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From AJR,   September 1998  issue

Oshkosh Paper Joins a Cluster   

And the relentless tide of geographic concentration rolls on.

By John Morton
John Morton (mortoninc@msn.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.     

Some comments bear repeating, so I'll recall what William Allen White of Kansas' Emporia Gazette wrote upon the 1925 death of Frank Munsey, whose consolidations of newspapers had put thousands out of work:

"Frank Munsey contributed to the journalism of his day the great talent of a meat packer, the morals of a money changer and the manners of an undertaker. He and his kind have about succeeded in transforming a once noble profession into an 8 percent security. May he rest in trust."

I experienced first-hand the impact of the newspaper sales, swaps and consolidations that have occurred in recent years with the sale of Wisconsin's Oshkosh Northwestern to Thomson Newspapers. I happened to be present in the Northwestern's office June 24 when Thomson officials announced the sale to the assembled staff. (My presence was unrelated to the sale.)

The staff, of course, was stunned, not least because the paper had changed hands about two months earlier. That's when the family owners of the newspaper, which had been locally owned for 130 years, announced that the Northwestern had just been sold to the Nutting family companies, owners of nearly 40 dailies.

The first sale had been upsetting, too, but two months' time had eased concerns because the Nutting family seemed intent on letting the Northwestern operate in the future much as it had in the past. Now came Thomson and a whole new set of concerns, fueled by knowledge that Thomson already owned dailies close to Oshkosh.

Would consolidation of some operations with the nearby Thomson papers bring layoffs? Was the news department vulnerable, given that the Northwestern's staff of 37 was about 50 percent higher than is typical for a daily with a weekday circulation of 24,000? Was it true that Thomson tends to let go from acquired papers employees who had previously worked for Thomson? (Indeed, two executives quickly dismissed--the directors of retail advertising and circulation--once worked for Thomson. But others so far have remained.)

These were among the questions on the minds of employees I talked with after the announcement, and some of them were rooted in the new realities of the nation's newspaper business.

While it may seem that newspapers are being traded like 8 percent securities, the motivation now is different from the greed-driven actions of Munsey. Instead, Thomson and almost all newspaper chains large and small are trying to preserve newspapers through reorganizations that will keep them successful in a much more competitive environment than Munsey ever faced.

Direct mail, the growing number of weeklies and shoppers, changes in how advertisers view newspapers and mounting competition from the Internet are all forcing changes in how newspapers, especially small ones, do business (see The Business of Journalism, May).

The principal change in the industry in the last half of the 1990s is geographic clustering, which allows a cluster owner to offer a much larger and more attractive market to the retail chains that have taken over much of local advertising than can be offered by a single newspaper. It also allows consolidation of adminstrative and other functions among several newspapers, thereby reducing costs and employment--hence the understandable concern in Oshkosh.

Thomson noted that Oshkosh will join its Winnebago Strategic Marketing Group, which includes the company's dailies in Appleton and Fond du Lac, 20 miles north and south of Oshkosh, respectively; in Maintowoc, 40 miles to the east; and in Sheboygan, 40 miles southeast. Oshkosh's addition gives the cluster a total circulation of 147,000 weekdays and 172,000 Sundays--a large presence in a rapidly growing area between Milwaukee and Green Bay.

The second Oshkosh deal also advanced the clustering of the Nutting newspapers. The transaction was in the form of a swap. Thomson obtained Nutting's Oshkosh Northwestern in exchange for three dailies in eastern Ohio, where Nutting already owns three papers and which is close to Nutting's four dailies in northwestern West Virginia. Nutting also received Thomson's Altoona daily in central Pennsylvania, where Nutting already owns three papers.

These and other realignments of newspaper ownership around the country are surely unsettling to the employees involved and acutely painful for those losing their jobs. But the economic structure of the newspaper industry has changed, just as it has in shoemaking, clothing manufacturing and many other industries. I'm sure William Allen White, were he alive, would regret the change, but he probably would have understood it.