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NEWSROOM STABBING

PAPER LOSSES: A MODERN EPIC OF GREED AND BETRAYAL AT AMERICA'S TWO LARGEST NEWSPAPER COMPANIES

By Bryan Gruley

Grove Press x 448pp x $23

I arrived in Detroit in the winter of 1976 in the midst of war--or several wars. Gangs of thugs outnumbered a demoralized police force, terrorizing downtown. The Big Three auto makers were battling the United Auto Workers and each other for survival. The city's first black mayor clashed repeatedly with white suburbanites and state legislators. And you could follow every amazing development in the city's two warring newspapers, the Detroit Free Press and the Detroit News.

The dailies were locked in a journalistic jihad, with only one expected to survive. Despite huge circulations, both were losing truckloads of money in recession-wracked Detroit. But the cash drain was just the cost of competing for the ultimate prize: virtual monopoly over the country's fifth-largest market. The winning journalists would prove themselves the best. The losers would wind up in the lengthening unemployment lines. It was enormous fun.

Or so it seemed in the Free Press newsroom. But as author Bryan Gruley demonstrates in his remarkably detailed Paper Losses, the two papers' staffs, readers, and advertisers would be betrayed by the top executives of the nation's two largest newspaper chains. Ultimately, Allen H. Neuharth, CEO of Gannett Co., and Alvah H. Chapman Jr., chairman of Knight-Ridder Inc., sought and won an antitrust exemption from then-Attorney General Edwin Meese III that permitted them to merge the papers' business operations and throw an effective 99-year lock on the market. Along the way, the 150-year-old Free Press sullied its reputation. And the vainglorious Neuharth managed to cripple the News and set its circulation on a downward spiral in return for the right to brag that, because his side dominated the board overseeing the joint operation, he had "won."

Critics of the media may delight in Gruley's evidence of the murky ethics at play in Detroit. The Free Press borrowed Chrysler Corp.'s Washington lobbyist to help win over Meese, letting Chrysler foot the bill. Editors altered their own quotes in stories about the struggle. The Free Press sought support from the governor, the mayor, and other politicians and business leaders it was supposed to be covering. Worse, Gruley says, some Knight-Ridder editors muffled criticism of Meese while the case was pending.

But the real villain is the Newspaper Preservation Act of 1970, intended to "preserve" independent editorial voices by letting two papers merge all but their news staffs. What the law has generally done, Gruley argues, is produce high profits for third-rate papers while robbing them of any incentive to improve. The law's mere existence encouraged the Detroit papers to keep prices below breakeven to justify their request for the merger. It also, said the judge who first heard the case, showed that "failure, too, had its own reward." The newspapers reckoned the reward, once the joint operating agreement was secured and ad and subscription rates were raised, would come to $93 million a year.

Gruley, who covered the four-year struggle for the News, is a colorful writer and a skilled storyteller. But he, too, has fallen into the conflict-of-interest trap by taking a 16-month paid leave to write the book. While neither paper comes off well, Gruley devotes far more space to the Free Press.

After the Downsizing Decade, seeing companies battle it out doesn't hold the romantic appeal it once did. Viewed another way, the papers' editors and managers did what they felt they must to save jobs. But as Gruley shows, the law giving papers an antitrust exemption isn't working. If the press is to remain independent of government, it can't hang around the back door with its hand out.PAUL MAGNUSSON


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