Philadelphia's two largest newspapers will lose 40 more newsroom employees this month, prompting union leaders Thursday to accuse management of bungling a tablet computer launch, censoring stories and deriding print newspapers as "legacy products."
The losses are just the latest setback for staffers, who have gone through repeated rounds of cutbacks and might soon have their fifth owner in six years.
A group of local powerbrokers and philanthropists hopes to buy Philadelphia Media Network from the New York hedge funds that took control after a 2010 bankruptcy auction. The sale price has plummeted from $515 million in 2006 to $139 million in 2009 to perhaps less than $70 million this year.
The hedge funds installed former Newsweek.com executive Greg Osberg as publisher in late 2010. The guild attacked his leadership in a sharply worded memo Thursday.
"Perhaps instead of killing stories he didn't like about the sale of the company and trying to be seen as some sort of digital visionary by holding press conferences at the Academy of Natural Sciences, ... creating a poorly launched tablet and worrying about apps that make a few dollars, Osberg should be focused on properly staffing the newspapers," the local Newspaper Guild said in a memo Thursday.
Osberg didn't immediately return a message. Spokesman Mark Block defended the tablet launch but said the company won't debate the criticisms of management in public.
"Neither the region nor the company would be well served debating the guild's comments about leadership and products," Block said.
According to the union, 21 people are taking buyouts and 19 full- and part-time editorial workers will be laid off by March 31. The Inquirer's Pulitzer Prize-winning cartoonist, Tony Auth, is among them.
The company plans to merge newsroom functions at the rival newspapers, relying on a single beat reporter, for instance, to provide event coverage for the broadsheet Inquirer and tabloid Daily News.
The newspapers will also leave their headquarters building this summer and move to city-subsidized space in a vacant department store. The building was sold as part of the bankruptcy.
The Newspaper Guild questions whether the job cuts are necessary, given what it called $6 million in union concessions in the 2010 contract.
"Whether Osberg wants to admit it or not, the print editions of the Inquirer and Daily News, which he offensively labels `legacy products,' are responsible for generating more than 90 percent of the revenue," the guild said.
However, Block said the cuts are part of an industrywide trend and aren't connected to the sale.
Cable TV mogul and philanthropist H.F. "Gerry" Lenfest leads the group trying to negotiate a deal with the hedge funds. The investor group includes powerful New Jersey Democrat George E. Norcross III, former New Jersey Nets owner Lewis Katz and 94-year-old business magnate Raymond Perelman. It's unclear if former Pennsylvania Gov. Ed Rendell, who announced the bid last month, is still involved. His spokeswoman has said he cannot comment because of a confidentiality clause.
Observers believe the sale may be completed by March 31. Lenfest doesn't expect any news this week.
"We have to go further in getting a deal done," Lenfest told The Associated Press on Thursday.
Two people familiar with the negotiations, who spoke on condition of anonymity because of confidentiality agreements, have put the sale price at $40 million to $70 million. Company earnings dropped to $4 million last year, they said.
The company cut 20 jobs last year, just the latest in a series of cuts under different owners. During its heyday under Knight Ridder in the 1980s, the Inquirer had about 600 union-covered newsroom employees and the Daily News about 200.
The numbers will soon be about 200 for the Inquirer, fewer than 100 at the Daily News and about 50 for Philly.com, according to the guild.
The layoffs announced Thursday include five full- or part-time Inquirer reporters, two full- or part-time Daily News reporters, seven part-time copy editors and two part-time Philly.com content producers.
According to Guild grievances, newsroom managers censored recent stories on a rival bid contemplated by developer Bart Blatstein, who now owns the headquarters building.
As for the tablet sales, Osberg had hoped the first batch of 5,000 might sell out by Thanksgiving. They debuted in September, at $99 with a two-year digital subscription. Six months later, 1,000 remain unsold, Block said.
Still, he said the branded tablets have helped push sales of the company's Android app.
"When you think about how we rolled it out, we timed it perfectly with the launch of a digital app," Block said.