Daily Papers Prepare For War

Democrat-Gazette invasion cuts ad, subscription prices

The Arkansas Democrat-Gazette’s launch of its daily Northwest Arkansas edition on July 13 had local newspapers slashing advertising and circulation prices in preparation for a media war like this area has never seen before. The newspapers have also been hiring additional employees and paying unprecedented salaries for journalists in this area.

Newspaper wars are generally good for readers, employees and advertisers but bad for the bottom line of the newspapers involved.

Both the Morning News of Northwest Arkansas and the Northwest Arkansas Times cut their subscription rates in half — to $42 a year — two weeks before the appearance of the D-G zoned for this corner of the state. In early July, the D-G began publishing news, “high profile” and entertainment sections written specifically for Northwest Arkansas readers. The daily zoned section was to premier July 13.

These wars are frequently won or lost with advertising — on car lots and in bright suburban malls — where reaching the most readers is essential for businesses.

The D-G set the tone for the advertising war by offering display advertising for half the price of the Morning News or the Times. The Morning News countered with a one-week “customer appreciation special” for the week of July 12, offering a different deal every day with the best deal being a buy-one, get-one-for-$1 offer.

Initially, however, the D-G won’t be able to penetrate the market like the local newspapers, so charging less for its ads makes sense — that is, until circulation increases. Advertisers will have to decide if they need to buy space in the Northwest Arkansas edition of the D-G or if they will be merely duplicating their efforts since many of them will already be advertising in one of the local newspapers.

All three local newspapers have begun offering free classified ads to individuals to compete with the D-G, which began giving away classifieds in the 1970s.

As of March, the D-G had 7,987 readers in Benton and Washington counties combined, according to the Audit Bureau of Circulations. But the launch of the zoned edition is obviously intended to increase readership dramatically, and the D-G says its zoned edition will also be distributed to another 10, less populated counties of Northwest Arkansas. Other March circulation figures include: 32,738 for the Morning News; 13,926 for the Times; and 9,921 for the Benton County Daily Record, which is based in Bentonville and covers only that county.

D-G changes focus

Northwest Arkansas is one of the few areas of the country with such extensive newspaper competition. The four daily newspapers mentioned above blanket the two-county area with coverage.

Traditionally, the local newspapers have specialized in daily beat reporting. Coverage of a specific city council or quorum court meeting might be found in all three newspapers the next day.

Since the Democrat (now the Demo-crat-Gazette) first opened a news bureau in Northwest Arkansas in 1989, the newspaper has eschewed daily meeting coverage of the area in favor of more enterprise reporting that would be of interest to a statewide audience.

In late 1996, all that changed. With Susan Scantlin on board as head of the Northwest Arkansas operation, the D-G began hiring beat reporters primarily from the Morning News to cover the same beats at the D-G. The D-G has hired about a dozen workers in its newsroom over the past few months.

In ’96, the D-G began shifting focus to cater to Northwest Arkansas readers with stories about local meetings and court proceedings that previously wouldn’t have made it into the state newspaper.

That was a departure from the paper’s former philosophy, which, basically, was: Arkansas has 75 counties. If we cover meetings of the Washington County Quorum Court, then we’d have to cover meetings of every quorum court in the state.

Until this month’s launch of the Northwest Arkansas edition of the D-G, the newspaper had three editions: one for Little Rock, one for surrounding areas of central Arkansas, and a state edition that reached the hinterlands like Northwest Arkansas. In recent months, the “Arkansas section” of the state edition has been choked with daily meeting coverage from Northwest Arkansas, prompting readers in the rest of the state to grumble, “Why isn’t the rest of the state being covered so thoroughly?”

Locals entrench

Randy Cope, publisher of the Times, says his newspaper is entrenching to its home territory, building a journalistic rampart around Washington County to keep the Little Rock vanguard at bay.

“We’re going to put out the best product Fayetteville has ever seen,” he says.

“Our ultimate goal is simple,” says Mike Masterson, editor of the Times. “We want to become the very best small daily newspaper in America, whether we’re in a war or not.”

In addition to replacing three reporters hired away by the D-G, Cope says he’s adding four reporters and three editors in the newsroom. He’s also hiring a marketing director, four new people in the advertising department and eight to work in circulation.

“It possibly could come down to customer service,” Cope says of the newspaper war.

“My boss and his boss and his boss came down here and basically gave us a blank check” to fight the D-G, Cope says. The Times is owned by American Publishing Co. of Chicago.

In response to rumors that the D-G may sell single copies of its newspaper for 10 cents in Northwest Arkansas, the Times spent $40,000 to change all 400 of its newspaper boxes so the price could be dropped below 25 cents immediately to compete.

“We’re just trying to be in a position to react to whatever they do,” Cope says.

