Singing the Big-City Blues

By Janice Castro.

In New York and Philadelphia, noted dailies are on the block

It has been a harsh season for many metropolitan newspapers. Chicago's Tribune Co. has put a FOR SALE sign on the New York Daily News, the largest general circulation paper in the country. In Philadelphia the old slogan "Nearly Everybody Reads the Bulletin "has been turned on its head. Now more people read the morning Inquirer, and the Bulletin is on the block. If buyers do not turn up soon, both the News and Bulletin may fold. Once prosperous dailies in Boston, Baltimore, Cleveland, Los Angeles and Seattle are also tottering.

Conditions vary from city to city, but the main problem is the same everywhere: readers and advertisers have trooped off to the suburbs. Says Publishing Analyst John Morton: "It's not that newspapers are dead. It's just that readership has been redistributed." Over the past two decades, for example, the News lost more than half a million readers while Long Island's Newsday upped its circulation 59%, to 507,000, and the Bergen County (N.J.) Record registered a 46% increase, to 145,000.

Large advertisers, meanwhile, began spreading their dollars around, buying space in both city and suburban papers and time on television. Instead of taking ads in all city papers, they gravitated to only one, either because it had a larger circulation or more affluent readers. Even a small disparity between papers--the Inquirer's circulation is only 27,000 higher .than the Bulletin's--could cause a stampede of advertisers.

In New York City, the News (circ. 1.5 million) commands 34% of the newspaper advertising, compared with 60.6% for the prosperous Times (circ. 887,000) and 5.6% for the money-losing Post (circ. 764,000). Onerous union contracts, high overhead and the start-up costs of a misguided (and now discontinued) afternoon edition helped push the News's losses to $11 million last year. This year, according to insiders, they are expected to exceed $20 million. To turn the paper around, a buyer would have to invest $50 million in its aging physical plant and win contract concessions from its 3,800 employees. Last week, amid rumors that the News would close within a month, George McDonald, the normally tough-talking president of the Allied Printing Trades Council, was purring with conciliation. Said he: "Everyone thinks we're bears, but we're really just kittens."

Warner Communications, an entertainment conglomerate with estimated 1981 revenues of $3 billion, is the most intriguing potential purchaser to surface since the paper was put up for sale four weeks ago. Its executives are still examining the News prospectus, but a spokesman emphasized that the parent of Atari was only making a "preliminary" inquiry. Ironically, the tabloid's best hope of finding a buyer may rest with the other properties offered in the sale. Said one industry source familiar with the offer: "It's clearly a package where the real estate is worth more than the paper." Indeed, the News Building on 42nd Street and the other property involved is reportedly valued at about $150 million. Thus some of real estate's big names are considering a bid. Among them: Mortimer Zuckerman of Boston, who also publishes the Atlantic. He is studying the prospectus but says the chances are slim that he will go any further. Post Publisher Rupert Murdoch denies any interest in acquiring his rival; he could reap an advertising windfall if the News folds. Says Morton: "Unfortunately for the News and the Bulletin, all the major newspaper companies are aware of their problems and are unlikely to buy them."

The 134-year-old Philadelphia paper lost upwards of $13 million in 1980 and more than $10 million in the first half of last year. Last August it was on the verge of closing but won an eleventh-hour reprieve when its unions agreed to $4.9 million in cutbacks. In exchange, the parent Charter Co. (Ladies' Home Journal, Redbook) promised to invest up to $30 million in rebuilding the paper. But that investment was contingent on the Bulletin's meeting certain revenue targets. Though readership rose by about 20,000, advertisers did not follow. Instead, they stuck with Knight-Ridder's Inquirer (circ. 424,000), which controls 60% of the city's newspaper linage, and its sister paper, the Daily News (circ. 223,000), which has 14%. The Bulletin was unable to improve on its 26% share.

Hearst papers in Boston, Baltimore, Los Angeles and Seattle are also on the critical list. The vital signs are most worrisome at the Boston Herald American: from 1977 to 1981, daily circulation nosedived by a third, to 203,000, and Sunday circulation by 43%, to 228,000. Readership has gone up slightly since last fall, when the Herald American converted to a tabloid format, but now the typographical union is threatening a strike, which could shut the paper for good.

The Hearst chain is laying off employees in Baltimore, where the News American (circ. 139,000) trails far behind the Morning Sun and Evening Sun (combined circ. 343,000). In Los Angeles, where the Herald Examiner (circ. 282,000) runs a distant second to the Times (circ. 1 million), the Hearsts have purchased 28 community weeklies and two suburban dailies to help stanch the flow of red ink. Advertisers can buy space in any number of the papers to reach selected targets in the sprawling Los Angeles market. In Seattle, Hearst's morning Post-Intelligencer (circ. 186,000) has asked to operate jointly with the rival Times (circ. 254,000) under the Newspaper Preservation Act. On Friday the administrative law judge hearing the case urged the U.S. Attorney General to approve the request.

In Cleveland a local millionaire named Joseph E. Cole stepped in a year ago to rescue the afternoon Press (circ. 305,000), which had been losing $6 million a year for its previous owner, the Scripps-Howard chain. Cole says a new design and color pictures have boosted circulation. But with the morning Plain Dealer (circ. 401,000) holding a 3-to-l edge in ad linage, the Press is still in danger.

Philadelphia is looking for an angel like Cole. As part of a Save the Bulletin campaign, one local advertiser has pledged to keep supporting the paper, and Mayor William Green is prepared to offer prospective buyers tax breaks and low-interest loans through the city's Industrial Development Corporation. But because of the Bulletin's operating losses and severance obligations ($12.5 million), few believe that a purchaser will step forward. During a newsroom meeting last week, a sports writer put a tough question to Executive Editor Craig Ammerman and Publisher N.S. ("Buddy") Hayden: "What should I tell my wife?" Hayden sighed, then answered: "I don't know what to say. Prepare for the worst." The same advice would seem to apply in New York--and during the coming years, in other cities too. --By Janice Castro. Reported by Janice C. Simpson/New York, with other bureaus

With reporting by Janice C. Simpson/New York

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