Time Inc., acknowledging that The Washington Star was losing about $1 million a month, warned the newspaper's employes unions yesterday that they were heading "toward an impasse" in labor negotiations that would lead to The Star's closing on New Year's Day.
In a tough talk to union leaders, Time Ins. President James R. Shepley said that if labor agreements are not reached by Dec. 31, "The Washington Star Company will have one and only one option-close down the market and pay off the creditors."
Shepley asserted that Time Inc., which purchased the newspaper earlier this year for about $28 million, was prepared to write it off as a loss. "It comes out to less than $10 million net after taxes-by no means an unacceptable loss," he said. "Continuing publication of The Star is much bigger risk, "Shepley added.
Union officials, who previously have appealed to Time Inc. to lift its Dec. 31 deadline, responded to Shepley's speech with dismay and some apparent anger.
Robert E. Petersen, president of the Greater Washington Central Labor Council and secretary-treasurer of Columbia Typographical Union No. 101 which represents Star printers, said, "We're not willing to sacrifice, at this time, the jobs and the future of all our people to make a profit for a company like Time Inc."
According to union officials, The Star is seeking steep reductions in the number of printers it employs.
Ray Dick, an official of the Washington-Baltimore Newspaper Guild, which represents news, advertising, clerical and other white-collar employees, asserted, "Dictation of terms [by The Star's management] is what we're faced [with] right now." According to Guild officials, The Star is seeking to freeze basic were schedules for Guild employes and make othe major changes in its salary system.
The Star's management and the 11 unions that represent about 1,270 intensive negotiations over new five-year contracts in the face of Time Inc.'s Dec. 31 dealine. Shepley's speech confirmed previous statements by union leaders that little progress has been made in bargaining so far.
Time Inc. has pledged to spend $60 million on The Star During the next five years if it can get acceptable contracts with the unions by Dec. 31.
Although all 14 contracts The Star currently has with its 11 unions are scheduled to remain in effect until late next year, Time Inc is seeking to replace the existing accords with stringently modified new agreements designed to guarantee five years of labor stability.
Union officials have disclosed in recent days that The Star's management has told them it is exploring the possibility of shifting from publishing an afternoon to a morning paper on weekdays. Shepley did not suggest this prospect in his speech, however, and he declined to talk with newsmen afterward. A Star spokeswoman said officials would have no further comment.
In a dramatic gesture apparently designed to help get Time Inc.'s stern message across, Shepley called union leaders to a private meeting at the Mayflower Hotel to deliver his 15-minute talk. The publishing company later made public a text of his speech.
Shepley's address was the first confirmation by Time Inc. of previous reports that The Star was losing about $10 million this year-nearly as large a deficit as the newspaper had incurred in 1974 when it was purchased by Texas businessman Joe L. Allbritton. Allbritton later sold it to Time Inc. Shepley said The Star's losses were expected to be "higher in 1979."
The Time Inc. president attributed The Star's mounting deficit partly to stiff competition from the Washington Post for advertising revenue. Saying that The Post's advertising income is four times greater than The Star's Shepley asserted, "They [The Post] mean to hold or increase their market share-over our dead bodies if necessary." Washington Post President Mark J. Meagher said The Post would have no comment on Shepley's speech.
Shepley repeatedly sought to counter speculation by some Star employes and others that Time Inc.'s threat to clost The Star might be a bluff-a management tactic designed to extract harsh terms from the unions."Don't confuse this situation with what might strike you as a parallel in London," he said. "If we go down, we stay down...It's a Washington fact of life that The Star could not recover from a shutdown. With all advertisers, all readers swinging automatically to The Post, we could never recover."
Shepley's reference was to last month's indefinite suspension of The Times and The Sunday Times of London. The London papers plan, according to their management, to remain closed until new contracts are reached with their employe's unions.
According to The Star employes' unions, Time Inc. has proposed complex and sweeping changes in their labor contracts. In broad terms, the proposals would restrict pay increases for white-collar employes and severely reduce the newspaper's blue-collar work force.
Leaders of the printers' union say that Time Inc. has proposed to guarantee only 25 of an estimated 175 current printing jobs, with an intial cut of 80 jobs planned by next June. Officials of Teamsters Local 639 say the union faces a proposal to bring in 300 to 400 nonunion employes-a move it views as a stiff threat to union jobs.
Officials of the Newspaper Guild say Time Inc. has offered terms modeled on a controversial contract previously negotiated with Time magazine and other Time Inc. employes. It would freeze basic wage schedules and allow management broad latitude to provide "merit" pay raises as it chooses.
Management, union officials say, would have the right to deny 10 percent of The Star's highest salaried white-collar employes any wage increase during the next five years.