'UPI's Day of Reckoning Draws Near'

Here's a story by Debra Gersh from the Nov. 10, 1990, edition of Editor & Publisher:

Rejection of Management-Proposed Pay Cut Could Force Closure

The day of reckoning is at hand for United Press International, as voting members of the Wire Service Guild cast their ballots for or against a 35 percent pay cut for 90 days, without which the wire service will liquidate immediately.

There is no guarantee, however, that these pay cuts will save the beleaguered wire service. The company says it is seeking these concessions to give it some "breathing space" while it seeks a buyer for either the service as a whole or its various parts.

However, union leaders say the company has gone to the well once too often and are urging the eligible WSG members to vote against the proposal.

In addition, UPI clients have been asked to accept a voluntary 9 percent increase in assessments in November, December and January.

Decisions about travel for stories is being made on a case by-case basis. It had been rumored that UPI would not send a representative with President Bush on his upcoming trip abroad because of travel expenses owed the White House for previous trips, but as E&P went to press UPI was planning to have someone there.

Sources indicate the wire service is losing $2.5 million a month.

In an emergency meeting Friday, Nov. 2, union leaders and UPI management met for eight hours in discussions WSG president Kevin Keane described as "gloomy."

At the meeting, UPI told the union its members would have to accept 35 percent pay cuts for 90 days to give the destitute wire service time to find a buyer. UPI told the WSG at the meeting that if the union refused a vote, UPI would liquidate through a Chapter 7 bankruptcy proceedings that Wednesday, Nov. 7.

Union leaders agreed to put the proposal before those union members qualified to vote, but have opposed its acceptance.

Guild president Keane said he and WSG secretary Chris Dahl are opposed to the proposal because it is too steep and UPI offered no safeguards or guarantees.

"It was a proposal made at the point of a gun," Keane said, adding that UPI offered no "Plan B."

That same Friday, the pay of UPI non-union employees was cut 35 percent across the board and the company announced it no longer would issue notice or severance pay to fired non union staffers.

About 50 non-union employees were fired, including a number of editorial managers, many of whom were longtime Unipressers. Reportedly among them was former managing editor Bill Ferguson.

"We were very disappointed with the way the company treated its own managers, too," Keane added. "You don't treat people that way."

Although the WSG represents about 300 UPI employees, only those in good standing, who have paid their dues in full, are allowed to vote. A number of editorial staffers affected by the union have resigned from the union as well. Keane declined to comment on how many Guild members at UPI are eligible to vote, but sources indicated it could be around only 100.

Ballots, mailed to union members Tuesday, Nov. 6, must be received by the WSG by Nov. 16, which coincides with the end of the current pay cycle.

If the WSG rejects the proposal, UPI is expected to cease operation at midnight, Saturday, Nov. 17, and begin filing for Chapter 7 bankruptcy protection Sunday, Nov. 18.

In the event of liquidation, it seemed likely there would be little, if any, recovery for severance pay.

The internal message wire at UPI has been buzzing with items pro and con concerning the proposal, and UPI executive vice president Pieter VanBennekom has been traveling to the wire service's remaining bureaus, campaigning for "yes" votes.

Unipressers campaigning for a "no" vote, however, were said to be contacting their colleagues via telephone, rather than over the wire because they see the issue as very personal.

According to notes sent over the message wire about some of these staff meetings, VanBennekom has said there is no alternative to a "yes" vote on the proposal. A "no" vote would lead to liquidation.

"Our only chance as a company is for an investor to step in," VanBennekom reportedly said.

Although rumors circulated about potential investors, and VanBennekom has said interested has been expressed by more than one potential buyer, no concrete information about who they might be was forthcoming.

VanBennekom did, however, tell staffers "you'd be surprised" at who has expressed an interest. He also noted that there "is enormous value in the logo . . . and that's what (a buyer) would be acquiring."

In another meeting, VanBennekom reportedly said, "We are getting close to knowing where the level of interest really lies . . . the inquiries are real. The interest is absolutely genuine. The question is, do these folks, are they really interesting in taking on the risk of righting the ship?"

In addition, VanBennekom told staffers there have been no "instant cancellations" from UPI clients, adding, "Nobody wants to put the last nail in the coffin of UPI."

The company rejected proposals to involve Guild members in the search for a buyer because, according to VanBennekom, "it tends to make the company more unsalable" by giving prospective buyers the feeling they have "no maneuvering room."

VanBennekom also said UPI rejected a WSG proposal for a shortened workweek because the staff already has been "severely constricted" by the recent layoffs and could not put out an adequate report with a shorter workweek.

When asked why UPI fired most of its sales staff, VanBennekom reportedly replied that it was a difficult decision, but "the prospects for new sales in this climate is unrealistic."

