Confidential Boston Herald Documents Show Staff Could Be Cut By 50 to 60 Percent
Monday, February 05, 2018
A deal book presented to a potential purchaser of the Boston Herald outlines a strategy to slash staffing — far greater than previously reported.
According to the deal book, the Herald staff would be reduced from the present staffing level of 228 by 50 percent to 60 percent under new ownership. The deal book was prepared by a private investment group and not by the Boston Herald.
Presently, the Boston Herald is in bankruptcy and both GateHouse Media -- owners of the Providence Journal and the Worcester Telegram -- and Florida venture capitalist Robert Loring of Revolution Capital Group are reported to be submitting bids.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTREAD THE DEAL BOOK BELOW
The deal book, which was prepared for Richard Whippen who is the Chief Executive Officer for Washington Suburban Press Network (WSPN) and Media Prowler, both Jeff Bezos Companies, shows how the Herald is being pitched.
Whippen also heads Whip It Media.
He is a former GateHouse Media executive in New England — he served as Director of Advertising from 2004 to 2007.
Whippen also worked at the Herald in the advertising department from 1996 to 2002.
According to the documents, “This unique offering has many deceptively attractive features that Whip It Media is pursuing to secure a loan through SunTrust Bank with a potential purchase price of approximately $5,200,000.“
The deal book outlines a series of cutbacks at the Herald that could transform the bankrupt newspaper into profitability.
Efforts to reach Whippen were unsuccessful.
Cuts to the Herald
Employee Cuts
According to the documents, “The Boston Herald has 228 employees, approximately 60% of whom belong to a union. Herald Interactivity, the company’s digital media group, is completely non-union.”
The document goes on to outline the status of the union contracts — specifically, that the editorial guild and the commercial guild contracts have both expired and both the Teamsters and typographers' contracts "expire in 2018.”
The document outlines that the Herald's next owner should ask the court to void the outsourced delivery operations which are now conducted by the Boston Globe.
“The expectation is that the new owner would not assume these obligations and would obtain appropriate approval to avoid them.”
“With total salary equaling about 50% of the total revenue and in comparison to other newspapers and media companies across the country, the Boston Herald is grossly overstaffed. The opportunity to start with a roughly 60 people staff reduction or approximately $4,160,000 in immediate savings.”
The document also outlines even greater cuts. “The Boston Herald should be operating at about 100 to 125 employees. So after the first year, it would make sense to reduce by another 30 employees or $1 million + in savings.”
The deal book also anticipates the discontinuation of $3 million in annual pension payments.
Office Space — “The Boston Herald leases two floors of an office building in the Seaport District of Boston totaling approximately 50,000 square feet. The lease agreement runs through 2022. Currently, monthly lease costs are $139,000 excluding electricity.”
“The lease has approximately 5 more years left on it. The potential for the filing for bankruptcy and leaving the lease for a much more suitable space with about a $75,000 a month saving is realistic. Fortunately, the pricing for space is at a low cost per sq ft is a premium space, so subletting is another option as well.”
Other challenges
The Herald has only $1.7 million cash on hand.
It only generated $8.7 million in print advertising and $2.8 million in digital for the fiscal year 2018. Advertising expenses are almost four million ($3.8M).
In the past four years, the Herald lost more than $8 million.
Editor's Note: The article was updated to affirm that the deal book was not prepared by the Boston Herald bankrupt entity, but by a private group seeking to potentially purchase the Boston Herald.
Related Slideshow: Whip It Media Documents on Purchasing Boston Herald - Jan. 30, 2018
Related Articles
- Boston Herald Files for Bankruptcy, GateHouse Seeking to Buy
- Whitcomb on Superman Potential, Boston Herald Bankruptcy on LIVE
- Confidential Boston Herald Documents Show Staff Could Be Cut By 50 to 60 Percent
- Cheat Sheet 45, FBI Files: Valachi Called to be Deposed in Patriarca’s Suit Against Boston Herald
- Cheat Sheet 33 The Patriarca Papers - Hoffa, Bianco, Suing the Boston Herald
- FBI Files - The Patriarca Papers - Entry 33 (Patriarca’s Lawsuit Against Boston Herald)
- Teamsters at ProJo File Federal Complaint Against Newspaper’s Owner GateHouse
- Providence Journal Sold to GateHouse, Sources Tell GoLocal
- NEW: ProJo Union Calls Out GateHouse for Secret Healthcare Rollbacks
- GateHouse Will Be Replacing Projo’s Website with Template Running in Arkansas, Nebraska and …
- ProJo Pulls Gregg from State House - What is GateHouse Thinking?
- What the Experts Say About the Boston Globe and Telegram Sale
- Bulger Mania - Has the Boston Globe Gone Overboard?
- Moore News: Rep. Finn Irked by Newport Daily News Bias and Boston Globe’s Wow
- Boston Globe Asks Reporters and Business Staff to Help Deliver Paper
- Head of Boston Globe’s Pressmen Union Tells GoLocal Problem is Not Theirs
- Boston Globe Early Edition Prints That Pats Lose
- Projo Reporter Tells Boston Globe “We Get Our Ass Beat All the Time” on Stories
