Family-Owned Papers Face Pressure To Sell

By: Mark Fitzgerald At first glance, The Seattle Times and The Paris (Ill.) Beacon-News would seem to have nothing in common. The 228,372-weekday-circulation Times serves a world-class Pacific Rim city that, despite the dot-com collapse, remains a high-tech powerhouse. The 5,217-daily-circulation Beacon-News serves the county seat of Edgar County in rural central Illinois.

Yet both papers are proudly family-owned: There's been a Blethen atop the masthead of the Seattle paper for more than a century, and a Jenison running the Paris daily since 1926. And for all their differences, the Blethens and Jenisons represent both the enduring tradition of independent newspaper ownership -- and the new and sophisticated methods some families are using to keep their papers for generations to come.

Seattle Times Publisher Frank Blethen organizes family retreats and seminars, lobbies furiously for family-friendly business laws, and practically dares anyone -- especially the paper's unhappy 49.5% minority partner, Knight Ridder -- to take the paper from his family. "Knight Ridder made an unsolicited offer of $750 million, which would have been the highest amount ever paid for a newspaper in the U.S., and the family laughed at them," he says. (A Knight Ridder spokesman confirms the chain has made offers for the Blethen stake, but says the amounts have never been made public.)

Meanwhile, in his Midwestern way, Editor and Publisher Ned Jenison is more modest and informal in his approach to keeping the Beacon-News in the family. But the workplace and dinner-table conversations about the paper and the community eventually resonated in his son Kevin. This fourth-generation Jenison at the paper went to school to become an engineer but now serves as associate publisher: "I really feel a commitment to the community, not only to keep the newspaper going -- but to keep it in the family," he says. "The Beacon name and the Jenison name are almost the same."

Ned Jenison is also modest about why the Paris paper has stayed independent. "Being small helps," he laughs. But the dailies nearby in Charleston, Danville, Mattoon, Robinson, and Watseka are all pretty small, too -- and they are all now owned by aggressive chains such as Lee Enterprises Inc., Community Newspaper Holdings Inc. (CNHI), Lewis Newspapers, and Community Media Group. The Beacon-News might look like a good fit in any of their clusters. Against that pressure, the Jenisons have continually modernized their newspaper and struck advertising alliances with other independents.

The 20th century was not kind to family newspaper ownership: While some 1,650 dailies were family-owned in 1900, the number plunged to 850 by 1960, 350 by 1990, and about 250 now, according to Thomas Kunkel, dean of the Philip Merrill College of Journalism at the University of Maryland.

Yet, like the family farm, another disappearing symbol of America, the family paper's grip on our national cultural imagination seems to grow even as its numbers wane. The fervor independent papers can stir was on display early this month at an Urbana, Ill., symposium on family ownership that often resembled a rally against chain ownership -- a kind of Farm Aid for family publishers, without the tractors or Willie Nelson.

Are these remaining papers doomed to corporate ownership? Not by a long shot, say those who know family papers best: the brokers who try to sell them, the chain executives who try to buy them, the consultants who advise them, the journalists and academics who follow them, and, not least, the publishers who run them. "Anybody that is still standing has a pretty clear idea of what they want to do with the paper," says Alex S. Jones, director of the Joan Shorenstein Center on the Press, Politics, and Public Policy at Harvard University, and a fourth-generation member of the family that owns The Greeneville (Tenn.) Sun and several other community papers. "There's nothing naive about the situation anymore."

Happy families

"Happy families are all alike; every unhappy family is unhappy in its own way." So Leo Tolstoy begins his novel Anna Karenina. An astute observation for 19th-century Russia, perhaps, but might it also explain why some families in the United States have been able to pass their newspapers along generation after generation, while others have seen their newspaper legacies slip from their hands in public spectacles of bitterness and recrimination?

Being a happy family may in fact preserve the newspaper from one generation to the next, says Ray Carlsen, who, as Inland Press Association executive director, has seen plenty of family owners sell out and plenty hang on: "If there is essential friendship inside the family, then continued ownership is much more likely. I have seen a lot of those [generational] transitions that seem to be going pretty effectively."

It turns out that publishers who keep their papers in the family are largely alike. They follow a common pattern of business and family practices.

The secret isn't in voting trusts and buyback bylaws, although family publishers emphasize that all mechanisms should be employed to lock up ownership. Still, it's worth remembering that Barry Bingham Sr. held the vast majority of the voting stock when he put The Courier-Journal in Louisville, Ky., on the auction block and that the Chandler family easily managed to smash the "unbreakable" voting trust at the Times Mirror Co. when it found a simpatico suitor in the Tribune Co.

