeleton staff to do work both in print and online. Complaints abound.
More like this:
- U-T to be sold to L.A. Times parent for $85 million — May 7, 2015
- Will Southern Cal Newspapers Combine? — Aug. 3, 2011
- Gores Brothers Finalists in Bidding for Warner Music — April 18, 2011
- U-T Was "a Bit Fat," but Low-Priced, Says Gores — Aug. 10, 2010
- Tracking the Takeover: Union-Tribune layoffs on schedule — May 7, 2009