A Time of Uncertainty for Many in the News Media : UPI’s Union Staff Agrees to 35% Pay Cut, Keeping the Wire Alive--for Now
Union employees at United Press International voted Friday to take a 35% pay cut rather than see the 83-year-old American news agency close down at midnight.
But some said they voted for the reduction so they could have an income while they looked for other work, and some fear that the long-suffering company may not survive past Christmas.
UPI’s parent, Infotechnology Inc., had asked staff members to take the pay cut for 90 days, and perhaps longer, to give it time to find a buyer.
The news agency, founded by E. W. Scripps, has been sold three times in eight years and once was in bankruptcy proceedings. A decade ago, when the company was much larger and healthier, E. W. Scripps Co. actually paid two “buyers” $10 million to take it off its hands.
“Sixty-five percent of something is better than 100% of nothing,” staff members in the Sacramento bureau argued in a unique employee debate waged over the UPI internal wire the past two weeks. “A vote to save UPI buys us time to look for other jobs in a recession-hardened news market. And maybe, just maybe, the cavalry will come riding over the hill.”
The company also asked its subscribers this month to accept a 9% rate hike for three months. UPI said it is losing $2.5 million a month and has $10 million in bills that are due immediately.
“This gives us time to continue operations and seek a buyer,” said Executive Editor Al Rossiter Jr.
Spokesman Milt Capps said UPI has “a dozen or more” companies interested in buying it.
Some employees doubt this. “I believe the only buyers for UPI are a few fringe ‘cherry pickers’ who want UPI’s name and, perhaps, a few isolated assets,” former UPI Guild officer Dan Charmichael wrote on the internal wire.
Thirty-eight percent of the employees voted to lose their jobs outright Friday.
“UPI is not a shrine,” one Washington staffer argued over the wire. “It’s a business. . . . We are dedicated professionals who have spent years being the targets of gross personal and professional insults by our employers, and who have grown weary of the constant battle to maintain life support systems that are continuously ripped away by UPI’s callous and inept owners. Enough is enough. Vote against the pay cut.”
Ronald E. Cohen, former managing editor of UPI and author of a book about its troubled decade, said the company is only a shadow of the news agency he once knew. While it once had 1,500 employees and 250 bureaus worldwide, in the past few months the already much smaller company closed bureaus in all but 15 states and some major foreign cities. It now has between 200 and 400 employees, according to insiders.
The company refuses to say how many clients, employees or bureaus it has. But many of UPI’s major clients, with the exception of the Los Angeles Times and the Washington Post, have dropped the service during the last five years. The New York Times and Wall Street Journal, for example, no longer subscribe.
A few months ago, UPI staffers agreed to a 6% increase in their workweek. With the new 35% pay reduction, UPI’s scale for Guild-covered reporters and photographers with eight years’ experience will be cut to $448.50 per week. Pay for first-year reporters and photographers will drop to $234 from $360 a week.
UPI’s immediate problems have much to do with its controlling shareholder, Infotechnology, which is under investigation by the Securities and Exchange Commission for possible securities fraud. Founder Earl W. Brian has been replaced as chief executive, and Chief Financial Officer C. Steven Bolen was fired after it was discovered that he allegedly paid himself $795,000 in bonuses. Infotechnology has said it no longer has enough cash to meet its daily operating expenses.
But UPI’s troubles go deeper. The company has reported a profit only twice in 30 years, and only sporadically before that.
One problem is that wire services are hard to make profitable. The Associated Press is a nonprofit cooperative of newspapers, and Reuters is subsidized by its financial data service. Most foreign news services are government-owned.
Some also argued that UPI’s original owner, E. W. Scripps Co., managed it badly and never provided the capital for the news agency to diversify. By 1978, Scripps had grown weary of the losses. It twice tried to sell shares of UPI to newspapers, both times in vain.
In 1982, it sold the company to a little-known pair of Nashville businessmen for just $1--and then bankrolled them with $10 million to operate it. With virtually no money of their own, William Geissler and Douglas Ruhe sold off most of UPI’s profitable assets over the course of two years to generate cash.
Eventually, management and creditors took the company away from them, and UPI slipped into bankruptcy. It was sold to Mexican press baron Mario Vazquez Rana in 1985, then to Infotechnology in early 1989.
