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WisBiz In-Depth: Newspaper chain ownership explodes in state
1/31/2005

By Gregg Hoffmann

Representatives of newspapers from around the state will convene in Appleton this week for the annual Wisconsin Newspaper Association convention.

The number of representatives will be about the same as it is very year.  But the number of companies they represent will be fewer than in the past.

Wisconsin’s newspaper industry has undergone a transition that has been going on around the county for a couple decades – consolidation of ownership.  It hit home in a big way in 2004, when Gannett, the biggest newspaper company in the country, bought five newspapers from Brown County Publishing, and two more, including the daily Green Bay News Chronicle, from The Denmark Press.  Also included in the transaction were a variety of specialized publications.

Gannett already owned 12 dailies in the state, including the Green Bay Press Gazette, the competing newspaper to the News Chronicle.  Totals for paid circulation Gannett newspapers in the state recently stood at 276,126 daily and 298,736 on Sundays.  The company employed 1,919 people.

So, the national giant also has become a giant in Wisconsin.

Another major corporate player in the state is Lee Enterprises, based in Davenport, Iowa.  Lee has four groups – Enterprises, Chippewa Valley, Capital Newspapers and River Valley – which total 24 newspapers in Madison, Racine, La Crosse and Portage. This week, Lee Enterprises agreed to acquire Pulitzer Inc. and its 14 daily newspapers, including the Daily News in Rhinelander as well as two big city newspapers in St. Louis and Tucson.

Of course, Journal Communications, based in Milwaukee and known best for the Milwaukee Journal Sentinel, remains a giant in the state with 32 newspapers, divided into three groups.

Many of these newspapers are weeklies or twice-per-week papers.  Some are so-called “shoppers,” free distribution newspapers that make money strictly on advertising. Yet others include niche publications, such as entertainment magazines, tourism guides, real estate listings and automobile publications.

When you count daily circulation, the Journal Sentinel still leads in state circulation, with Gannett combined dailies a close second and Lee newspapers in third and closing. When you include weeklies, shoppers and specialty publications, the numbers become too complicated, even for some of the chain representatives to provide. Suffice it to say, these three chains are doing business in Wisconsin big time.

At one time, major corporate chains primarily held just daily newspapers, but across the nation the trend for corporations to acquire weeklies and shoppers has increased dramatically.

“In an increasingly evident trend, paid circulation daily newspaper companies are acquiring weekly groups with mostly free distributions,” led a report about national trends in 2004 from Cribb & Associates, a major broker of newspapers based in Bozeman, Mont.

“There have always been buying and selling that goes on (in Wisconsin),” said Peter Fox, executive director of the Wisconsin Newspaper Association.  “There generally have been more acquisitions, and startups, by newspaper corporations in the last 20 years.” Fox added that many in recent years followed the national trend cited by Cribbs.

Of course, the major questions posed by the trend are:  1) is it good or bad for the newspaper industry? and 2) is it good or bad for the communities those newspapers serve?

Critical Research

Some researchers have maintained that chain ownership leads to “cookie cutter” newspapers around the country and a reduction in diversity of voices in the marketplace.

Consider this excerpt from a Northern Illinois University study by a group headed by researcher Angela Powers: 

When a media conglomerate generates large capital, they can acquire or buy out other smaller media organizations to generate more sources of income, which becomes a cyclic process. Gomery (1993) suggests that the main causes of media conglomeration in the United States are, "economies of scale", "vertical integration", and "corporate diversification".

"Economies of scale" suggests that bigger conglomerations can have greater returns based on their size. "Vertical integration" suggests that media conglomerates try to create an entity that encompass most if not all of the consumers media needs. And "corporate diversification" suggests that media conglomerates own other forms of media besides their mainstream in order to compete with other smaller competition.

“Bagdikian (1997) found the same occurring trend in the media industry. He suggests that daily newspapers, magazines, broadcasting systems, books, motion pictures, and most other mass media are moving in the direction of tight control by a handful of huge multinational corporations. Bagdikian also suggests that media monopoly practices are encouraged by two "ancient" motives, and those are, "money" and "influence". Bagdikian’s concept of "money" motives is basically the notion of economy of scales.

"Market dominant firms simply make higher profits out of every dollar than less dominant firms. The ‘influence’ motive is the underlying assumption that, ‘market dominant corporations in the mass media have dominant influence over public’s news, information, public ideas, popular culture, and political attitudes’. This implies that media ownership does have significant impact on the society.

Another body of research shows that despite the economies of scale involved in large chain ownership, newspaper readership in the country, and in many cases ad revenue, continues to decline.

