Philadelphia papers' publisher talks layoffs

April 9, 2008 5:03:27 PM PDT
In a sign of falling fortunes, the owner of Philadelphia's two largest daily newspapers told a judge on Wednesday that unraveling the merger of two of its pensions could lead to more layoffs because the company would have to pump at least $8 million into the underfunded plan. The Newspaper Guild of Greater Philadelphia is suing Philadelphia Newspapers LLC, a unit of Philadelphia Media Holdings and owner of The Philadelphia Inquirer and Daily News. The union is upset that management merged the fully funded Guild pension plan with an underfunded plan without its consent, charging that it would put the health of the first plan in jeopardy.

But the company's lawyers told U.S. District Court Judge Berle M. Schiller that if it has to put more money into the underfunded North Broad Street plan, more layoffs could be necessary.

In March, the company cut over 80 non-editorial jobs, two months after Chief Executive Brian Tierney warned the unions that it must reduce costs by 10 percent or have difficulty meeting debt payments.

The lawsuit, filed last week, accused the company's trustees of violating federal employee benefits laws and breaching their fiduciary duty. But the company argued in separate court documents that the Guild had until the end of 2007 to find a multi-employer pension with which to merge. Failing that, the company said, it had the right to take over the plan as spelled out in an agreement with the union - and directed a merger with the North Broad fund.

As of March 1, the Guild pension plan was fully funded with assets of $193 million and liabilities of $180 million covering 2,344 members. The North Broad pension, with nearly 900 members and almost all belonging to the Guild, is 39 percent funded as of Jan. 1, 2007.

The judge is expected to make a ruling on Friday.