AJR  Unknown
From AJR,   October 1998

Continuation of In Lord Thomsonís Realm   

By William Prochnau
William Prochnau, a former national reporter for the Washington Post, is a contributing editor of Vanity Fair.     

Back in Cumberland, John J. "Jack" McMullen is telling me about how his and a co-owning local family came to sell the Times-News to Thomson. The year was 1986, the height of the small-town gold rush. Roy Thomson's secret had been out of the bag for years and chains competed to smother the dwindling number of local owners in cash. "I've never told anyone how much," McMullen says. "It was an ungodly sum."

McMullen, the publisher, had no desire to sell. But the family ownership, divided among a third-generation group of heirs, the only one of whom had any interest in running the paper being Jack McMullen, was ideally set up for a buyer. To the others the money simply looked too good. McMullen was outvoted. Thomson asked if he would stay on in the interest of continuity and he said he would. The staff was terrified. So were the town fathers. McMullen wrote a reassuring editorial: "You will have the same paperboy. When you come in to pay a bill, you will talk to the same person." But they would not have the same publisher. Two months after the deal a different Thomson man showed up on a Monday and said the new publisher would be there on Thursday. "Don't go out bad-mouthing us," the Thomson man said.

"Newspaper quality is such a subjective thing," McMullen says. "I've tried to be silent about it. People are always asking me what I think about the paper. Still. And I say that it would just be sour grapes. But I guess from that comment alone you can gather that I don't like everything I see. Page one was never for sale. Nobody got charged for an obit or a wedding."

Still, the changes in the newsroom came slowly, in other areas a lot quicker. "Ad rates went up immediately--way up--and all the advertisers were howling," continues McMullen, now 65 and practicing law. "You couldn't jump ad rates that way with home ownership. Your neighbor would never talk to you again."

In 1986 the paper was still a morning-evening combo with two staffs "that fought like cats and dogs," McMullen says. That went soon; probably would have anyway, he acknowledges. But the news staff now is smaller than either of the combination papers, he says. Most of the reductions came by attrition. The paper just didn't hire anybody.

"If there were a Pulitzer Prize for the bottom line, they would get it." He laughs but not with mirth. "Benign neglect" is the way he describes policy toward the newsroom. "The publisher comes in and says, 'Do what you have to do, don't get me in trouble, and that's it.' It's as if the old truism about journalism--that the newsroom is not a revenue producer--bothers them. I mean, actually bothers them. It's as if they don't understand what the whole idea is."

Interstate 68 west out of Cumberland pulls hard uphill through Frostburg, where Lance White lives (he can't get to work in a tough snowstorm), then on through more natural barriers, past the home of Mayor Spencer Schlosnagle and across into West Virginia. All told, it is 69 miles from Cumberland to Fairmont, home of the Times-West Virginian. Hard miles to a hard town.

Theresa Haynes is hot-footing it down Adams Street toward the Marion County Courthouse. She has two bylines above the fold this morning, including the banner, and now this is another busy day, a normal day. A grand jury is bringing indictments, the sheriff wants new high-intensity lighting around the jail, having been embarrassed by another escape, and the ground is dropping out from under her.

Fairmont is a tough old coal town trying to come back from rocky times. The framed front page in her publisher's office tells the old story in deck after deck of big, black headlines:
78 Miners Entombed in Farmington No. 9 After Blast Rips Workings; 21 Escape Underground Holocaust; Fire Growing in Intensity, Keeps Rescue Teams on Surface

The black dust from the once-rich mines has dug into the very face of the town's skyline, making it look like a gritty black-and-white photo on the sunniest day. Eighty mines once snaked mile after mile beneath the town. The last of them closed three years ago, a starker tragedy, most think around here, than decades of grim deaths. But that's history. Haynes deals with today's news, the first draft of history, as they say, and today's news is that parts of town are settling in on the collapsing cavities. The Catholic church slipped a few years ago. Now a house is sinking, too, but the state contends this one has nothing to do with the mines. Haynes landed the chore of checking it out, although she's not sure why. Lord knows she has enough to do covering the cops, the courts and the county commission. No fax machine here.

