Greed and Betrayal or Saving a Newspaper?   

Paper Losses: A Modern Epic of Greed & Betrayal at America's Two Largest Newspaper Companies
By Bryan Gruley
Grove Press

Paper Losses: A Modern Epic of Greed & Betrayal at America's Two Largest Newspaper Companies
By Bryan Gruley
Grove Press
448 pages; $23

Imagine you're an Olympic finalist, primed for a winner-take-all showdown with your arch rival. Then, without consulting you, your manager agrees to a tie. You can still perform in the finals, but the score will be ignored.

That's essentially what happened in 1986 to the staffs of Knight-Ridder's Detroit Free Press and Gannett's Detroit News. Frontliners in the nation's most sizzling newspaper war, they suffered the deadening letdown of a sudden retreat. The papers agreed to a Joint Operating Agreement allowing them to combine business operations, sidestep antitrust restrictions and split profits for the next 100 years.

In a book that's both an impressive reporting achievement and a cathartic expression of his own disillusionment, Detroit News Washington correspondent Bryan Gruley has compiled a detailed inside history of the struggle.

Against the odds, Gruley has made this potential major snoozer into interesting, nearly page-turning reading.

Granted, he was blessed with a roster from central casting that includes Gannett's Al Neuharth, with his Napoleonic ego and lubricious charm; Knight-Ridder's Alvah Chapman, the kind of low-key, four-square Southerner who somehow fleeces the fast-talking stranger; and the Free Press' tempestuous publisher David Lawrence, a consummate newspaper junkie put through the public anguish of ramrodding the dreaded JOA into reality.

As a disclaimer, I should point out that I have worked for both Gannett and Knight-Ridder and alongside many of the people in Gruley's book. His portraits of them ring true to me.

Through them, Gruley traces what, if it were a movie, he might call "Indecent Proposal": the bargain to trade cutthroat competitiveness for a merger some predicted could reap $100 million a year.

At the time, both papers were losing millions. The News had been the powerhouse, with both morning and afternoon editions, a heavy circulation lead and a stranglehold on ad revenue. But the Free Press was gaining fast, slicing the circulation gap with a vigorous (and expensive) push called Operation Tiger.

During a series of high-stakes meetings, Chapman and Neuharth warily forged a deal. Gannett won control of the merged corporation but Neuharth ceded to the Free Press the coveted morning publishing cycle.

Under federal law, the agreement required the Justice Department to officially label one of the two proud papers as "failing." The Free Press was nominated. On the surface the case seemed clear; the paper had lost some $66 million from 1979 to 1985. But the losses were deceiving, since both papers had deliberately held down prices and ad rates during the newspaper war. And the Free Press had Knight-Ridder's deep pockets behind it.

Was it really failing? For three years, that central question ran through the Justice Department and the federal courts. Eventually, Attorney General Ed Meese upheld the JOA, and in 1989 the Supreme Court voted 4-4 to let it stand.

By then, many Gannett executives hoped the court would kill it. They regretted yielding their morning position and they believed they could, in a renewed fight, KO the suddenly-labeled-a-failure Free Press. Knight-Ridder, meanwhile, had conducted a frantic, sometimes smarmy PR campaign for the merger, calling in favors from local politicians, members of Congress and unions, and pulling some punches in covering the embattled Meese.

It all left a bitter aftertaste, and the early results were disappointing. Circulation plummeted at both papers. Advertisers resisted monopolistic rate increases. Overall, Gruley writes, the papers "had manipulated and demoralized their employees. They had confused and angered their customers. They had bent their own ethical rules to achieve their financial ends. They had tarnished the good name of Detroit journalism."

Yet the story has another side — one that makes Gruley's use of the words "greed and betrayal" seem unduly harsh.

To management's way of thinking, this achievement was no bloodless tie score, but a longterm win-win. It ended a draining (and for one paper almost certainly suicidal) war in an era where few markets can support two competing dailies. It prolonged the survival of two very good newspapers, and it helped both corporate bottom lines.

Though "Paper Losses" excels in recreating the backstage maneuverings, it is less successful in settling the larger issues: Is the JOA really a sellout to greed or the best deal available under tough circumstances? Did the two chains cynically lie to their employees or just engage in smokescreen dissembling to cover the negotiations? Would Detroit actually, as Gruley suggests, be better off if the war had produced one victorious great newspaper (like the Philadelphia Inquirer after the Bulletin folded) rather than two shaken survivors?

At the heart of this story is loss of innocence and faith — an awakening by both newspeople and readers to the merciless inner workings of Journalism as Big Business. Call it real life if you like. Gruley calls it betrayal, and you have to, at the very least, admire his passion.