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Gwinnett Daily News Closing Did Not Surprise Many: Observers Say Expansion outside Traditional Market Was Fatal Mistake

Magazine article Editor & Publisher

Gwinnett Daily News Closing Did Not Surprise Many: Observers Say Expansion outside Traditional Market Was Fatal Mistake

Article excerpt

The recent decision by the New York Times Co. to close its 55,745-circulation Daily News in the Atlanta suburb of Duluth, Ga., did not come as a complete shock to many.

Formerly known as the Gwinnett Daily News, the paper was bought for a reported $90 million by the Times Co. in 1987. The Daily News moved into an ultramodern $40 million printing plant in January 1990. Last summer, it dropped "Gwinnett" from its nameplate and started a Metro Atlanta edition that was distributed in more than 1,000 vending boxes throughout most of the Atlanta area.

Some foresaw a "Newsday South" type of situation, in which a historically suburban daily invades the turf of a more established urban-based competitor.

The Daily News measurably increased its coverage of the city of Atlanta and its closer-in suburbs, but the market did not embrace its unfamiliar new status as somewhat of a two-newspaper town.

Bearing this out, the Metro Edition never developed the circulation base that would be attractive to advertisers. Less than 10,000 of the Daily News' circulation was outside its ancestral base in the fast-growing Atlanta suburb of Gwinnett County, where it was founded as a weekly in 1858 and became a daily in 1965.

"The problem was that we could not get the kind of rates for advertising that would disperse some profits," said Daily News editor James Osteen.

Times Co. president Walter Mattson said in a statement that after it was determined that the Daily News had "no hope" of showing a profit, it was offered some 40 potential buyers but received no takers. He said that after a buyer could not be secured, the decision was reached to shut the paper and sell its offices, equipment and subscriber lists to Atlanta-based Cox Enterprises rather than sustain continued losses. Cox owns the Atlanta Journal and Constitution.

Atlanta-area newspaper people and Wall Street analysts alike see the logic in the decision.

"It looked like a no-win situation. Cash was flowing out of there and they didn't see a decent return, so being fairly conservative people, the New York Times Co. cleared the decks by cutting their losses," said Mary Ann Winter, a newspaper analyst who tracks the Times Co. for Brown Brothers Harriman in New York.

A common thought expressed here was that the losses and resultant closure might have been preventable if the Daily News had completely stayed within its historically profitable Gwinnett base.

"Until its purchase by the New York Times Co., the Gwinnett Daily News, as evidenced by the high price the Times paid for it, "was probably the most successful of Atlanta's suburban daily papers," said Millard Grimes, owner of the 10,400-daily-circulation Rockdale Citizen of Conyers, Ga., another suburb just outside Atlanta.

"The demise is unfortunate, but it seems to have resulted from attempts to become a metrowide newspaper rather than any decline in support from advertisers and readers in their home base of Gwinnett County," Grimes added.

Grimes' 1985 book, The Last Lino-type -- The story of Georgia and Its Newspapers Since World War II, is considered the authoritative work in the field.

"Because of the price the Times Co. paid for the paper, going outside Gwinnett were intentions that were known from day one," said Gwinnett Home Weekly co-publisher and general manager David Still, whose 10,500-paid-circulation weekly had competed with the Daily News since 1970. …

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