CHAPTER THIRTEEN: DEBT & GANNETT

Part Three of History of a Calamity: It's a Hack's Life

Sep 19, 2022

When you are a shop floor worker, whether you’re wearing a blue collar on an assembly line or a white collar, in a newsroom, it is a smart policy not to know too much about the business side of the enterprise where you are an employee.

This is particularly true, if you’re a hack.

Front Page of USA Today’s first edition. USA Today was launched by Gannett on Septemeber 15, 1982

For a while in the mid 1980s I learned more than any reporter should ever know about the news business. It was traumatizing. I worked for the best part of a year as a temporary executive secretary in the New York office of Gannett, America’s largest newspaper chain.

I was adrift—yet again —having been “encouraged” to leave the Washington Post. I took the hint. It wasn’t that my work was bad, I did the basics of my starter’s job: answering phones and pigeon-holing mail with aplomb. I also wrote a fair number of good articles.

But I was a bad fit at the Post. When I lucked into my job there I expected the paper to be full of characters out of The Front Page or His Girl Friday, a bunch of wise-cracking cynics. I have a decent line in cynical wise-cracks, and thought I'd fit right in. But that was not the Post’s culture at all. It was very Ivy League private club, like Yale’s Skull and Bones or Harvard’s Porcellian. That culture had been bureaucratized by the human resources department. There were inner circles within inner circles, and prescribed routes to staff jobs, I ticked none of those boxes.

The deputy editor of Style, Mary Hadar, invited me into her office for a career chat which went something like this: Michael, you are good but a lot of people here are “good”. You will never get a full time reporting job at the Washington Post, so it’s time for you to move on.

I went back to New York where I found that a file of cuttings from the Post opened doors but not to full-time salaried employment. Money running out I started temping as a secretary and ended up at Gannett Outdoor, the largest billboard company in America, a division of Gannett. And this is where my education in unwanted knowledge began.

By the mid 1980s, the new America whose seeds were planted during the Oil Crisis of 1973 was blooming. Ronald Reagan was in the White House, regulations dating back to the Depression that put some checks on speculation were lifted. Businesses were no longer being built over time, they were being created overnight by mergers and acquisitions, sometimes friendly, frequently not so friendly.

Newspapers were a Wall St favourite. Although many, particularly those that published in the afternoon, were going out of business, the ones that remained were essentially monopolies in their towns. Circulation was at an all time high. Everyday millions of dollars in revenue came in —Gannett, was generating almost 60 million dollars a quarter in revenue—financiers were happy to lend multiples of that number to enable the purchase of more newspapers. Gannett, which owned small town papers, was building itself into a big media business this way.

The company was led by an arrogant, charismatic man named Al Neuharth, a self-described Son of a Bitch, and proud of it. He even called his memoir cum leadership manual, “Confessions of an S.O.B.”

Another change since the Oil Shock of 1973 was a decisive shift in America’s population from the old industrial northeast and Great Lakes region to the south and Southwest.

Neuharth with Gannett and Ted Turner with CNN were news business visionaries. They realized there were more things to American culture than those who set the cultural agenda in New York and Los Angeles could dream of.

CNN was headquartered in Atlanta Georgia, one of the fastest growing cities in America. As CNN had become an established part of the media landscape, Turner had never considered moving it to New York. There was no need. He and Neuharth understood the country was no longer taking dictation from the city about what was important.

The New York Times daily circulation broke one million for the first time in its history in 1985. That same year Gannett’s 85 newspapers had a daily circulation of 6 million. Selling advertising to those readers as a group or by region or in combination with other Gannett properties, like billboards and television stations was the pitch of the men (and one woman) whose correspondence I typed, whose phones I answered.

The reach of Gannett had allowed Neuharth to launch America’s first genuinely national newspaper: USA Today a few years after CNN went on the air. It was by physical and intellectual design, a challenge to the New York Times and The Washington Post and The Wall Street Journal and LA Times and every established big city agenda setting newspaper in the country.

