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NEWSPAPER MONOPOLY.

American Journalism Review July 1, 1999 | BASS, JACK Chains are proclaiming “location, location, location” as they swap properties for geographic dominance.

THE NEWSPAPER CHAIN IS TRYING TO FIGURE OUT IF IT MAKES sense to add a certain 40,000-circulation daily to its portfolio. Decision time is fast approaching. So the CEO spreads before him all the pertinent documents to the studied–cash-flow models, market analyses, payroll and circulation breakouts, broker recommendations, highway maps.

Highway maps?

Absolutely–in some ways maybe the most crucial papers in the stack, truth be told. That’s because where newspaper companies once were quick to gobble up most any property that came available to them–call it growth for growths sake–today they have come to embrace the mantra of “location, location, location” with a fervor that would put a real estate agent to shame.

On a scale never before seen or imagined, newspaper chains are concentrating their holdings into tight geographic groups. Stimulated by new opportunities for cutting costs and building revenues, and encouraged by tax laws and changing trends in retail advertising, such established companies as Thomson, Knight Ridder, Cox, Media General, Hollinger, Gannett, Donrey and MediaNews are swapping properties like baseball cards, unloading papers that don’t fit their geographic strategies and acquiring ones that do.

Thomson Newspapers has a fancy name for a complex of papers in close proximity–it calls them “strategic marketing groups.” Cox speaks of “regional groups,” while MediaNews and other companies simply use the more generic term “clusters.” Whatever you call them, they are transforming the landscape of newspaper ownership in America and fundamentally changing the way the industry does business.

The Project on the State of the American Newspaper has identified 125 major regional concentrations (see “Togetherness, Newspaper-Style,” page 80), involving more than 400 papers–or well over a fourth of the nation’s dailies. And the numbers keep growing. By the end of this year, predicts Owen Van Essen of the brokerage firm Dirks, Van Essen & Associates, another 30 or more papers will be traded among at least 10 different companies, all aimed at tighter concentration of ownership.

The ultimate cost-cutting prize is having two or more papers share the same printing plant. But even when this isn’t possible, nearby papers may share overhead costs such as accounting, they may pool their regional sports coverage or their state and regional political coverage, and (although this is rare) they may even share a centralized copy desk.

“The closer you are, the more you can share,” explains Brian Cooper, senior vice president of Cox Newspapers, which will soon open a new plant to print two of its North Carolina papers.

Geographic concentration also allows more enticing deals to large retail advertisers. With one buy order, one ad sheet and one bill, a Sears, a Circuit City or a big regional bank can place ads in any combination of newspapers it wants within the group. For advertising agencies, which increasingly make buy decisions for the major retailers in regional malls, the combined circulation of a newspaper cluster, purchased on a cost-per-thousand basis, makes more sense than buying space in bits and pieces from competing papers with overlapping circulation areas.

But while the economic advantages of geographic concentration become more obvious every day, the implications to readers and to journalism are less clear.

Since Cox acquired it in 1995 and integrated it into a three-paper group, the Greenville Daily Reflector in North Carolina has updated its computer system and is getting Washington coverage of its congressional delegation for the first time. It is scheduled to move into a new printing plant in October.

Since MediaNews bought the 35,000-circulation San Mateo County Times in 1996, to add to its other holdings in the San Francisco area, it has reinvigorated an afternoon paper that was losing money and lacked the resources to adequately cover the local pro sports teams. Now the Times shows a profit, runs nearly twice as many pages as before, and covers local news well enough to hold its ground against the San Francisco Chronicle to the north and the San Jose Mercury News to the south.

On the other hand, after MediaNews bought Long Beach’s Press-Telegram from Knight Ridder in 1997, it slashed newsroom salaries, damaging morale and prompting more than half of a seasoned and respected staff to leave. Knight Ridder did something similar with the Monterey County Herald, which it acquired in 1997 in an exchange of California and Colorado papers with Scripps Howard. The new owner cut staff in Monterey, refused to recognize the existing Newspaper Guild contract, crushed morale and alienated many people in the community.

An obvious drawback to geographical concentration is that it reduces the competitiveness and diversity of journalistic voices. In 22 states now, one company controls 20 percent or more of the daily newspapers operating there. For example, Media General owns one-third of all the properties in Virginia. Lee Enterprises owns one-third of Montana’s daily papers. And more than half the 44 dailies in Oklahoma now belong to a single company, fast-growing Community Newspaper Holdings Inc., or CNHI.

The Journal Register Co. owns five of Connecticut’s 18 daily papers; they cooperate in both newsgathering and business operations. Times Mirror owns three other Connecticut papers, which share some editorial functions. These two chains account for more than half of all the local papers sold in Connecticut each day.

Twelve of New Jersey’s 19 daily papers are owned by just three companies–Gannett, Newhouse and Macromedia. They account for two-thirds of the circulation of all New Jersey-based dailies. They also dominate coverage of the state government, furnishing 29 of the 38 newspaper reporters assigned full-time to the capital.

Concentration of newspaper ownership is nothing new, of course. But in recent years it has become pervasive. Of the 543 newspaper trades and acquisitions recorded between 1994 and 1998, all but a few have resulted in tighter concentration of ownership within a state or region. Indeed, the idea of building clusters prompted most of those sales in the first place. (See “The Selling of Small-town America,” May.) Some major players have taken advantage of the seller’s market to pare their holdings to more manageable levels. Thomson has lately reduced its U.S. daily newspaper holdings from more than 150 to just 50. “The problem with the 150-odd newspapers was rather like a biblical farmer scattering his seed on the land,” Stuart Garner, Thomson’s chief executive officer, told the Milwaukee Journal Sentinel. “There was no logic in where the newspapers were located.” Now there is a logic. Forty-five of those 50 remaining papers are in specific clusters–three in southeastern Indiana, eight in central Wisconsin and so on.

