Death watch over Indianapolis News p.10

By: Robert Neuwirth As circulation dives, management ends
discounts aimed at reviving Star's ailing sister

Though it's home to the famous car race, Indianapolis' fastest traffic these days could be readers running from the afternoon Indianapolis News.
Owned by Central Newspapers, the News has hemorrhaged more than one-third of its circulation in two years. At that rate, within two years it will hit the point where managers have said they will have to reconsider its fate.
Investors say the News' days are numbered. "It's just a matter of time," said John Miller, an Ariel Capital Management analyst whose Chicago-based money-management firm holds 6.6% of Central and is the largest single outside investor. "I would tend to believe that maybe within another year or two we will see the Indianapolis News come to an end. It only makes sense." He called the potential savings "substantial."
The News' average daily circulation is down to 36,340, off 33.2% since December 1996, according to company figures and the Audit Bureau of Circulations. Afternoon circulation has declined to just over 13% of total circulation at Indianapolis Newspapers. By contrast, in 1990 the News sold more than 100,000 copies a day ? and represented more than 25% of total INI circulation. Meanwhile, with daily circulation of 233,883, INI's morning Star is up 2.3% since 1990.
"We are not doing anything special or specific for the evening paper," said Dale Duncan, president and general manager of both papers. He said the News' circulation losses have slowed this year ? and telemarketing continues ? but discounts, long offered to lure subscribers, have recently been canceled.
Still, Duncan said that there is virtually no duplication between subscriber lists at the two papers. Therefore, even though the News represents a fraction of INI daily circulation, it offers "substantial incremental reach for our advertisers," he said.
But a continued News circulation slide could change the outlook. "If it were to fall below 10%, we would get worried," Duncan said. At current rates, the News could cross that line within two years.
The decline of afternoon papers ? and dominance of morning circulation ? is a decades-long phenomenon driven by changing reader habits. Even so, 819 dailies remain in the afternoon cycle (11 million combined circulation), compared with 705 morning dailies (45 million circulation). In 1990, there were 530 a.m. papers and 1,125 p.m. papers. Companies operating morning and afternoon papers in the same town have been closing or merging afternoon titles for years.
"It's 'Let nature take its course,' which, of course, I suspect it will," John Morton, a newspaper analyst based in Silver Spring, Md., said of the News. He said most operators shutter afternoon titles when they fall below 20% of total circulation.
If Central's own track record is any indication, there's no hard rule. In Phoenix, afternoon circulation slipped below 10% of the market before the Phoenix Gazette closed in January 1997. The move ended 85 jobs, but 85% of subscribers converted to the morning Arizona Republic. When Central merged the Muncie, Ind., Star and Evening Press in June 1996 ? and cut 37 jobs ? 30% of circulation was in the afternoon, according to ABC audits.
Since September 1995, the Star and News have been produced by a single news staff. Just 20 to 25 newsroom staffers work on the News ? six on the editorial page, the rest in copy editing and pagination.
The News was founded in 1869 and bought by Eugene C. Pulliam's Central Newspapers in 1948, when p.m. papers outnumbered a.m papers 4 to 1 nationwide and when News circulation was 174,080, to the Star's 173,935. Indianapolis also had Scripps Howard's 93,710-circulation afternoon Times.
Because Central's stock trades on
the New York Stock Exchange, Wall Street figures into the News' future. CNI shares have declined almost 20% since early July, but analysts like Central. In a report downgrading many newspaper stocks, Merrill Lynch analyst Lauren Rich Fine urged investors to buy Central and noted "the possibility" the News will close.
Investor influences have created pressures unimaginable for family patriarch Eugene C. Pulliam, who died in 1975 but was later quoted in Forbes: "I've never been interested in the money we make but in the influence we have." Analysts speculate that Pulliam's heirs, who control the company, are emotionally attached to the News. Eugene S. Pulliam, longtime publisher of the Star and News, is in his 80s and ailing. Sources expect no action on the News during his lifetime.
Nevertheless, Louis A. "Chip" Weil, a former Gannett Co. executive who took over as Central's CEO in late 1995, has shown a willingness to put p.m. papers out of their misery. "Unlike the family, and unlike Frank Russell [former CEO and current chairman], I don't think Chip Weil has any sentimental feeling about the afternoon paper in Indianapolis," Morton said. Weil declined comment.
?(Robert Lavelle/Indianapolis News Eugene S. Pulliam, longtime Star and News publisher, pictured in 1956, is in his 80s and ailing.) [PHoto & Caption]
?(Editor & Publisher Web Site: [Caption]
?(copyright: Editor & Publisher October 10, 1998) [Caption]


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