Battered Hawaii Underdog Remains Afloat

By: Lucia Moses When Canadian publisher David Black stepped in to buy the Honolulu Star-Bulletin last year, local advertisers were relieved that the Hawaii state capital would remain a two-daily city. Some sympathized with its underdog struggle with Gannett Co. Inc.'s The Honolulu Advertiser, while many stood to gain from the ad-rate competition.

Good wishes alone won't guarantee success for the Star-Bulletin, however. Since the afternoon paper was severed from its joint operating agreement with the morning Advertiser and reborn March 15, hopes for the paper have begun to fade.

The Hawaii economy was starting to emerge from a long slump when the Sept. 11 attacks threw its crucial tourism sector into a tailspin. This month, MidWeek Printing Inc., parent of the Star-Bulletin (and MidWeek, a free-distribution shopper), resorted to pay cuts and layoffs of 19 staffers, or 4% -- the newsroom was spared after its union voted for deeper pay cuts to save five jobs.

"As time has gone on, it's clear the newspaper is not attracting the advertising I think [Black] hoped it would," said Mike Middlesworth, a Hilo Island-based newspaper consultant who worked for Black early in the sale process. "My feeling is, in the long run, the Bulletin is not going to succeed."

Black admitted advertising has been "pretty spotty" since Sept. 11, but said staff cuts will restore his goal of profitability at his entire Hawaii operation. Star-Bulletin Publisher Don Kendall said the paper is on target, getting 38% of the market's daily newspaper ad pie in October.

Readers have benefited from re-energized local coverage by both papers. And both have cut subscription rates, which increased circulation but caused some advertiser skepticism about the numbers. In the six months ended Sept. 30, Advertiser daily circulation rose 39%, to 152,098, under new Audit Bureau of Circulations (ABC) rules. The Star-Bulletin's circ rose 7%, to 64,305.

While some may consider it folly to go up against the biggest U.S. newspaper company, Black is counting on Gannett to eventually tire of its costly newspaper war. Free of the pressures brought to bear by Wall Street, he maintained he doesn't care if the Star-Bulletin continues to drain money. "Unfortunately, I have some titles that have lost money for 20 years," said Black, who owns more than 80 small dailies and weeklies. "I can be very patient." He will have to be.