In 1970 New Jersey was home to at least 33 daily newspapers, and today only 19 remain, with nine owners. With Gannett's July 1998 purchase of the Daily Record (Morristown) and the Ocean County Observer, that single chain owns seven of New Jersey's 19 daily newspapers. Two chains own five out of the six New Jersey newspaper with the largest daily circulations. The readers of these six papers make up over two thirds of the total daily circulation of New Jersey papers and 84% of them are reading papers owned by Gannett or Advance Publications (Newhouse).
Papers that have closed since 1970 include:
One former New Jersey publisher bemoaned the number of New Jersey cities that no longer enjoyed competing papers. When he began his career there were nineteen cities in New Jersey with two or more competing dailies, and by the time he retired the number was down to two. Today there are only nineteen daily papers total.
In addition to the loss suffered whenever a newspaper folds, other papers are shifting from local to conglomerate ownership.
The timeline in Appendix I shows both the general scope of the trend, and the way it has accelerated in the past few years.
These changes often result when families are unable to afford the large inheritance taxes they would need to pay to keep the papers in family hands. The Newspaper Preservation Act, which allowed for the creation of joint operating agreements, was
designed in the hope that it would preserve more newspapers. Critics of thae act have noted, however, , "Although the Newspaper Preservation Act ... is predicated on the notion of newspapers as special, privileged enterprises, as truth-seeking ventures that must never be held to the same profit-maximizing criteria as other economic organisms, the law's results have encouraged exactly the opposite."
Chains can have an advantage because they can "Combine business and some editorial operations at a cluster of smaller papers while attracting big advertisers with a competitive cost per 1,000 readers."
None of these changes are unique to New Jersey. They reflect a national trend. Consider the following statistics:
What are the potential effects of such consolidation?
In August 1997, when Gannett announced its plans to purchase the Asbury Park Press, Jon Shure, president of the New Jersey Policy Perspective, noted that, "the pattern of longtime family owners selling out to big chains (and there is none bigger than Gannett in terms of circulation) has not been good news for journalism." As he explained,
"Local owners of newspapers take their profit in two forms: Cash and psychic rewards. Their involvement in reporting the news and setting the agenda enables them to be well-respected in their communities and players in state politics as well as make a very nice living. But when a chain comes to town, money becomes the primary measure of success. The local owners might have been happy to make a single-digit percentage profit. But Gannett tells the publisher at each of its papers what the profit target is each year, and they better make it. What they have to cut to get there is up to them. But it usually involves axing the most 'expendable' part of the newspaper operation - people. And cutting people inevitably means cutting quality in the name of satisfying the most important audience of all as far as a chain is concerned: not the readers, not the employees, but the shareholders."
But it is more than just readers who suffer. Small New Jersey businesses may face hurdles in obtaining reasonable rates on advertising.
In this paper we will look at the trend toward newspaper consolidation, consider what it means to the citizens of New Jersey, both the readers and advertisers, and introduce two of the major players, Gannett and Newhouse.
Effect on Quality
The potential for the profit-seeking motive to trump good journalism or good citizenship is a frightening one, and one analysts applaud when describing why investors should buy newspaper stock. One analyst wrote admiringly, "Gannett's management lives, breathes and sleeps profits, and would trade profits over Pulitzer Prizes any day."
One example in New Jersey, involving the Newhouse chain, occurred several years ago, when the Newark Star-Ledger was accused of pressuring politicians to place ads in the paper if they hoped to receive any favorable coverage. Although the editors denied it, one campaign aide taped his conversation with a Newhouse ad salesman, and the chief political reporter admitted that at the time the newsroom received memos from the ad department, with a tally of which candidates were buying political ads in the paper.
Journalists themselves focus criticism on a more subtle, and perhaps more pernicious effect, the slow erosion of commitment to the highest standards of journalism, self-censorship by ambitious reporters and distraction from what many feel should be the job of editors and reporters. Squires describes "the internal pressure from the owners of the press to use news organization resources in the most profitable way." Gannett executive, John McMillan in an essay entitled "It's Time to Reinvent the City Editor" notes that "Instead of talking to a reporter, the city editor audits time cards. Instead of editing copy, the city editor writes a memo about expense accounts. Instead of reading the competition, the city editor goes to a management meeting. ... I submit that we run the risk of alienating our basic resource - reporters."