Physically, it meant to emulate television which, despite the newspaper circulation figures, was now the primary source of news for most Americans. USA Today was printed in colour and there were lots of visuals like pie charts. It was even sold from dispensers meant to look like TVs. There weren’t too many words to tax readers, adjectives were rarely allowed by editors. Television news stories were growing shorter and shorter as American attention spans grew twitchier and twitchier. USA Today took that as a given, and its stories matched the television attention span.

USA Today was aimed solidly at the millions of Americans who were on the road every day for business, flying from Phoenix to Dallas or driving from Sioux Falls to Fargo and spending the night in Holiday Inns or Hiltons or even Super 8 motels. The paper was bought in bulk by the hotel chains and given away free as a kind of perk for guests. The sports pages had results from all 50 states: professional through high school. There were local stories clipped from a Gannett owned paper, so travelers could keep up with news from their communities when they were on the road.

USA Today was mocked as roundly as CNN had been by the journalism establishment. Neuharth didn’t care. He had the kind of chip on his shoulder that only a country boy who grew up dirt poor in Depression-era nowhere South Dakota could have. He was competing with publishers who had inherited their jobs. The Sulzbergers and Grahams and Chandlers could go to their exclusive clubs, he lived in his company provided Gulfstream jet with the private shower so he could zoom around the country to visit the empire he was assembling and then get back to his home in Cocoa, Florida for the weekend.

In New York, Gannett maintained an apartment in the Waldorf Towers for his use. The fact that he was rarely in the city didn’t matter. Every morning his cherry wood panelled office had to have the day’s papers arranged on his desk as if he were about to walk in.

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The business empire Neuharth oversaw had its origins in Elmira, New York at the beginning of the 20th century. Frank Gannett bought an interest in the Elmira Gazette, a money-losing newspaper, and within a year had bought its competitor, the Elmira Star, and merged the two. He had hit on a business strategy that worked. Combine all the papers in a locality under single ownership and advertisers had nowhere else to turn to get word of their products and services to the public. The newspaper publisher could set the ad rates as he (he in those days) saw fit.

As Frank Gannett began, so he continued. Elmira is situated in the empty quarter along the border between northern New York state and Pennsylvania and Gannett bought up papers in the region. Ultimately consolidating the newspapers in Rochester NY into the Rochester Times-Union which became the Gannett chain’s flagship paper.

The typical Gannett outlet reflected the small town, small c conservatism of the communities where they were located and they were looked down on by the agenda setting papers in the big cities.

By the time he died in 1957, Frank Gannett had acquired 30 publications plus some broadcast properties. He never started a newspaper of his own.

The business did not pass into the hands of an heir. Paul Miller former Washington Bureau Chief of the Associated Press had been recruited by Gannett in the late 1940s to work for the company and at his death replaced him as Chairman and CEO. Miller recruited Al Neuharth who was just shy of forty to join the company in 1963. By then Neuharth already had three decades of experience in journalism as a reporter and manager overseeing all aspects of newspaper production.

Neuharth was two years old when his father died and he was raised by a single mother in and around the hamlet of Alpena, South Dakota, population not quite 500 and shrinking as the Great Depression and Dust Bowl years took their toll on America’s heartland.

During high school he began part-time work at the town’s weekly paper, The Alpena Journal. It was not avocational. The family relied on his earnings to help keep food on the table.

After serving as a combat infantryman in World War 2—he earned a Bronze Star—he returned to South Dakota to attend the state’s public university. Neuharth majored in journalism and went to work for the AP upon graduation but growing up in poverty he would never be satisfied with just a reporter’s salary. After two years at the AP’s grindstone he made his first attempt at journalistic entrepreneurship. He and a friend borrowed money and launched a weekly newspaper covering all South Dakota sporting events. SoDak Sports circulation wasn’t bad but advertisers did not support it. The news is a business first and so after two years Neuharth shut the thing down having lost the entire $50,000 he borrowed to get it off the ground.

Next came a job at the Miami Herald. He already knew that management was where the money was in journalism and worked his way around newsroom management jobs impressing those further up the chain of command by his ruthlessness. The Miami Herald was owned by the Knight chain of papers which operated in large American cities including Detroit. Neuharth was sent by the company to the Detroit Free Press to make it more competitive in its market.

