It was not the owners of the Portland Press Herald who sought out Maine hedge-fund mogul S. Donald Sussman to proffer a cash infusion to save the ailing newspaper. Rather, it was the idea of the Press Herald's unionized employees.
Sussman, the paper announced late Friday, will lend the Press Herald and its sister papers between $3 million and $4 million in exchange for five percent of the company and a seat on its board of directors. Sussman is also a philanthropist and the husband of Maine Democratic Congresswoman Chellie Pingree.
Tom Bell, a Press Herald reporter and president of the local Newspaper Guild union representing many of the company's workers, confirms that neither the company's owners, Texas-based HM Capital Partners, nor Sussman himself who initiated the deal.
"We didn't speak to him directly," Bell says. "It was through a third-party intermediary," whom he declined to name. Another person (a fourth party?) had mentioned to union leaders that Sussman had some interest, so the union got in touch late last year.
"It was prior to our negotiations with Kushner and Harte," Bell says, referring to the bid by the 2100 Trust, owned by Massachusetts entrepreneur Aaron Kushner and former Press Herald president Chris Harte, to purchase a majority stake in the company and institute significant cuts and reforms. That effort, in which Harte and Kushner proposed significant cuts to union workers' pay and benefits packages, failed to get union support last month (see thePhoenix.com/AboutTown for details on that).
When that deal fell through, Bell says there had yet been "no sign" Sussman was interested. Rather, there were what Bell calls "two likely scenarios," one in which the company would go into bankruptcy protection, and the other in which Kushner and Harte would buy the company despite the union objections.
Then Sussman stepped forward, and the union's outreach efforts bore fruit. Even as far back as early 2010, when the Blethens were seeking to sell the company, union representatives had "spent a lot of time calling around the state" seeking investors, Bell says. Those inquiries hadn't turned out, but the attempt to pique Sussman's interest did.
What happens now remains a bit unclear. While the company's announcement of the investment said "one of the first steps . . . would be to hire a top notch CEO with media experience," Bell indicated that the existing interim CEO, Neil Heyside of rescue firm CRG Partners, was likely to stay for at least several months to oversee some in-house technology transitions.
That includes a new computers and new software that on the editorial side integrates story publication online and in print, and on the advertising side makes everything much clearer and easier. "We have a very Byzantine system that makes it hard to know on a day-to-day basis how the company's performing," Bell says.
Bell says the company and the union hope those changes really boost the newspapers into a much stronger position; the size of the required investment remains unclear, and the dent Sussman's loan to the papers will make in its existing debt is also uncertain, leaving the full impact of the new deal fairly foggy.
The deal may take "a few weeks" to close, according to Guild vice-president Greg Kesich, an editorial writer at the paper who sits on the board as one of two Guild reps (a third seat is shared by two smaller unions representing company employees).