He added, "I wish I could say this (pay cut) will not be for naught . . . but I can't. It's the only thing possible that gives us a shot for the future."

Although indications were that the sale of Financial News Network was "virtually guaranteed," the possibility, however unlikely, remained that parent company Infotechnology Inc. could sell FNN and UPI as a package.

Infotech co-chief executives Alan J. Hirschfield and Allan R. Tessler have retained the investment banking firm of Wethheim Schroder & Co. Inc. to effect the sale of Infotech properties such as FNN.

Infotech also reported that internal audits spurred by shareholder lawsuits alleging misrepresentation of the company's financial position and by a Securities and Exchange Commission investigation (E&P, Oct. 20, 27; Nov. 3) have shown only one instance of misappropriation of funds: some $795,000 "not properly authorized" but allegedly received by FNN's former chief financial officer C. Steven Bolen.

Infotech stock continued its decline, falling to as low as $1 a share. FNN stock was up very slightly, fluctuating at around $2.50 a share as E&P went to press.

Unipressers in various bureaus, as they have done in the past, wasted little time sending their comments about the latest proposal over the internal message wire.

Helen Thomas in the White House urged her colleagues to "vote to give UPI another chance to survive. I have never lost faith that we could make a comeback, and I know the sacrifices everyone is being asked to make are very tough. But I also know that none of us wants new agency journalism to be a monopoly in this country. I am appealing to all to vote to keep us in business. The alternative would be a tragedy."

Not all staffers were as ready as Thomas to accept the wage cut proposal, however, as one sent the message, "I, too, (am) unwilling to use my body as a flotation device for the Titanic."

Many of the messages -- especially from veteran Unipressers who have been through the wire service's well documented trials and tribulations -- expressed anger, frustration, bitterness and despair at the situation, and many had begun investigating the unemployment benefits in their states.

Voting to save UPI at the expense of our paychecks is not a realistic proposition," messaged one Unipresser to all. "Those of you who have been around UPI for a long time should know that it already has ceased to exist.

"Ask yourself if you still feel like you are providing clients with what they need. Are you proud of the compromises you are forced to make daily?

"It is a real tragedy to have owners who try to lay the fate of a once-great company on the desks of those who have kept it going all these difficult years. UPI exists only because its owners want to make one more withdrawal from the company bank by trying to dump UPI off on some other owner.

"Haven't we had enough? UPI already is lost. It has been ruined by years of mismanagement and gouging. Let's preserve our dignity and self-respect by not allowing ourselves to be raped again by this set of owners, and the next if there are to be more.

"Voting for these pay cuts may gain you a few more weeks of pay, or it may get you more months of misery. In the meantime, it will be more and more embarrassing for UPI and the memory of what it once was. Follow the example of Howard Beal and say, 'I'm mad as hell and I'm not going to take it any more.'"

From Paris came the message . . . (T)hose in the United States are being asked by management to cast a live or die vote, thereby placing the onus of killing the agency on those who have most sacrificed for it all these years. The high management types will find other, even better paying jobs. You can be sure of that.

"The first reaction, therefore, is to urge a 'no' vote and the hell with it. After all, the American newspaper establishment decided long ago it did not want to support two independent competitive worldwide news agencies.

"But looking at the situation from faraway Paris, it seems to me that the ultimate insult would be to allow management to say (which they will, you can bet on it) that the employees killed UPI. We cannot let them get away with that, and I for one could not bring myself to pull the plug on a dying man.

"Therefore, it seems to me that the only intelligent vote is to accept the wage cut and hope for the best. Maybe UPI will live, probably not. But in any case, those who have sweated over the years to insure its survival, excellence and integrity will not be blamed, however wrongly, for killing it. Let those who have run UPI into the ground take the responsibility."

Others looked at the situation from a more economical standpoint.

Wrote one Unipresser, "Dignity is a seven-letter word which my kids can't eat."

Another, voicing concern for Unipressers overseas, to whom the company has a legal obligation but who would not necessarily be repatriated prior to a bankruptcy filing, state, " . . . I speak only for those guys and gals spread across the planet from Bangkok and Buenos Aires, Karachi and Kuala Lumpur. There are staffers who are every bit as dedicated as we on the domestic end of things, and I would venture to guess that they could use the breathing space to get their belongings and families back home.

"They are already taking the pay cut, coupled with a dollar that has plunged against foreign currencies . . . Many, I suspect, would stay abroad and do other things, but many probably would return home, and that's easier to do with three months of planning and some money. Ain't no unemployment lines for Americans stuck in Moscow or New Delhi that I know of.

"My humble plea is vote your mind, but keep the overseas folks in mind."