At 23, Haynes is the youngest reporter on the Times-West Virginian staff. She arrived from West Virginia University's journalism school last year at a college graduate's entry-level $336 a week and went straight to obits and night rewrite, then to cops. She is good at it, deceptively shy, maybe intentionally so, and tenacious. She also has one of the strongest qualities of a natural reporter: She is not afraid to ask a dumb question.

"What's with this DUI?" she asks the sheriff's clerk innocently, reading from a puzzling report she'd pulled from the tray of overnight misdeeds.

"A dee-VEE-eye, honey," comes the reply. "That's an expired vehicle inspection."

Haynes shrugs and plows on, taking notes on a man who tried to steal a car but couldn't get it started and an irate girlfriend who trashed her boyfriend's apartment by dumping all the food in the bathtub, smearing ketchup on the walls and filling his bed with dirt.

Then it's on to the sheriff's office for the mandatory "What's goin' on today?" She learned early that not all the stories are in the overnight reports. The best story of her young career came after the same question. The sheriff was "just plain bummed out" about a 911 call that the operator referred to the state police instead of his office. The call dealt with a rape in a convenience store. The sheriff had a man just a minute away. But the state police had to roust an officer from bed and, in the delay, the rapist got away. "It became a big issue that went on for days and days," she says. "We even gave it a name: The 911 Go Mart Case."

A quick stop at the Marion County Commission. The clerk is reading four single-spaced legal pages of unsettled estates, the county's last call for folks who were born broke and died broke. Haynes catches up on marriage licenses and then heads back to the office.

"At first everybody was friendly, but now there are a few who aren't," she says, reflecting on a job she likes. "You can either be friends or do the news."

Suddenly, she does a shy mimic of the new managing editor's first staff meeting: " 'Well, hi there, I'm going to redesign the paper by the end of the month, and everybody on the staff is going to produce a story a day.' " Haynes was taken aback by the last part. "I guess everybody wasn't," she says, deadly serious. She had 30 bylines last month.

Actually, Andy Prutsok redesigned the paper, wrote new design guidelines and began a weekly column in his first month. With a circulation of 15,900, the Times West-Virginian is the largest paper Prutsok, 37, has ever worked for. He also came out of West Virginia University--most of the staff did--with dreams of "going to the big city and being an ace writer." Instead he landed at a weekly and worked his way up to papers in Cartersville, Georgia, and Hopewell, Virginia, and finally Mena, Arkansas, before getting this break. Here he has a staff smaller than Cumberland's but a luxury to him--seven reporters, two photographers and four sportswriters.

"I suppose everybody out there is bitching about salaries," he says, gesturing toward the newsroom. "They ought to see what people were getting paid in the South--and the whole town was getting that kind of money."

Actually, the staff doesn't bitch that much, considering that grousing is an art form in newsrooms. The pay is terrible. A journeyman works his way up to $450 a week, maybe a few bucks more after a dozen years. But low pay is the curse of small-town newspapering, hardly peculiar to Thomson, although the chain has a deserved reputation for putting a registered trademark on the practice. Despite that, morale is unusually good in Fairmont. The newsroom has a chatter to it, like the dugout of a pennant-chaser: "This is a great story! George used the word 'draconian' in it. Everyone in town will know that one!"

The paper is small-town solid--maybe even good, such judgments, as McMullen says, being subjective. The publisher, Frank Wood, has stiffed the trend toward charging for obituaries and weddings. "We discussed it," he says. "But it's the only time most people get their picture in the paper and it just feels like adding insult to injury in a town that is struggling so hard to recover." What would it do to a 28 percent margin? Lift it to 28.02?

Almost everyone in the newsroom from Wood on down has his or her personal Thomson story--that moment of sheer panic during a takeover or that is-it-too-late anxiety attack after taking the job.

