AJR  Features
From AJR,   March 1999

Staying the Course   

Preconceived notions too often stand in the way of investigative reporting, a New York Times editor warns.

By Bill Roesgen
Newspaper consultant Bill Roesgen has been editor or publisher at 10 newspapers in nine states. He retired as publisher of Lincoln's Journal Star in 1997, after organizing the merger of the morning and evening papers in Nebraska's capital.     

VELMA WESSLING IS SITTING in the kitchen of her modest home on South Oak Street in Gordon, Nebraska, reading a morning newspaper that was printed in Omaha, more than 500 miles away. She is less than ecstatic.
"Here it is 8:30 a.m., and the paper just got here," she says. "When we had that other carrier, the paper always came by 6:30."
But early or late, the arrival of the Omaha World-Herald in this tiny town in the Nebraska panhandle is a highlight of Wessling's day. "I start at the back and read the whole paper," she says. "The only thing I don't read is the funnies." A one-time semi-truck driver, hospital worker and master plumber--"you name it and I've done it"--the widow Wessling is retired and disabled, and the World-Herald is her window on the world.
Today she'll read about a minister defrocked in Omaha for performing a gay wedding, an appeal for volunteers to count cranes in the state's Sand Hills, Saddam Hussein's defiance, President Clinton's peccadilloes and every bill introduced in the Legislature at Lincoln. What she won't read is the remarkable story of how the Omaha World-Herald came to be in her kitchen.
At 6:30 the night before, her paper was loaded onto a green and yellow truck in Omaha and trundled down Interstate 80. At Grand Island, it was shifted onto a second truck for the journey to North Platte. A third truck hauled the paper to Alliance, here it was picked up by the driver of the fourth truck, who finally brought it to Gordon.
While long-distance motor routes are not uncommon in the West, few newspapers commit as much effort to an entire state as the World-Herald. At a time when other dailies are eliminating far-off, money-losing subscribers and some of the news coverage that caters to them, the World-Herald has been holding steady.

PUBLISHER JOHN GOTTSCHALK knows the territory. His first job was sweeping floors for the weekly paper his grandfather founded in Rushville, Nebraska, a few miles down U.S. Highway 20 from Wessling's house. In 1966, after graduating from the University of Nebraska-Lincoln, Gottschalk took a job selling ads for the weekly Sidney, Nebraska, Telegraph. Two years later, he bought the paper. In Sidney, Gottschalk acquired a taste for public service and served a term as mayor.
He joined the World-Herald as assistant to the president in 1975, after selling the Sidney paper. Five years later, he was elected vice president. He moved up to president and chief operating officer of the Omaha World-Herald Co. in 1985, and to CEO in 1989.
Gottschalk, 55, is only the fifth publisher in the 109-year history of the World-Herald. That averages out to better than 20 years a publisher. "I have the luxury of thinking not in terms of months or quarters or years, but of generations," he says.
His newspaper's culture is "radically different," he says, contrasting the World-Herald's vast reach with the retrenchment at the neighboring Des Moines Register and in many other newspaper markets. The World-Herald, he says, is determined to be the lowest-cost provider of the highest-quality product to the largest number of customers.
Gottschalk figures the company loses money on every paper it sells outside Omaha and its surrounding counties--between $3 million and $4 million a year. Twenty-six percent of the paper's circulation is outside the Omaha trade zone, in the outer reaches of Nebraska and in western Iowa.
"I don't fault ownerships unwilling to pay that price," Gottschalk says, but "newspaper after newspaper has been sold into slavery, mediocrity and decline...by owners who look at them as properties."
The World-Herald once came close to losing its independent status. In 1962 the paper was about to be sold to the Newhouse chain. Then Omaha construction contractor Peter Kiewit stepped in, as a company brochure says, "literally at the 11th hour."
Kiewit had no interest in running the World-Herald, Gottschalk says, "but he didn't want his hometown paper owned by someone else." The next year, he bought out the heirs of the founding Hitchcock family, then set about creating an ownership structure Gottschalk calls "as bulletproof as any in the industry."
Under the Kiewit formula, nonunion employees became eligible after his death to buy stock. They now own 82 percent of the company; a Kiewit foundation owns the rest. This makes the World-Herald one of only two large employee-owned papers in the country. The other is the Milwaukee Journal Sentinel.
Newspaper stock analyst and AJR columnist John Morton recalls a number of other newspapers once owned by employees, including those in Kansas City, Missouri, and Peoria, Illinois. Most of them got in trouble as employees quit and "cashed out," he says, draining their resources and forcing eventual sale to corporations.
Neither Gottschalk nor Keith Spore, his counterpart in Milwaukee, thinks that could happen to them. In Omaha, for example, employee stockholders who sell can receive only book value for their stock. Anything over that must go to charity. So neither employees nor the Kiewit foundation has any financial incentive to sell to a buyer offering a premium.
Any sale or change in the structure of the World-Herald requires approval of the employees and the foundation. Should the business someday turn so sour that both decide to get out of it, the newspaper would be sold at auction by sealed bid, no second chances.
Gottschalk says he doesn't expect to see that happen in his lifetime. With stock values rising 20 percent a year "as long as I can remember," Omaha retirees have done very well, Gottschalk says. "I like making millionaires."

