In talks convening today, the New York Daily News will seek concessions from its employees in return for an ownership stake in the tabloid, though prospects for success seemed cloudy as union leaders were balking at accepting cutbacks in wages or staffing.
"We're not bargaining," Newspaper Guild Local 3 President Barry Lipton said. "We've already given all we can."
About 800 of the newspaper's 2,700 jobs were eliminated when the late publisher Robert Maxwell acquired the Daily News from the Tribune Co. in March. It is the unions' public posture--with the News thrust into Chapter 11 bankruptcy protection last week in the wake of Maxwell's death--that further cuts should come from the management side.
As investigators attempted to trace hundreds of millions of dollars missing from Maxwell's empire, sources close to the situation said the News' future may grow bleaker if it is forced to disgorge up to $25 million in British pension-fund assets improperly used to prop up the paper.
News spokesman John Campi said Tuesday that the paper's directors had ordered an independent review of "all cash transfers involving the Daily News" since Maxwell's eleventh-hour takeover.
Meanwhile, New York Mayor David N. Dinkins met with representatives of the unions and News management--including Maxwell's son, Kevin, the paper's publisher since his father's death last month. Dinkins pledged his "cooperation and assistance" in efforts to keep the debt-hemorrhaging tabloid alive.
"In this time of fellowship and cheer and miracles, we are here to say that the Daily News is an important New York institution," Dinkins said after the meeting at his official residence, Gracie Mansion. The mayor was flanked by Kevin Maxwell and George McDonald, president of the Allied Printing Trades Council.
The News is losing about $400,000 a week, and a source involved in the negotiations said the gap between revenue and expenses could be closed by reducing payroll expenses 15%.
Maxwell said it was premature to discuss specifics, although he has said the newspaper will require a cash infusion from an outside investor and an equity-sharing arrangement with its workers in order to survive.
Whether an investor can be found is an open question. When Robert Maxwell took control of the paper last winter, Tribune Co. had to pay him $60 million to assume the News' liabilities. To ensure long-term survival, the News not only must get past its current liquidity crisis but also raise $500 million to build a modern plant.
Arthur Anderson & Co., the accounting firm overseeing Maxwell bankruptcy proceedings in London, has been invited to name a representative to the News' board of directors, Campi said.
Union representatives were not named to the board, but labor mediator Theodore Kheel and investment banker Eugene J. Keilin will represent union interests in attempts to reorganize the paper.
Meanwhile, in London, investigators said substantial evidence links Kevin Maxwell to transactions of a pension-fund management company at the heart of the mystery surrounding the missing Maxwell millions.
Kevin Maxwell, 32, and his brother, Ian, 35, are under a British court's order to disclose by next week what they know about the affairs of the company, Bishopsgate Investment Management Ltd., one of several companies their father controlled.
"The evidence we were able to collect and present to the court over the weekend (regarding Kevin Maxwell) appeared to be very substantial," said attorney Margaret Cole, who is working with Neil Cooper, the court-appointed provisional liquidator of Bishopsgate. That evidence prompted a British judge on Monday to freeze Kevin Maxwell's personal assets, estimated at $810 million.
Kevin Maxwell has declined to comment on allegations that he approved transfers of pension funds, but on Tuesday said that he would step aside as publisher of the Daily News if it became clear to him and his associates that he was damaging the paper's efforts to survive.
Auditors probing Robert Maxwell's business dealings said they have traced nearly $720 million in missing employee pension funds that Maxwell used in recent months to help prop up his struggling communications empire.
However, Cooper said it was uncertain how much of that can be recouped, adding that $590 million is still missing.
Victor F. Zonana reported from New York and Rone Tempest from London. The Associated Press also contributed.