Other research has more mixed findings, with evidence of actual improvement in the quality of newspapers that are owned by chains and some revitalization of the industry through innovation and combining of papers with Internet operations and other multi-media.  Representatives of the newspaper industry in Wisconsin, understandably, side with this latter body of research.

Industry Leaders Respond

“First and foremost, the scale of economy in running the business is an advantage (to chain ownership),” the WNA's Fox said.  “This often includes knowledgeable people, improvement to the product, up-to-date production techniques and equipment, and other things.”

James Hopson, publisher of the Wisconsin State Journal, heads Lee Enterprises groups in Wisconsin.  “We can offer a number of things that improve the quality of a newspaper,” Hopson said in a recent phone interview. “No. 1 is expertise.  We have newsroom training programs.  We can share copy and ideas. We won’t put up with bad quality.  We evaluate newspapers and if they are not doing a good job let them know it, but we also offer them help.”

Ellen Leifeld, vice-president of Gannett’s Midwest Newspapers Group and president and publisher of the Appleton Post Crescent, agreed that chains can improve the quality of newspapers.  “I’ve been in the business for more than 30 years, most on the news side, and have worked for Gannett, but also family-owned newspapers,” Leifeld said.

“There clearly are a number of benefits for both readers and employees.  Speaking for Gannett, we really emphasize local news and First Amendment reporting in small and large communities.  We can devote resources that those family-owned newspapers might not have.”

By owning clusters of publications, which might include dailies, weeklies, shoppers and niche publications in a region, chains can offer advertisers better and broader reach, and include regional as well as local news, Leifeld said.

Journal Communications often is looked at as the “hometown” newspaper operation, but it too has become a sizeable chain with the addition of weeklies through what was ADD Inc. and now is called the Journal Community Publishing Group.  It also recently opened a new printing facility in the Milwaukee area -- a signal of its commitment to putting out newspapers that connect with their communities. The company’s holdings extend into eight states.

“We are what I would call a moderate-sized group,” said Scott McElhaney, president of JCPG.  “The giants keep getting bigger.  We have free distribution and weekly newspapers in our group and always are always looking to maintain and improve quality.”

Stereotyped Perception

Fox said the perception of chain ownership diminishing local news coverage and service to the community is not accurate.  “The chief negative (in chain ownership) is that people have stereotypes of newspapers belonging to that community, and only that particular community,” he said.

“When a newspaper becomes part of a larger chain, these people see it as perhaps not totally serving that community interest. But for news to be relevant and meaningful it has to be local.  Local-local-local are the words in newspapers and politics.  Chains know this.  If they don’t cover local news they won’t be successful in the long run.”

Hopson agreed and said that, at least in Lee’s case, individual newspapers in the chain are given autonomy.  “Newspapers are products of their community,” he said.  “You can go anywhere in this country and listen to the radio, and you won’t know where you are.  But, in newspapers, if you don’t reflect your community accurately and fully, and engage the readers, you won’t be successful.

“We don’t tell people what to put into the newspaper.  For example, La Crosse and Racine endorsed John Kerry, and the Wisconsin State Journal, Bush.  I found out who La Crosse endorsed the day after they had done it. They didn’t come to me and ask ‘We’re going to endorse Kerry. Is it OK, boss?’”

Leifeld said Gannett also emphasized autonomy and local news.  “The foundation is local news,” she said.  “People often say, ‘my newspaper.’ I don’t know if they do that for others (media).  So, we emphasize local coverage.”

It’s very likely that you will see the chain ownership trend continue to grow in Wisconsin.  Some individual newspapers and smaller chains – like United Communications, the owner of the Kenosha News and five weeklies, Conley Publishing, Eau Claire Press Company, Southern Lakes Publishers and others – are of the size and locations to be very appealing to the giants.

Hopson said of Lee:  “We like the markets we are in here. We would look for acquisitions that fit two categories – daily newspapers with at least 30,000 circulation and newspapers that could be functionally integrated into groups.” He gave the current Lee-owned Chippewa Falls and La Crosse area groups as examples.

McElhaney said the Journal Community Publishing Group is “looking on a regular basis” for newspapers that would expand its current groups.  Leifeld said Gannett shares a similar philosophy to Lee and the Journal Communications on acquisitions of newspapers and also sees a growing market in magazines and niche publications.

“We like Wisconsin,” Hopson said, also summing up sentiment expressed by the others.  “We like doing business here.”

--Hoffmann is a former journalism instructor at UW-Milwaukee and a veteran reporter and writer. Newspaper publishers and editors gather Feb. 3 and Appleton for the annual convention of the Wisconsin Newspaper Association. For more on the state's newspaper industry, click here:http://www.wnanews.com/


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