The change in substance covered is sometimes blamed on giving the reader what they want. John Kolesar, retired editor of Gannett's Courier-Post in Cherry Hill, says, "I guess the editors are like the readers: they've apparently changed the kind of stories they like. They'd rather read about sugarless desserts than about the Democrats who have padded the payroll in the courthouse."
The threat of bias or censorship
In addition, newspaper chains or large publishers may misuse their newspapers to support a specific agenda. The stories about how the newspapers have been misused are rarely reported in the press according to one source, "One example is [Si Newhouse's] life-long friendship with Roy Cohn - the unrepentant avatar of McCarthyism and legal confidant of Mafia dons. His extensive financial, social and legal ties to Newhouse and his family have remained glossed over for years as Cohn managed to plant, fix and incite stories about the powerful and well-connected in their publications." The Newark Star-Ledger, described as "one of the most virulently pro-McCarthy newspapers" refused to run columns criticizing McCarthy and was used as a conduit for many of McCarthy's spurious allegations.
Ralph Ingersoll II, purchased the Morristown Daily Record in 1987, with the financing help of Michael Milken, then the junk-bond king of Drexel Burnham, and later a convicted felon. Later Ingersoll ran favorable features on Milken, and testified four times on his behalf in front of congressional committees. Milken and Ingersoll were described as having a "one hand washes the other" relationship.
While editors have never shied from stating opinion, the effects today may be more pernicious. Rather than reading a bold editorial from one paper and a sharply contrasting one from across town, the reader's exposure is limited to one piece, which may be masquerading as a news feature.
In addition, a larger, though less distinguishable bias, may be at work. David Stern, former publisher of the Camden Courier, wrote in his autobiography that, "[Monopoly publishers] travel with big businessmen, think like big businessmen and talk
like big businessmen. They may call themselves independent and claim to be impartial, but when the chips are down on any crucial issue, nearly all of them will be found in the big-business camp."
Probably the worst accusation to be made against conglomerate publishers is that they censor the papers. Companies vociferously deny these accusation, but in at least one case, it appears to have happened. The Trenton based Journal Register Company, which publishes eighteen dailies including the Trentonian, participated in such a case in Connecticut, according to an article in Editor and Publisher. Reporter Marsden Epworth, of the Torrington Register Citizen, covering a new Sunday circulation promotion, included a few innocuous quotes from unhappy readers in her article. The next day the publisher allegedly demanded to the editor that Epworth be fired. The editor resigned in protest, Epworth was fired, and when she asked why claims she was told it was for violating company policy "that you cannot write anything that embarrasses the Journal Register Company or casts it in a bad light." A few days later another 15-year employee resigned when the company refused to publi!
sh letters to the editor on this matter, noting that "People in a community like ours consider the newspaper the voice of the community because they have been free to write in and speak. If we don't allow them to do that, it ceases to be their voice and they can no longer trust our integrity."
Policy Decisions Guided by Profit
Another New Jersey example of how ownership can reshape a newspaper's priorities centers on the issue of tobacco advertising. Until 1987, the Morristown Daily Record, then with a circulation of 60,000 refused to carry tobacco advertisements.
This policy was reversed when the Tomlinson family sold their newspaper to Ingersoll. Other family owned papers followed similar policies. Some banned tobacco ads immediately after the surgeon general published his report in 1964. Others stopped accepting such ads after they lost a family member to cancer.
Between 1980 and 1991, at least five newspapers which had formerly declined tobacco ads, reversed their policies. In each case this change followed the sale of the newspaper.
Anti-tobacco advocates have long been concerned that the revenue brought in by tobacco companies may inhibit coverage of anti-tobacco stories. Regina Carlson, Executive Director of the New Jersey Group Against Smoking Pollution (GASP) notes, "On a few occasions I've had reporters who work for Gannett newspapers tell me they couldn't cover a story or report information I gave them because of the ownership by Gannett. Staffers at newspapers acquired by Gannett have told me that their building's non-smoking policies were being violated by Gannett executives, and they were concerned that [the company] would reverse that [no-smoking] policy."