The Times has a news sharing agreement with the Daily Record, so each of those papers has access to the other’s local stories.

The Daily Record is also entrenching to its home county.

Daily Record publisher Mike Brown addressed the subject in a June 28 editorial, saying his newspaper is the only daily “totally focused on the people and events of Benton County.”

The Morning News, which is owned by Donrey Media Group and bills itself as a regional newspaper, plans to keep covering both Benton and Washington counties. The newspaper is hiring a community page editor and a copy editor, but those positions aren’t in direct response to the D-G invasion, says Charlie Alison, the Morning News’ night metro editor.

“We’ve been working for several years, not necessarily because we thought the Democrat was coming to town, but we wanted to improve our product,” says Tom Stallbaumer, publisher of the Morning News.

Walter E. Hussman Jr., now 51, was hailed by many as a genius for taking on the venerable Arkansas Gazette and winning one of the nation’s most competitive newspaper wars — which had dragged on for some 17 years. The Gazette, 172 years old at the time of its death in 1991, was, after all, the oldest newspaper west of the Mississippi River.

Gazette fans were likely to call Hussman something other than a genius after his scrappy Democrat vanquished the mighty Gazette. But whatever they called him, they had to admit, Hussman had taken on Goliath and won. Since then, many of Hussman’s detractors have praised him for continuing to put money into the newspaper after the war. Hussman could have pulled his reporters out of areas such as Northwest Arkansas and still made money covering only Little Rock.

One of Hussman’s most controversial policies during the newspaper war concerned advertising for Dillard’s Inc., which is headquartered in Little Rock.

The Democrat slashed its display advertising rate from $7 per column inch to $1 to lure most of Dillard’s business and cripple the Gazette in the early-1980s. At the time, the Gazette was selling its display advertising for $9 per column inch. Hussman later offered Dillard’s a fixed fee for all the pages of advertising the department store wanted.

In 1986, the Patterson family sold the Gazette for $60 million to Gannett Co., the Arlington, Va.-based media conglomerate. The Gazette discounted home delivery to 85 cents a week, a record low, but still couldn’t stop Hussman’s momentum. After the war ended, Hussman reportedly said he would have given up if the Gazette could have stopped his momentum.

Dillard’s ultimately pulled all its advertising from the Gazette in 1989 after Hussman reportedly proved to William Dillard that the Gazette was charging small advertisers less for display ads than it was charging Dillard’s.

Gannett gave up in 1991, and Hussman bought the Gazette for $69.3 million. The Democrat swallowed the Gazette’s assets, laid off the vast majority of its employees, appropriated its name and spawned the D-G.

“The Democrat and Hussman undid us completely by virtually giving advertising away to Dillard’s, giving the impression they’d earned the advertising,” says Hugh B. Patterson, 83, who served as publisher of the Gazette from 1948 to 1986.

Patterson says Hussman, who bought the Democrat in 1974, was losing $4 million a year on the Democrat during the height of the Little Rock newspaper war. Some observers estimate Hussman dropped a total of $100 million to save the Democrat. Gannett, on the other hand, lost more than $110 million on the Gazette during the five years it owned the newspaper.

Patterson says the Democrat was “subsidizing” Dillard’s through advertising.

“Dillard’s didn’t need that kind of subsidizing at all,” he says. “I don’t know how [William] Dillard felt being subjected to that kind of charity.

“Obviously, we could not meet those prices because we were limited by our resources. We could not afford any loses like that. Hussman was having a bonanza with his cable television businesses.”

There’s no indication yet that Hussman, now publisher of the D-G, will offer advertising for $1 per column inch in Northwest Arkansas, but the smoke is still clearing from the first battle in this war. Neither Hussman nor Paul R. Smith, vice president and general manager for the D-G, could be reached for comment. On the news side, we didn’t hear back from Scantlin or D-G Managing Editor Bob Lutgen either.

“You had free classifieds, inexpensive advertising and a large news hole,” Tom Kemp says of the Democrat. “They captured the readership.”

Kemp worked as vice president of sales, promotion and publicity for Dillard’s before going to work for the Gazette in 1977 and serving as an adviser to the Democrat after 1982. He’s now retired.

“Walter is an astute businessman — very bold, aggressive, tenacious. He had to make a decision to make a move and do something big or he wouldn’t be able to keep the Democrat alive. It was sort of like ‘damn the torpedoes’ and he just put his money where his mouth was. They totally underestimated Walter and his talent and ability.”

But the victory wasn’t due only to Hussman’s talent and ability, says Kemp.

“The Gazette just made tactical errors,” he says. “It was just poorly managed during both regimes. Walter was smart enough to capitalize on it, and he walked away with the whole market. No one thought this would ever happen, but it just fell into place.”