The Knight chain, like so many other newspaper enterprises, was at its core a family business. Neuharth could not see a way to the top if he stayed with the company. So he courted and was courted by Paul Miller and ended up moving to Rochester to run the Gannett flagship.

The company became his laboratory for creating a business based in a new kind of paper. One in which news was packaged less like green vegetables—you need to read these stories because they’re good for you—and more like fun. After a few years in the frozen north around Rochester he was sent to Florida to organize some recent Gannett acquisitions including one in Cocoa just across the water from Cape Canaveral.

He took the existing paper in Cocoa and completely revamped it from a journalism point of view and as a business proposition. The editorial content would be more entertaining and new technology meant it could be printed in color which made the revamped paper, which Neuharth called Today [now called Florida Today], easier on the eye. The business innovation was to give the paper away for free until he could guarantee advertisers a high circulation.

Neuharth also learned how to work the Gannett boardroom and a decade after his arrival at the company he forced Paul Miller out and became Gannett’s Chief Executive Officer.

It was the mid-70s, the high tide of serious journalism in America and there was a lot to be serious about: not just Watergate and the Pentagon Papers, but the end of America’s wars in southeast Asia, local corruption, school desegregation in the northeast, and the recurrent bouts of inflation caused by instability in the Middle East.

Gannett papers did not go there. You can’t eat prestige. Profits came before Pulitzer Prizes. The corporate DNA went back to its founding: buy small papers in a region, consolidate their operations, create a local monopoly that advertisers need to use to get word of their products and services to consumers. Then use the profits to buy more papers.

By the end of the decade, Neuharth had built America’s largest newspaper chain, nearly 80 papers. Gannett had also acquired the largest outdoor advertising company in the US.

For all the money splurged on acquisitions, Neuharth understood the most important thing in his approach to the news business was relentless growth. Every quarter he was in charge, the company set a new record for profits. Some of the profit was returned to shareholders as dividends. But much was reinvested in the company’s continued acquisition campaign. Then in 1982 Neuharth broke with that strategy to launch USA Today.

The paper’s conception and execution summarized everything he had learned about journalism and its audience, the production of newspapers, and the business possibilities in them. The idea was to create something that didn’t exist before the internet: a genuine national daily newspaper for America.

Many of the ideas had been tried out when Neuharth created Florida Today. USAT, as it was known in the company, was printed in color. Satellite technology was used to have it produced at various Gannett plants around the country so it could be distributed in a timely fashion. It was given away for free in an attempt to boost circulation figures.

It’s editorial offices were not in Rochester but across the Potomac river from Washington DC in suburban Virginia (corporate hq would relocate from Rochester to Virginia a few years later). Many of the original reporting staff came from Gannett papers and they brought the sensibility of their communities to the jaded world of Washington media. USAT was derided in the same way that CNN had been when it launched a year earlier. It was nothing more than McNuggets of news or “television you could wrap fish in.” The paper went beyond impartial reporting to a point of entropic, near meaningless neutrality in story selection and analysis.

But out in the heartland, where Neuharth came from, the paper was reaching the readership it was intended for.

The company claimed an enormous circulation for the paper based on the giveaways—within two years of the launch it was approaching a circulation of 1 million—as well as a readership, based on what is called “pass along rate” of close to five million. Despite these big numbers giving it away for free meant the paper lost money. But the sums being lost were comfortably absorbed by the profitability of the other Gannett properties.

At the Washington Post I was a bad fit. “Wise guys finish last,” I had been warned shortly before being told it might be best for all concerned if I moved on. But in the secretarial pool at Gannett’s New York office at 535 Madison Avenue I was welcomed. I wasn’t a wise guy, I was funny. Another artsy bohemian New Yorker making rent money temping and entertaining my co-workers.

And I entertained myself as a Zelig figure in Gannett’s corporate culture, there in the picture observing events, but not seen by the executives around me. It was an education in corporate life.

Gannett’s Outdoor division had recently purchased Canada’s largest billboard company and had brought its corporate leaders to New York to oversee Gannett Outdoor’s operations. One of Neuharth’s methods in acquiring properties was to offer the most senior managers positions at Gannett, lesser employees might well face the sack once the deal went through but by buying the loyalty of the upper management levels or the owners of enterprises he could smooth a purchase.