“Newspaper companies are going to have to find more and more creative ways to keep their companies growing,” says Dean Singleton, CEO of MediaNews and one of the industry’s leading practitioners of clustering. “Eliminating duplication is one of those things that help do that. This is not a growth industry.” David Lord, president of Pioneer Newspapers in Seattle, agrees. “Overall, there is an industry recognition that we have to do it. Logically, it makes sense.” Imagine a huge game of Monopoly, with all the players trading properties. Everyone knows that Boardwalk and Park Place are worth more if you own them both, which means a player who owns one will pay a premium to get the other. It’s the same with newspapers. Consider a recent deal between Thomson and Ogden, a subsidiary of Nutting Newspapers. Thomson traded away four dailies in Ohio and Pennsylvania with a combined circulation of 90,000 to get a single paper in Wisconsin, the Oshkosh Northwestern, with a circulation of just 25,000. The reason Oshkosh was so important to Thomson was that the company already owned the four other dailies that ring the Lake Winnebago area. Ogden co-owner Robert Nutting hadn’t planned to sell the Northwestern, according to a member of the family that originally owned it. “The story we heard,” the family member, Thomas H. Schwalm, told the Milwaukee paper, “was that Thomson kept throwing newspapers at Ogden until he couldn’t say no.” Or try following this transaction without a scorecard. In 1996, three companies–Thomson, Cox and Hollinger–executed an elaborate three-way swap involving 15 daily papers in seven states. Thomson picked up Cox’s six newspapers in Arizona: the Yuma Daily Sun on the California border and five suburban dailies along Phoenix’s long eastern flank–the Chandler Arizonan-Tribune, Gilbert Tribune, Mesa Tribune, Scottsdale Progress Tribune and Tempe Daily News-Tribune. Subsequently Thomson merged all five of the Phoenix-area papers into the Mesa-based Tribune, with zoned editions for each community. (A year later Thomson would augment its Phoenix cluster by acquiring, from Ottaway Newspapers, the Daily News-Sun in Sun City.) Cox, meanwhile, got from Thomson two North Carolina papers–Elizabeth City’s Daily Advance and the Rocky Mount Telegram–to go with the nearby Greenville Daily Reflector, which it had bought from an independent owner. Simultaneously, Cox got from Hollinger the Marshall News Messenger in East Texas, where it already owned three dailies, one of them less than 20 miles from Marshall. Cox said it also received cash and “other considerations.” Hollinger sent Thomson a weekly and a cluster of three small dailies–the Greensburg Daily News, the News-Times in Hartford City and the Rushville Republican–in the southeastern corner of Indiana. The dailies had a combined circulation of not quite 13,000. In return, Hollinger got three dailies from Thomson–the Enid News and Eagle in Oklahoma, the Register-News in Mount Vernon, Illinois, and the Herald-Palladium in Benton Harbor-St. Joseph, Michigan. (The Enid paper was subsequently resold, to CNHI, bolstering its concentration in Oklahoma.) As a result of this complex trade, both Thomson and Cox were able to concentrate their holdings. Hollinger did not, but the three stand-alone newspapers it received had a combined circulation of 67,000, while the four papers it gave up had only about 21,000. If nothing else, this comparison suggests how much more highly valued papers may become when they can be sold into a geographical group or cluster.

Such groups need not be limited by state lines. Knight Ridder owns the largest newspapers in each of the Carolinas, the Charlotte Observer (244,000 daily circulation) in North Carolina and The State (120,000 circulation) in Columbia, South Carolina, as well as the fast-growing Sun News of Myrtle Beach (45,000 circulation) on the South Carolina coast. Peter Ridder, publisher of the Observer and the younger brother of Knight Ridder Chairman and CEO Tony Ridder, says the distances between these papers “prohibit clustering in the traditional sense.” It’s 90 miles south from Charlotte to Columbia, 140 miles east from Columbia to Myrtle Beach, and almost 200 miles northwest from Myrtle Beach to Charlotte.

Still, since coming to the Observer in 1997, Ridder has pushed for greater sharing and “partnership” among the three newspapers. The Observer has joined in the sharing of content–especially sports–that had been going on for some time between Columbia and Myrtle Beach. Because Myrtle Beach is a golfing mecca, the Sun News files golf coverage to all three newspapers. It gets coverage of Clemson and University of South Carolina football from The State and racing news from Charlotte, a NASCAR hub. A Carolinas.com Web site lets users click on any of the three papers.

Since Ridder’s arrival, Columbia and Charlotte have been sharing South Carolina governmental and political news. And the Observer’s Columbia bureau has been cut from two reporters to one.

Traditionally, the Observer’s reputation in South Carolina has been one of aggressive enterprise in covering state government and politics. The State currently runs stories generated by the Observer’s one-man shop in Columbia. A veteran journalism watcher there tells me the arrangement has reduced competitiveness. If the Observer is covering a story at the Statehouse, he maintains, The State doesn’t assign one of its reporters, who might see a different angle.

So far, the Observer hasn’t developed any significant joint advertising arrangements with its South Carolina partners, but it is exploring ways to do that, especially something related to golfing in Myrtle Beach. “If there’s a market, we’d do it in a minute,” Ridder says.

Since all these papers circulate in the Myrtle Beach area, “We’re in a lively three-way competition,” says Paula Ellis, publisher of the Sun News. She adds, “We cooperate when everyone agrees it’s to the advantage of all.” Says Ridder, “I can see more and more synergies between the three Carolina newspapers. I am certain that will happen.” Synergy notwithstanding, the proliferation of geographic concentration all across America raises hard questions for journalism:

* As time goes by, will there be fewer competing journalistic voices in a given state or region? One already sees this happening in places like Connecticut, Virginia and New Jersey.

* What happens to clusters when they mature? Since the trend is so new, it’s impossible to say with any certainty. In and around Westchester County, just north of New York City, Gannett for years operated one of the nation’s tightest and most conspicuous clusters. But last fall it merged those 10 separate nameplates into a single suburban paper, the Journal News. Now readers get late sports results, a bigger newshole and other editorial improvements that efficient consolidation can offer. Yet, with Westchester County’s scores of incorporated municipalities and independent school districts, many readers mourn the diminishment of “local, local” news and lament the snipping of another thread to their particular hometowns, the vanishing of a newspaper masthead that was overtly “theirs.” Strong, independent weeklies are thriving there.

Out in California, meanwhile, the Contra Costa papers that Knight Ridder bought in 1995 from the family of Dean Lesher still publish as separate entities through the week. But the chain wasted little time before consolidating what were five different Sunday papers into a single muscular edition that circulates nearly 200,000 copies.

* Will the fatter profits generated by the new geographic strategies mean more money for journalistic improvements, or will newsrooms languish even while earnings rise, as has often happened in the 1990s? Singleton speaks optimistically on this point, despite his reputation for keeping a tight rein on newsroom budgets. “The revenue implications are more important than cost-cutting,” he argues, “because selling advertising jointly not only helps your revenue base, it increases your newshole. If you sell a page of department store advertising that you didn’t have before, you get a page of news you didn’t have before. One of the beauties of clustering is that it takes papers standing on the brink and makes them very healthy.” * Will there be less journalistic competition? It depends. In the Bay Area, Knight Ridder’s San Jose Mercury News and its Contra Costa papers go head-to-head against the complex of papers owned by MediaNews, and both those groups compete vigorously against the area’s dominant metro, the San Francisco Chronicle. (See “The Battle of the Bay,” January/February.) This new order, though, raises another concern. As a few newspaper companies ring big cities with their coordinated groups of small to medium-size papers, will major metros lose the fight for suburban readers and advertisers? Will this further isolate suburbs from their central cities, and further deprive suburbanites of an understanding of big-city problems? It’s easy to imagine this happening in places like Philadelphia and Los Angeles. But for now, the question remains unanswered.

If it ever is answered, chances are it will be in the affluent communities east of San Francisco Bay, where you can find one of the nation’s most sophisticated clusters coolly humming along, 24 hours a day, seven days a week.

IT’S ALMOST 8 P.M., AND NANCY CONWAY, EXECUTIVE EDITOR of the five Alameda Group dailies, drops by the “news center” for a final checkup before heading home. In a large second-floor room that approaches the size of a basketball court, dozens of copy editors, grouped ,in units of three to six, sit at their terminals. They re doing the usual things–polishing copy, writing headlines and captions, laying out pages. But not for one newspaper–for five. Simultaneously.

The news center, in the upscale, aptly named Alameda County town of Pleasanton, is a unique place. Some 70 people work here, many of them processing copy and photos for newspapers in communities 30 miles apart. The staff is young, and most don’t live in those communities, don’t work there, and seldom visit.

Centralizing the copy desk and composing room functions of five different papers is designed to promote efficiency and save money for their owner, MediaNews. From that standpoint it appears to work extremely well. Still, watching the dispatch with which these people do their jobs, in almost assembly-line fashion, it’s easy to conclude something important may be lost in the process.

