Maxwell Approves Tentative Deal to Acquire N.Y. News

NEW YORK —  In what is likely the last chance to save the strike-bound and financially hemorrhaging New York Daily News, British publisher Robert Maxwell signed a letter of intent Tuesday to buy the newspaper and announced that he would meet with union leaders later this week to see if he can win enough concessions from labor to make the sale final.

“We’re delighted that there’s someone who wants to own the paper and run it in New York,” said George McDonald, president of the Allied Printing Trades Council, an umbrella group for the nine striking unions.

Daily News officials said the sale to Maxwell is subject to numerous conditions, including execution of a definitive contract and satisfactory labor agreements with the unions by March 15. If Maxwell cannot come to terms with the unions by then, the News’ current owners have said, they will close the paper.

Union leaders expressed confidence that agreements with Maxwell could be reached by the paper’s deadline. “If both sides shake their heads in the same direction,” McDonald said, “we could do it in 48 hours. Now we have somebody we can deal with. We never got any offer from the News’ management.”

But management sources said they consider it hardly certain that Maxwell can win enough concessions to make the paper, one of four in New York, sufficiently profitable. It is also possible that Maxwell will still have to come back to the paper’s owners, Tribune Co. of Chicago, for final negotiations before a sale can be reached.

One source described the agreement Tuesday as merely a framework that sets the stage for the News’ sale, rather than any kind of firm agreement.

The News has been trying to regain consistent profitability for more than a decade, and it almost closed in 1982.

Its publisher, James Hoge, said Monday that the paper is now losing $700,000 a day, losses heavily compounded by the bitter strike that crippled the paper in late October. Since then, management says, the News’ circulation has shrunk by nearly 50% to 600,000, and competitors say the numbers are far lower than that. Advertising has fled.

Terms of the proposed sale to Maxwell were not disclosed, but sources say the British publisher would not pay Tribune Co. any cash.

Instead, Maxwell would assume the paper’s long-term liabilities, including perhaps $150 million in lifetime contracts, severance and pension responsibilities. In addition, Lazard Freres & Co., the investment banking firm handling the sale, has estimated that the new owner would need to spend another $50 million to bring back the paper’s circulation and advertising to its pre-strike levels.

And Tribune Co. estimates that it would cost $350 million to $500 million to build new printing and distribution facilities to replace the News’ antiquated presses.

In the face of that, sources suggested that Tribune Co. is likely paying Maxwell to take the paper off its hands. According to published reports, Tribune Co. offered another buyer, Mortimer Zuckerman, $60 million to take the News.

Zuckerman refused, saying he would not take the risk for less than $82 million.

Tribune Co. is agreeing to sell the paper after an elaborate and costly long-term plan to turn around the paper failed. That strategy, which began in the mid-1980s, involved revamping the paper and working with the unions to cut costs.

As part of the provisions in the letter of intent to sell, the Daily News also agreed not to hold discussions or negotiations with any other potential buyer while Maxwell was involved.

Maxwell, who reportedly was invited by both parties to come in and save the paper from extinction, talked to union leaders Tuesday by telephone. He was to leave Britain that same day and begin negotiations Thursday in Manhattan.

Thursday’s meeting is to include “just the unions and himself--no lawyers, no brokers. Just himself,” McDonald said of Maxwell.

The Czechoslovak-born Maxwell heads Maxwell Communication Corp., which employs more than 15,000 people in 16 countries and generates annual revenue of about $1.7 billion.

His holdings include the Daily Mirror, Britain’s second-largest newspaper; the European, the recently launched English-language newspaper for Europe; the Macmillan publishing house, and Collier’s Encyclopedia.

David Treadwell reported from New York, and Thomas B. Rosenstiel reported from Washington.