Wood was working at the Register-Herald in his hometown, Beckley, West Virginia. The paper had been on the market for awhile. Some heavy hitters, including the New York Times, were rumored to be interested. He was out of town when the word came out of nowhere that Thomson had made the buy. He called a friend in advertising. "Who is Thomson Newspapers?" Wood asked. He had never heard of the chain. "You don't want to know," came the reply. "I have heard nothing but horror stories."

Marlo Verrilla, the lifestyle editor who came to Fairmont 18 months ago, tells a similar story. "When I came here, I didn't even know it was a Thomson newspaper. That might have made a difference. They had a terrible reputation. One of my friends heard and said, 'God, how could you?' "

The business editor, George Hohmann, has been in and out of Thomson papers three times. His first experience, not long out of journalism school in the early '70s, was jarring but apparently not indelible. He became editor of Ohio's tiny Piqua Daily Call, circulation about 8,000. "I walked in," he recalls, "and I was immediately told that we had to reduce the staff by three and I got to choose the three. It was awful." He lasted eight months, then quit and spent a year recovering in Europe.

But for each there is a second half to the story. Thomson turned into a career for Wood--he says he found that if you make the numbers, "they leave the running of the paper to the publisher in each community, figuring he understands the place."

Ask Verrilla if she likes her job and the answer is an unwavering yes. She likes small towns, the mood in the newsroom and the elbow room--a side benefit of benign neglect. "They let you write longer," she says. "I get 20 to 30 inches for my features." (She does three a week, and for two days she edits the club news and food page.) "Once they gave me 75 inches. A photographer and I followed coon-dog puppies as they were raised and trained. Nine months. We took the front and back pages of the lifestyle section."

Hohmann ducked out to Europe and took another eight-year interlude, this time in the rare-coin business, but the narcotic of the newsroom, even a Thomson newsroom, always drew him back. "I don't think there is ever any doubt that they get their money's worth out of us," he says. "But what worries me is not the Thomsons." He gestures toward a monitor where a reporter is cruising the Internet. "What worries me is that we are all going to wake up some morning working for the telephone company."

Andy Prutsok, coming from Mena, had no doubts. Like any new boss, he is driving the reporters harder than ever. But they like him. He pushes them to improve themselves and he often does it with that most useful of tools--a sense of humor.

"An ideal page one?" he responds to a question. "Sex, drugs and rock 'n' roll." He wears just a wisp of a smile. "I have no qualms about compelling folks to buy the paper. But I guess ideally it would be a good local story that's not a government meeting." It's the new mantra. No government. No meetings. But the rookie, Theresa Haynes, still checks out the Marion County Commission as the unclaimed estates are read.

Prutsok's new column can be keenly satirical. An unusual bill introduced by a West Virginia state legislator inspired a recent one. The road-kill bill, they called it. The proposal would allow West Virginians to keep road kill for food if they hit it with their own cars. For Prutsok, a native, it was too rich to pass up. He wrote a column of one-liners suggesting bills that would give similar aid to West Virginia's image. Placing a luxury tax on shoes gives you the idea.

Prutsok, in town only six weeks, comes into the office a few days later looking sick. "I had my dog poisoned last night," he says, and you can tell he's trying to convince himself it had nothing to do with his job. He has two small children.

"He was a barker. I kept him in the garage. The cops said maybe he ate antifreeze. But I don't have any antifreeze." Who knows. Small-town newspapering can cut pretty close to the bone.

About this time Forbes magazine publishes its annual list of the world's richest men, and it causes, as Thomson editors and publishers describe it, "the groan heard throughout the empire." Kenneth Thomson has made it back into the top 10 after a one-year dip to 16th. Quietly, the executives on the front lines complain that Forbes has changed the rules on them, reducing the list to the "working rich" and thereby eliminating such stalwarts as the Sultan of Brunei and his $40 billion or so. Thomson comes in at $14.4 billion. The only North Americans he trails are the Microsoft boys, Bill Gates and Paul Allen, the Walton family and Warren Buffett.

