The Media

By TOM LITTLEWOOD

A sorry St. Louis story

LET'S SUPPOSE you own a widget company. There's another widget maker in town. The competition is keen, and there's some question whether the market can continue to support both of you. The public value of maintaining two brands of widgets is considered so vital, however, that the government agrees to make an exception to the antitrust laws. The exception is to permit the two firms to merge everything but the content of the product and the name on the package. Not only will the competitors use the same business office, the same machinery and the same salesmen to sell their separate brands, but they will fix prices and pool their profits-legally.

After several years of this arrangement, you're still losing money. Your competitor is making a little, but after he gives you your cut you're both in the red. Nor does the future look much brighter. So what do you do? You go to your competitor cum partner and say: Look, there's only enough demand here for one of our products. I'll go out of business and leave the field to you if you agree to give me half your profits for the next 50 years and maybe longer.

That, essentially, is what happened in St. Louis late last year between the morning paper, the Globe-Democrat, which is owned by the Newhouse communications conglomerate, and the Post-Dispatch, the afternoon paper, which has been owned since its founding 105 years ago by the Pulitzer family.

The Newspaper Preservation Act, passed by Congress in 1970, gave a failing newspaper the opportunity to enter into a joint operating agreement with the other paper in town. Under the provisions of that law, the two are allowed to fix advertising rates and combine business and production functions while keeping their independent news staffs and editorial policies. The St. Louis agreement was the only one of 24 such combinations (none in Illinois) which did not prove profitable, in most cases highly profitable. Suburban flight was even greater in St. Louis than in most other places, and both dailies were badly shaken by competition from suburban shoppers. The Post had been losing circulation more than twice as fast as the Globe, but the former published a fat Sunday edition, which the Globe did not.

Newspapers are not widgets, to be sure. There was a sound public purpose in doing what could be done to preserve a diversity of news and ideas in a city. But the way the Newhouse organization used the act to make money not by publishing but by not publishing was a perversion of its intent. At the same time that Newhouse was cutting its deal in St. Louis, the U.S. Department of Justice was looking into a reported payment of $14.5 million by a Newhouse paper in Cleveland to a competitor that went out of business in that city.

The Justice Department and the mayor of St. Louis pressured Newhouse into selling the name of the newspaper and certain of its assets to a businessman from Columbia, Mo., Jeffrey Gluck. At this writing, the Globe is still publishing. But if the Globe couldn't hack it with all the extraordinary advantages of the joint operating agreement, how can it possibly expect to succeed without? Part of the Post's understanding with Newhouse was that it would change from the afternoon to the more lucrative morning field, which is quite likely the coup de grace to the Globe.

The meaning of all this to people in Illinois is considerable. Both St. Louis dailies sent good reporters to their Springfield bureaus. Although the Post's Bill Lambrecht may well have been the best of all the Illinois Statehouse correspondents in recent years, the Globe was consistently more interested in Illinois news and circulation. Kathy O'Dell, the Globe's star St. Clair County reporter, managed to scoop the Belleville paper with regularity. The loss of yet another journalistic spotlight on the troubled affairs of the Illinois city of East St. Louis is cause for mourning in itself.

The Pulitzers undoubtedly saw the deal with Newhouse as a way of preventing both from going under. As long as it was locked into the afternoon field — and into a doomed marriage with the Globe — the future looked dim. And the Post is still among the nation's top newspapers combining aggressiveness and social responsibility.

But it is hard not to be saddened by how it was done. Just after the Civil War, the Hungarian immigrant Joseph Pulitzer — grandfather of the present publisher — arrived in the city by the river to do battle against "the trusts" and "the privileged classes," bringing a new, independent style of journalism that would ask no favor of any party or government. For the next 50 years at least, the Post-Dispatch will be sharing profits with a former competitor in order to achieve a daily newspaper monopoly, in violation of every principle for which the first Joseph Pulitzer stood.

And if all this weren't disheartening enough, from the Illinois point of view, Bill Lambrecht is no longer reporting from Springfield. He was promoted at the beginning of the year to the Post-Dispatch Washington bureau.

April 1984/Illinois Issues/43