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American Journalism Review
Gannett's Trading Partner  | American Journalism Review
From AJR,   January/February 2001

Gannett's Trading Partner   

By Lucinda Fleeson
Lucinda Fleeson is director of the Hubert H. Humphrey Fellowship Program at the University of Maryland. She has trained journalists in Eastern and Central Europe, Africa, Latin America and, most recently, Sri Lanka, where she was a Fulbright Scholar. Her training manual for teaching investigative reporting in developing democracies has been published in 18 languages by the International Center for Journalists.     

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IN THE 1970S, Rupert E. Phillips was an impressive young ad salesman for Alabama's Montgomery Advertiser--so impressive that he was promoted to publisher of a small weekly owned by Advertiser Publisher Harold E. Martin. Martin sent Phillips across the Arkansas state line to his Baxter Bulletin in Mountain Home. It was a job that lasted almost five years, until Phillips bought his first paper, the weekly Mountain Echo, about 25 miles down the road in Yellville, Arkansas.
For a while Phillips tried to do both jobs, staying on as publisher of the Baxter Bulletin while spending much of his time selling ads for his new weekly. It was an arrangement that didn't sit well with Martin, who threatened to fire Phillips for conflict of interest. The two parted ways.
No matter. Phillips was launched on a new career in media acquisitions. He soon purchased several other Arkansas weeklies and dailies, including the Hope Star. In 1988 he moved his base of operations to Destin, Florida, where he operates under the names Liberty Newspapers Limited Partnership, Phillips Media Services, Newsco Inc. and Better Built Media Inc.
Over the last 20 years the little-known newspaper owner has entered into a number of deals with Gannett. At least twice, a deal with Phillips has spelled doom for a Gannett competitor.
Phillips, now in his early 50s, generally declines interviews and did not return calls to his Florida office seeking an interview for this article. Tara Connell, Gannett's director of public affairs and government relations, says that the company and Phillips share a normal business relationship of buyer and seller. "That we do business with him is not only obvious but reasonable. Anything that implies a conspiracy is just ridiculous. We would have a hard time avoiding him, given our reach, in these markets.... We do business with him because we buy things because we make money on them. I presume that is why Mr. Phillips buys newspapers. He'd be nuts to do it for any other reason."
Here's how the Phillips/Gannett connection has developed:
During the 1980s, Phillips expanded into the Midwest, acquiring papers from Gannett in Coffeyville, Kansas; Sturgis, Michigan; and Fremont, Nebraska.
In 1989, he was part of an investment group that purchased Gannett's El Diario, New York's largest Spanish-language paper.
In 1989 Phillips bought the weekly North Arkansas View in Mountain Home. In 1995, he turned it into a daily, renamed the Mountain Daily News, to compete against his former employer, the Baxter Bulletin, which was purchased by Gannett the following year. Phillips shut down the Mountain Daily News in 1999. The Baxter Bulletin immediately began mailing editions to the former Mountain Daily News subscribers.
In 1990, Phillips purchased the Graphic, a free weekly in Richmond, Indiana. In 1992, he sold the Graphic to Gannett's Palladium-Item, which shut it down two years later.
In 1991, Gannett purchased the Journal Newspapers, a chain of five suburban dailies surrounding Washington, D.C., from the Times Journal Co., which also owned the successful Army Times group of military publications. Gannett bought the publishing company primarily to use its state-of-the-art color presses for USA Today. But Gannett already owned Washington's WUSA-TV, which conflicted with FCC rules. So where did it turn? Four months after the purchase, Gannett sold the money-losing Journal papers to Phillips. In 1997, Gannett purchased Army Times Publishing Co.
In 1995, Gannett was negotiating with the New York Times Co. to buy its Daily Commercial in Leesburg, Florida; when the talks fell apart, the Times sold to Phillips.
On September 16, 1999, Gannett and Phillips announced they would close Phillips' Honolulu Star-Bulletin after Gannett agreed to pay Phillips $26.5 million. But local residents vigorously contested the shutdown, a judge ordered Phillips to put the paper up for sale, and in November Canadian newspaper owner David Black agreed to purchase the Star-Bulletin.
During the period Phillips has owned the Honolulu paper, the owner has not been a factor in the newsroom's operation. Publisher John Flanagan and former Managing Editor David Shapiro say they were left alone to run the paper as they saw fit. For that, they and the staff are grateful.
"Rupert got a flat annual payment off the top, so he didn't care," says Shapiro. "If an advertiser was unhappy with anything we wrote, he could cancel the ad and it didn't affect his revenue.
"For seven years," he adds, "we've been the most editorially independent newspaper in the country."

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