Maine papers could face shutdown, CEO suggests

The president and CEO of Blethen Maine Newspapers Inc. says its dailies in Portland, Augusta and Waterville may have to be shut down if its parent company winds up in default and its Maine assets cannot be sold.

In an affidavit filed in U.S. District Court, Charles Cochrane said Blethen Maine and The Seattle Times Co. face severe financial problems that threaten their ability to pay lenders and meet financial convenants, such as having sufficient revenue and cash flows.

Blethen Maine's assets, which include the Portland Press Herald, the Kennebec Journal in Augusta and the Morning Sentinel in Waterville, were put up for sale in March and management has instituted a series of layoffs, with another planned later this month. Cochrane said that if no buyer is found, even more drastic cost-cutting measures will be required.

His statement was filed in conjunction with the company's lawsuit against the Portland Newspaper Guild that asks a judge to determine whether a buyer of the Press Herald must abide by its union contract.

"Without a sale, it is even possible that BMN would be dismantled altogether, which would put all of BMN's employees - including the union's members - out of work. BMN, its employees and the communities it serves will be severely harmed if this happens due to the loss of jobs and three local newspapers," Cochrane said in the affidavit, filed last week.

Guild President Tom Bell said Blethen Maine never told the union that the newspapers could be shut down. "We think these are scare tactics," he said, suggesting that Cochrane's worst-case scenario was hypothetical.

In an interview, Cochrane denied that he was engaging in scare tactics and said a shutdown is neither imminent nor even probable, as some media reports suggest.

"It does lay out an extreme case of what could happen if eventually a sale were not made. But certainly there is not any indication in this filing nor is it accurate that the newspaper's going to be closed down next week or next month," Cochrane said.

"It is a possibility that this could happen if over time we were not able to get a sale and business conditions continue to deteriorate," he said.

Bell said the ownership link between the Maine newspapers and the Seattle parent is such that one cannot be easily severed from the other.

Last week, an investor group that includes former Defense Secretary William Cohen emerged as a potential buyer of the Blethen Maine properties and was given exclusive rights over a limited time period to negotiate terms of a sale.

Cochrane's affidavit said the potential deal remains "highly uncertain," in part because it requires the buyer to reach an agreement with the union on terms of a new contract.

Cochrane said Blethen Maine lost money last year and is likely to lose money in 2008. Advertising revenue at the Press Herald and Maine Sunday Telegram is down 19 percent from last year, he said.

The impact of this month's layoffs at the Press Herald will be eased because of a Guild proposal in which union members agreed to take a total of more than 400 hours of time off without pay to preserve jobs, said Bell, whose union represents 350 employees in Portland and Waterville.

"It was successful," he said. "There will be relatively few people laid off."