"Every time he makes the list a copy goes up on the staff bulletin board," says Gary Omernick, publisher of the Herald Times Reporter in Manitowoc, Wisconsin, who admits that he breathed a sigh of relief during the year of the dip. "But you know what someone once said," Omernick adds. "The function of newspapers is to inform souls, but the role is to make money."

In approaching the story of the Thomsons and their empire it is important to understand that there really are two stories about each--the story about old Roy, the legend, and young Ken, the heir; and the story about the original empire and the successor realm, a part of the tale that is still playing out.

There is no doubt that Roy and Ken were chiseled out of the same Scottish hardwood gnarl. But, after that, they differed in almost everything but their unrelenting need to squeeze a buck out of all they touched.

A barber's son who quit school at 13, Roy Thomson approached life and money like a riverboat gambler, once uttering a line straight out of a casino addict's handbook: "I buy newspapers to make money to buy more newspapers to make more money." He brought the value of the dollar home to everyone in the family when, visiting Italy, he dispatched postcards home to his grandchildren by surface mail. Air-mail stamps cost too much.

The media empire began almost by accident--or necessity, depending on your point of view. But it began with a radio station, not a newspaper. Two years before buying the newspaper in Timmins, Ontario, Thomson was going broke trying to sell radios to the gold miners. So he bought the local radio station, pumped it up with piano music and local commercials, lots of local commercials, until people damned well had to buy his backlog of receivers. From that moment on, he described his favorite music as "the sound of radio commercials at $10 a whack."

Still, he was a man of joy, "an animated cash register," someone said. The two characteristics--joy and the cash register--reached an apex in 1959, when Thomson parlayed his successes into the purchase of the Sunday Times of London, adding the Times of London shortly thereafter, and was rewarded with a peerage: Baron Thomson of Fleet of Northbridge in the City of Edinburgh. It was some march from Timmins. Thomson began to enjoy himself thoroughly. He met with world leaders and cut deals with the famous. Once, in the Kremlin, he met Nikita Khrushchev, who asked him what good all that money would do him. "You can't take it with you," the Soviet premier said. "Then I'm not going," Thomson replied. He became still richer in a North Sea oil partnership with billionaire John Paul Getty, a man also fond of one-liners. "A billion dollars is not what it used to be," Getty said. Thomson was undeterred. "Paul's richer than I am," he conceded. "But then, I'm six months younger than he is."

By the time Thomson died in 1976, at age 82, no one was quite sure what he was worth--except plenty. "I'm as rich as my credit," he always had said. His will was disguised in legalisms and totally unrevealing. But analysts concluded Roy Thomson had fallen just short of the empire's first billion.

The son who took over was 53 years old, although Kenneth Thomson had been running the North American newspaper division for almost 23 years. As the Roaring '90s began and Kenneth approached 70, he was still being called "young Ken" or, by his detractors, who were not few, "Lord Silverspoon." Of all the often legitimate abuse heaped on Kenneth Thomson, these were the least fair. Ken Thomson had spread the empire onto all continents but Antarctica and headed for cyberspace. He owned an airline with 40 jumbo jets, Britain's largest package travel company and the majority holding in the Hudson's Bay Co. Next came what Maclean's, Canada's national magazine, called perhaps the world's "largest media oligarchy," daily newspapers with a total circulation of more than 4.5 million and a kind of Tinkertoy set of magazines and weeklies and newsletters and directories--"an incredible 40,000 other editorial products," the magazine wrote. His net worth had passed the Gettys and the Rothchilds, and he seemed likely to bequeath his heirs a fortune 20 times what his father had bequeathed him.

What he had done for the craft that provided the seed and much of the substance of his incredible riches was not as impressive. Most of Thomson's horror stories--the "awful-awfuls," one executive calls them--occurred under the leadership of Kenneth Thomson and his hirelings.