An editor of one of the outlying newspapers admits as much to me. “It’s harder to do a good job,” he says, when your paper’s editing team “is not sitting next to you. There’s a communication that’s so intimate, especially when you’re on deadline. We try to be creative, but this process forces us to be efficient. It’s hard for copy editors in a different location to have a sense of the community and a feel for the newspaper.” There is little time to fret about it, though. That’s because the copy streams in steadily, not only from the five scattered newsrooms but also from a regional staff that produces news, business and entertainment stories for all the papers within the cluster–the Oakland Tribune, the Tri-Valley Herald in Pleasanton, the Daily Review in Hayward, the Argus in Fremont and the Times in San Mateo. The operation is so complex that Conway says it took her a year to fully grasp it. She has moved in the last year to decentralize as much of the operation as possible. But due in part to the mechanized atmosphere and the limited opportunity for collegiality, turnover is high. “There’s an open position most of the time,” she acknowledges.

On the other hand, without the kinds of innovations MediaNews has imposed, a couple of the papers in the Alameda cluster might now be losing money instead of making it. They might even be gone.

With its centralized control and coordination, the news center is part of what makes Alameda County one of the country’s most thoroughgoing examples of newspaper clustering.

It is the brainchild of William Dean Singleton, who has popularized several of today’s hot newspaper trends. He engaged, for example, in one of the first tax-free trades of daily newspapers–an exchange with Harte-Hanks in the mid-’80s. Such exchanges were common in real estate back then. Now they’re common among newspapers as well.

It was also Singleton who popularized the word “clustering” as it applies to newspapers. As a broader business term, clustering refers to the geographic concentration of interconnected companies and institutions within a field. Silicon Valley is a cluster in this sense–a nexus of enterprises, all engaged in high technology, cooperating and competing simultaneously. For Singleton, however, the term means the combining of operations for newspapers in close proximity to one another–usually in the same or adjacent counties. go to website greenville daily news

Singleton developed his version of the idea 16 years ago–not in California but in southern New Jersey, where he and a partner bought the Gloucester County Times in Woodbury and Today’s Sunbeam in Salem, an adjacent county seat. “Clustering seemed the right thing to do,” Singleton says. “The papers are 28 miles apart. They had many of the same advertisers. It did not make sense to have two operations.” It became obvious to him that both papers could be printed in a single plant, with a single composing room, and that one accounting department would suffice for both. Besides the cost-cutting, their combined circulation made them more attractive to department stores and other regional advertisers, who could get a combined, discounted, “one buy, one bill” rate.

Singleton doesn’t claim he invented this kind of clustering, but he says he wasn’t aware of any other papers that were doing it when he started.

A boyish-faced man of medium height, Singleton, 47, met with me recently at the unpretentious MediaNews headquarters in Denver, whose Post is its flagship paper. Dressed in slacks and a long-sleeve pullover shirt, he looked like a relaxed suburban real estate broker who enjoys desserts. Singleton’s older sister, Pat Robinson, serves as his personal secretary, the fully trusted keeper of the gate. In a single word she sums up what she remembers most about her brother as a child growing up poor in a small Texas town: “Determination.” Singleton explained how, in clustering the two New Jersey papers, he and his business partner and mentor, Richard Scudder, hit upon the formula that would help propel MediaNews into the big time. Today it is the country’s seventh-largest newspaper company, based on daily circulation; it is fourth in terms of number of daily papers owned, 51. Among privately held firms, it is outranked only by the Newhouse family’s Advance Publications.

In New Jersey, Singleton says, he found out the hard way–from subscriber complaints–that readers can be passionately parochial about editorial content. Though Salem and Gloucester counties are literally side by side, he says, “we learned early that [they] are very different. Readers in one county went through the roof if stories about the other county ran in. their paper.” He came to believe that highly localized news was the key to attracting and holding an audience advertisers would want to reach.

In 1985, MediaNews purchased three family-owned East Bay papers–the Daily Review, Argus and Tri-Valley Herald–all in fast-growing Alameda County. Over the next decade, the deathbed resurrection of the Oakland Tribune and the purchase of the money-losing San Mateo County Times south of San Francisco added 100,000 more in circulation to the Alameda Newspaper Group, or ANG.

“San Mateo was a family-owned newspaper that could not have remained viable if standing alone,” Singleton says. “It was squeezed between San Francisco to the north and San Jose to the south. It had lost major advertising and was deteriorating. It had all the overhead of a single newspaper of 37,000. They couldn’t cover the Giants and 49ers on the road. It was losing money when they decided to sell it. We made a lot of overhead go away. We were able to put in a lot of regional and national advertising, opening up the newshole. Suddenly a paper running 24 to 28 pages is now running 40 to 48.” For the year ending March 31, ANG’s newspapers were the only ones in the Bay Area to show circulation gains. Preliminary Audit Bureau of Circulations figures show that since 1998, the five ANG papers gained 1.2 percent daily and 2.3 percent Sundays. In contrast, Knight Ridder’s Contra Costa group lost 4.6 percent of its circulation in the same period.

The Oakland Tribune publishes three zoned editions daily, each with a section of local news. There’s an Oakland cityside edition, one for the upscale East Bay Hills and a third for the city of Alameda, which was already there when MediaNews acquired the paper in 1992. The paper’s overall circulation is 70,000.

“After doing some initial flushing out of circulation in certain areas, the Tribune’s circulation has remained steady,” says ANG President Scott McKibben.

But Singleton wasn’t done shaking up the state’s newspaper landscape. Early this year, in a boldly innovative stroke, MediaNews cut a deal to take over a majority stake in Donrey’s nine California papers. Most of these are in the southern part of the state. But in the Bay Area’s hotly contested newspaper wars the merger allowed ANG to leapfrog Knight Ridder’s Contra Costa group to acquire the Vallejo Times-Herald, with its 20,000 circulation. This gave Singleton a foothold in the North Bay, at the base of Solano and Napa counties and not far from Sonoma and Marin counties–all unclustered areas with single-owner newspapers. He routinely waves off speculation about his next move, but one can only imagine Singleton’s mind revving with strategic possibilities as he contemplates a map of the Bay Area.

McKibben moved to California three years ago to run ANG. Along the way he has raised editorial salaries–with reporters starting at $500 a week minimum (this will go to $525 in August) and averaging a bit over $700–and ended a decade of newsroom rancor by overseeing an agreement for a Newspaper Guild contract that covers newsroom employees at the five core papers.

And as much as it pained him, he won the respect of his editors last year by acceding to a majority vote of the editorial board to endorse Democrats Barbara Boxer and Gray Davis for senator and governor. A self-described Midwestern Republican ideologue, McKibben notes that as group president he had the authority to dictate political endorsements. “I told them vehemently how much I disagreed with them,” he recalls, “but they convinced me that their position was built on good, sound logic and on fact and not on emotion, and the only reasons we differed were on philosophical background. So I let the editorial board go with who they wanted for governor and U.S. senator here. I am now in a part of the country that is basically Democratic, although out where I live in the suburbs is 57 percent registered Republican. I opened the paper here on two consecutive days and I was sick to my stomach.” ANG’s combined one-buy, one-bill circulation of 237,000 (including Vallejo) attracts national advertisers and major retailers. Roughly 35 percent of all display advertising runs in all the papers, McKibben says.

