KATHARINE GRAHAM: THE BUSINESS WOMAN

By: Mark Fitzgerald and Todd Shields 'Washington Post' Leader Transformed Paper and Herself


If there never had been a landmark First Amendment struggle over the Pentagon Papers and if Watergate had remained forever a third-rate burglary, the newspaper industry would still be mourning the loss of Katharine Graham.

Her leadership of the Washington Post Co. obliterated the notion that a woman -- even a woman raised, as Graham once said, to be nothing more than a "doormat wife" -- is not capable of running a major media company. She also proved that a mediocre newspaper can be transformed into one of the world's most important.

Kay Graham even changed how Americans thought about newspapers. She inspired the "Lou Grant" TV character Margaret Pynchon, and so millions of Americans came to believe that behind every big-city paper was a woman whose patrician manner masks a passion for great journalism.

Graham, 84, died of head injuries last Tuesday, three days after falling at a Sun Valley, Idaho, conference for media elites. It was a world she was born into, but one her famously dysfunctional family never expected her to lead. Yet, she grew the Post Co. from a minor media player with revenue of just $84 million when she took its helm in 1963 as a numbed and inexperienced widow into a powerhouse whose revenue reached $2.4 billion last year.

Former Gannett Co. Inc. Chairman Al Neuharth was one of the many newspaper executives she sought out for advice when she took over the Washington Post Co. barely a month after the suicide of husband Philip Graham in August 1963. Graham was not quite the clueless widow of her Pulitzer Prize-winning autobiography "Personal History," Neuharth said last week.

"I think she exaggerated slightly," he said. "I told her that in her book she was too harsh on herself and too generous about the Post." Despite Neuharth's baiting of Ben Bradlee and the Post in the 1980s, Graham remained friendly, he said: "She knew it was a game. I was looking to get attention for USA Today, and the best way was to do that is kick the big guy."

Frank Daniels of The News & Observer in Raleigh, N.C., gave her advice during a labor dispute at the Post. Ovetta Culp Hobby, who had taken over as head of the Houston Post Co. when her husband died, virtually ordered Graham to make speeches, a duty that would remain agonizing for years. Otis Chandler, who started the Los Angeles Times-Washington Post (LAT-WP) news service with Phil Graham, was the guest of honor at her first business dinner.

"The early years were a very difficult period for her," Chandler told E&P last week. "She was bright but shy, reluctant to step into the limelight. When the executive committee of LAT-WP met in Washington, Kay was even reluctant to run the meeting of about 15 executives. But she was a quick study, and she began quickly to enjoy it, meeting publishers and editors around the country."

She had come a long way from the timorous Vassar girl whose father, Eugene Meyer, arranged her first newspaper job at the old San Francisco News. On her first day, she said she felt "defeated before I began" and begged him to take her back to Washington.

Uncharacteristically, the man who had belittled her throughout childhood encouraged her. Within a month, she wrote, "a touch of ambition was taking hold." Soon she was covering strikes and matching whiskey shots with union leaders after work.

Ben Bagdikian, the Post's national editor in 1971, credits her lonely decision to publish the Pentagon Papers -- risking the company's $100-million initial public offering of stock -- with giving her the confidence to "take greater risks" with the Watergate investigation shortly thereafter.

Probably the greatest test of Graham's personal leadership came in 1975. That year, pressmen began a strike by disabling all 72 printing units of the Post's nine presses. Graham went nose to nose with the union for five months before breaking the strike by hiring 107 nonunion pressmen to replace a work force that, in accordance with contract rules, could balloon to as many as 800.

Turning to management problems, she cleaned house so thoroughly that Time ran an article -- with the headline "Krusty Kay Tightens Her Grip" -- that portrayed her as an impulsive boss under the thrall of Omaha, Neb., investor and board member Warren Buffett. "I particularly detested the sexist implications of stories like these -- always being depicted as the difficult woman, while whoever left the company was the victim of my female whims," she later wrote.

Graham proved she could make the same business mistakes as the big boys. Against her better judgment, she approved the purchase of the Trenton (N.J.) Times, an afternoon paper in a losing fight with the livelier Trentonian. "We never learned to manage the paper, and we ran it abysmally," she wrote. Publicly, she called the paper the Post's Vietnam, a "foolish statement," she later said in her book, but exactly how she felt.

Fearing a violation of federal cross-ownership rules, she also leaped at the chance to swap the Post's highly regarded Washington TV property for a mediocre station in recession-bound Detroit.

But those missteps hardly compare to the business legacy she is leaving.

Post watchers and insiders say Graham imbued her son and his managers with her vision of a profitable company that sets long-term goals, even as it pursues journalistic excellence.

"Her legacy is and will continue to be freedom of the press," said Richard Simmons, who as president of the Post Co. guided its stock price from $27 a share in 1981 to more than $300 in 1991. (It closed at $592.50 the day Graham died.) "And simultaneously, the firm conviction that profitability and editorial excellence go hand in hand."

Her impact on the Post Co. "is longstanding and enduring. It completely informs the direction of the company," said Thomas A. Russo, a partner with the Lancaster, Pa.-based investing firm Gardner Russo & Gardner, which holds Post stock. Her Pentagon Papers decision impressed investors as well as journalists, Russo said. "The fact that she did show such courage allows [Post management] to take tough decisions" now, he said.

Control of the Post Co. will remain in Graham family hands, a newspaper representative said. The family controls all of the Class A stock that elects 70% of the board. Some of Katharine Graham's holdings may be sold to satisfy estate taxes. But before their sale, the shares may be converted to the less powerful, publicly traded Class B stock.



Mark Fitzgerald (mfitzgerald@editorandpublisher.com) is editor at large and Todd Shields (tshields@editorandpublisher.com) is the Washington editor for E&P.



Copyright 2001, Editor & Publisher.