- The Washington Times - Friday, March 13, 2009

NEW YORK (AP) - The Star Tribune of Minneapolis and leaders of its printer’s union reached a new deal Friday just hours before a judge was to rule on whether the nation’s 15th-largest newspaper could void a labor contract to achieve $3.5 million in annual savings.

George Osgood, president of the union’s local bargaining unit, said the agreement came just before 8 a.m. Friday, following an all-night session that began Thursday after the second of three days of hearings in U.S. Bankruptcy Court. The newspaper filed for Chapter 11 protection from creditors in January.

Osgood said the new terms were “an improvement” over what the company earlier offered, but he would not provide details or say whether concessions reached $3.5 million. He said he wanted to wait until union members vote early next week on whether to accept the deal reached by their leaders.

The Star Tribune had sought permission from U.S. Bankruptcy Judge Robert Drain to abandon a contract that covers 116 pressmen, who run the newspaper’s printing presses and ensure that the ink colors are properly balanced and the pages properly aligned. The existing contract was to expire Nov. 30, 2010.

The newspaper has said it needed $3.5 million in savings from the union as part of a total savings of $20 million it wants from all its unions annually.

Osgood said the union was under pressure to reach an agreement because the judge had indicated he would be forced to rule in the company’s favor if the two sides returned to court Friday afternoon without a deal. Lawyers planned now to ask for a one-week delay in Friday’s hearing to await the results of the union vote.

Drain warned the printer’s union in court on Thursday that the company’s lenders had the power to shut down the company if they were not appeased by management’s ability to cut costs. He had urged the two sides to reach a deal.

“Implementing this deal is critical to the Star Tribune’s future,” Star Tribune Publisher Chris Harte said in an e-mailed statement. “These are difficult but essential cost cuts, and we are glad to have reached an agreement through negotiation.

“We all want to move forward, emerge from bankruptcy and get the company back to financial stability,” he said.

The company has not said whether it would seek the cancellation of union contracts that cover another 600 workers. Besides the pressmen, the newspaper’s four largest unions represent newsroom employees, drivers and mailroom workers.

The Star Tribune filed for bankruptcy protection in January. In the declining advertising market, the newspaper faltered under a heavy burden of debt it took on when Avista Capital Partners LP bought it from McClatchy Co. in March 2007.

As of December, the newspaper had $667 million in debt, $492 million in assets and $27 million in cash. So far, it has skipped $20 million in interest payments to lenders. From early 2007 to the end of last year, the newspaper has cut $50 million in costs.

Three other major newspaper publishers also have sought bankruptcy protection in recent months: Tribune Co., whose properties include the Chicago Tribune and Los Angeles Times; Journal Register Co., owner of the New Haven (Conn.) Register and other newspapers; and the company that owns The Philadelphia Inquirer and the Philadelphia Daily News.

Meanwhile, the Rocky Mountain News in Denver shut down Feb. 26, and the owners of the Seattle Post-Intelligencer and the San Francisco Chronicle have said they may be forced to close. A decision on the Seattle newspaper could come next week; one option is for the newspaper to continue as an online-only operation with a skeletal staff.

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Associated Press Writer Jeff Baenen in Minneapolis contributed to this report.

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