The readers of all ANG’s papers get staff coverage, at home and on the road, of the Oakland Athletics and the San Francisco Giants in the summer and the Oakland Raiders and San Francisco 49ers in the fall–coverage that none of the papers could afford alone. The top reporter’s salary, $58,000, goes to a sports columnist.

Nancy Conway, who years ago stumbled into journalism after she was unable to find a teaching job, directs the overall news operation. But each paper has its own editor and reporters to cover local news. Although editorials are written for the group, local editors decide whether to run them or substitute their own on local issues.

Conway, who began working for Singleton in 1978, runs her shop with a heavy emphasis on communication among her subordinates. Her top editors respect her. They confer twice daily, via conference calls at 11 a.m. and 2:30 p.m., to go over news budgets, including Bay Area stories from sports, entertainment and business, and from the 15-person regional news staff that works out of Oakland. The editors also get together every Tuesday morning at 10:30, at rotating locations. They start by discussing editorials and regional issues and remain for lunch, breaking up at 1:30.

In 1997, when welfare reform was a major issue, Conway assigned a five-person team that worked five months on a comprehensive, five-day package of stories and photographs that focused on Alameda County. Across the bay, the San Mateo paper published a different version that was localized for its area. The series won the 1998 Casey Medal for Meritorious Journalism from the Casey Journalism Center for Children and Families at the University of Maryland. It also won the 1997 California State University at Sacramento print journalism award for excellence in reporting on California state government and politics.

A Sacramento-based reporter files state news for all ANG’s papers. Conway keeps a rapid response team on alert seven days a week for big breaking stories.

The regional news staff covers growth and transportation issues and other stories of common interest to all Bay Area readers. After a major storm, a single story may run page one in all the papers, but each will have localized color photos and perhaps local sidebars. “We’ll get the story and tailor it to our readers,” says Editor Ernie Hines of the Tri-Valley Herald.

During my visit, a story on a major Bay Area traffic study got heavy front-page play. The four Alameda-oriented papers focused on how the Sunol Grade, a notorious climb of Interstate 680 in the southern portion of the county, was becoming the Bay Area’s worst commuter nightmare. The San Mateo paper, however, emphasized increased congestion on the cross-bay San Mateo Bridge.

Page two of each paper is devoted to Bay Area news, which reader surveys show is second in interest to more localized news. Regional, state and national-international stories fill up the A section. Local news, sports, editorials and letters to the editor may differ in the papers that have zoned editions. On a random day’s look at all five of the ANG core papers, the two Tri-Valley editions carried a lengthy local editorial endorsing a $150 million school bond issue affecting both circulation areas, but the editorial did not run in the zoned San Ramon Valley Herald that serves a separate school system.

Because the papers serve suburban commuters who travel clogged highways, McKibben says the goal for home delivery is 5 a.m. for readers with longer commutes, and 5:30 elsewhere.

San Mateo Editor Terry Winckler says one of the great advantages of clustering for small papers “is pooling resources when it makes sense. You metro-ize those things in common–major tragedies and crime news; the earthquake; major grass and wildfires; bigger-picture stories, such as Yosemite, that everybody relates to … [and] that you couldn’t get by leaving each newspaper totally autonomous. We’ve learned to select those news and information areas that all can use to combine our resources.” San Mateo is the only afternoon paper in the group. Winckler’s 2 p.m. deadline for the last edition allows him to carry final New York stocks to the heart of his circulation area. But there have been problems, too. Early on, ANG made some of the same mistakes in San Mateo that Singleton’s New Jersey papers had in regard to what is, and isn’t, “local.” ANG’s natural East Bay sports bent drew huge complaints from Peninsula readers in San Mateo. “Focus groups showed that San Mateo fans loved the Giants and 49ers, but loathed the A’s and Raiders,” Singleton recalls. “We were catching hell because we were emphasizing East Bay sports. We learned the hard way in San Mateo that it was a separate county.” AGGRESSIVE AS MEDIANEWS HAS BEEN IN THE BAY Area, it has been just as determined in the rough-and-tumble Southern California market. Here again the industry is studying the innovative ways in which Singleton, starting from scratch, has cobbled together a major presence–in just three years. But even allowing for growing pains, the cluster-building down south has been rockier than one might have expected, given how much experience MediaNews has gained up in Alameda.

MediaNews emerged on the SoCal scene in 1996 by acquiring from Thomson three papers already functioning as a cluster–Pasadena’s Star-News, the San Gabriel Valley Tribune and the Whittier Daily News. The price was $110 million.

A year later it picked up Los Angeles’ Daily News, a paper with a 200,000 circulation in the San Fernando Valley, from the estate of the late Washington Redskins owner Jack Kent Cooke. The announced price was $130 million. Cooke had paid $176 million for the paper a decade earlier. Beyond that, Cooke had spent another $76 million to move the paper from Van Nuys to a new plant in Woodland Hills and for a modern printing facility in nearby Valencia designed with extra press capacity.

About the same time, MediaNews added the Press-Telegram in Long Beach, a troubled paper that Knight Ridder was trying to unload. Although marginally profitable, the paper was printing on letterpress units nearly half a century old, and Knight Ridder was facing the prospect of having to lay out tens of millions of dollars to replace them. Singleton got the paper as an “asset sale”–a device for reducing taxes–for $38 million.

Thus, for a total of $278 million, MediaNews wound up with a cluster of five newspapers with roughly 425,000 total circulation in Los Angeles County, ringing the home turf of the formidable Los Angeles Times. Their combined operations function as the Los Angeles Newspaper Group, or LANG.

Then came the Donrey deal. Singleton originally approached Donrey’s owners, the Stephens family of Little Rock, Arkansas, about buying the California papers outright; they weren’t interested. “They didn’t want cash,” he says. “They didn’t need cash. It would have meant substantial taxes for them. They liked California, its growth. We showed them how their newspapers and ours together created a lot more crucial mass. We arranged a partnership share with a lot of the newspapers we owned. It gives them a piece of a growing company instead of cash. We would have preferred to pay cash.” Under the deal, Singleton became a two-thirds owner of the partnership. His contribution included all five papers in his Bay Area cluster, plus the Pasadena, San Gabriel and Whittier papers from the L.A. cluster, plus 23 weeklies with a combined circulation of 125,000. Donrey brought the Vallejo Times-Herald, expanding the Bay Area cluster. And in Southern California, it contributed the 68,000-circulation Inland Valley Daily Bulletin in Ontario, extending LANG’s reach into a demographically desirable area to the south, crossing into San Bernardino County.

Although most of the other Donrey papers lie farther out from Los Angeles, they still fit into Singleton’s long-term thinking. That strategy came into sharper focus in March, when Singleton announced that Gannett had joined his Donrey partnership with its 77,000-circulation San Bernardino Sun. With the Daily Bulletin in Ontario controlling the western half of San Bernardino County and the Sun covering the rest, Singleton dominates a lucrative market that is expected to double in the next 20 years. “It was the icing on the cake for our Los Angeles strategy,” he says.

The deal with Gannett pushes circulation in California to over 900,000 for dailies operated by Singleton. As a standalone newspaper, the Sun was getting competition from a San Bernardino edition of A.H. Belo’s Riverside-based Press-Enterprise. It also faced growth plans there by the Los Angeles Times, one of whose executives saw the Sun as “struggling.” As part of Singleton’s domain, it stands to get a share of any national or regional advertising LANG sells.