The Canadians arrived around the time I began temping bringing with them heavy provincial resentment about being in the city that never sleeps and doesn’t really care where Toronto is.

“Michael, what’s the most important lunch spot in New York,” Don Davidson the head Canadian asked, assuming I knew all there was to know about executive dining.

“Le Cirque,” I answered without hesitation or real knowledge.

“I want you to call Le Cirque and make a reservation for tomorrow, for four people, their best table. We have to let this city know the Canadians are in town.”

Needless to say there were no tables available for two months.

A few months later the prospect of buying up Britain’s largest billboard company became a possibility. Davidson decided he and his team needed to fly over to inspect the properties. There was a lot of to’ing and fro’ing about how to travel to London. Fuck it, let’s take Concorde, Don decided. For that the Canadians’ wrists were severely slapped by Gannett’s Chief Financial Officer, Doug McCorkindale.

In the run up to Christmas, Don spent a great deal of time deciding what to give his regional managers as a gift. He settled on fleece lined sheepskin coats that cost north of $400 each. That’s 1984 dollars. The first week of the new year was spent typing his response to the effusive, boot-licking thank you notes from the recipients.

There was a lot of time wasted but there were deadly serious moments. Quarterly revenue targets were set at the edge of achievable and if they weren’t met, jobs were at stake. Opening and reading the mail before passing it along to Don—email was only just becoming common—was an education. You could imagine the person who failed to meet his target, a king in his provincial domain, quivering. It gave me ulcers just to imagine having to meet increased profit targets quarter by quarter.

Gannett was meant to be a temporary situation but the workload wasn’t heavy and the people were congenial, they laughed at my jokes, so I stuck around. After a couple of months, I was promoted up one flight to the 32nd floor, the company executive floor. 12,000 square feet and a huge terrace with views down Madison Avenue. There weren't more than 6 or 7 execs with offices on the floor, and they were on the road most of the time.

When Neuharth was in town I was assigned to the reception desk. I had two basic jobs, use my sixth sense to know when he was heading for the elevator, and buzz him out so he didn’t have to break stride as he left. And then, occasionally, I was sent down to the hot dog guy on the corner of 53rd and Madison and got him two franks with mustard and sauerkraut for lunch. He often went down himself and chatted with the vendor while eating the hot dogs, his way of keeping it real, I suppose.

There was lavishness in everything Gannett did to attract advertisers, ad agencies, the middle men—media buyers, what are they, who knew they existed? Lunches were catered and magnificent, and largely uneaten. New York in the mid-80s was rediscovering excess after the near bankruptcy experience of the mid-70s and part of the ritual was just letting things go to waste. What happened in the 32nd floor boardroom was for show.

We may publish papers in hayseed towns you never heard of, but Gannett is for real was the message.

The message heard, advertisers would leave and the executive secretaries had the lunch or made care packages of the steak and exquisite salads to take home. And the wine! The only time I’ve ever had a First growth Bordeaux was a bottle of Chateau La Tour with a single glass poured from it that I rescued following a meeting. Believe the hype.

The excess, the lavishness of the New York operation, and Neuharth’s lifestyle were paid for down on the shop floor.

Publishers of the individual papers, like regional managers of the billboard operations, were set tough quarterly revenue targets and cost cutting to achieve those targets tended to fall on the editorial employees.

Reporter salaries were kept as meagre as the USA Today word count. Journalist’s unions were busted or neutered.

Neuharth, who had been a journalist, seemed to regard reporters and editors as not particularly important. The product they put out every day was a medium to carry ads and generate revenue, not inform the public.

Advertising, not reporting, was king, at Gannett. On the executive floor I worked for Gannett Media Sales, a Neuharth creation designed to sell advertising across all Gannett outlets: newspapers, television stations and outdoor. Each of those divisions had their own sales teams with high paid execs. The sales execs often operated at cross-purposes but it didn’t seem to matter so long as profit targets were met.

One spring evening, the company hired a Circle line boat and invited top executives from many different industries for a sunset cruise around Manhattan Island. Smart move, captive audience.

