Joe L. Allbritton will pay an "insignificant" amount for the New York Daily News if his tentative deal announced Thursday goes through, according to a source familiar with the transaction.
But sources say that Allbritton will take on the News' contingent liabilities, such as severance payments and unfunded pensions, which must be paid out if the paper goes under. If the News were to fail today, those liabilities would amount to at least $100 million.
If these reports are correct, then Allbritton--who has made hundreds of millions of dollars by making good on calculated financial risks--would be taking on the biggest gamble of his career.
If, on the one hand, the News survives, Allbritton's short-term return will be minimal, if any. It's likely, in fact, that the News will provide him with tax losses to offset profits from his other holdings. If, on the other hand, the News fails after he takes control, his liabilities would be immense, sources said.
Wasting no time, the 57-year-old Allbritton today met with newspaper union representatives at his suite in the Carlyle Hotel on Manhattan's upper East Side. Formal negotiations are scheduled to begin on Monday.
Allbritton's offer to acquire the News from the Tribune Co. of Chicago is contingent on his ability to get major concessions within 30 days from the 11 unions representing 3,800 full-time employes. Others who have considered acquiring the News figured that 1,500 employes would have to be cut from the News' work force.
According to sources, the Tribune Co. has agreed to pay severance expenses for any employe cuts that Allbritton can negotiate within the 30-day period. Thus Allbritton must get sizable reductions right away in order to make acquisition of the newspaper possible and to reduce his liability if it should fail.
One serious problem facing Allbritton is that New York newspaper union contracts contain so-called "me-too" clauses. This means if the unions make certain concessions to the News, then those same concessions automatically go to the New York Times and Post.
However, there reportedly are 600 News employes who lost their jobs to automation, some of whom have lifetime contracts and spend a few hours a week at the News. Allbritton is certain to offer incentives to get these employes to retire, especially because the "me-too" provisions don't apply to them.
Other cuts will be more difficult to come by and will depend on how successfull Allbritton is when he personally negotiates with each of the unions.
The Tribune Co., which announced the paper was for sale on Dec. 18 after learning that it would lose $11 million in 1981, came under increasing pressure to find a buyer that would keep the News alive.
Another would-be buyer, real estate developer Donald Trump, was turned down by the Tribune Co. only hours before Allbritton got the nod. This happened, sources say, because he would not take on the liabilities and he was not knowledgable about the newspaper business.
Allbritton was judged as more interested than Trump in keeping the News alive. Not only has Allbritton owned the now-defunct Washington Star, but Allbritton Communications Co. in Washington controls a number of newspapers, including the Trenton Times, which it bought from The Washington Post and WJLA-TV, Channel 7, in Washington.
Theodore Kheel, the labor mediator and attorney who is representing Allied Printing Trades Council, the umbrella organization over the 11 unions, said he would be amazed if Allbritton had agreed to take on the News' immense liabilities.
"If he is going to be at risk to that extent," Kheel said, "I think we can make a deal with him."
After the Carlyle Hotel meeting this morning with Kheel and Trades Council President George McDonald, Allbritton said that he was not going to answer questions about his contract.
Allbritton said the News is not "the typical dying newspaper," which he described as "an afternoon publication, No. 2 in its market, suffering a continuing downward spiral of circulation and advertising defections, struggling to maintain an editorial identity."