Gannett received 12 percent ownership and a seat on the seven-member California Newspapers Partnership board, with MediaNews and Donrey sharing the remaining ownership on a two-thirds, one-third basis. One insider says the deal with Donrey was arranged so that Singleton may well wind up buying out that company’s interests. Another said he wouldn’t be surprised to see MediaNews eventually gain full ownership of the San Bernardino Sun. The Gannett deal also fueled speculation that Singleton may end up acquiring Gannett’s 41,000-circulation Marin Independent Journal, another stand-alone paper just north of San Francisco, now that he has a North Bay foothold in Vallejo. He declines comment on such speculation. And as for Southern California, he says, “The next year will be one of digesting, of weaving them all together.” But in digestion there is sometimes heartburn. In Southern California, the biggest dose has been at the Press-Telegram.

An asset sale means the purchase is treated as if the buyer were purchasing the hard assets and starting the business all over again. In a $100 million deal, for example, the buyer may acquire $10 million in fixed assets, such as buildings, land and equipment. The other $90 million may be in intangible assets, mostly goodwill, which can be amortized over 40 years.

Furthermore, in an asset sale the existing labor contracts aren’t binding on the new owner unless they contain “successor” language. If a union is already in place and 51 percent of its members are rehired, the union has to be recognized, but negotiation of a new contract starts from scratch. That’s what happened in Long Beach with the local unit of the Newspaper Guild.

Singleton cut the salaries of most editorial employees by more than 20 percent, to roughly the level of the Guild contract at the larger Daily News. A typical reporter with five or more years of experience saw a drop in pay from $851 a week to $673–or from $44,252 to $34,996 a year. Senior editors and top local columnists were retained with no cut in pay.

Singleton argues that the new pay levels are fair. “If you’ve got a newspaper over here with a wage scale that is X and one next door that is Y, and you cluster, you’ve got problems. So when you’re buying assets in a cluster you make changes you don’t make if you’re buying somewhere else…. The salary level at Long Beach was way, way high for a 100,000 daily, just way overpaid for a paper their size.” To add to the bitterness at Long Beach, MediaNews laid off a large number of noneditorial employees–the first coming just eight days before Christmas of 1997. According to the Newspaper Guild, some 200 jobs were eventually lost among mailers, pressmen, truck drivers, janitors, customer-service workers and distributors. “None in the newsroom were dismissed,” Singleton says, “but Long Beach was dramatically overstaffed in other areas. It was a very fat operation under Knight Ridder. Too many people in the composing room, accounting and the pressroom.” Just over a year later, half the existing newsroom staff–57 out of 110, according to one journalist who actually counted the noses–had left the paper.

Russ Parsons, a food columnist for the L.A. Times and a Long Beach resident who has long depended on the Press-Telegram for local news, says, “When Singleton took over, the theory was that it was going to become a local paper. But in reality the Press-Telegram provided fine local coverage before. Many things now remain uncovered, often because of green young reporters who don’t know the community and don’t have the memory or the contacts. They have a reduced staff.” “That’s hogwash,” counters Press-Telegram Executive Editor Rich Archbold. “I’ve been here for 20 years. Our managing editor has been there for 30. Our local columnists all stayed. The institutional memory–I’ve got it and other editors have it.” As for the size of the staff, Archbold says, “We haven’t lost any positions, but we’ve been prudent in not filling all positions when they became open–to help us with expense budgeting. We have 104 positions.” No matter the ill will, the Press-Telegram did achieve a modest gain in daily circulation for the year ending March 31, from 103,249 to 103,929. And recently it was honored by the Greater Los Angeles Press Club for overall excellence for a newspaper of more than 100,000 circulation, beating out the L.A. Times for the organization’s highest award.

It was Singleton himself who met the Long Beach workforce to deliver that Yuletide news about pay cuts and layoffs. He also invited any employee who wanted to talk to him personally about it to do so. Several took him up.

“I went to his office,” one reporter recalls. “I said, `Dean, I need more money.’ He said, ‘Maybe we can cut the difference. It’s up to the managers; we give them a budget.’ “The managing editor told me he didn’t have any money. That’s what negotiating one-on-one got me. I went back to talk to Dean in a few months. He said he would get back to me, and he never did.

“Singleton was amiable. He was approachable. He gets some points from me on that.” The reporter laughs. “I talked to the Big Cheese, and all I got was holes.” Singleton says it’s part of an editor’s job “to take the budget he has and use it to get the job done. Salaries should be based on local supply and demand. A reporter in a small town will get less than a reporter in a city because it costs less to live. We set profit goals based on what we had to pay to buy the newspaper.” While the idea of lower cost of living in small towns may be true generally, editors at some of Singleton’s Bay Area papers acknowledge that most of their reporters can’t afford to live in the suburban communities where their papers operate. Cost of living in the Bay Area is among the highest in the country. “What I see,” one editor warns, “is that the pool of people coming in as reporters is shallower and smaller than it’s ever been, and it’s getting more so.” Singleton says the editorial payroll at his papers averages “between 10 and 10.5 percent of revenue”–slightly higher, he says, than the industry as a whole. But he adds, “We as an industry have underpaid. Raising pay scales is part of our long-term strategy. We recognize that when you pay for quality, you get quality.” In Los Angeles, Singleton retained the top editors at all the papers in his LANG group. Dorothy Reinhold is vice president and executive editor for the three-paper San Gabriel Valley group, which has a combined circulation of about 120,000 and operates as a subcluster within the larger group. “It’s much better to be bought by somebody who wants you than to sit on a shelf waiting for someone to buy you,” she says. “Dean bought us on purpose. He had a plan for us. He stitched us together and made a quilt of us. And the quilt will get larger. It’s working.” The LANG editors seem happy with the freedom they have under Singleton–and with improved resources. These include a $5.5 million upgrade of newsroom computer systems. For the Press-Telegram, now printed in the Daily News plant, the new offset presses have vastly improved its use of color.

Although they operate primarily within Los Angeles County, the LANG papers serve different markets. The San Gabriel group–with separate papers for Whittier, Pasadena and the rest of the San Gabriel Valley–has 31 municipalities within its circulation area. Long Beach covers 20 municipalities, and Archbold says that where they compete head-on the Press-Telegram outsells the L.A. Times by more than 2-to-1. The Daily News concentrates on the San Fernando Valley. Besides its main edition and a Los Angeles version for street sales, there are four-page local wraps for zoned editions for Santa Clarita, Simi Valley, Conejo Valley and Antelope Valley, as well as a combined Glendale and Burbank edition. LANG also publishes a free, 70,000-circulation Spanish-language weekly.

The Daily News’ one-person state capital bureau in Sacramento has been expanded to a two-person bureau for LANG. It now produces a Sunday column, with briefs tailored to each of LANG’s three circulation areas. A third person, the Alameda group’s Sacramento reporter, shares office space and information. And MediaNews recently announced it will open a six-person Washington bureau that will include two California reporters, one from the north and one from the south.

Another addition is a Sunday travel section for all the LANG papers. Reinhold recalls that when she went to work for her paper five years ago there was talk of adding a travel section. Staffers got excited about it and developed a prototype, “but it never went anywhere because we were told they couldn’t get the numbers. Working with a larger group, we’re giving our readers a freestanding travel section.” Unlike his Alameda Group counterpart, who accepted the vote of his editors on major political endorsements, LANG President Ike Massey made the decision to endorse the Republican candidates for governor and senator.