The next day I typed a letter for the vice-president in charge of advertising for USA Today, Joe Welty, to an executive at a major tobacco brand. In it, Welty recounted their conversation on the cruise. He had been surprised to hear that the reason the company’s cigarettes did not advertise in the paper was the executive felt USA Today was anti-tobacco because of its reporting on the cancer-risk associated with cigarettes. Welty apologised and offered the exec an opportunity to make the case for smoking on USA Today’s opinion page. The offer was accepted and the piece duly appeared. Cigarette ads for that executive’s brand were soon running in the paper.

Neuharth’s Gannett was not the only newbie pursuing advertisers in New York. In the mid-80s Rupert Murdoch was every bit as much an outsider in American news as Neuharth and Turner. In 1976 he had paid a small fortune, $30.5 million, for the New York Post, a liberal afternoon paper, brought in a bunch of editors and reporters from Australia and Fleet St and turned it into a New York version of his British paper, The Sun, without page 3 girls.

Advertisers stayed away in droves, the paper was losing money. The tale, apocryphal perhaps, is Murdoch was at a party with a senior executive from Bloomingdale’s, a major department store. Why aren’t you running ads in the Post? he asked. The answer, “Rupert, your readers are our shoplifters.”

In the mid-80s Wall St was helping new empires to be built through the miracle of leveraged debt. Corporate raiders bought enterprises they hadn’t built and took on debt to buy them. The favored way was to drive up the share price so that stock holders would sell to the raider.

In the spring of 1985 Ted Turner made a hostile takeover bid for CBS, one of America’s big three television networks. The CBS news division was considered the country’s finest broadcast journalism operation. It was also a target of conservatives for its alleged liberal bias. Many in the New York media establishment assumed that Turner wanted to buy CBS to gut its news division and make it subordinate to CNN.

The reported $5.4 billion price Turner was offering was astronomical but through the miracle of leveraged debt Wall St thought his projections of future revenues and cost savings would allow him to pay it back. The management at CBS wanted to keep Turner away. Debt was their tactic as well, they would load CBS with so much that Turner would lose interest.

A few weeks later, I came to work and the usually somnolent 32nd floor was crackling with nervous energy. Young men I’d never seen before were going in and out of the office of Gannett’s chief financial officer, Doug McCorkindale, spread sheets in hand, having hushed conversations. The company’s share price was mysteriously rising, the first sign that a take-over bid was coming and since one wasn’t being sought it had to be a hostile take over.

Who? The rumour was CBS was attempting to buy Gannett, a company it could in no way afford to purchase, but it was willing to go deep in the red to make itself unattractive to Turner. Another rumour was that Gannett was now working with Turner to buy CBS and the plan had leaked out.

I was given strict instructions about secrecy, told to refer all journalists calls to a corporate flack, and under no account discuss what was going on. And the calls did come in, this was a big business story.

The distance between what was happening as Gannett fought off the bid and the day to day life of its journalists and the newspapers they produced was too vast to fully comprehend.

The intense maneuvering on the 32nd floor would effect their lives and careers much more than the quality of the work they did. If the hostile takeover bid was successful the debt would have to be paid off somehow, cutting jobs was the easiest way to make savings. And if the bid didn’t materialize—as happened—and Neuharth went on buying papers using debt—as he would—the result would be the same. Jobs would go. And the pursuit of advertisers by making the newspapers congenial, unthreatening environments, rather than places where the day’s news, possibly on a new surgeon general’s study about the dangers of smoking was reported without fear or favour cut the essential reason most hacks are called to be journalists in the first place.

It is a strange world where doing good work for a profitable enterprise, is still not enough to keep a person employed.

In the end, much of what was reported in the papers turned out to be a smokescreen. There were very real negotiations going on between Gannett and CBS and they had reached an advanced stage. Then Neuharth’s personality blew up the deal. In “Memoirs of an S.O.B.”, published in 1989, he wrote, “I blew it. I flexed my muscles, my ego was overwhelming.”

