Sales, Scoops and Sunshine

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By: Mark Fitzgerald

With industry attention riveted on the Hollinger International Inc. civil war and the fight to own its trophy papers in London, Chicago and Jerusalem, some significant U.S. newspaper sales have closed in recent weeks without attracting much notice.

The transactions confirm that venture capital is moving into the newspaper industry again — and that the centripetal force of local news consolidation continues unabated.

Among the biggest transactions was the sale of Murphy McGinnis Media Inc. to Superior Publishing Inc., an affiliate of MCG Capital Corp., the Washington, D.C., investment company that trades on the Nasdaq. With a combined circulation of 300,000, the 17 Murphy McGinnis newspapers are located in the northern reaches of Wisconsin and Minnesota and include the flagship Daily Telegram in Superior, Wis., The Grand Rapids (Mich.) Herald-Review and The Daily Tribune in Bob Dylan’s Minnesota Iron Range hometown of Hibbing.

In one sense, the sale means an end to a firm created just seven years ago by John B. Murphy, Elizabeth Murphy Burns, James M. McGinnis and Charles R. Johnson. But in a larger sense, it ends three generations of family ownership that can be traced back to the 1890 purchase of what was then The Superior Telegram by Murphy’s grandfather. “The decision to sell was not easy, but being retired for three years, and having no one in our family with an interest in being active in the newspaper part of our business, it seemed like a good time to explore other opportunities,” Murphy said in a statement.

The sale will allow the family’s Morgan Murphy Stations, which owns five TV stations in Wisconsin and Washington as well as 12 radio stations in Wisconsin, Washington and Idaho, to “redeploy our assets in our other media interests,” said Murphy Burns, president of the broadcasting company.

Johnson has been named CEO and president of the new newspaper company.

Dirks, Van Essen & Murray, the Santa Fe, N.M.-based newspaper merger-and-acquisition firm, represented Murphy McGinnis Media in the sale.

Another significant recent transaction, with Dirks, Van Essen also representing the seller, was the sale of two Long Beach, Calif., community papers — the Grunion Gazette and the Downtown Gazette — to William Dean Singleton’s MediaNews Group Inc. of Denver. The purchase of the weeklies, with combined circulation of 65,000, fills in more of the MediaNews cluster in southern California, which includes the daily Long Beach Press-Telegram and the Daily News in Los Angeles.

Said John and Fran Blowitz, who had published the Grunion Gazette since 1981 and added the downtown paper seven years later: “Ours was no longer a mom-and-pop newspaper operation. It needed a more global approach to secure the futures of our excellent staff.”

The News-Gazette in Champaign-Urbana, Ill. — which two years ago celebrated its 150th anniversary by sponsoring a two-day seminar dedicated to preserving family newspaper ownership — struck a blow for local ownership with a little shopping spree of its own earlier this month.

The paper bought the four nearby weekly newspapers and the commercial printing operation of East Central Communications from Trinity Holdings Inc. of suburban Pittsburgh. Included in the sale are Rantoul Press, the Piatt County Journal-Republican of Monticello, the Gibson City Courier and CR Target. They have a combined circulation of 26,500.

“This fits perfectly in our long-term plan to grow and develop our printing and publishing franchise in East Central Illinois,” said News-Gazette Chief Financial Officer J. Michael Martin. “This is a long-term commitment to our future growth and continued independence. Everyone should benefit from the result.”

The broker? Once again, it was Dirks, Van Essen.



Aggressive Investigating

Months of investigative work has just paid off for newspapers in Chicago and Greensboro, N.C.

In the case of the Chicago Sun-Times, the official reaction to its investigative project was about as immediate as it gets. On Monday, with the last of the paper’s three-part investigation into the city’s Hired Truck Program, Chicago Corporation Counsel Mara Georges announced at a press conference that the program’s former director, Angelo Torres, had been arrested by the FBI and fired by the city.

In the series, the Sun-Times revealed that the city of Chicago was paying $40 million a year in no-bid contracts to use private trucks that often drive to job sites and idle all day, doing literally no work. In six months of reporting that included often-tedious surveillance of the do-nothing private truckers, reporters Tim Novak and Steve Warmbir also discovered that the program was something of a members-only boondoggle, with the price of entry being political connections — or a well-placed bribe. About two dozen of the participating private contractors were mob-connected, the reporters found.

In publishing the investigation, the Sun-Times departed from the usual newspaper practice of breaking the “big story” on Sundays. Instead, the first part ran on Friday, the second on Sunday and the final part on Monday. That was on purpose, said Editor in Chief Michael Cooke: “We wanted to start it on a day when we knew we’d get a good crackle.” Had the series been longer, he said, he would have started it on his preferred day, Wednesday. “But we wanted to be sure it stretched to Sunday,” he said.

The city’s cooperation in providing records was “practically zero,” Cooke said, and, indeed, the final installment of the series noted that the paper had asked for a copy of an Ernst & Young audit of the program the city commissioned back in 1997. They were refused, on the shaky grounds that, in the words of the city’s legal department, the document “would not be subject to discovery in litigation.”