Asked about Guild issues, LANG editors agree that it is a question for Massey to answer. He doesn’t equivocate. “Certainly we would rather not have the Guild,” he says. Neither the San Gabriel nor the Donrey papers have Guild units.

The Guild unit at the Daily News signed a three-year contract this spring, which included a 3 percent raise for the first year and 2 percent for the next two, created a merit pay pool, increased mileage reimbursement and improved other benefits. Negotiations are continuing at Long Beach, where editorial workers are being denied sick days until an agreement is reached. The sick leave issue added to the rancor in the newsroom. One reporter tells me, “I was sick for a week, with fever and a terrible cough, but I went to work every day because I didn’t want to deprive my family of vacation time.” When I visited, reporters at the Daily News were less happy than the editors. They complained that expenses for news coverage were being picked at as never before. The spacious newsroom is housed in a building converted from a manufacturing facility for electronic parts. It has long corridors, solid walls and not a single window. Editor Dave Butler has been working on a design to break out an exterior wall and add a long window. It would cost $7,500.

In the Daily News building’s executive offices, Massey occupies an airy space with windows that open onto the sunny Southern California landscape. He has worked as a manager for Singleton much of his career. Asked about the newsroom window, Massey says, “It’s not a high priority,” Last year, however, he contributed $60,000 in company funds to a San Fernando Valley organization seeking to have the valley secede from Los Angeles County. It was the largest single donation to that group and a gesture that drew widespread criticism and upset many of his own reporters. The Daily News Guild unit sent Massey a letter contending that the paper’s contribution “has jeopardized its credibility.” (See Free Press, October.) Revisiting the issue months later, Massey is unrepentant. “We make editorial endorsements all the time,” he says. “Does that mean we can’t cover elections?” And the Guild’s rebuke? “Self-serving bullshit,” he says. go to site greenville daily news

Unsurprisingly, the L.A. Times was one of those that kicked Massey around for his largess. MediaNews’ consolidated ring around Los Angeles has given the West’s preeminent paper plenty to think about, and it’s clear the LANG editors relish this newly stoked sense of competition. Even so, that didn’t keep Singleton from consorting with the opposition when he saw the opportunity for mutual benefit. Last year MediaNews and the Times entered a joint venture to provide total market coverage for preprint advertisers. The 50-50 joint venture, called the California Independent Postal System, is a door-to-door delivery system. The way it works, Massey explains, is that LANG and the Times provide computer tapes of their subscribers to a third party for merging and purging. The preprints then are distributed as inserts to all subscribers of both papers, and CIPS makes deliveries to the nonsubscribers. Massey says the joint effort shows that the two companies, despite being fiercely competitive, still “can do things together that our customers want.” Adds Singleton, “Every preprint advertiser will tell you this is what they’ve been wanting for years. What we’re doing allows advertisers to print fewer copies because they don’t have overlap. I’ve never seen it done before.” He professes to be unconcerned about reports in trade publications of a Justice Department investigation. “If somebody complains, the Justice Department is required to look at it,” he says. “We have very savvy lawyers, as does Times Mirror. We both have been in this business long enough to know what you can and can’t do.” To him, the joint venture reflects his belief that newspapers get stronger if they can work with each other to increase profits without compromising areas of competition. It’s no different, he believes, than a Knight Ridder paper printing a national edition of the New York Times. It’s just business.

LEST YOU GET THE IMPRESSION THAT CLUSTERING IS only a high-stakes game played in sunny metro markets, consider the case of the Oshkosh Northwestern in east central Wisconsin.

In June 1998, the staff of the 24,000-circulation daily was stunned to learn that the paper had just been acquired by Thomson Newspapers. They were stunned not only because it was Thomson, but because the paper had been sold only two months before. (See the Business of Journalism, September.) That April, the paper’s family owners had sold the Northwestern to West Virginia-based Ogden Newspapers. Now Ogden was flipping it again. In the fog of the announcement, one reporter recalls hearing Thomson executive Paul Seveska tell the staff, “I know you’ve heard a lot of bad things about Thomson, but things have changed. Have an open mind.” To get the Northwestern, Thomson traded away four papers in Ohio and Pennsylvania, whose combined circulation was more than triple that of Oshkosh. It was willing to give so much because the Northwestern completed Thomson’s cluster of dailies around Lake Winnebago. In a three-hour drive you can hit all five towns in this cluster–up the Fox River Valley from Oshkosh to Appleton, and then around the lake to Manitowoc, Sheboygan and Fond du Lac.

By joining what Thomson calls its Winnebago Strategic Marketing Group, the Northwestern got access to a reporter in Madison, the state capital, and another in Washington. Business reporters no longer had to limit quotes in news stories to those who advertised in the paper, as had been the case under the previous publisher. On the other hand, Thomson cut the reporting staff, and those who remained soon understood that they were expected to stretch out their reporting without the expectation of a raise or overtime pay.

Thomson’s five papers around Lake Winnebago have a combined daily circulation of 143,000, and three smaller Thomson papers 70 miles away–in Marshfield, Stevens Point and Wisconsin Rapids–add another 43,000. The close proximity allows savings from shared overhead, pressrooms and other operations. Advertisers can purchase the papers in any combination. Furthermore, these central Wisconsin papers don’t have the competitive pressures that MediaNews faces in California.

The small cities here are not like California communities, where people are likely as not to be from somewhere else. ANG’s Scott McKibben, who has worked in Oshkosh, says the Wisconsin cities differ from one another more than those in the Bay Area do. “There’s a world of difference between Appleton and Manitowoc,” he says.

One thing these cities do have in common is a strong allegiance to the Green Bay Packers. The Thomson group capitalizes on this with tabloid specials before and after every Packers game–16 weekends during football season. Last year’s package included a column by the team’s head coach. The Packer specials, produced by a sportswriting team, are a big hit with fans and a good revenue source, with each paper selling local ads and deciding how much of the copy to use. The tab may run 16 pages in one paper and only eight in another.

Thomson CEO Stuart Garner contends that his company has the most sophisticated clustering operation of them all. Unlike Singleton–who has enhanced competition in parts of California, mostly by clustering properties that had dim prospects on their own–Garner has developed a strategy of unite-and-conquer. Primarily, he concentrates his resources by seeking to dominate smaller markets where Thomson already had a presence and where competition is minimal.

The advertising operation for Thomson’s Wisconsin groups goes a step beyond what Singleton does in California. One sales unit functions as an in-house ad agency that seeks out regional advertisers. For a Broadway play like “Showboat” coming to Milwaukee’s Performing Arts Center, for example, prospecting can begin more than a year ahead of time. A buy for the central Wisconsin market might even include papers outside the chain, such as Gannett’s Wausau Daily Herald. Thomson charges a 15 percent agency commission to non-Thomson participants.

As it has elsewhere, Thomson has introduced advertisements on the front pages of the Wisconsin papers. Putting ads on the front page is a practice that many American journalists and critics deplore, but the taboo is clearly eroding (see “Out Front,” page 34). USA Today, for instance, will introduce small page-one ads in the fall. Certainly the practice doesn’t bother Garner; the papers in his native England run front-page ads all the time. He says they produce a significant amount of revenue, and he turns away the suggestion that they might undercut a paper’s credibility.

The smallest of the Thomson papers in the Lake Winnebago area is the Herald Times Reporter in Manitowoc, with a circulation of 17,000. Editor Gerald Guy told me the paper also publishes a 37,000-circulation shopper for Manitowoc County that gives advertisers total market coverage and publishes features and “whatever anybody sends in.” The shopper, which has a full-time editor, is sufficiently popular that the distributors call on patrons once a year for voluntary $10 subscription payments–and more than a quarter of them pay it.

