Hussman: Arkansas Newspaper Merger a 'Permanent' Solution

By: Mark Fitzgerald The merger of the northwestern Arkansas newspapers published by the Arkansas Democrat-Gazette and Stephens Media might look a little like a joint operating agreement (JOA), but there's one big difference, says Walter Hussman: The merger is intended to be a "permanent solution" to the papers' financial difficulties.

"In a JOA you have two corporations, and an agreement with a limited term that might be 100 years or 50 years," Hussman, the owner of Democrat-Gazette parent Wehco Media, said in an interview Friday. "This is a corporation, and we each own 50% of it. A JOA is limited, this is a permanent solution."

With the announcement of the merger Hussman showed again his capacity to surprise the newspaper industry. This is the publisher, after all, who erected an online pay wall long before other newspapers began thinking about it, who won the Little Rock newspaper war against giant Gannett Co., and who expanded the D-G's circulation reach into northwestern Arkansas when other metros are pulling back into their "core" market.

Under the merger, Stephens, publisher of The Morning News and several weeklies, will handle local editorial operations, while the Democrat-Gazette, which publishes a zoned edition in 12 counties and owns the Northwest Arkansas Times and Benton County Daily Record, will be responsible for regional news.

The Democrat-Gazette will take over all production, distribution and business operations.

"What's different from a JOA also is we're not asking the Justice Department for an antitrust exemption," Hussman said. He likened the merger to the end of the Little Rock newspaper war when Hussman's Arkansas Democrat bested Gannett's Arkansas Gazette in 1991, and bought and merged the two papers.

The Justice Department has asked Stephens to try to sell the Morning News and its siblings before OKing the merger. Bozeman, Mont.-based Cribb, Greene & Associates is the broker for the newspaper -- but the prospect of a sale seems highly unlikely.

"That could happen, although it seems hard to imagine," Hussman said. "You can't even sell a newspaper in a one-paper city, let alone two."

For now, it seems that the merged corporation will continue to print out of the two plants the papers have in northwestern Arkansas. "It would be great to be able to print out of one," Hussman said, "but in this situation we can't really talk to one another because Justice is hoping someone will come along to buy the paper."

There's no telling when the Justice Department will determine enough time has passed to declare a sale impossible, Hussman noted.

When Hussman went to Northwest Arkansas Times in Fayetteville to tell the staff of the merger plan, he said it was "sobering" to be in a university town and reflect on the fate of the newspaper.

"You look at what happened to the Ann Arbor News," he said, referring to the daily's decision to transform itself into a digital operation with a print edition just twice a week. "That's a larger university town, with a larger university than the University of Arkansas. It's sobering to realize that we really have to make sure we do all we can to see that newspapers survive."