Pulse: Power: Paper Cuts on Broad Street

In the past 10 years, Knight Ridder has doubled the ­Inquirer and Daily News profit margin and slashed the papers’ staffs. They’re not done yet. When an analyst recently asked how long the company could cut costs without creating a “franchise risk,” CEO Tony Ridder replied, “I’d say infinity is how long we can do this. … We are not at the bone, believe me.”

If there is any fat left in Knight Ridder’s business, much of it is here in Philadelphia, where one of the company’s largest newspaper properties continues to show some of its poorest financial results. There are inefficiencies aplenty to be rooted out at 400 North Broad, where employees have worked for years under a rather cushy set of union contracts stipulating, among other things, that the Daily News not be shuttered, that the Inquirer and Daily News be delivered aboard separate Teamster-driven trucks, and that senior employees enjoy Supreme Court-level job security.

These contracts won’t expire for another year, but already the posturing is under way. In June, Inquirer and Daily News publisher Joe Natoli presented the company’s strategic plan for the next year, which calls for hiring more customer-service and advertising salespeople. He emphasized the need for ever-greater revenues, which struck some employees as crying poor to soften them up for contract negotiations.

“It’s going to be a year of hell,” predicts John Laigaie, head of Teamsters Local 628. “People take these jobs for life. Now this company wants us to convince people that we have to let you go to satisfy some 25-year-old on Wall Street.”

Newspaper Guild officer Howard Gensler says Knight Ridder should spend money bulking up its content, not just its sales force. “If Coca-Cola kept watering down their soda and charging more for it, they wouldn’t walk around wondering why people aren’t buying it,” he says.

The Newspaper Guild has been doing some saber-rattling of its own. When Inquirer editor Amanda Bennett recently asked reporters to blog and respond to readers at Philly.com, the guild complained that it was outside the collective bargaining agreement. It has also advised its members to squirrel away money in case of a strike.

With Knight Ridder pining for a 25 percent profit margin and the unions still fuming over what it’s taken to get to the current level — about 16 percent — Tony Ridder will have trouble slicing to the bone, at least on this round.