In her book "The Thomson Empire," Susan Goldenberg noted that employees at some of the small U.S. dailies began rebelling with bitter strikes. In 1979 the workers at the tiny Valley Independent in Monessen, Pennsylvania, went out--and would remain out 14 months--to move Thomson off a journeyman's salary scale of $190 a week. That same year the newsroom hit the bricks at the Oswego Palladium-Times in New York. A reporter named Carol Wilczynski, who ran a one-person bureau in a small neighboring town, complained, "If I wanted supplies, I had to go to Oswego and would be handed one pencil. We weren't allowed to buy reporter shorthand books but instead were given scrap paper."

In Canada the awful-awfuls were still worse. On the same day in 1980, Thomson suddenly shut down the Ottawa Journal, laying off 375 employees, and Canada's other major chain, Southam Inc., put 370 people on the streets by closing its Winnipeg Tribune. The simultaneous shutdowns gave Thomson a monopoly in Winnipeg and Southam a monopoly in Ottawa. The moves so outraged the Canadian government that it filed conspiracy charges against the two companies and formed a royal commission to investigate them. Thomson and Southam were eventually acquitted, but the commission recommended a breakup of Thomson. "Its small-town monopoly papers are, almost without exception, a lackluster aggregation of cash boxes," said the report. But time had passed and politicians don't take on publishers--witness the Newspaper Preservation Act in the United States.

The deepest scar in the Thomson legacy came in the company's handling of the suddenly jobless Ottawa employees. Southam immediately set about trying to find its Winnipeg people new jobs. But Kenneth Thomson did nothing but offer a billionaire's strange, almost otherworldly, advice: "Each one has to find his own way in the world." Throughout the '80s Thomson Newspapers maintained profit margins of up to 35 cents on the dollar and salaries a notch above poverty level.

Kenneth Thomson developed quite differently from his father. He never quite seemed to get the joy out of his money; never, as Roy did, hopped aboard his yacht, with its pseudo-snakeskin walls, and sailed off for impromptu dinners with Lord Beaverbrook in Bermuda; never impulsively bought a newspaper like the old St. Petersburg Independent in Florida so he would have a place to moor his boat. Most telling of all was his handling of the company's--and, at that time, journalism's--twin crown jewels: the Sunday Times of London and the Times of London. To Kenneth Thomson the newspapers ate money instead of produced it--"just a drag on profits," he complained. He sold them in 1981 to a new colonial entering the game, Rupert Murdoch. Kenneth withdrew into a deeply private, almost reclusive life.

"The smartest thing those who have more than anybody else can do is not to flaunt it," he said in a rare interview with Peter C. Newman for his 1991 book on the Hudson's Bay Co., "Merchant Princes." "It's resented and it's in terribly bad taste. It shows a poor sense of priority."

Thomson married a beautiful woman, a model named Marilyn Lavis, and they had two sons and a daughter--David Kenneth Roy, Peter and Lesley. Marilyn cut her husband's hair to save the barber's bills. They lived in a 23-room Georgian mansion in Toronto's tony Rosedale section. But when Newman visited it, he found the mansion dark and rundown, the drapes still those hung by the original owner. The Thomson family usually ate dinner in the kitchen to save on electricity. The family had difficulty keeping maids, the wages it paid to domestic help were so low.

Still, Thomson was no Howard Hughes. He reported daily to his office on the 25th floor (the public elevator runs to 24) of the downtown Thomson Building. There he was surrounded by his other passion--a collection of paintings by the Dutch-Canadian artist Cornelius Krieghoff. Always the monopolist, he has owned as many as 204 Krieghoffs, virtually all the artist's output. Art critics noted that this might be a tribute to the quality of the 19th century Canadian landscapes, but it also was a convenient form of price-propping for tax write-offs when the Thomsons donated an occasional canvas to a museum.

Lord Thomson declined to be interviewed for this article. The refusal was courtly and revealing. The Project on the State of the American Newspaper "promises to be of great value to the American newspaper industry and to Thomson Newspapers," he wrote, offering all possible cooperation except an interview. For a moment he almost revealed an unusual touch of romance about his multibillion-dollar corporation's founding in printers' ink.

