Beantown Battle p. 10

By: Tony Case WHEN BOSTON Herald publisher Patrick J. Purcell bought the daily tabloid from his mentor, media baron Rupert Murdoch, two and a half years ago, he called it "the opportunity of a lifetime."
Despite the rising newsprint costs, softening advertising, mounting competition and a changing demographics that have socked the newspaper industry, Purcell remains optimistic about his paper's prospects against its competitors. These include, most notably, the much-larger Boston Globe, as well as the market's formidable broadcast media and the assortment of dailies that dot the region, in Quincy, Worcester and a dozen other towns.
And the Herald's roster of rivals is expanding, as Fidelity Capital's 100-plus weeklies and a handful of dailies in eastern Massachusetts have achieved a combined circulation exceeding 1 million.
In the face of all that, the Herald's ad revenues last year advanced 50% over 1994, according to Purcell. While advertising business in Boston, like elsewhere, has slid, the publisher reports that his paper has enjoyed strong growth in the automotive-display and help-wanted categories.
On the technology front, the tab recently invested in a Sheridan inserter for its Sunday edition.
To compete against the Globe's online help-wanted service, Boston.com, the Herald has developed its first interactive product, Job Find.
And while newspapers everywhere have instituted drastic cost-cutting measures, the Herald's staffing levels have stayed relatively stable.
But Purcell admits he was thrown for a loop by the record newsprint price increases that wreaked havoc on the newspaper industry's profits the last couple of years.
"If I had thought newsprint prices were going to rise as dramatically as they did when this was first in the offing, I'd have been a little more suspect, perhaps, of the prospects," the publisher said.
The Herald is the undisputed underdog in one of the country's last remaining daily newspaper wars. But while it plays David to the Globe's Goliath, nobody, not even the Herald, expects the mighty giant in this battle to come tumbling down.
The circulation of both the papers is in decline, following a national trend. According to the most recent Audit Bureau of Circulations figures, the Globe lost over 14,000 copies daily and 8,000 Sunday, and the Herald dipped by about 10,000 weekdays and 19,500 Sunday.
Still, the Herald's circulation of 294,000 daily and 204,000 on Sunday pales beside that of the Globe, with its reach of 486,000 during the week and a 778,000 Sunday.
Among the country's top 100 newspapers by circulation, the daily Globe ranks 12, the Herald 31.
The Globe trounces the Herald in terms of advertising, as well.
Competitive Media, which measures linage of the top newspaper markets, reported that the Globe had 69% of the two papers' ad share last year. It was most dominant in retail, with a staggering 85%. Both papers count the city's large department stores, Macy's and Filene's, among their biggest retail customers.
The Herald is also saddled with antiquated printing presses, capable of producing only spot color, and a bare-bones distribution system, compared with the broadsheet Globe's four-color capability, which was just upgraded at a $50 million cost, and dominant delivery operation. The Globe is over 70% home-delivered, while over 80% of the Herald's daily sales are newsstand.
On the news side, the Herald's modest-sized staff of 200 goes head to head against the Pulitzer Prize-winning Globe's massive team of 500 ? to the chagrin of some Herald managers.
Two years ago, in a piece in this magazine, managing editor Andrew Gulley wrote: "The frustration here is a small staff competing against a larger one. We would like to do more and have a few more bodies to do it with. There are areas we'd love to compete in and can't. It's galling.
"On any given day, they mount a staff two, three, four times the size of ours," he went on. "That means we have to work harder ? and smarter."
All that is not to say the Globe doesn't have its own concerns.
The paper announced last March it was laying off mailroom workers and cutting $4.4 million from operating expenses due to newsprint costs and lackluster ad revenues. And, while nobody at the Globe would confirm it, it's been rumored that the paper's financial performance last year didn't meet the Times Co.'s expectations.
"I think we're a successful newspaper, and we're doing well," Globe president Benjamin B. Taylor responded. "We're a profitable newspaper, well-positioned for the future."
But it is the Herald and its also-ran status that makes it the newspaper to watch in this scuffle ? and many observers wonder just how much longer the tab can hold on.
"The Herald is clearly the most vulnerable player in the daily war," said Jay Fitzgerald, managing editor of the Boston Business Journal, pointing out the paper's difficulty operating with an aged infrastructure.
"The Herald's short-term outlook is bright; its long-term outlook is not," observed Dan Kennedy, who covers the media business for the Boston Phoenix, an alternative weekly.
Kennedy predicted that tough economic times such as those that plagued the industry in the early part of this decade could well send the Herald over the brink.
"When you operate that close to the edge . . . it's hard to see them surviving the next recession," he said.
Purcell wouldn't divulge any financial results. He never has ? and as long as his company remains a private enterprise, he won't have to. But the publisher is quick to acknowledge that this independence can be a double-edged sword.
