Neuharth defends JOA against charges in book by Detroit News reporter p. 10

By: Mark Fitzgerald Chides author for saying one of the papers should have been allowed to fold sp.

DETROIT'S JOINT OPERATING agreement "from a business standpoint is already a success," former Gannett Co. Inc. chairman Allen Neuharth declared as he defended himself against charges that the JOA he negotiated has turned to shambles in just four years.
"In 1993, the JOA . . . had a turnaround in the eight-figure range . . . . The JOA's OK. Detroit will have two newspapers for at least 96 years," Neuharth told an audience at a Jan. 27 event sponsored by the Freedom Forum, a foundation he has headed since his retirement from Gannett in 1989.
Neuharth was the only former or current top executive involved in the JOA who accepted an invitation to discuss it with Bryan Gruley, a Detroit News reporter who has written a book on the subject, Paper Losses: A Modern Epic of Greed and Betrayal at America's Two Largest Newspaper Companies.
Neuharth negotiated the JOA on behalf of Gannett's News. Alvah Chapman, who retired as the top executive at Knight-Ridder Inc., declined an invitation to speak about the history and results of his efforts for the Detroit Free Press.
"I called Alvah and said he really should reconsider," Neuharth said. "But he told me, 'I don't really think it's necessary. I think you can display enough greed and betrayal for us both.' "
Both Neuharth and Chapman are taken to task repeatedly in Gruley's book, which portrays the JOA as a cynical deal by cynical people.
"I could not abide the chairman of the biggest newspaper company in America deceiving his own employees," Gruley said, referring to what he said were Neuharth's misleading statements at the time Gannett bought the News about whether a JOA was in the works.
But the book also portrays both executives in a way that they usually are not regarded: as losers.
Neuharth, Gruley argues, held the winning hand at the bargaining table ? dominance in circulation and a concession by Knight-Ridder that its Free Press would be labeled the "failing newspaper" in the JOA application ? yet he frittered away his advantage.
By agreeing to be the afternoon paper, Gruley writes, Neuharth condemned the News to inferiority. Indeed, News daily circulation has declined from 690,422 in the September 1989 Audit Bureau of Circulations FAS-FAX to 366,988 in the September 1993 FAS-FAX.
But Knight-Ridder has little reason to crow. While the Free Press at last leads the Detroit market with a daily circulation of 556,116, that is a drop from its September 1989 circulation of 626,434.
And both newspaper companies have suffered further financial losses rather than the quick profits they envisioned when they proposed the JOA in 1986.
In his talk at the Freedom Forum, Gruley said he has concluded that Detroit would have been better off without a JOA.
"One of those papers should have been allowed to die in the early 1980s just like other papers died," he said. "That other [surviving] paper would have been able to stop the bloodletting, stop the insane practices that went on in Detroit ? giving away papers, giving away advertising ? and that paper would have been able to stave off that [range of] new competition, from suburban papers to CNN."
Gruley said he has not predicted that the News will be folded ? as JOA papers folded in St. Louis or Miami, for example.
"Despite what my bosses say every six months ? that the numbers will go up, and I hope that's true ? I'll believe it when I see it," Gruley said.
Neuharth did not answer the most pointed question Gruley put to him: "What was it, Mr. Neuharth, did you screw up or did you just not care ? or was this your plan all along?"
Instead, Neuharth turned the tables on the reporter.
"I did not realize you wanted one of the newspapers to die in 1986," he said, fixing Gruley with a squinty eye.
"Had I known," he continued, "that one of these papers should have died, I would have conducted myself better.
"As it is, these greedy, greedy businesspeople saved two newspapers for the city of Detroit ? even if one of the best reporters, like Bryan Gruley, wanted one of those papers to die."
Neuharth dismissed the decline in News circulation as having "gone down somewhat" but said sales figures turned around in the last quarter.
Similarly, he said, losses were reversed with a turnaround "in the eight-figure range. That's $10 million."
Neuharth did not specify any financial results, and Detroit Newspaper Agency president and CEO Frank Vega said the agency does not "divulge individual unit numbers."
"So I'm not really in a position to make any comment," Vega said. "The only thing I would say is we feel we are on track in the JOA."
Neuharth rejected suggestions that the News sooner or later will be shuttered by the JOA.
"Why would it be advantageous to close a paper with a circulation of more than 300,000? There are many JOAs that survive with circulation ratios of two to one or more," he said.
"Another reason the paper will not be closed is because its owner, the Gannett Company, has some pride in its editorial product," he added.
As the agreement is written, neither Gannett nor Knight-Ridder could share in the JOA if it ceased publishing its paper.
Neuharth conceded that the implementation of the JOA had faltered under its first DNA heads, but he said it is turning around "under street-smart Frank Vega."
And Neuharth offered a simple remedy for the News' circulation woes: Start printing the News earlier to reach outstate Michigan readers.
"Print enough papers at 5 a.m. to be on sale in Battle Creek or Midland . . . where people are more conservative and where before the JOA the News had some real morning circulation."
It would be a mistake, he said, for the News to displace Free Press press time in an effort to make morning home delivery in Detroit.
"The Detroit News had artificial circulation for home delivery in Detroit, where people are more liberal," he said.
Vega declined to comment on Neu-harth's distribution advice.
The future of Detroit's newspapers is more assured than it has been in decades, Neuharth argued.
"I can assure you that the golden age, as some have called it, of newspapers in the 1960s was not nearly so golden as some people remember or would like to pretend it was," he said.
"When Hearst sold the Detroit Times to the Evening News Association [in 1960], since that time the question was whether there would be two papers or one paper in Detroit.
"Now there is no longer a question," Neuharth said. "There will be two papers despite the 'greed and betrayal' of Alvah Chapman and Allen Neuharth."
?( "As it is, these greedy, greedy businesspeople saved two newspapers for the city of Detroit-even if one of the best reporters, like Bryan Gruley, wanted one of those papers to die.") [Caption]
?( ? Allen Neuharth, former Gannett Co. Inc. chairman who negotiated the Detroit newspapers' joint operating agreement) [Photo & Caption ]


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