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The Honolulu Advertiser
Posted on: Saturday, February 27, 2010

Acquisition plans began in 2009 after big losses

 •  Honolulu newspaper merger would mean name change, layoffs

By Rick Daysog
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Taking a tour of The Advertiser's Kapolei printing plant yesterday were, from left, Advertiser production director Marty Black, Star-Bulletin publisher Dennis Francis, Star-Bulletin owner David Black and Advertiser publisher Lee Webber.

WILL HOOVER | The Honolulu Advertiser

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Plans to purchase The Honolulu Advertiser were launched nearly a year ago in response to the weak local economy and the sluggish advertising market.

Star-Bulletin owner David Black announced on Thursday that he was buying The Advertiser from Arlington, Va.-based Gannett Co.

Dennis Francis, the Star-Bulletin's publisher, said yesterday that mounting losses at the Star-Bulletin in recent years prompted Black last year to outline a plan to his local board to purchase Honolulu's largest daily paper.

Francis said Black also went to the U.S. Justice Department's antitrust division seeking guidelines on how he could acquire the larger newspaper, Francis said.

"With the economy stuck for the last few years and no end in sight, it became a situation where it was how much longer can we do this," Francis said.

Under the deal, the Star-Bulletin's owner, Oahu Publications Inc., will acquire The Advertiser, its nondaily publications and Gannett's interest in Hawaii.com.

Oahu Publications, which is controlled by Black Press Ltd. of Victoria, British Columbia, will merge the Star-Bulletin and The Advertiser into a single newspaper if it is unable to sell the Star-Bulletin.

Terms of the deal were not disclosed.

Francis said that Oahu Publications has not officially put the Star-Bulletin up for sale yet and has not received any interest for the daily newspaper.

The staffing at a merged newsroom will likely include all Star-Bulletin staffers and an unknown number of Advertiser employees.

The Star-Bulletin's 70 staffers currently are covered by their union contract, which provides job protection for the newspaper's employees.

Under the asset sale of The Advertiser, Gannett executives said that Oahu Publications will not acquire the daily newspaper's union contracts.

Evan Ray, Gannett's senior vice president for finance and operations, initially told Advertiser Staffers on Thursday that "every full-time and part-time employee at The Advertiser will be offered employment by the new company" at the completion of the deal.

But when pressed by staffers, Ray said The Advertiser's union contract will not be picked up by Oahu Publications once the merger is completed several months later. That would eliminate any job protection for Advertiser Staffers.

Unlike a stock sale where a buyer acquires the assets and the union contracts of a company, an asset sale will allow Oahu Publications to "pick and choose" which Advertiser employees that it plans to hire, said Michael Nauyokas, a local attorney who specializes in employment law.

"They're not buying the company, they are buying its parts," Nauyokas said.

"They don't have the burden of the union contract or the union wages or its benefits."

Wayne Cahill, spokesman for the Hawai'i Newspaper and Printing Trades Council and the administrative officer of the Hawai'i Newspaper Guild, said staffing of the combined newsroom will be subject to negotiation.

He noted that Oahu Publications has yet to provide details on how it plans to merge the newsrooms.

"We're trying to preserve as many jobs as we can," Cahill said.