A publisher's worst nightmare p.37

By: Jose Nicholson An unflattering story about an Indianapolis advertiser results in the advertiser haltin $40,000 a year in ad buys.

After an Indianapolis business newspaper published an unflattering article about on of its advertisers, the advertiser halted $40,000 a year in ad buys in the newspaper and an additional $260,000 annually in other media under the same ownership.
The ad revenue loss at the Indianapolis Business Journal is the kind of nightmare publishers fear because the story had no factual errors, which could have been corrected to placate an advertiser, and the publisher was convinced the story was fair and balanced.
The Journal advertiser, supermarket chain owner Don E. Marsh, also ordered the weekly newspaper be removed from 23 of his supermarkets where it had been sold, according to Journal officials.
Marsh took additional retaliatory measures, according to Jouranl chairman, Michael S. Maurer. The supermarket chain owner killed a deal to allow a bank operated by Maurer, the National Bank of Indianapolis, to install a branch in a Marsh supermarket, says Maurer, and he also served notice that he will sell all his stock in Maurer's bank.
Marsh acted after he failed in attempts to get the story watered down or spiked, says Maurer.
The story appeared across the top of the Journal's Feb. 1-7 issue and reported that Marsh's nonvoting common stock grew ""just 11%"" over three years years while the stock of three other supermarket chain jumped 81%, 248%, and 378%.
Marsh did not responded to more than a dozen requests from E&P for comment. After two weeks, a Marsh spokesman left a voice mail message: ""He has instructed us to say that he is not interested in participating in the story and not interested in anyone else responding.""
Emphasizing that he also spoke for all Marsh officials contacted by E&P, the spokesman added, ""His instructions are what we need to go by.""
Journal chairman Maurer, who knows Marsh from civic functions, says the supermarket chain owner repeatedly asked him ""to change the story to make it a positive story or to pull it altogether.""
"He just said he was a big company, and he does a lot of business with me, and he wants me to change the story."" says Maurer, also a part owner of the Journal, which sells for $1.50 and has a paid circulation of about 15,000.
Maurer says he responded to each of Marsh's requests by explaining, ""I do not dictate to the editorial deparment what they write.""
The newspaper chairman says he never considered watering down the story ""because if we would give in to Mr. Marsh's request then every advertiser would ask to change a story. It would destroy the integrity of a newspaper.""
Advertisers, of course, often see things differently. Some may look at any news article that does not praise them from beginning to end and bitterly denounce it as one of the greatest outrages in the history of journalism.
While Marsh maintains his silence, one of his oldest acquaintaces is defending him..
Jim Kittle Jr., chairman and CEO of Kittle's Furniture, an Indianapolis based $100 million company with 17 stores, writes in a letter published in the Journal that the story ""painted a poor picture of what I consider to be avery good company.""
Kittle is a major local advertiser himself, spending $9 million to $10 million a year on ads, mostly in local newspapers, including an occasional ad in the Journal. He concedes the Marsh story is accurate, but criticizes it for docusing on Marsh's shareholders-and paying too little attention to Marsh's active community involvement and his superior record with his customers and employees.
"In the other three areas, by almost any standard, Don Marsh and his company would rank No. 1,"" Kittle writes. ""As it relates to the shareholders, the Marsh family, unlike some other corporate executives, have the majority of their personal net worth tied directly to the company.""
In an interview with E&P, Kittle says Maurer and other Journal officials routinely ask local businesses to advertise in the Journal and support Maurer's other local businesses. When it comes to the Journal's news coverage, Kittle complains, it fails to give local business ""a break.""
"I think you'd get a break compared to Kroger of Safeway,"" says Kittle, explaining, ""A break is just a balanced approach.""
Local publications ought to have some ""bias"" in favor of local businesses,he adds. ""The bias means that you're even more careful to be balanced on local companies because that's where you are doing business.
Kittle has little tolerance with the explanation that Maurer offered to Marsh: that he does not dictate what his editorial department writes.
Describing Maurer's stance as that of an owner who claims, ""I stay totally away from the editor,"" Kittle retorts, ""That's BS! That's not what happens! If you own the paper, you know you have some responsibility as to what the paper says! WHen he says he doesn't do that, that's just flat f----flase!""
"I'd have done the same thing Don did, "" he says of Marsh's reaction.
Marsh Supermarkets began in 1931 with one grocery store opened by Marsh's father, Ermal W. Marsh, and last year posted total annual revenue of $1.5 billion. It operates 88 supermarkets and 177 convenience stores in central Indiana and Western Ohio. Marsh also runs a wholesale distributor that Serves 1,500 nonaffiliated convenience stores in 10 states and a firm that specializes in catering, business fafeteria management, vending, and concessions.
According to Journal officials, Marsh Balked for several months at requests for an interview. On the day before the story went to the printer, Maurer persuaded him to sit down for a half-hour talk with a reporter.
After the story appeared, Marsh offered no comment, say Journal officials, and spoke only through action.
"He had his grocery stores call us an dsay, 'Come and get your newspapers,'"" says Journal chairman Maurer, whose ad staff was notified tyhat Marsh was halting all ad buys.
