'Arkansas Democrat-Gazette,' Stephens Media Seek Merger

By: KELLY P. KISSEL After spending millions of dollars trying to scoop each other in fast-growing northwestern Arkansas, the Arkansas Democrat-Gazette and Stephens Media announced Thursday that they are seeking to merge news operations.

Stephens Media, which owns several newspapers in the region, said on its Web site that the two media companies asked the Justice Department to approve a joint venture.

Under the proposal, Stephens would sell The Morning News, its flagship paper in the region, and run the newsroom for the new operation. The Arkansas Democrat-Gazette, owned by Little Rock-based WEHCO Media Inc., would handle business operations.

The Morning News has a circulation of about 35,000. The Democrat-Gazette distributes its Northwest Arkansas edition in 12 counties but does not break out a circulation number for the zoned edition. It has a newsroom in northwestern Arkansas but shared stories across zones.

The two Little Rock-based media groups have been battling for readers in northwestern Arkansas for the past decade. Both companies added staff, but amid the economic downturn and a general decline in newspaper readership, both either laid workers off or instituted furloughs in an effort to control costs.

"The Morning News and the Arkansas Democrat-Gazette's Northwest Edition have suffered significant financial losses during the current economic recession," Stephens Media said on its Web site. "Both companies have employed various cost-cutting strategies, but despite these measures, the newspapers continue to have significant operating losses."

Both companies would have an equal financial interest after The Morning News is put up for sale.

"If someone comes along and buys it, then we'll continue to compete with The Morning News and this merger won't be consummated," said Walter Hussman, chief executive of WEHCO. "We suspect that won't happen."

Stephens Media owns newspapers at Fort Smith and Pine Bluff, along with several weeklies in Benton and Washington counties and in Missouri. The Arkansas Democrat-Gazette Inc. also owns the Northwest Arkansas Times and the Benton County Daily Record in northwestern Arkansas.

Under the agreement, a limited liability company called NorthwestArkansas Newspapers LLC would be formed.