THE OMAHA DAILY WORLD WAS founded in 1885 by lawyer Gilbert M. Hitchcock, who bought the Daily Herald four years later and merged the two papers. Driven on the rails that first spanned the continent through Nebraska, the World-Herald went West with Horace Greeley's young men until it was lapping the foothills of the Rockies, touching Colorado, Wyoming and South Dakota, then washing back deep into Iowa to fill the gaps left by the retreating Register.
But it's hard to imagine a newspaper less strategically sited to dominate its state. Omaha clings to the Missouri River, on the far eastern edge of one of the longest states, a time zone away from subscribers in the far western counties of Sioux, Scotts Bluff, Banner and Kimball. Omaha advertisers aren't asked to support that far-flung distribution, Gottschalk says. "Our rates are based on useable circulation...for the shoe store in south Omaha," he says.
In its close-in metro market, Gottschalk claims, more people read the World-Herald than are watching newscasts on all four local TV stations. No figures on the TV news audiences were available. "We're a newspaper, not a medium," Gottschalk says with typical bluster. "TV is a medium, because it's neither rare nor well-done."
The paper claims the highest metropolitan penetration in the country for markets with 150,000 or more households. The penetration in Douglas and Sarpy counties was 62.6 percent for the period ending September 1998, according to preliminary figures filed with the Audit Bureau of Circulations. The paper is trailed by the Buffalo News, with 59.6 percent.
The World-Herald maintains this metro penetration with both morning and afternoon delivery of five editions--four in the morning and one in the afternoon. Its p.m. edition still reaches twice as many subscribers as the a.m. versions, although the gap is narrowing. And while the paper changes little between editions, General Manager Rick Siebert estimates as many as 5,000 readers buy two papers a day.
The price doesn't hurt. At $2.50 a week for seven-day home delivery, the World-Herald isn't aiming to set circulation revenue records. Weekday single-copy prices stayed at 25 cents long after many competitors were selling for 50 cents, finally edging up to 35 cents in 1996.
ABC reports show the paper's circulation holding steady through most of the mid-'90s, before dropping about 2 percent over the past two years to 226,630 in March 1998.
By comparison, the Des Moines Register took a big circulation hit in the mid-'90s, when it pulled out of daily delivery to the far reaches of Iowa to concentrate on the "Golden Circle" around Des Moines (see "The Retrenching Register," November 1997). Its numbers fell from 186,037 in mid-1994 to 166,008 in mid-1997, but dipped only 1 percent since then, to 165,423 in June 1998. The Register reaches 47.5 percent of the households in its city zone.
For subscribers far from Omaha, the World-Herald is often a second buy. That doesn't bother Gottschalk, who counts among his readers the most influential and affluent citizens of his state. The paper holds their interest with a philosophy Gottschalk characterizes as "plain, common sense, do-the-right-thing, play-the-long-game." That matches fairly well the character of Nebraska itself--moderately conservative, still vaguely populist, home of the country's only single-house nonpartisan Legislature, and a state whose most destructive passions are safely channeled into Husker football.

