latest in a string
The newspaper's closing isStar-Bulletin reporters react.
one of many shutdowns and
cuts at isle companies
Union leaders brief Cayetano on the effects of the closing.
By Rick Daysog
and Pat Omandam
Each afternoon for more than four years, Norman Cheung delivered the Honolulu Star-Bulletin to 270 homes in Liliha and Nuuanu, never thinking his job was in jeopardy.
But on Halloween Eve, the 18-year-old Honolulu Community College student will deliver his last copies of the Star-Bulletin, whose owner abruptly announced yesterday that it will shut down Hawaii's oldest and second-largest daily newspaper.
The paper is the latest business casualty of Hawaii's struggling economy, now entering its ninth year of stagnation. It is also a highly visible reminder that the isles are missing out on the mainland economic boom.
"I don't believe it at all," Cheung said yesterday outside the Hawaii Newspaper Agency production plant in Kakaako. "It seemed like a stable company."
Cheung and hundreds of independent carriers face economic uncertainty in the wake of Liberty Newspapers Limited Partnership's announcement yesterday that it reached an agreement with media giant Gannett Co., owners of the Honolulu Advertiser, to close the afternoon paper and dissolve the joint operating agreement that created the Hawaii Newspaper Agency in 1962. The agency was formed to handle production for the Star-Bulletin and Advertiser and help assure the survival of both.
The shutdown also will mean that 90 Star-Bulletin staffers will lose their jobs on Oct. 30. About 50 HNA employees will be laid off later.
The news comes on the heels of recent announcements by other Hawaii companies of layoffs and closures blamed on the state economy. Pacific Century Financial Corp. announced this week it is eliminating more than 1,000 Bank of Hawaii positions as part of a company reorganization that will result in the loss of 265 employees.
Also, Signature Flight Support announced it will leave 135 people without jobs in early November when the major fueling and ground support business ceases operations in Honolulu. And the owner of the Sun Press announced this week that it will shut down its remaining neighborhood newspapers next month.
The layoffs come as a splash of cold water amid early indications that Hawaii's economy may be improving.
But the cuts are not necessarily a sign that things are getting worse, said Leroy Laney, an economics professor at Hawaii Pacific University.
Laney said news of the Star-Bulletin's closure yesterday is a continuation of a trend that started in the 1990s, with Hawaii consistently losing jobs. Laney said this has occurred in other sectors of Hawaii business, but is it more noticeable now because well-known companies are being affected.
"This is not anything particularly new," Laney said. "Banks have been doing it, most of the larger employers have been doing it for several years now."
"Obviously, it makes a bigger splash and a bigger impression when the larger, more visible employers are the people laying people off. If a similar number of people lost their jobs amongst small businesses, it wouldn't get as much attention because it would be harder to generalize," he said.
Laney said there have been signs of improvement in the state economy, including the most recent forecast by the state Council on Revenues, which shows that tax revenues and personal income are growing.
"You know, a lot of these layoffs seem to come, for whatever reason, clustered together. But I would say that if they are clustered then we might get over it more quickly than if they were spread out over time," Laney said.
But for many employees like Cheung, the news of the Star-Bulletin's demise came as a surprise given that the owner was making money, not losing it.
Under the terms of the JOA, the Liberty partnership received income of $1.42 million in 1993 to $1.81 million in 1998.
Liberty's annual income for operating the Star-Bulletin, which was guaranteed, was expected to grow to $2.5 million in the year 2012, when the JOA was set to expire. The income levels translates into a 12 percent rate of return, which is well below what mainland investors these days expect, given the booming U.S. economy.
According to one industry source, investors generally expect a 25 percent to 35 percent rate of return from their investments in a media venture.
Rupert Phillips, Liberty's managing partner, said the prospect of moving the company's investment to get a 30 percent return on the mainland was one of several reasons he and his partners asked Gannett to buy them out.
Phillips noted that Gannett agreed to pay back the partnership's initial investment in the Star-Bulletin, which is believed to be about $15 million, in addition to a termination fee based on savings from future payments required under the JOA.
"Unlike in Hawaii, the newspaper business on the mainland has continually improved since 1993, resulting in an increase in newspaper earnings for newspapers and an increase in the market value of newspaper investments," Phillips said.
That's no consolation to Eduardo Lozoya, who delivers 233 copies of the Star-Bulletin every day in Kahala. The independent driver said it will be hard to find other jobs because no one is hiring right now.
Lozoya said couriers like him are often the last ones newspaper owners consider when they make changes to the company. While he and others may have future jobs delivering The Honolulu Advertiser, his message to top management is to think how their actions affect those who deliver the final product.
"Please, make a solution. Don't close the company," he said.
As for Cheung, he knows he will never find another part-time job that pays him $1,200 a month for about two hours of a work a day. His greatest fear is having his prized car repossessed because he can't make the payments.
"It is the end of the world for me, for now," he said. "It is one of the saddest days on the job."
Meanwhile, Gov. Ben Cayetano and the state attorney general's office are looking into whether the closure of the Star-Bulletin was legal under federal law.
"We are looking at the anti-trust implications," said Cynthia Quinn, spokeswoman for the attorney general's office.
Here's a look at Gannett Co., owner of The Honolulu Advertiser, soon to be the city's sole daily newspaper:
Gannett at a glance
1998 operating revenue: $5.12 billion.
Skyrocketing shares: In 1967, a purchase of 100 shares for $2,900 would have been worth $421,176 in May 1999.