Where is your editor's loyalty?
When a corporation runs a newspaper, personnel decisions and appointments follow a different course. In a family owned paper, when the publisher retires he is often replaced by an editor who has spent many years learning about the community.
Author Doug Underwood describes managers whose "first loyalty is to the corporation and their career within the corporation. The issue of the well-traveled newsroom manager - devoted almost exclusively to his or her success within the framework of the corporation's agenda -- has become a troublesome one in this era of chain ownership." Gannet in particular has faced criticism for this practice.
A career with Gannett may involve a great deal of moving around, with little time to learn about an individual city. At the Vineland Journal, a Gannett paper, the retiring publisher was replaced by the former president of the Lou Harris polling company which Gannett had sold earlier that year. Al Dolata came to Gannett as a labor relations director, and his newspaper experience included stints in two New York papers, a California paper, a Honolulu paper as well as Bridgewater, NJ.
Demographics and chains
Profit seeking may not be the same thing as seeking circulation increases, however, and may instead mean that newspapers seek readers who fit "desirable" demographic statistics, at the expense of other community groups. Al Neuharth, then of Gannett, once suggested that the cost of a daily newspaper should be one dollar per issue, because, as Squires characterizes it, "Price maximizes revenue and holds down printing and distribution costs while culling from the circulation base the unwanted low-income reader."
One way newspapers may seek high-income readers is simply by the content of their coverage, or as one critic noted, "Addressing themselves strictly to a homogenous, affluent audience, they have found they can deliver readers to advertisers with generic lifestyle stories and a minimum of local involvement." This has been observed with the Advance/Newhouse chain, "Somehow in the Newhouse equation, the quality of information seems to depends on how 'demographically desirable' you are. " A recent innovation allows an even more precise targeting through "microzoning" in which different versions of the paper are sent to different localities.
Does the management at newspaper companies care as much for the low income reader as the high income reader? Will they insist on equal coverage, and equal membership drives, for the entire area they cover? A clue may be found in Gannett's Frank Vega, CEO of Detroit Newspapers, and his apparent disregard for the great circulation losses suffered during the newspaper strike there. Vega is quoted as having said, "A lot of people stopped taking the paper, and they may have been union members. I'm not sure how many union members shop at Neiman-Marcus. Most of them shop at Sam's Warehouse."
At one time local merchants relied on newspapers as a way of connecting with potential customers. As consolidation increases, local businesses may need to pay more money to reach fewer readers. The reason: one analyst, suggesting that Gannett would be a good stock to purchase, noted that it had "virtually an unregulated monopoly."
When Gannett announced in August that it had disbanded its national newspaper sales rep firm, Gannett National Newspaper Sales, and awarded representation to several different firms, Samuel W. Papert III, noted that, "This consolidation is very helpful for the industry. We'll have to spend less time prospecting for the same customers and more time to grow the pie for all of us." But what is best for the advertising industry may not be best for the small businesses who advertise in the papers. When multiple newspapers are "prospecting for the same customers" they offer competitive pricing. When consolidation takes place, papers often "grow the pie" simply by raising rates.
It is generally difficult to obtain records of former advertising rates, newspapers are understandably reluctant to offer such evidence. However, some out-of-state examples illustrate the potential. In 1982 the cost for a page of local display advertising in the Newhouse-owned Cleveland Plain Dealer was $7,878. Then its competitor, the Cleveland Press closed, amid unproven charges that Newhouse had induced the closing. A year later the advertising rate was $10,504, an increase of 33%. In an earlier case, where Gannett, upon achieving monopoly status imposed a 43% rate increase, and, "Ads were full of errors. When mistakes were caught on proofs, no second proof was provided. Deadlines were early and rigid, and late ads were not run on the desired day."