While he doesn't have to answer to stockholders and analysts, he's out there on his own when the hard times come, unlike the Globe, which has the considerable cushion of its wealthy parent, the New York Times Co.
"We've never had to worry about whether the market said we had to get a 12% return," Purcell said. "We have certain obligations we have to meet, and we're meeting them. There's certainly a profit expectation."
Some have suggested that Murdoch won't allow Purcell to fail, that the Australian magnate, who heads up the worldwide media colossus News Corp., has merely parked the Herald with his prot?g?. After all, Murdoch still owns the building that houses the paper and the property on which it sits.
In 1989, Murdoch, because of FCC regulations preventing a company from owning a newspaper and television operation in the same town, had to let go of Boston's WFXT. By selling the Herald in 1994 to Purcell ? then publisher of the Herald and New York Post and president of News Corp.'s U.S. subsidiary ? allowed Murdoch to buy back the station, a key outlet for his Fox network.
Purcell himself hinted at his continued connection to Murdoch in an interview with this magazine last spring.
"My arrangement with Mr. Murdoch is to keep this paper alive and, basically, to make sure I meet my financial obligations," he said. "So far, we've been able to do that without seriously affecting the livelihood of people here."
As noted above, whereas large metropolitan papers, owned by publicly owned media giants ? including the Globe, Times Mirror Co.'s Los Angeles Times and Knight-Ridder Inc.'s Philadelphia Inquirer and Daily News ? have busily slashed expenses and people of late, the Herald has hardly scaled back at all, according to Purcell.
"I think we've always managed ourselves close to the bone," he said, noting the paper's staff had remained "steady" since he took over. He admitted to having negotiated changes, which he called "fair and balanced," in work procedures in the composing and mail rooms, allowing for some reductions.
"Obviously, with technology, there's still some things that can be done in the composing room," he said. "But we're pretty lean in delivery, we're pretty lean in advertising sales and circulation. There's not too much else we can do without seriously impacting our operation."

No competition?
A two-newspaper town, yes. But it's been said that the Globe doesn't really consider the Herald its competition ? rather, it sees itself going up against the New York Times and Washington Post, at least in terms of news coverage.
But if Globe higher-ups really feel that way, they won't admit it.
"I think anybody involved in the gathering and dissemination of news and advertising is a competitor of ours," said Benjamin B. Taylor, the Globe's president and son of the paper's chairman and publisher, William O. Taylor, adding that he and his colleagues take the Herald "very seriously."
Mary Jane Patrone, the Globe's vice president of advertising and marketing, added, "Pat Purcell is just as feisty as he was when he was here with Murdoch."
Soft advertising, declining circulation and the newsprint dilemma "would lead you to think they'd be reeling," she said. "And yet, they don't seem to be."
Globe advertising people, Patrone went on, "go through the Herald every day ? just as they do with us, I'm sure ? to see if there's any advertising we're not getting, how much of one of our good customer's advertising they're getting, to see how we can get some of those dollars in here, make sure we're not eroding anywhere.
"You can bet the city room is doing the same thing, only they're poring over the news pages. Do they have a story we don't have, an angle we don't have? I think we keep each other on our toes, certainly. And they're very aggressive and don't miss an opportunity to tweak us, which is good. It stings when they do. We certainly pay attention to it."
But one has to wonder how much impact other print media in the Boston area ? most notably, Fidelity's stable of weeklies ? have on the dailies.
The consensus seems to be not much.
Even the head of the Fidelity group, Community Newspaper Co., insists its papers don't compete with the Globe and Herald.
"There's the Globe, there's the Herald, and there's Community Newspapers. They're complementary products," chairman and CEO William R. Elfers said, explaining that most of those who buy the Fidelity papers also read one of the Boston dailies.
Purcell, who says he hasn't studied in-depth the threat posed by the weeklies, admitted that they had "carved out a niche for themselves. They're forces to be reckoned with."
But it's hard for the smaller papers to compete for advertising, he contended, as they only come out one day a week. And their news coverage focuses on community happenings, compared against the broader scope of the Herald and Globe.
Patrone said the weeklies, however, appear to be positioning themselves to compete for the dailies' retail and classified ad business.
"They may not consider themselves a competitor," she said, "but we always look at them as though they could be, which I think is just a smart way to run the business."

Blueblood vs. blue-collar
In local news coverage, the Globe and Herald are highly competitive, as those on both sides freely admit.
And, of course, each paper claims it beats the other guy.
"I hesitate to say we're a 'serious tab,' but we certainly are a legitimate tabloid, and we take the news very seriously," said Herald editor Andrew F. Costello. "At the same time, we try to have fun . . . and do human-interest stories, so the paper really has a lot of life."
The Globe-Herald war seems on its surface to be the classic battle between upscale broadsheet and workingman's tab.