Number of daily newspapers: 74, with a combined circulation of more than 6.7 million.
Founder: Frank E. Gannett and associates in 1906.
Here's a look at the Honolulu Star-Bulletin:
Who we are, or were
Owner: Liberty Newspapers Limited Partnership
First Edition: 1871
Last Edition: Oct. 30
Number of employees: About 90
Joint Operating Agreement: The JOA between the Star-Bulletin and Advertiser was revised in 1993 and was scheduled to run to 2012
Reasons for closing: Poor economy, declining circulation, less return on investment than expected
Unions angry; similarBy Mary Adamski
closing in S.F.
Newspaper union leaders whose members will lose their jobs briefed Gov. Ben Cayetano about the effects of the closing of the Honolulu Star-Bulletin.
ILWU President Eusebio "Bo" Lapenia said the discussion yesterday covered concerns about why no effort was made to find a buyer for the newspaper.
"We talked about the Hart Scott Rodino Act, which gives a state attorney general standing in proceedings concerning failing firms and whether they have to be offered for sale," said Wayne Cahill, administrative officer of the Hawaii Newspaper Guild.
He said the unions told Cayetano about the California government investigation into the dissolution of the joint operating agreement covering the San Francisco Examiner and the San Francisco Chronicle. The Hearst Corp. proposal to sell the Examiner and buy the Chronicle has been put on hold while the state attorney general investigates, Cahill said.
Liberty Newspapers Limited Partnership announced the dissolution of the Star-Bulletin yesterday. Rupert Phillips, general partner of the Florida-based firm, told employees the decision was based on the investors' disappointment with the rate of return since they bought the paper from Gannett Corp. in 1993.
"The workers are getting shafted again," said Lapenia, also president of the Hawaii State Federation of Labor, AFL-CIO. He said 34 newspaper delivery employees, ILWU members, are among the 50 Hawaii Newspaper Agency workers who will lose their jobs, in addition to all 90 Star-Bulletin employees.
"They told us no supervisors will be laid off," Lapenia said. "Is that fair? It's always at the worker's expense."
The impact of the closing on individual employees in such areas as extended medical coverage and severance payments will be discussed in "effects bargaining" with the company later this month, Cahill said.
A Newspaper Guild membership meeting was set for 10 a.m. tomorrow to go over union members' concerns. The meeting at the ILWU office building at 451 Atkinson Drive was originally planned as a mobilization seminar for contract negotiations. The current collective bargaining agreement with the Star-Bulletin, Advertiser and Hawaii Newspaper Agency ends in June.
Cahill said he did not believe the prospect of labor negotiations was a motivation in the company's decision to dissolve the afternoon newspaper.
"It's too early to tell" what effect the action will have on negotiations, he said.
What does it feel like
to lose your job?
It's a turnaround for ourBy Mary Adamski
reporters as they're asked
to comment on the news
Sports writer Paul Arnett remained uncharacteristically speechless as he ran the gauntlet outside the News Building.
"I've always wanted to say 'no comment,' " he said gleefully after eluding the television news crews that staked out the scene of yesterday's news about the impending demise of the Honolulu Star-Bulletin.
It's just what he wouldn't take for an answer out in the sports fields and locker rooms of the University of Hawaii.
Being the seeker of a quote, a reaction, a sound bite, it's what we do.
It's a queasy feeling to be the prey.
All those times when we canvass the crime scene for a coherent witness, those frustrating legislative sessions when we get one "no comment" after another, those long hours staking out the federal mediator's office for a pithy update and almost worse, when you got more than you wanted, a diatribe, a scolding, a fanatic telling you a detailed and tedious scheme.
Worst are those times you stick a recorder, a camera, your face into their face and collect the tears of someone else's tragedy. We did penance for that yesterday.
It was our day to be the target.
I wasn't smart enough to follow Arnett's example. I paused to play "background information source" with my TV friends, hanging behind the camera.
I fell for the reporter's sincere deep-into-the eyes contact and the line about how I contribute to the community understanding of this thing.
"You've just lost your job, they're dismantling the newspaper which has been both career and family for 37 years. Do you feel betrayed?"
"What do you see as the effect on future newspaper labor negotiations?"
Plenty of my peers opted for Arnett's method. It was hard enough trying to pick yourself up and march through the rest of the day.
Most of us haven't sorted out the facts and the prospect of our lives changing forever.
But there I went, before even any morning coffee -- a lot of us didn't have the stomach for coffee yesterday -- yadayadayadayada. I had my minute of fame as a talking head. And didn't have the sense to disappear as another camera and reporter turned my way. Oh my, what was I thinking?
My role in this reporter job has been to be a listener and observer. Oh I can blather away at my Irish best in the relaxed company of friends. But I turn to a pillar of salt when expected to perform or be lucid before an audience.
I've never gotten up the nerve to be a lector at church where all that is required is to read the scriptures. Teeth chatter, hands shake, skirts flutter just standing before a crowd.
Actually, there was one time I did consent to read for a church service. It's funny how I remembered that experience yesterday as I looked fearlessly into the lens and tried to tell you that for us, this is a matter of the heart not the pocketbook.
My sole appearance as reader of psalms was for another matter of the heart, the wedding of my dear niece Mara, and I was happily numb then, too.
I don't expect to make a new career as a stand-up talker.
So if you missed my talking-head experience on television, don't wait for a return engagement.
My time of talking about it is past.
I find I've come to my time of tears.
No cameras, please.