By the time the Gannett-CBS deal fell apart Turner had lost interest in the network and bought MGM movie studio and its library of films instead. Al Neuharth kept buying newspapers in larger and larger markets. Others, usually hedge fund types, emulated Gannett’s business model: buying properties with debt, holding on to them like trump cards, then putting them into play and selling them on to other speculators.

For a long time there was profit in it, nowadays its more like a game of pass the parcel. But it does make a person wonder, what is the purpose of a newspaper?

“ … wherever the people are well informed they can be trusted with their own government;”
Thomas Jefferson, letter to Richard Price, January 8, 1789

You can find variations on Jefferson’s thought all over. No democratic society can succeed where its citizens are ill-informed about its government and about the daily events that others experience. The press has an educative function that is different from that of schools. Citizens should want to know about the things we report and it is our job to report the world in a way that makes citizens want to learn more. That’s why journalism is a calling.

A true hack would admit there’s a certain amount of naivete in that view. At the time Jefferson wrote his friend Richard Price, the press in America was absolutely scurrilous. Opinion was expressed viciously with little regard to facts and Jefferson was often on the receiving end of vicious coverage. His friend and rival John Adams, when he replaced George Washington as president, put in place the Sedition Act of 1798, curbing the press’s freedom to "print, utter, or publish...any false, scandalous, and malicious writing"about the government. The act proved so unpopular that Adams lost the next election to Jefferson.

History isn’t static. There are periods of progress and then regression. The history of American journalism is no different.

The 1970s high point of journalism that Neuharth and his Gannett stood out against was an aberration. Since then there has been a reversion to the mean, and in journalism mean really does mean mean.

How the Gannett story finished:

There was a brief moment when it seemed I might enter the backdoor to a career at Gannett. There was an opening in the squad of secretaries who attended Neuharth and I was asked if I’d be interested. The salary on offer was more than I had ever earned, the requirement for travel appealed, and it seemed like a way to get an MBA without going back to university.

I was flown down to DC for further interview and tests in secretarial skills but the job was never going to happen. I was a terrible typist and had no shorthand, which were more important skills than being able to tell jokes. As at the Washington Post it was time to move on although not completely. A real journalism job came up—temporary, but genuine reporting involved—and I took it. I moved to London to freelance. Using connections made at Gannett, my first stories were for USA Today. Not using adjectives was really very difficult.

Today Gannett is still America’s largest newspaper chain but it is no longer the company Neuharth wrenched into being in his competition with the princes of American media. The Chandler, Graham, McCormick and Bancroft families all sold out. Only the Sulzbergers, owners of the New York Times, are still in the game.

It’s easy to understand why the old families cashed in their chips. Newspapers, the foundation of journalism in America, have become a terrible business. Since 2005, 2,500 papers have shut and newsrooms have thirty percent fewer editorial employees, that’s 40,000 jobs gone. Most of those thrown out of work have not found new employment at on-line news outlets.

Consolidation of chains has been the only way many titles survive. Gannett was bought out by GateHouse in 2019 for $1.2 billion. The combined company comprises 260 newspapers and retains the Gannett name.

In 1985, just before the CBS takeover bid, Gannett shares were trading at $59.50 a piece, in April 2020 they were trading at 63 cents a share. As I write these words in 2022, the price has gone up to $2.33. The company has 24,000 empoyees but only 1 in 10 are actually journalists.

The company is not unique.

And it seems that most people don’t care. During the heyday of American journalism, serious work was produced and implicit in the pursuit of stories without fear or favor was the idea that there was a serious readership interested in what was published. Neuharth pointed a way to a different relationship with readers, and a different relationship with profit from them.

Today serious journalism is still produced, it is not clear that there is an audience for it.

Thomas Jefferson who had more reason to hate the press than most wrote,

‘Where the press is free, and every man able to read, all is safe.”

But people are also free not to read and that has contributed to America’s Calamity.

This is the second chapter of Part Three of History of a Calamity, the story of how America went from Victory in World War 2 to Donald Trump and Cold Civil War in a single lifetime … Mine.

It is free to read but to keep going I need your help. Please click on the donate button and also share it widely.

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CHAPTER THIRTEEN: DEBT & GANNETT

Part Three of History of a Calamity: It's a Hack's Life

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