While waiting for a new printing plant to be completed this year in nearby Appleton, Guy faced a midnight deadline for his afternoon paper, which temporarily was being printed before dawn in Oshkosh, an hour and a half away. The presses there run full-time during the day on large contract printing operations.

A tall, large-boned man who used to be a college football player, Guy says he likes to train young reporters and copy editors and have them move on after a couple of years. “With new people, you get new ideas,” he says.

While I sat in his office, a cohort in Appleton called about a young copy editor working for Guy. Guy explained that she learned quickly, had mastered the editing software and was ready to move up to the 80,000-circulation Post Crescent. The phone call sealed the transfer, which included a significant pay raise. Another call to Sheboygan involved talk about a higher-paying job for a reporter who had done well.

But as with MediaNews’ Southern California experience, among the thorniest issues for the Wisconsin cluster have been newsroom pay and labor relations generally. The 1997 merger of the Guild and the much larger Communications Workers of America indirectly linked the unions representing editorial employees in Sheboygan, a Guild shop, and Appleton, which had been affiliated with CWA since the mid-1980s.

The pay and benefits at these two papers outstrip those at Thomson’s other Wisconsin papers, where the newsrooms have no union. A reporter at Sheboygan with five or more years’ experience earns a Guild contract minimum of $717 a week, or $37,284 a year. But at the Oshkosh Northwestern, whose circulation is almost identical to that of Sheboygan, an editorial staffer told me that no reporter earns as much as $28,000, which is the nine-month salary for that city’s first-year public school teachers.

The head of Sheboygan’s unit, Dave Gallianetti, says contract negotiations are much more difficult since Thomson took over. He believes the company’s “ultimate goal is to get rid of the union.” But, Gallianetti adds, the company has kept its “hands off the editorial product.” And in Appleton, I found a staff proud of its statewide reputation for quality. “We have a good working relationship with our editor and publisher,” says John Lee of the Guild/CWA local. “I think there’s a relationship between quality and the union. It adds stability, with staff continuity committed to this newspaper and this community.” CLUSTERING HAS EVEN FOUND ITS WAY TO THE TOBACCO-growing region of eastern North Carolina. In and around Greenville, economic development has come late. This is by far the least urban part of the state.

For 114 years, the local paper, the Greenville Daily Reflector, was owned and operated by its founding family, the Whichards. But in 1996, they decided it was time to sell. Recalls Jordan (Jordy) Whichard III, “The family wanted to find a buyer who produced good newspapers, who had resources and could provide good long-term opportunities for our employees, and who had exhibited good stewardship in communities where it owned newspapers.” They settled on Cox, a private company whose flagship paper is the Atlanta Journal and Constitution.

After the sale to Cox, Whichard agreed to stay on as publisher of the 20,000-circulation morning daily and a companion group of weeklies. His newspapering apprenticeship had begun at age 14 and had touched on virtually every job, from stuffing inserts to writing editorials.

In 1996, Whichard’s duties expanded after Cox acquired two nearby dailies from Thomson–the 14,000-circulation Rocky Mount Telegram in an adjoining county and the 12,000-circulation Daily Advance in Elizabeth City, roughly 100 miles in the direction of the Outer Banks.

The transition has gone “better than we expected, as well as we could have hoped,” he says. “Cox not only has not interfered in the core group of newspapers and how we operated them, but has contributed significant financial support to secure acquisitions and to centralize and update our computer systems.” A new printing plant will open in October on the outskirts of Greenville. Besides providing a new home for the Daily Reflector, the facility will print both it and the Rocky Mount Telegram, an afternoon paper. It will also permit an already thriving commercial printing business to expand. Elizabeth City, a two-hour drive from Greenville, will continue to publish out of its own plant.

“I’m not sure there’s a true model yet for newspaper clustering,” Whichard says. “You can translate that concept into a wide array of operation initiatives that meet particular strengths and cultures of the companies. I’m sure we do it a lot different from Dean Singleton in California.” There is no universal copy desk here, and the newspapers run no common sections. Except for accounts payable, each newspaper operates its own local business as well as its own editorial offices. But all operate from a central computer system housed in Greenville, using high-speed telephone lines. The editors meet monthly at rotating locations and alert one another if their staffs are covering a story of regional interest. The sports editors work informally to coordinate and share their coverage of East Carolina University, the pride of Greenville, and Atlantic Coast Conference teams.

The three North Carolina newspapers and four others in east Texas form what Cox calls “regional groups.” They are the only such groups among the company’s 15 daily newspapers. The North Carolina group has only begun to develop joint “one buy, one bill” advertising sales among its dailies and weeklies.

What is unique about Cox is its areawide computer network, CoxNet, which links all the newspapers together with a common technology and software. It grew out of coverage of the 1996 Olympics in Atlanta. A team of more than 300 reporters, editors and photographers from all the Cox papers assembled in Atlanta to publish a separate newspaper covering the Olympics. The Daily Reflector used material from this operation to provide special coverage that included a package for advertisers.

The personal relationships and technology ties established that summer evolved into CoxNet, a daily internal wire service that provides the various papers with such material as a food ease developed by the Journal and Constitution.

Greenville Executive Editor Al Clark says, “It allows us to use material from other papers regularly. We use a steady stream of material–food pages, for example, and health page material and commentary/insight for Sunday readers. At our staff levels, we’re not able to create this material, and it frees up time for our local folks to work on local stories.” CoxNet also transmits editorials from its papers, which local editors may use if they wish. “We don’t run editorials from other Cox newspapers,” Clark says. “We run local editorials on local issues seven days a week. I’m concerned about some other papers that say it’s too much trouble, or they don’t want to stand the heat. There’s a great big silence out there when the local newspaper isn’t doing it.” Clark is enthusiastic about having access to a reporter in Washington, Eunice Moscoso. She has been hired to provide stories exclusively for the chain’s smaller papers. “It’s adding something we never had,” Clark says. “It’s the first time we’ve had someone who can go directly to our congressman’s office and get reaction on national issues.” Moscoso takes calls from any of the small-paper editors and follows up on local stories that involve federal agencies or Congress. Clark and Whichard hope to develop similar local coverage from the state capital in Raleigh.

Cox has provided no influx of cash for the editorial side, Clark says, “but it’s made things available to me, such as the Washington Post and New York Times news services, that we didn’t have before. We find them valuable. There’s no difference in how we approach community journalism, but there’s people we can call on for advice and assistance. The Cox purchase has been positive from the sense of more resources.” In addition to transmitting news and features and a food or book page with a modular design that allows space for local advertising, CoxNet also produces spec ads, created by the 28-person graphic design staff of the Atlanta newspapers. An example might be an ad for an optometrist, which could be sold by a salesperson at any Cox paper. “A reader looks at the whole paper,” says Arnold Rosenfeld, Cox’s vice president for news, “and a side effect of better-looking advertising is that it makes the whole paper look better.” SO WHY HASN’T TODAY’S RAPID SPREAD OF MONOPOLY-like clusters drawn the attention of the Justice Department? Why isn’t it an antitrust issue when, say, Thomson ends up owning every daily paper in a dozen adjacent counties of Wisconsin?