Indeed, the newspapers' readership figures say much about their differences. According to Scarborough Research, 44.8% of Globe readers have undergraduate degrees, compared with the Herald's 20.1%. And 34.5% of Globe readers have household incomes of at least $75,000, compared with the Herald's 20%.
But Costello says his paper shies away from the blood-and-guts formula traditionally embraced by tabloids.
"We try to deemphasize process stories and even crime stories right now," he related. "This is a pretty intelligent market and people don't want a steady diet of crime, a steady diet of process stories. We try to offer a greater mix, and try to be a little bit surprising."
The Herald also tends to run shorter articles than the Globe, which Costello sees as crucial to keeping readers.
"People don't have the time to devote to newspapers that they once had, and if you're continually running 30-inch stories, it's asking too much of the reader," he said. "On the whole, our paper is extremely well-edited. It moves quickly."
Adds Purcell: "I think there was a strong perception over the years that the Globe was way too liberal, was not particularly supportive of a free-market or capitalistic business approach.
"Our emphasis is supporting a strong free-market system, a conservative editorial approach to putting a newspaper together, with a little more gossip and a little more of a slant to the way stories are presented ? not to sensationalize or make light of the serious issues, but . . . not to be so ponderous. Those product distinctions enable people to buy both papers, I think. For those people who are not going to be Globe readers ever ? for whatever reasons, they feel alienated by it ? they may find a home with us."
Even the Globe's top editor, Matthew V. Storin, admits the Herald is a tough rival, in some areas.
"Journalistically, they're very competitive, but it's a very narrow field: crime, politics and sports, by and large," he said.
But there are entire areas the Herald, due to its smaller size, simply can't cover as well as the Globe, Storin maintained. Among them: investigations, education, science and religion.
"We're sort of like a full-service bank and they're like an ATM window," the editor quipped. "You can get a lot of things here, but if you're just looking for money, you can get it either place."
Storin ? who returned to the Globe three years ago after having worked there from 1969 to 1985 ? has been credited with beefing up local news coverage. Today, in fact, the paper is just as apt to play a crime story on Page One above the fold as an article about Congress or Bosnia.
The strategy: to connect with ordinary citizens, while dwelling less on the broader, more-complex issues that have little impact on people's everyday lives.
"When I got here, I wanted us to be less predictable, both in terms of perceived biases people felt the paper had, covering liberal issues . . . and in terms of covering the news that dealt with power, government, business, sports, that sort of thing," Storin explained.
The Globe may have surprised some when it recently ran what could be characterized as a sympathetic piece on a leader of Operation Rescue, the radical pro-life group whose members have been convicted of bombing women's clinics and killing abortion doctors.
"To close readers of the Globe over the years, that had to be a shock," Storin said. "But I wanted people who pick up the Globe ? except, perhaps, for those on the most extreme sides of the issues ? to feel comfortable with the paper.
"You wouldn't have to go too far in this town to find somebody who would say, 'Oh, the Globe is a liberal rag,' or whatever, but the careful readers in town, people in politics and all, I think would tell you that it's very balanced."
The Boston Business Journal's Fitzgerald observed that the old Globe "in many ways was almost European, in that it didn't hide its politics very much. It was liberal, and would hammer you with the opposing view. But it's making steps to be perceived as more objective."
Aside from improving its local report, the Globe also overhauled its business section, adding four writers at a time when other papers are slashing staffs.
Meanwhile, Storin insists that his mega editorial staff isn't out of proportion with the industry.
"I think for what this paper accomplishes, we might even be slightly smaller" than it should be, he maintained, comparing his paper's staffing levels to a Philadelphia Inquirer or Newsday.

Why Boston?
The burning question is: How is it that Boston supports two competing dailies when other large cities ? Dallas, Houston and Pittsburgh, among them ? could not?
Purcell proposed that most dual-newspaper towns disappeared because the products there were too similar.
"If you look at the cities that still have competing newspapers ? New York, Chicago, Denver ? they all have the
up-market broadsheet and the middle-of-the-road tabloid," he said.
The Phoenix's Dan Kennedy added, "Boston is different because, in a lot of towns, both papers try to go after the affluent, upscale audience. If you're going to have that sort of head-to-head competition, you're really just going to need one paper."
The Herald's previous owner, Hearst Corp., tried to take the paper uptown in the mid-1970s and failed, the writer pointed out. Murdoch gave the paper the identity that defines it today.
Storin offered that the area's well-educated, nontransient populace and the fact that Boston is the state capital ? not to mention the hub of New England ? keep both papers alive and kicking.
"People here have an interest in the institutions, in politics, and they like having two newspapers," he said. "If they thought there was a danger of losing one ? and, from time to time, that has cropped up ? you'd hear them say that would be terrible."
Adds Globe president Taylor: "I think people like newspapers around here. They value them. They trust them. They love them in some cases, hate them in others, but they read them. We're lucky to publish in this town. If the town can support two newspapers going forward, so be it."