As co-founder of the Family Business Consulting Group Inc., Craig Aronoff specializes in helping families pass their businesses along to the next generation. While most of his work is outside the newspaper industry, he's been an adviser to such publishing families as the Sulzbergers of The New York Times. Newspaper families, he says, have got the first step down pat: "One of the big differences [from other industries] is the wonderful sense of mission about being the custodians and the defenders of the First Amendment. When I worked with The New York Times folks, they couldn't imagine that anyone had more passion about their business than they did."

That sense of mission permeates successful newspaper families, large or small. "If I heard my dad say it once, I heard it a million times: 'The newspaper is a public trust, and it comes first,'" says Walter Hussman Jr., publisher of the Arkansas Democrat-Gazette in Little Rock. Hussman's father also drummed into his son the five different constituencies, in order, that a paper must serve: First, the readers, then the advertisers, employees, creditors, and, finally, shareholders. "He'd say, 'If you keep it in that order, everyone will do fine.'"

Christopher White Walker feels the family sense of mission every time he walks into his office at The Emporia (Kan.) Gazette. He has kept the room looking just as it did when it was occupied by his great-grandfather, the legendary William Allen White, with the sepia-tone photos and letters from the eight presidents who corresponded with White.

"You really understand that you are here just as a caretaker. That is a real goal of mine, to pass the Gazette on to another generation," says Walker, the current editor and publisher. "It's almost a duty to show that independent daily papers can survive." Walker says he lives by the response his grandmother had whenever brokers would come sniffing around for a sale: "She'd say, 'The newspaper is a family -- and how can you put a price on a family?'"

Publisher H. Brandt Ayers, whose family's 25,956-daily-circulation The Anniston (Ala.) Star is often rated among the nation's best papers, jokingly attributes his success to "my two talents -- nepotism and monopoly." More seriously, he adds: "There's a rootedness to family ownership. We care deeply about this little patch of land."

William Dean Singleton, who grew his MediaNews Group Inc. on a tasty diet of family papers, says inculcating passion for the business is critical: "Every family situation is different, of course, but you show me a generation that's not interested in the newspaper -- and I'll show you the paper that is going to be sold."

Freedom Communications Inc. was saved from a recent crisis because it communicated its libertarian mission to the latest generation, says family business expert Aronoff. "The fourth-generation folks understand what their grandfather did," he says, "and they bought into it -- and now they are literally buying into it."

Unhappy families

Clearly, though, a family sense of mission is not enough by itself to keep a paper. For there are patterns of behavior in unhappy newspaper families, too, as Allen H. Neuharth can attest.

As chairman and CEO when Gannett Co. Inc. was on its newspaper-buying binge in the 1980s, Neuharth snapped up dozens of dailies from family owners, including three prized papers relinquished after meltdowns in their legendary families: The Courier-Journal owned by the Binghams; The Des Moines (Iowa) Register owned by the Cowleses; and The Detroit News owned by the descendants of James Scripps. "In all three cases, sibling rivalry, dissent, disinterest, and a desire to cash in brought about those sales," Neuharth says.

The papers involved don't have to be that big to fall victim to family greed -- and in fact the smallest-sized can be most vulnerable, notes Larry Grimes, president of Gaithersburg, Md.-based W.B. Grimes & Co. "If you've got a 30,000-circulation daily doing $20 million revenue, where the publisher is making a really nice living out of this, then the kids seem a little more eager to jump into [newspaper ownership]," he says. "But if you've got a smaller daily where the owner/publisher is still working 12 hours a day and is struggling to make $100,000, well, the kids look at that and say, 'Maybe I want to go somewhere else -- and if the family could sell this for $2 million and split it up, that wouldn't be too bad.'"

Unhappy newspaper families are back in the news these days in a way they haven't been since the great industry shakeout of family ownership nearly two decades ago. This summer, the expected sale of the Chicago Defender stalled yet again, marking the fifth year since the death of owner John H. Sengstacke that family feuding and poor estate planning has kept the black daily under control of a bank trustee. And just last month, the Hoiles family avoided the unwelcome sale of Freedom Communications, parent of The Orange County Register in Santa Ana, Calif., by agreeing to transfer ownership to the fourth generation of shareholders.

