The Sun-Times unions and the writers guild are negotiating an “economic relief” package with the Chicago Sun-Times, according to Teamsters 706 leader Tony Judge, Jr. The Teamsters are working with other unions, including the Chicago Newspaper Guild and unions for the mailers, composers and others. Judge said the newspaper had asked for a seven percent total reduction in labor costs, but that the unions, although each will need to negotiate the details of changes individually, are working together. Together they had negotiated that seven percent request down to a 5.3 percent reduction. In addition, the company will undergo a union sponsored audit to assure company compliance with the terms of a relief package.

Judge said the rollback from the contracts will be for one year.

Question: Can the Sun-Times survive a year?

Judge: I can't answer that. Hopefully with these concessions they can. The unions are working in good faith. And, they are getting a commitment from management. Management is going to take these cuts too.

Judge said the rollback is one of 47 initiatives that include a consolidation and elimination of some Pioneer Press titles, cutting operations in Schuamburg and Plainfield, outsourcing some activities, including in editorial and realigning routes within the city.

That realignment will cost the union 14 jobs, Judge noted.

A prior report in this blog quoted a union member as saying that the realigned routes were meant to make it easier for the Sun-Times to fold its routes into Chicago Tribune routes. When asked about the Chicago Tribune efforts at beefing up its street sales operations, Judge said the two developments may not be related. Sources at the Chicago Tribune indicate this is to take on products such as the Wall Street Journal and the New York Times.

Misha Davenport, unit co-chair at the Chicago Sun-Times for the Chicago Newspaper Guild noted that the Guild has not agreed to outsourcing editorial. “The reconstitution of the Board of Directors has put these negotiations into limbo,” Davenport said. He said that he had expected the new board of directors to clean house quickly and implement plans to turn the company around, as indicated in their letters to shareholders. “They're not moving as fast as I'd expected,” he noted.

If the rollback is 5.3 percent across the board, the Sun-Times Media Group would enjoy savings of about $5 million using recent filings by the company. An additional $1.6 million would be saved by consolidating routes at the street level according to Judge.

At the end of the third quarter, 2008, the Sun-Times Media Group had cash on hand of $99.8 million. It's cash burn was running a pretty consistent $13 million to $16 million a quarter. Meaning a roughly $60 million annual burn rate. If the company can not stop the burn, it will be illiquid sometime in the second quarter 2010. It announced a $50 million cost cutting effort in early 2008 and another $50 million cost cutting program in late 2008.