United Press International and the Wire Service Guild negotiated a15-month “austerity program” designed to end a 20-year historyof unprofitable operation exacerbated by an accelerating cash-flowproblem in recent months. Luis G. Nogales, UPI’s executive vicepresident and general manager, said the “stringent measures”would result in savings of $12 million and enable the company “tobuild a foundation for sustained growth.” William Morrissey,president of the Wire Service Guild, called the agreement the”worst .
. . I have ever recommended to the membership” butsaid there was no choice “under the circumstances.” Thosecircumstances included an estimated $7 million deficit for 1984 and $9million owed to other companies providing service to UPI. Under the accord, salaries of the 900 union members were cut 25percent effective September 15, but the cut will be restored in stepsand at the end of the agreement salaries will exceed the levels prior tothe cut. The cut will be reduced to 15 percent on December 15, 1984, to10 percent on April 12, 1985, and to 5 percent on July 1, 1985.
OnOctober 1, 1985, salaries will be restored to the precut levels,followed by a 3-percent increase on December 15, 1985, and a 2-percentincrease on January 1, 1986. Prior to the cut, the “topminimum” (payable after 5 years’ service) was $29,026 forreporters and some other employees. The company also was permitted to postpone its payment to thepension plan for 1 year.
When payment is made, it will be retroactive to the normal date. In return for these changes, 6.5 percent of the parent Media NewsCorp.
‘s stock will be distributed to the employees in proportion tothe amount each lost as a result of the pay cut. The Wire ServiceGuild, which is part of the Newspaper Guild, also gained a seat onUPI’s board of directors. UPI’s 1,100 nonunion employees voted to accept wage andbenefit changes similar to those for the union-represented workers.Many of UPI’s financial difficulties have been attributed to thefact that the market for wire news services is dominated by thenonprofit Associated Press, which serves 1,286 newspapers and 5,666broadcast stations, compared with UPI’s 802 newspapers and 3,298broadcast stations. Also, several major newspapers have establishedwire news services in recent years.