As AP customers defect, employees get squeezed

19 Nov 2008

Chuck Bartels, in the AP’s Little Rock bureau, flashes his union colors.

The wire service also wants “scheduling flexibility” for beat reporters, wants to increase the number of senior journalists who are exempt from overtime or scheduling requirements, seeks to remove regional desk editors from Guild representation and wants to tack on an additional six months’ probation for temporary employees who have passed their nine-month probation in one bureau and then are offered a permanent job in another.

Oh—and it also wants to eliminate pay altogether for interns. Let ’em eat credits.

“There is no room for staffers who are resistant to changing operating demands,” Mike Silverman, senior managing editor, declared in a statement read at the bargaining table that elicited no little bristling on the union side. “There will be no place to hide those who refuse to pull their weight in the streamlined AP of 2009.”

Outside the negotiating room, meanwhile, the roster of AP customers who are publicly rethinking their commitment has grown by leaps and bounds, with a reported 7% of the cooperative’s newspaper members giving notice of revocation. Potential competitors also are beginning to crop up.

More recently, CNN announced it is about to launch the CNN Wire, aimed specifically at newspaper editors. An all-expenses-paid three-day “summit” in December will showcase its wares and reportedly has attracted interest at Newsday and the Plain Dealer, among others. Local content-sharing consortia also are proliferating, with a Northeast group taking shape to parallel the arrangement already reached among seven leading newspapers in Ohio.

Red T-shirts in AP’s Washington office show displeasure with company proposals.

Amid all this turmoil, therefore, it may come as a surprise to learn how financially robust AP was just a few months ago—far more so than its newspaper members. Revenue has grown for four consecutive years, hitting $710 million in 2007 and projected to reach $750 million this year. Net profit increased 80% last year, while debt was all but eliminated, paid down from nearly $60 million in 2004 to approximately $5 million last year. There was $30 million in the bank. Strong cost containment measures have allowed the wire service to reduce news expenditures while increasing capital investment.

The contrast between AP’s publicly reported finances and its draconian bargaining proposals has infuriated members of the News Media Guild, who in protest have been arriving at work clad in red T-shirts that bear the message, “We keep AP Working.”

“AP deserves credit for the dramatic increases in profitability,” allowed Tony Winton, president of the News Media Guild. “But at the same time, it is fair for the workers who helped create that success to share in it.” Noting that AP for years has described its service as “essential,” Winton added that the union is in discussions with AP “over its most essential component: its staff, the men and women who collectively are responsible for making—and keeping—the AP essential.”

To push the point, the News Media Guild has mounted an online petition drive for its members that criticizes AP’s contract proposals as regressive and failing to meet employees’ needs. The petition urges the company to “reverse course and promptly enter into an agreement that invests in its employees and provides security and stability for both them and the company.”

But the cooperative’s solid financial footing also didn’t sit well with its members when AP recently unveiled a revised rate structure that it wanted to implement in January. Despite AP’s claims that the new rates would lower costs for some members, a significant number concluded just the opposite and raised a firestorm of protest. After initially ignoring the reaction, the wire service shifted gears and said it would reduce rates, lift proposed restrictions on content and think about dropping its two-year requirement for cancellations.

More tellingly, AP recently returned $21 million of its hoarded cash to members, and has said an additional $9 million is on the way. At press time, AP Chief Executive Tom Curley was expected to issue a much more pessimistic assessment of the company’s financial position, buttressing its current hiring freeze.

The irony in all this is that today’s AP is highly innovative, evolving fresh business models and moving to new media platforms with an alacrity newspaper publishers must envy. But its lack of a similarly keen appreciation of its customer base has created a financial bind where there was none just a few months ago, and as often is the case in such situations, it appears to be trying to remedy its plight by squeezing its employees.