CHARLESTON – A federal agency says missed contributions to Charleston Newspapers’ retirement plan and the company’s application for a distress termination of the plan are not related.
Pension Benefit Guaranty Corporation spokesman Marc Hopkins said Friday that PBGC attached a lien on behalf of the plan earlier this month. That’s a standard practice when required pension payments of $1 million or more are missed. Hopkins said Charleston Newspapers and other entities responsible for that retirement plan have missed payments for the last few years. The $1,341,121 in missed payments took several years to reach that amount, he said.
Hopkins also said the lien does not affect the plan’s ability to pay current or future benefits owed to participants. Rather, it is designed to offer financial protection for the plan and to help ensure that it’s properly funded.
Regarding the distress termination of the plan, Hopkins said PBGC received that application in June.
“A plan sponsor that makes such an application must demonstrate to PBGC that it can’t stay in business and continue its pension plan,” Hopkins said. “PBGC will evaluate the company’s financial condition and make a decision based on those findings.
“It’s PBGC’s preference to keep plans going with their sponsors. If that can’t happen, we’ll step in and take responsibility for paying the pension benefits of all plan participants up to the legal limits. For plans that end in 2015, the maximum guaranteed benefit for a 65-year-old retiree is $60,136 a year.”
Hopkins said the Charleston Newspapers Retirement Plan remains in the hands of its sponsor for now, and that the PBGC is going to work with the company to keep it that way.
Charleston Newspapers notified planholders in May that it planned to terminate their pension plan Aug. 1. In that situation, PBGC takes over as trustee and uses plan assets and its own assets to ensure retirees get their benefits.
On Friday, Charleston Newspapers Chief Financial Officer Trip Shumate said the liens had been placed against the entities named as plan sponsors – Charleston Newspapers, Daily Gazette Company, The Daily Gazette Company, Daily Gazette Holding Company LLC, Charleston Newspapers Holdings LP, Daily Gazette Publishing Company LLC, G-M Properties Inc., ABRY/Charleston Inc. and Ridgeview Express Delivery LLC – because of lack of payments.
“We are behind on our minimum contributions, so we had the lien filed against us,” Shumate said. “We’re now working with the PBGC to get caught up. We have been talking to them since January to get this taken care of. We will be done and caught up with our payments in the next few weeks, next few months.
“The PBGC guarantees benefits are there for those in the plan up to a certain maximum. And more than 99 percent of those in our plan are under that maximum.”
Hopkins said those entities are named in the lien because they have the legal responsibility to fund the pension plans for employees.
"With the situation in the relation with Charleston Newspapers, it’s not unique what we did with them,” Hopkins said. “Any plan sponsor that misses contributions of a million dollars or more, we place liens against them so pension obligations can be fulfilled."
Hopkins said PBGC works similar to the FDIC with banks, insures almost all private pension plans across the country. Right now, PBGC insures about 22,000 plans. Hopkins said there are 200 of them with liens against them right now, including Charleston Newspapers.
Now, Hopkins said PBGC will work with the entities to help them get caught up on payments.
“We will bring people to the table to talk to us,” he said. “We’ll talk to them in the weeks and months ahead about getting caught up. That’s the ultimate goal. We want these plans to be funded so members of the plans don’t have to worry about their benefits.”
News of the missed pension plan payments comes days after the Charleston Gazette and Charleston Daily Mail announced a merger to become the Charleston Gazette-Mail.
The merger was announced on Sunday, five years to the day after a federal antitrust settlement was reached regarding Charleston’s two daily newspapers.
On July 19, 2010, U.S. District Judge John Copenhaver approved an antitrust settlement to regulate both newspapers.
"The Charleston Daily Mail shall continue to be published as a daily newspaper," he wrote then.
Copenhaver wanted proof that Charleston Newspapers, the operating partnership between the papers, didn’t discriminate against the Daily Mail, which then was an afternoon newspaper with a smaller circulation than the morning Gazette. He sought that proof of compliance for five years. That five years expired Sunday, and staffers were gathered that afternoon and told of the merger.
Then, according to reports, newsroom staffers at both papers were gathered and told of the newsroom merger. They papers had shared the same press and business operations since forming a joint operating agreement in 1958. The Sunday Gazette-Mail has been published for decades, and the Saturday Gazette-Mail has been around for nearly a decade. Last year, the papers began printing combined holiday editions.
After new Charleston Gazette publisher Susan Chilton Shumate told the staffers of the merger, they had just hours to put together Monday’s paper, according to wvfocus.com.
“The action itself is not something I am surprised about,” one employee told wvfocus.com. “I’m surprised with the way they went about it, but then, I don’t know all the circumstances.”
Employees who weren’t at the meeting received an email announcing the change around 5 p.m. Sunday.
“Beginning today, the two newspapers are combining newsroom functions with the exception of editorial page content,” the email said. “Welcome to the Charleston Gazette-Mail.”
Like the announcement in Monday morning’s newspaper, the email said the new Gazette-Mail would retain two independent editorial pages – one conservative and the other liberal.
“This is not one paper gobbling up the other,” the announcement said. “It is a combination of the two newsroom staffs working in cooperation to produce the most comprehensive news product in West Virginia.”
“The email they sent made it sound like the Charleston Gazette-Mail would be bigger and better than before … But I don’t know that the situation was handled well enough to make me feel totally confident about that,” the anonymous employee told wvfocus.com. “Just based on the way that they’ve handled it so far, I don’t think that they will tell us any of their plans before executing them at any point in this transition.”
At a July 20 meeting, newsroom staffers were told they’d have to reapply for their jobs, and that the new Gazette-Mail newsroom would employ about 65. At the time of the merger, the Gazette employed 45 workers and the Daily Mail 33.
Copenhaver’s 2010 final judgement was in an antitrust case brought by the U.S. Justice Department against the Daily Gazette Company and MediaNews Group.
Although the Daily Mail’s and Gazette’s joint business operations were known as “Charleston Newspapers,” the Daily Gazette Company owned the Gazette and MediaNews owned the Daily Mail. Both companies had 50 percent stakes in Charleston Newspapers until 2004 when MediaNews sold out to the Daily Gazette Company for a reported $55 million.
In 2007, the Justice Department filed a suit alleging the Daily Gazette Company “planned to deliberately transform a financially healthy and stable Daily Mail into a failing newspaper and close it.”