Marsh was spending about $40,000 a year on quarter-page display ads in the Journal for his catering firm, which hadles corporate functions, and on sponsorship of two publications the Journal publishes each year, a book of lists and a tabloid newspaper that reports on local corporate philanthropy. Marsh also was purchasing full-page ads on both publications' back pages, including one that described his sponsorship of a series of outdoor concerts each summer by the Indianapolis Symphony Orchestra.
Marsh's secretary called Maurer's assistant to cancel the bank-branch deal, says Maurer. And Marsh's ad agency notified Maurer's three Indianapolis radio stations-WTPI-FM, WZPL-FM, and WMYS-AM-that he was halting his heavy schedule of ad buys, Maurer says.
"The Marsh company also discovered that my company owns The Senior Beacon, and they have canceled all ads in it now,"" says Maurer, referring to a
monthly for older citizens.
Journal president and publisher Chris Katterjohn says the controversial story was fair and balanced. Advertiser presure to slant news coverage ""happens frequently and regularly,"" says Katterjohn, who has been with the newspaper since its founding 19 years ago. ""Maybe once a month we run into presure, but never before to this degree. ""It's just a constant underlying aspect of the newspaper business.""
Although Marsh is among the Journal's 20 largest advertisers, publisher Katterjohn calls his $40,000 in annual purchases ""a pretty small percentage of what we bring in advertising.""
The Indianapolis Star and The indianapolis News ran stories on the controversy, with both dailies reporting Marsh offered no comment.
Among those who read about the quarrel was John Burkhart, a Journal cofounder who subsequently sold his stake.
"I would have to say I was shocked,"" says Burkhart, a Journal cofounder who subsequently sold his stake.
"I would have to say I was shocked,"" says Burkhat, who also founded the College Life Insurance Co. in Indiana and served as its president.
The loss of a big advertiser could cripple some business newspapers ""if they were operating on narrow margins, particularly if the owners didn't have the money to invest into it."" says Burkhart, now 90.
Rayt Begovich, president of the Indiana chapter of the Society of Professional Journalists (SPJ) and eight of his board members says in a letter, ""The obvious intent was to intimidate and quash the operation of a free and independent press.""
"The grand irony about using advertising dollars to influence news coverage is that an unbiased news product is the vehicle that delivers the kinds of readers, listeneres, and viewers that most advertisers want to reach,"" adds the letter, which was published by the Star.
Begovich, who also is vice president of Hetrick Communications, an Indianapolis public relations firm, suggest in an interview that advertisers to consider a letter to the editor. ""You don't control a free press by using advertising dollars to get the results you want,"" he says. ""Newspapers and media face this threat around the country. Unfortunately, sometimes it works hopefully, most of the time it doesn't.""
Furniture advertiser Kittle scoffs at the ethical standars espoused by local leaders of the SPJ:""It's an advertiser's prerogative to select people who are on your side. ""That's free enterprise."
Censorshp or free enterprise? John Myrland, president of the Indianapolis Chamber of Commerce, declines to take sides. He describes both the Marsh organization and the Journal as ""good corporate citizens."" and praises Marsh and his supermarkets as ""very generous in this community and in all the communities in which they operate.""
The clash between Marsh and the Journal has been building for years, according to publisher Katterjohn, who recalls Marsh became ""lightly irritated"" whenever the Journal reported ""Things like when we found out about them operating a new division, and they weren't ready to talk about it and didn't want us to write about it.""
In an effort to smoth things over several years ago, Katterjohn invited Marsh to the Journal for lunch. ""He talked about his grocery business and the kidns of things they were talking about doing internationally. I don't remember hism being real critical of the paper or anything like that,"" says Katterjohn, who describes the get-together as "" a pleasant experience.""
As for their relationship's recent train wreck, Katterjohn says: ""Sometimes results like this are going to happen when you pursue good journalistic principles. You can't do anything about it.""
"The only thing that I feel bad about is that our sister radio stations lost so much business because they were totally innocent, "" says Katterjohn, who adds he didn't publish a story on the dispute because he did not want ""to rub salt in the wound.""
Journal staffers never doubted that it would stand up to advertiser pressure, says editor Tom Harton, but they were pleased when the dailies' coverage ""let other people know who might have though that a newspaper would buckle under that kind of pressure.""
"Mr. Marsh would like nothing better than to close our newspaper, but it's not going to happen,"" says Maurer. ""Newspapers have to rise above the undue influence of their advertisers. It's a very, very important point that we've, unfortunately, had to prove.""
?(Advertiser Don E. Marsh (insert) yanked $40,000 a year in ads after an unflattering story about his supermarked firm in the Feb. 1-7 issue of the Indianapolis Business Journal (above).[Photo & Caption]
?(-Michael S. Maurer, Chairman, Indianapolis Business Journal) [Caption]
?(Editor & Publisher Web Site:http:www.mediainfo.com) [Caption]
?(copyright: Editor & Publisher March 20, 1999) [Caption]