IT WAS A SCENE TO WARM THE HEART of William Randolph Hearst--or P. T. Barnum: Embattled Omaha Mayor Hal Daub marching into the World-Herald building to take a lie-detector test. Running for re-election in 1997, Daub was accused by his opponent of lying about the cost of a new police helicopter program. A relatively minor dispute had mushroomed into a campaign issue over the mayor's integrity. The World-Herald hired a Kansas City lie-detector expert and persuaded Daub to submit to more than an hour of questioning wired up to pulse, perspiration and breathing monitors in the newspaper building.
Daub passed the test and emerged jubilant, flashing two thumbs up. Cameras from all four local TV stations recorded Gottschalk's verdict, delivered in front of a giant World-Herald logo. Cynics called the lie-detector test grandstanding. But then-Executive Editor Mike Finney says he recommended it "for the right reason": to learn the truth about a dispute that was poisoning municipal elections.
"Actually, it probably hurt us in terms of publicity," Finney says. The World-Herald had endorsed Daub, and some readers thought the test was designed to give credibility to the paper's candidate. "To our historical critics it looked like an inside deal." If the mayor had flunked, the newspaper might have been seen as more impartial, Finney says. Daub went on to win re-election.
Will Norton, dean of the College of Journalism and Mass Communications at the University of Nebraska-Lincoln, acknowledges the mayor's lie-detector test was good theater, but says the paper might have done better to step back and let some third party establish the truth about the mayor's veracity. "It's very difficult to separate yourself from the power structure when you have that kind of power."
Former UNL Chancellor Woody Varner once described the World-Herald and the university as the two most important institutions in the state. Neither Finney nor Gottschalk is apologetic about the paper's role as power player.
"We don't bully people," Gottschalk says, "but we don't have a problem when we see egregious wrong" in pointing it out. "It's a stewardship."
Norton says in the two years of Finney's tenure as executive editor, the World-Herald became increasingly aggressive in enterprise reporting. One example was a five-part series on E. coli bacteria, triggered by the discovery of tainted beef in a Columbus, Nebraska, processing plant. Four or five reporters worked for four months in 1997 to put the stories together. "We thought it was time to step back and examine the issues involving consumer safety," Finney says.
The result? The state cattlemen's association pulled auction advertising from the paper. "Some cattlemen were upset because we didn't portray them as leading the effort for public safety," Finney says. But "there was no allegation of correctable error. The complaint was why [the paper] should do such a thing.
" `Why didn't you do it on cars?' " Finney recalls the cattlemen asking. "If we were in Detroit, we'd have done it on cars."
The paper has won three Pulitzer Prizes, but not in recent decades. One was awarded in 1920 for an editorial deploring the lynching of a black man by a mob; another in 1943 for public service for the paper's leadership in a scrap drive during World War II; and a third in 1944 for a photo of a veteran returning to his family.
More significant may be the prize the paper didn't win. A 1973 Pulitzer for investigative reporting went to the then-competing but now-defunct Sun Newspapers of Omaha, for uncovering the huge pile of money amassed by the Boys Town charity empire. The reporting led to reforms of the organization's solicitation and use of funds.
David Stoeffler, editor since early 1997 of the Journal Star in Lincoln, considers the World-Herald "a worthy competitor," albeit one with a right-wing slant.
Des Moines Register Editor Dennis Ryerson agrees with the "right-of-center" description but says that "reflects their readership."
Gottschalk would prefer the World-Herald be seen as closer to the center. "We've endorsed more Democrats than Republicans," he says. Among them was former Nebraska Gov. Ben Nelson, a Democrat, who says he won the World-Herald's endorsement for the second of his two races and was lauded with a "glowing editorial about the Nelson years" when he left office in January.
Norton considers the investigation of Nebraska beef as daring as attacks on the University of Nebraska's legendary football coach, Tom Osborne. He notes wryly that sports columnist and Nebraska alumnus Lee Barfknecht had the gall to vote for Michigan in a 1998 poll to pick the national championship team. Barfknecht then admitted it in a column in the paper. "They're not trying to gain anybody's approval," Norton says. "They're trying to do the right thing."

