Cold Newspaper War Breaking Out

After securing several key territories in the central Arkansas newspaper market over the last year and a half, owner of The Morning News of Springdale, Stephens Media Group of Las Vegas has nearly encircled the central operating grounds of Arkansas’ only statewide daily.
But if the newspaper chain owned by SH Corp. (formerly Stephens Group Inc.) of Little Rock is hoping to challenge Walter Hussman Jr.’s Arkansas Democrat-Gazette for control of the market’s readers and advertisers, it won’t be spelled out ahead of time.
One might call it a cold newspaper war.
“We look at [purchasing] any newspaper that might make sense,” said Dennis Byrd, chief of the Arkansas News Bureau and publisher of seven of Stephens’ recent central Arkansas acquisitions. “I can tell you that we remain in acquisition mode and are always looking at papers of any size that would be beneficial to the company.”
Stephens Media’s recent and swift assault on the central Arkansas market solidified its footing in a part of the state where it previously lacked presence, prompting many observers to wonder whether the Democrat-Gazette might have a viable competitor in the works.
KDC Communications, owned by Kitty and Dave Chism, kicked off the buying frenzy when it sold The Times of North Little Rock and the Maumelle Monitor to Stephens Media in October 2005 after a decade of ownership.
In June, Stephens Media sewed up a deal with Magie Enterprises to acquire the Cabot Star-Herald, Carlisle Independent, Lonoke Democrat and Sherwood Voice weeklies and the semiweekly Jacksonville Patriot. Also included in the deal was the Weekend Edition, a total-market-coverage publication.
Financial terms of the agreements were not released.
Hussman said his Wehco Media Group, which owns the Democrat-Gazette and 19 other dailies (including one Fayetteville and one Bentonville) and weeklies in three states, never felt any pressure to acquire additional central Arkansas properties.
“When [Stephens Media] bought The Times in North Little Rock and all that — those aren’t things we look for,” he said. “We would like to find more acquisition opportunities like the one we found in Chattanooga [Tenn.] or something, which I admit are too few and far between.”
Wehco Media bought the Chattanooga Times and the Chattanooga Free Press and combined the two in 1998.
First Strike
The sale of KDC Communications’ weeklies in North Little Rock and Maumelle to Stephens Media in October 2005 was first considered a logical response to the changing landscape in Northwest Arkansas.
Stephens Media owns three daily newspapers in Arkansas: The Morning News of Springdale, the Southwest Times-Record of Fort Smith and the Pine Bluff Commercial. The papers in Northwest Arkansas compete directly with Hussman’s northwest edition of the Democrat-Gazette — and with newspapers that Wehco threw into the mix last year.
In August 2005, Wehco picked up the Northwest Arkansas Times of Fayetteville, the Benton County Daily Record of Bentonville and eight weekly papers from the Walton-owned Community Publishers Inc.
After the Democrat-Gazette ended a five-year slump and finally turned a profit with its northwest edition and Wehco paid off its debt from the Chattanooga venture, Hussman was ready to exercise an option in an existing “alliance” with CPI that allowed him to buy the papers at any time during a 10-year period.
“We had excess money after having paid off all of our bank debt for the first time in 30 years,” Hussman said. “We didn’t have any disagreement with [CPI], and it looked like a good economic opportunity for us. We didn’t seem to find any others that looked that good at the time, so we jumped on it.”
Getting in Line
With Hussman’s new-found reinforcements in Northwest Arkansas, the circulation battleground was almost evenly divided between Wehco and Stephens Media.
But the territory battle dates even further back to 1995 when Thompson Newspapers Inc. wanted first to sell the Times. CPI and Wehco turned in a $14 million joint-ownership offer while NAT LLC, controlled by the Stephens family, bid $22 million, and an agreement to sell was drawn up in favor of NAT LLC.
The sale was challenged by CPI in federal court on the grounds that a near-monopoly in the market was being created. Stephens had consolidated the Springdale and Rogers papers to create The Morning News, and that held 54 percent of the market’s circulation.
The court ruled in favor of CPI, so Thompson sold to American Publishing Co., which turned around and sold the Times to CPI alone in 1999. The next year, the alliance between Hussman and CPI was announced.
The rivalry between Hussman and Stephens shifted to a new front when, just a few weeks after Hussman picked up the Fayetteville and Bentonville dailies, Stephens Media bought the North Little Rock and Maumelle properties.
Despite the timing, Sherman Frederick, president of Stephens Media, insisted that the purchase was just a coincidence. Frederick did not, however, rule out the possibility of competing more often than once a week.
“Going to additional frequency, whether it’s twice a week or even daily, is certainly something we would look at,” Frederick said after the purchase. “I just don’t know if the market is at the point now where we would do it immediately.”
But with the newspaper industry past its prime, Stephens Media may find it to be profitable simply picking away at advertising revenue in the rural central Arkansas towns where it acquired papers rather than risking a startup.
The only notable daily startup in the last decade has been The City Paper in Nashville, Tenn., which competes with The Tennessean, and it has struggled.
“It’s generally a declining industry,” Joel Waldfogel, a business and public policy professor at the Wharton School of the University of Pennsylvania, said in a report the school issued this year.
Only two gaps remain in the virtual ring Stephens Media has around central Arkansas, with the Log Cabin Democrat in Conway and the Benton Courier being the only major links left untouched.
“If you plot out all the central Arkansas operations they control, they are making a ring around Little Rock,” said Mark Magie, whose family owned the last five papers Stephens Media bought in Arkansas. “If they could get Benton and Conway, they would have it pretty well sewn up.”
‘A Very Nice Offer’

Following the purchase of the North Little Rock and Maumelle weeklies, Stephens Media was adamant that the company would remain in acquisition mode.
So it was no surprise when just eight months later, another long-standing family operation, Magie Enterprises, turned its newspapers over to Stephens for an undisclosed price.
The Magie family broke into publishing in 1955 with the Cabot Herald, which they soon merged with the other existing paper there to create the Cabot Star-Herald. The family added the Lonoke Democrat and the Carlisle Independent in the 1970s and rounded out the company with the Jacksonville Patriot and the Sherwood Voice in 1992.
Longtime publisher Cone Magie died in March at age 81. His son Mark said Stephens Media’s offer was just too good to turn down.
“Over the years, when we saw other papers sold, the topic would come up about us selling, but nothing that was ever very serious,” Magie said. “We always did want to keep the newspapers packaged as a group, and then when Stephens came by, it was a very nice offer that we couldn’t refuse.”
Of the five papers Stephens purchased, the Cabot newspaper is the largest, with a 12-month average circulation of 7,769, according to the Arkansas Press Association.
Streamline Mode
Since taking over the seven publications in central Arkansas, Stephens Media has made some changes to streamline the group operation.
Mark Magie said he stuck around for 30 days after the purchase to help with the transition but had since stayed away from the newspaper business.
“As part of the sale, we can’t compete in the business for five years anyway in central Arkansas,” he said.
Byrd took over as publisher of the publications, and Eric Francis, a longtime reporter at The Times of North Little Rock, oversees the editorial product for all seven papers.
The old Magie cluster of papers was formerly printed in Cabot, but Stephens Media has moved all the printing to its press at the Pine Bluff Commercial.
“It seemed like a logical change to make,” Byrd said. “There’s a bigger press with more capacity and it’s a lot faster there.”