The Los Angeles Times noted that, "With no significant competition to worry about a company like Gannett can -- and does -- jack up its circulation and advertising prices almost at will, a practice Gannett boasts of openly when speaking to security analysts about what a good, safe investment Gannett stock represents." Indeed, in a meeting with investment brokers in 1986, Gannett's chief of operations bragged, "We've had 40 price increases thus far and anticipate nine more later in the year."
Richard McCord, in his book The Chain Gang: One Newspaper versus the Gannett Empire chronicles what these practices mean for local businesses and competing newspapers. He points to a Gannett memo which describes "Operation Demolition" and instructs sales reps on how to "eliminate" a competitors advertisers.
In addition, it may be that the large owners of these papers are happy to lose the business of local merchants. According to James Squires, in his book Read All About it: The Corporate Takeover of America's Newspapers, "Small advertisers are driven out of the newspaper to other, cheaper media, such as free weeklies and shoppers. This creates an underclass strata of advertisers and their customers, who are excluded from newspapers and ultimately alienated from them. . . . The cost of paper, printing and circulation make it more profitable to publish fewer pages of high-rate advertising than more pages of low-rate advertising."
Who owns New Jersey's papers: Profiles of the largest companies
Gannett in New Jersey
Gannett itself started out as the family business of Frank Gannett, who owned what was described as a "sleepy newspaper chain of twenty-five small town papers in upstate New York." In his seventies, and looking for a successor, Gannett hired a man named Frank Miller, who saw a future in chain building. Hired in 1947, Miller made his first acquisition in 1959, purchasing the 80,000 circulation, non-union Camden Courier-Post for $5 million. Like many of his later sales, this one grew from a relationship begun on the golf course. When a golfing friend's widowed mother decided to sell the family paper, Miller was the first person they called.
This was the beginning of many years of rapid growth. In 1971, Gannett purchased an average of one newspaper every three weeks. Today Gannett publishes 89 daily newspapers, operates 18 television stations, five radio stations, and cable television systems in five states. The strategy they followed was described by analyst Christopher Shaw as the Gannett formula, increasing profit margins in two years from 15 to 40 percent by "minimizing costs and raising advertising and circulation prices to the limit."
Former Gannett employee Doug Underwood is quite critical of Gannett in his book When MBAs Run the Newsroom:
"Five years of attending Gannett corporate conferences taught me that careers were built on espousing all the higher principles of journalism at company meetings while very often doing something much less inspiring back home at the newspaper. ...From a business standpoint, it is cheaper to create a foundation, to fund a few university and midcareer education programs, to train managers to say the right things, and to send around corporate publications advocating high-sounding principles than to adopt truly creative, innovative, risk-taking solutions -- or do the expensive job of really upgrading the quality of news operations."
Gannett is often praised for their record of supporting first amendment and other worthy causes, but Underwood is skeptical about their motivation:
My intuition -- and my five-year experience as a Gannett News Service employee -- tells me that Gannett does very consciously craft its journalistic crusades and the public relations efforts that back them up to create a corporate image that makes it harder to attack the company's monopolistic practices. Like Playboy and Penthouse, which are careful to put socially redeeming reading material around the pictorial layouts, Gannett has kept congressional critics, tax reformers, and antitrust enforcers off balance by promoting itself as a champion of open government and First Amendment principles and the cause of women and minorities. That isn't to say the company doesn't have sincere reasons for pushing the causes. But its motives are mixed at best, I believe."
Former Gannett CEO Al Neuharth addresses this in his autobiography, Confessions of an S.O.B., when he describes his heavy schedule of public speaking appearances prior to the introduction of USA Today, when he describes the content of his speeches "My message in my speeches was always a local adaptation of the public's stake in free press and free enterprise. But my mission was mostly self-serving."
The Newhouse family has been described as "the largest privately held fortune in the United States. In New Jersey they own the paper with the largest circulation, the Newark Star-Ledger, and two other papers. Critics have noted, "Valued for the wealth that could be extracted from them, the Newhouse newspapers were in many ways, like large antebellum plantations, where the owners held little regard for those who toil in the fields or for the essential nature of their product.
Appendix 2 New Jersey Ownership--Daily Papers