THE WORLD-HERALD'S DESIGN is sarcastically described by one editor as "the cutting edge of retro." Heads are upstyle in a Cheltenham face that hasn't changed since the '30s. The Journal Star's Stoeffler suspects the World-Herald's look doesn't do much for younger readers but is appropriate for an older audience.
The paper is printed on a 50-year-old letterpress with indifferent color reproduction. It had no Internet presence until early 1998, and staffers complain that technology linking the home office with bureaus and major news generators is inefficient.
But if change looks glacial at the World-Herald, it does happen. A new production plant is set to open this spring as part of a huge downtown redevelopment project the paper helped spearhead.
Some readers complain the World-Herald is too focused on its outer market, neglecting city coverage, minorities and young people. In an average weekday, about 200 stories fill 140 news columns, including a full page of international news.
"Of course, if we closed the [two-person] Washington bureau" and pulled reporters off regional coverage "there would be more coverage of Omaha," says Finney, now president of World Media Co., a World-Herald subsidiary handling Web operations. But his successor as executive editor, 24-year staffer Larry King, says the paper will not cut back on this broad coverage. It's "part...of what we are," says the former assistant managing editor, "the cost of doing business."
The World-Herald has revamped its Lincoln bureau and is adding regional staff, King says. Minority representation on the paper's 191-person news staff--about 5 percent--doesn't match Omaha's minority population of nearly 18 percent and Nebraska's 7.5 percent, according to 1990 U.S. Census Bureau figures. But Finney isn't interested in "numerical goals."
"If you look at the body of coverage, it ought to reflect concern for the overall community," he says. "You need special sensitivities to do the thing for people who are different from you, in age, race and gender." He says the paper has made progress, but coverage of minorities "is not a strength of our coverage."
State Sen. Ernie Chambers, the only black member of the Legislature, would call that an understatement. Chambers, who represents a largely black Omaha district, says the paper is "not held in high esteem by black people."
He adds, "They don't hire reporters who understand minority issues," or, having hired them, they "don't allow them to report honestly." Chambers calls the paper "negative, slanted and arrogant." World-Herald editorials on racial issues are "asinine," he says, "preaching to the black community on how it should behave" or trivializing minority concerns.
King says simply, "We need to do better at hiring and promoting minorities."
Agriculture still gets lots of attention, but the paper also tries to appeal to a younger urban audience, with entertainment stories, a heavy emphasis on sports and a Sunday section called Working, full of career tips and employment ads.
The World-Herald used to expect young Nebraskans to inherit their parents' values. School news dominated a youth page; there were few appeals to the wider interests explored in teen magazines and no concession to the anti-culture of "Beavis and Butt-head." But even this is changing, says Cate Folsom, a city editor. Teen columnists are being urged to tackle tougher issues.
"There's a greater sense of freedom, a willingness to take chances," Folsom says. "Beavis and Butt-head" made a section front last year--when it was discovered that one of the show's writers was the son of a state senator.

WHAT DOES THE WORLD-HERALD get for that perverse determination to put a newspaper in the hands of every Nebraskan who can read? Ego satisfaction, to be sure. It also holds value for regional, franchise and national advertisers and earns respect from opinion leaders in Omaha and around the state.
Increasingly diversified, the World-Herald Co. has a gaggle of subsidiary organizations running community newspapers in Nebraska, South Dakota and New Mexico, plus direct marketing, advertising and communications services. The Stockton Record in California is also among the company's holdings.
Gottschalk considers the company well-positioned to survive the next millennium's chaos of communications. But 40 percent of the company's revenue still flows from the newspaper at 14th and Dodge. Company officials declined to give more specific revenue or profit numbers.
"In 15 years, it will be very difficult to have the same penetration we have now," the publisher says. "But if we slip, it will be significantly less than the industry."
And if all else fails, the World-Herald can still play those two chips most newspapers have long since cashed in: the afternoon edition and Velma Wessling's money-losing subscription in Gordon.
But don't bet on it.