It turns out that although the Justice Department rarely challenges the regional consolidation of newspapers under a common owner, it does take a look at almost every deal. And this, in and of itself, has a deterrent effect, some antitrust lawyers maintain.

In the early 1970s, newspapers engaged in what were called “midnight mergers.” One paper in a city would buy another, and Justice wouldn’t know about it until the deal was done. To prevent that, Congress passed the Hart-Scott-Rodino Act, which requires automatic review of almost all daily newspaper sales before they become final.

“Justice is not giving a green light to consolidation,” says Alan L. Marx, a former Justice Department section chief responsible for newspaper antitrust matters. Today he advises newspaper companies about mergers and acquisitions. “Private counsel will tell their clients, `This deal has real problems; do you want to go along?’” When the owners of the San Francisco Chronicle recently signaled that they might be looking for a buyer, Singleton told me that MediaNews would not be interested because of potential antitrust issues.

Still, some observers wonder how much deterrence there is. The issue, however, turns on whether competition is preserved within a market, according to Marx. Take the case of Thomson’s purchase of the Oshkosh newspaper, the deal that gave it a monopoly of the five dailies around Lake Winnebago. Marx says the papers were contiguous, but their individual markets and circulation areas had little overlap. In such a case, he says, “the antitrust laws are not going to cover it.” When Justice talks about competition, it usually emphasizes competition for advertising business, because it’s more difficult to ascertain “facts” about news. “When I was at Justice,” Marx says, “the theory we always had [was] that if you find commercial competition for advertisers, you get the preservation of editorial competition. Preserving editorial voices was an important consideration, but under antitrust law the only question was whether there was competition” within a market.

Lee Enterprises owns four key dailies in Montana. But even though its Helena bureau dominates the coverage of state government, this doesn’t raise antitrust issues. Its papers–in Helena, Butte, Billings and Missoula–have little commercial overlap.

“Justice asks a lot of questions about editorial competition,” says Marx, “but has yet to see how to use the answers.” The issue involves both First Amendment considerations and political sensitivity. “It would have bothered me a lot to figure out how to use differences in editorial content in deciding what kind of actions we bring.” In 1997, when MediaNews sold the North Jersey Herald & News to Macromedia, owner of the nearby Record in Bergen County, the sale was held up for eight months while Justice tried to determine that both papers would continue to operate separately and that their markets didn’t overlap significantly. Charles W. Gibney, a Record executive who was closely involved in the investigation, says the government expressed concerns about whether “an independent voice would be leaving the community.” Still, Justice’s 19-page request for documents, which filled about 300 banker boxes, focused primarily on the sale’s impact on advertisers.

Although the two papers continue to operate separately, they have consolidated their accounting, press and composing room operations, and they cross-sell advertising. The Record, with a daily circulation of 141,000, remains a regional newspaper, while the Herald, with only 43,000 circulation, remains highly local.

The fact that Justice is investigating a pending deal often means little. Usually, Marx says, it means “that some staff lawyer got authority to ask for more information on a deal. Any complaint almost automatically results in an investigation.” A little-heralded 1995 case from Northwest Arkansas, however, forced the resale of a daily paper to its original owner, with the result that newspaper competition there has been preserved. The Justice Department did not initiate this case, but it intervened in a lawsuit brought by private litigants.

Thomson had sold the Northwest Arkansas Times, in Fayetteville, to the Stephens family, whose Donrey Newspapers already owned the Morning News in Springdale. These two small cities adjoin each other in Washington County. The Springdale paper also competed with a smaller paper, the Daily Record, in adjacent Benton County.

In voiding the sale, U.S. District Judge H. Franklin Waters cited a 1953 U.S. Supreme Court opinion saying that for antitrust purposes daily newspapers have two markets: one for readers and one for advertisers. He noted that by owning both the Fayetteville and Springdale papers, the Stephens family would control 84 percent of the circulation and 88 percent of the newspaper ad revenue in the two-county market. This, he concluded, would deter the Times and Morning News from vigorous competition.

Craig Conrath, the current Justice section chief who participated in the case, says Waters’ interpretation of market forces “is still the way we look at transactions today.” The department, he says, doesn’t want “to bring a case … where the evidence is weak.” After the sale was reversed, Thomson sold the Fayetteville paper to Hollinger, which continues to operate it. Since then, the Morning News in Springdale has responded by beefing up its coverage. It now has an expanded five-person news bureau in Fayetteville and an eight-person bureau in Rogers, the largest community in Benton County. A four-person bureau in Little Rock provides a flow of news from the state capital to Springdale and to Donrey’s three other papers in the state.

Jim Morriss, the Morning News’ executive editor, says the paper has also expanded its copy desk and sports coverage. “We’re very strong on political and legislative coverage,” he says. “We have improved the quality of our newspaper.” Not only do the Times, the Morning News and the Daily Record compete for local news, subscribers and advertisers, but the Arkansas Democrat-Gazette in Little Rock has installed a printing plant and a fully staffed newsroom to publish a Northwest Arkansas edition that circulates in 12 counties. Its daily Northwest Arkansas section provides strong news coverage for the region.

Unlikely as it may seem, Washington and Benton counties now constitute one of the most competitive daily newspaper markets in the country. Maybe Northwest Arkansas is a unique case, with little impact on the industry as a whole. Still, it does seem to suggest how the preservation of editorial competition can improve newspaper quality and provide for a better-informed citizenry.

And perhaps it’s not so bad for business, either. Recently, the newspaper industry learned that for the last reporting period, overall daily circulation slipped another one half of 1 percent. The numbers were down at the Arizona Republic, at the Dallas Morning News, at the Boston Globe. But in Springdale, the Morning News is selling 2,500 more copies a day compared with a year ago. Circulation is 35,858–up 7 percent.

[ILLUSTRATION OMITTED] Concentrating Their Control One result of concentration of ownership is that in 22 states, a single company controls at least one-fifth of all the daily papers. This breakdown doesn’t address circulation dominance, but it’s interesting nonetheless

STATES WITH AT LEAST 10 DAILIES

Oklahoma (44 total dailies) CHHI (23 dailies) 52% New Jersey (19) Gannett (7) 37% Montana (11) Lee (4) 36% Virginia (28) Media General (9) 32% Connecticut (18) Journal Register (5) 28% Kentucky (23) CNHI (6) 26% Missouri (43) Liberty (11) 26% Arizona (16) Wick (4) 25% Idaho (12) Hagadone (3) 25% Texas (88) CNHI (20) 23% Wisconsin (35) Thomson (8) 23% California (93) MediaNews (20) 21% Georgia (34) Thomson (7) 20% North Dakota (10) Wick, Forum, Hollinger (2 each) 20% South Carolina (15) McClatchy (3) 20%

STATES WITH FEWER THAN 10 DAILIES

Wyoming (9) Wyoming News (5) 55% Delaware (2) Gannett, Independent (1 each) 50% Maine (7) Seattle Times (3) 43% Hawaii (6) Donrey, Gannett (2 each) 33% Rhode Island (6) Journal Register (2) 33% Vermont (8) MediaNews (2) 25% Nevada (9) Donrey (2) 22% JACK BASS is a former Nieman Fellow who published his own weekly newspaper, covered politics for 10 years and taught journalism for 11 more. The most recent of his six books is “Ol’ Strom: An Unauthorized Biography of Strom Thurmond,” written with Marilyn W. Thompson. He earned a doctorate this year from Emory University and has joined the faculty at the College of Charleston.3 BASS, JACK