"The first step in the creation of what is now the Thomson Corporation was taken by my father in 1934 when he bought his first newspaper in Northern Ontario--the Timmins Weekly Press," he wrote. "Almost miraculously in those Depression days he managed to buy the paper for $6,000--$200 down and $200 per month. Thomson Newspapers has gone a long way since then. We are proud of their quality, both as vehicles of public service and as sound business operations. The two are invariably interlinked."

The words about Timmins were touching, the town and the paper, one would think, corporate icons. But the empire's origins had already been extinguished by the bottom line.

Susan Goldenberg visited the isolated town in her researches in the '80s and found the Press, by then a daily, in total disarray, the look of it Dickensian. Blue paint peeled off the newsroom walls, torn pieces of plastic served as window blinds, reporters in a computer age still pounded away at wounded typewriters. In 1996 the Timmins Daily Press passed out of the Thomson fold like a ship in the night, sold quietly with a group of expendables. If the queen of English-language journalism, the Times of London, couldn't survive Thomson's bottom-line economics, how could the Daily Press? Emotion paid fewer dividends than front-page sewer stories. The founding paper was dismissed without even a note in the corporation house organ, the Thomson News, which handled the obituary as part of the sale of 14 unnamed Canadian papers "east of Thunder Bay, Ontario."

"They don't have an emotional bone in their body," says Bill Sternberg, Thomson's former Washington bureau chief who now works at USA Today. Sternberg spent seven years building up the bureau, then saw it gutted in one night over dinner at the J.W. Marriott Hotel, the staff to be told in the morning. The Washington bureau is now down to two reporters, one writing for Thomson's Arizona papers, the other for the Wisconsin group. "Just look at Timmins. They sure had enough money to have kept the paper for sentimental reasons. But they didn't. They don't have sentiment and they don't have ideology. The ideology is dollars."

By the time of the bureau upheaval, however, in January 1997, both the overarching Thomson Corp. and Thomson Newspapers had moved into a dramatically new corporate era.

Historically, the newspaper business has been remarkably recession-proof. Fortunes were made off screaming headlines during the Great Depression and, despite constant hand-wringing, the business had a Wall Street reputation for holding up throughout the periodic recessions since the end of the Second World War. The recession of the late '80s and early '90s was startlingly different.

A look at the arc of Thomson's newspaper profit margins since 1987 gives a perfect illustration:
1987: 33.9 percent
1988: 31.2 percent
1989: 29.3 percent
1990: 24.4 percent
1991: 20.0 percent
1992: 17.6 percent
1993: 15.7 percent
1994: 17.2 percent
1995: 17.3 percent
1996: 15.6 percent
1997: 17.6 percent
1998 (first half) 17.5 percent

Profit margins of 15 percent and up would not throw most companies into shudders of fear. But it did Thomson, as it did some others in the newspaper industry. The recession dug deep and lingered. Had the golden goose finally died? The statistics could prove almost anything--circulation shrinking, advertising down in a market filled with high-tech competitors, people not reading. The situation was made to order for the same woebegone speech to which Roy Thomson had responded four decades earlier: "Want to sell?" But this time it was a Thomson who said "Yes."

Over the next half-dozen years, the company would shed nearly two-thirds of its daily newspaper holdings worldwide. Just since 1995 it has sold some 60 of its American papers. Why We Must Transform Our Business, blared a special "Transformation Now" issue of an in-house publication. Thomson was still buying--big. It was just buying differently.

The Thomson Corp., as publicity-shy as its owner, had always maintained an almost ghostly low profile in the corporate world--ignored by Wall Street because its stock was traded on Canadian boards (the corporation is publicly owned but 73 percent of the public is the Thomson family), and barely visible even within the newspaper industry. Ashtabula, Ohio, and Opelika, Alabama, do not draw much scrutiny. But then, as Maclean's magazine described it, Thomson began "moving through the corporate jungle with the stealth of a giant anaconda, sloughing off newspapers like old skin and gobbling up database companies in huge bites."

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