“It sounds like a cliche, but this was the result of six months of digging and late night and databases and piles of documents by two guys who never took no for an answer,” Cooke said.

An audit was also at the center of the latest development in the investigative work the News & Record in Greensboro, N.C., has conducted on its city-subsidized affordable-housing program known as Project Homestead.

For 10 years, Project Homestead was widely viewed as a feel-good success story. Led by the charismatic Rev. Michael King, the program built housing for people with low or moderate incomes on lots donated by the city. The lots, worth an average of $17,000, were intended to give new homeowners “instant equity” in their houses. The city also often provided second mortgages. Since 1991, Project Homestead built or rehabbed some 700 homes and apartments in Greensboro, while getting at least $17.6 million in funding from the city.

News & Record Editor John Robinson said the paper had “heard things” about King for years. “We had one of our longer-term reporters, who has a knack for investigation, take a run at (Project Homestead). Once he started asking for records through the city and through Homestead, we saw that things weren’t adding up,” Robinson said.

What reporter Stan Swofford uncovered was a pattern of questionable expenses and abuses, all with inadequate monitoring by the city, which kept putting off an audit of the nonprofit. One reason: King had become a powerful political force in Greensboro, who just a couple of years ago proved he could deliver 15,000 votes for a favored candidate. But when the News & Record articles were first published last September, the furor was such that King was forced out as president, and city officials ordered the long-delayed audit.

The pressure only increased on the paper, though, and there were clear suggestions that the coverage was biased against low-income blacks.

On Sept. 22, King died in his home. Autopsy findings are not due for a few more days, but no one seems to doubt that he killed himself. A group called “Friends of Project Homestead,” led by prominent black political figures and others, accused the paper of killing affordable housing in the area with its coverage. The financial problems of Project Homestead, the politicians implied, was the paper’s fault.

“The organization has continuously been met with negative publicity, hampering the organization’s ability to successfully implement the plan and meet its financial obligations,” state Rep. Alma Adams said at a press conference that received widespread coverage. A state senator accused television stations of getting “its filth from the print media.”

Through it all, Robinson calmly defended the paper’s reporting while denying it had anything against the program’s goals.

On Jan. 16, however, the city’s audit of the program was finally released — and all Greensboro could see that the paper was right to question Project Homestead’s practices. Between 1997 and 2001, the audit found, employees used Homestead credit cards to charge $480,362 in personal expenses and another $266,803 in personal travel expenses. The nonprofit was leasing a Lexus and a Lincoln — which were driven by non-employees.

Worse, the program was cheating the poor. When it sold homes, it paid itself broker fees, and did not pass along the savings that came from getting all those $17,000 properties for free. For many, “instant equity” instead became an instant debt burden. Homes were also sold to people whose income exceeded the qualification limits.

Now local and state law enforcement plus the FBI are looking at possible criminal violations in the program. “The city, for its (part) said it’s giving Homestead 45 days to respond to the audit,” Robins said, “and won’t really say very much about it — not that that’s going to stop us.” (Attempts to contact Homestead and its Interim President Tom Scott were unsuccessful. The number provided for the program by directory assistance was answered by a telephone company recording.)



Sunshine Amendment Will Be on California Ballot

The third time was the charm for SCA 1, the proposal to enshrine in the California Constitution the public’s right to obtain government records and attend government meetings.

After finding reasons to keep the constitutional amendment off the ballot for the last two years, the Senate unanimously passed the measure Jan. 16. It will be on the ballot for the upcoming November election and if state history is any indication, this freedom of information amendment will prove far more popular with the voters than either of the two major party candidates.

The amendment was the brainchild of the California Newspaper Publishers Association (CNPA) and the California First Amendment Coalition (CFAC). Now the organizations say they are combining for a “public awareness campaign of grassroots coalition building, town hall meetings, public official and public figure endorsements, public service announcements and opinion pieces.”

To get involved or stay informed on SCA 1 contact CNPA General Counsel Tom Newton at tom@cnpa.com or CFAC Executive Director Kent Pollock at kpollock@fac.org.



Strictly Personal

Arnie Matanky died Jan. 5 in Chicago at age 73. Older journos will remember Arnie as a reporter with the old Chicago Sun and a longtime writer and editor at WBBM-TV and WBBM radio during the 1950s. For residents along Chicago’s lakefront, Arnie’s legacy is the Near North News, which he founded in 1956 and continued for 40 years, and the Gold Coast Art Fair, which has delightfully snarled traffic in the neighborhood since he co-founded it in 1958.

But for a newcomer to Chicago in 1984, Arnie was a one-man welcome wagon, noting the appointment of the new Editor & Publisher Midwest editor in his weekly as if that news mattered at all in the swank apartments of the Gold Coast. He frequently and unexpectedly showed he was paying attention to the Chicago guy with little items in the Near North News that seemed to be better read in city media circles than the original work they referenced.

Goodbye Arnie. And thanks.

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