The New York Times Co. is pulling the plug on its metropolitan area newspaper and magazine distribution company, City & Suburban.
A 100 percent-owned subsidiary of the Times, City & Suburban currently delivers about 200 newspapers and magazines to newsstands and retail operations in the metropolitan area and is believed to be losing tens of million of dollars a year. It will shut down in January.
Getting out of the money-bleeding operation won’t be cheap, however.
The exit costs could ultimately reach more than $120 million, according to one industry source.
Approximately 550 full-time equivalent employees will be affected by the closure. The Times said it plans to “ease the change by providing severance packages.”
That means the company will have to successfully conclude negotiations with the Newspapers Mailers and Deliverers Union.
The Times would not comment on the financial impact of either the operation or shutting it down, but conceded that in today’s environment, the distribution arm is “no longer an economical business.”
One source said that the company is dangling an incentive offer of $50,000 per worker, which would bring the Times’ buyout liability to $27.5 million. The buyout proposal has yet to be accepted by the union, which is known to be one of the toughest negotiators in the city.
Doug Panattieri, the president of the drivers’ union, did not return calls seeking comment.
Beyond the buyout, the Times also could be liable for unfunded pension contributions to the drivers’ union, which could run another $100 million.
“The business environment has changed dramatically since 1992, when City & Suburban was formed, and wholesale distribution is no longer an economical business for the Times Co.,” said Scott Heekin-Canedy, president and general manager of the Times.
He said the company would move to a model similar to that used by its national edition by using independent third-party distributors.
In addition to the Times, City & Suburban delivers The Post, the Daily News, The Wall Street Journal and the Star-Ledger. It also delivers most of the major weekly titles in the New York metro area.