Freedom came under pressure to cash out from Tim Hoiles, a third-generation family member who, as it happens, was advised by Christopher Shaw. In the 1980s, Shaw virtually single-handedly forced a sale of The Courier-Journal and took noisy if ultimately unsuccessful runs at two other coveted independent operations, the St. Petersburg (Fla.) Times and the Milwaukee Journal Sentinel.

We're not likely ever to see a rerun of those Dynasty-like dramas again. For one thing, there aren't that many family-owned dailies left to plunder. Independent papers accounted for as much as 69% of annual newspaper sales during the 1980s, but are in the single digits these days, notes Owen Van Essen, president of the Santa Fe, N.M.-based brokerage firm Dirks, Van Essen & Murray.

It's a family affair

The most important factor in keeping the paper in the family, Van Essen says, is keeping in the loop all those family members who don't work at the newspaper: "They might only be involved as board members, but they understand from generation to generation what newspaper ownership in a given market means."

There are a lot of ways to do that, and the most common practice over the years is to do it pretty informally. In Paris, Ill., for instance, the Paris Beacon Publishing Co. is a family affair that includes Ned Jenison's 92-year-old mother Barbara as treasurer. Grandson Kevin is the only third-generation Jenison employed by the paper, but his wife and two brothers serve on the publishing company's board, and everyone knows what's going on with the Beacon-News. "We're a close-knit family and get together as often as we can," Kevin Jenison says. "And it seems, whether we want to or not, we always end up talking about the newspaper."

The Shorenstein Center's Jones recalls his parents suddenly and seemingly inexplicably becoming football fans just as their children turned college age. They would drag the five kids off to bowl games during school vacations. "Only later, it occurred to me this was their way to get us in the car for a period of time to get to know each other," he says. It must have worked: Though he is best-known as an author of books chronicling successful and failed newspaper families (the Sulzbergers and the Binghams), Jones still says, "I have always found it very peculiar that people who ran newspapers were so easily seduced by the idea of turning it into money. ... Having a newspaper, if it's a good newspaper, is a way of life."

Family-business expert Craig Aronoff warns that informal, dinner-table communication can take a newspaper family only so far: "By the time you get to the fourth or fifth generation, you're talking about 13 or 14 dinner tables. You absolutely cannot rely past the first generation on the dinner table."

Bigger family-owned or family- controlled newspaper companies are increasingly turning to formal retreats, and even full-blown seminars, to smooth intragenerational relationships, and to prepare a next generation for leadership. The Blethen Corp. holds two formal meetings every year for the fifth-generation descendants of founder Alden Blethen. At the most recent one, Robert M. Steele, the Poynter Institute's ethics group leader, conducted a two-day seminar on journalism values and ethics. At other meetings, the young generation itself, many of whom have now reached their 30s, sets the agenda.

That's only the beginning, says Frank Blethen: "I spend 30% of my time on things relating to family -- communications, planning meetings, sharing information, meeting with [relatives]. In too many families, the management of the business is exclusionary." Blethen says the communication has helped the family cope with complaints from its joint-operating-agreement partner and competitor, the Hearst Corp.'s Seattle Post-Intelligencer, as well as its Seattle Times newspaper partner, Knight Ridder. "Knight Ridder has made some attempts to create family dissension. They've sent some letters to family members signed by [Knight Ridder Chairman and CEO] Tony Ridder," Blethen says. A Knight Ridder spokesman tells E&P, "It's fair to say Knight Ridder has sent letters." And Knight Ridder executives, for their part, have complained publicly in the past about Blethen's management, including his salary and his purchase of a group of Maine dailies.

Won't you come home?

For all their preparations, and hopes, publishers insist they won't push their kids into the family newspaper business. Family-business counselor Aronoff says that's a good idea: "We actually encourage the kids to go off and pursue whatever their passion is, and then see if they want to come back."

In Paris, Ill., Kevin Jenison isn't sure if his son, a sophomore music major at the University of Illinois, will want to run the Beacon-News someday. There are little signs, though: The youth spent his summer hanging out in the newsroom, doing whatever needed to be done, just like his dad used to do.

It's a life, oddly enough, recommended by at least two former chairmen of that ultimate symbol of homogenizing chain ownership, Gannett. Speaking at the family-ownership symposium this month, Al Neuharth recalled: "My predecessor, Paul Miller, and I used to tell each other, if we ever owned an independent paper, we would never let it go."