Newspaper pension plans accept $1.5 million payment

The employee pension plans at Philadelphia Newspapers L.L.C. have agreed to accept $1.5 million to settle their claims against the bankrupt media company, resolving an issue that had hung over the company's reemergence under new ownership.

Seven union pension plans had said they were owed $12 million to cover funding shortfalls that had accrued since the company - owner of The Inquirer, the Philadelphia Daily News, and Philly.com - filed for bankruptcy in February 2009. The company's lenders are in the process of taking possession of the company, which they plan to rename Philadelphia Media Network Inc.

As part of the settlement, the pension plans agreed to drop their appeals of the reorganization plan, which absolves the new owners of responsibility for keeping the pensions funded in the future.

The pension funds and the newspaper's owners agreed to "fully and finally" settle the issues rather than engage in a protracted legal battle, according to papers filed with the U.S. Bankruptcy Court. The company asked the court on Friday to schedule a hearing for Thursday to accept the settlement.

The position of the pension plans was weakened in July when Bankruptcy Judge Stephen Raslavich denied their request to delay the reorganization while the pensions appealed to U.S. District Court.

Raslavich said a delay could imperil the company's financial health if the bankruptcy case were not concluded by September.

Under a reorganization plan that Raslavich confirmed in June, Philadelphia Newspapers L.L.C. is being sold for $139 million to 16 financial institutions that were among its senior lenders.

After meeting privately with labor and management representatives Tuesday, Raslavich said he was "encouraged" to learn that most of the unions had reached contract agreements with the new owners, removing some of the last impediments to an ownership transfer.

Raslavich offered to act as a mediator to resolve the unsettled contracts. "I'm hopeful the parties will reach an amicable resolution of those issues," he said.

The new owners have received concessions from the unions, including wage reductions, furloughs, longer workweeks, and changes in work rules. Rather than contributing to the pension plans, the company will offer union members a 50 percent match for up to 6 percent of pay contributed to a company-sponsored 401(k).

The company's largest union, the Newspaper Guild, has agreed to a three-year pact that includes a 2 percent across-the-board pay cut and 10 unpaid furlough days a year, equivalent to an additional 4 percent cut.

The Guild, which represents journalists and advertising and circulation staff, has scheduled a ratification vote for Tuesday.