Magazine article Washington Journalism Review

Breaking Up Is Not That Hard to Do

Magazine article Washington Journalism Review

Breaking Up Is Not That Hard to Do

Article excerpt

A company that publishes one daily newspaper generally makes a lot more money than one that publishes two in the same town.

This truism has sunk a lot of afternoon papers owned by morning newspaper companies, and it is starting to sink newspapers published by joint operating agencies as well.

Joint agencies, I probably need not remind you, are the controversial arrangements under which two companies combine under the protection of the Newspaper Preservation Act of 1970. The act allows the papers, in what otherwise would be a violation of antitrust laws, to publish editorially separate newspapers supported by common production, circulation and advertising operations. In other words, the two owners share profits.

Joint agencies, which have existed since the mid-1930s, were declared illegal by the U.S. Supreme Court in the late 1960s. Congress resurrected them with the 1970 law because it concluded it was in the public interest to permit newspapers to skirt antitrust laws if the result meant preserving separate and competing editorial operations.

So far, so good. In recent years, though, the preservation law's intent has been undermined by the very same economic forces that fostered creation of joint agencies in the first place.

Joint agenices were created because one newspaper in a market could not survive in full-scale competition with another. In effect, a joint agency allowed the two newspapers to operate like a commonly owned morning-and-afternoon newspaper company. By eliminating commercial competition, the joint agency produced higher profits than the successful paper had made by itself. Ideally, the profits are high enough that after they're split the successful paper makes more than it used to, and the weaker paper makes at least something.

However, the market forces (chiefly television growth and declining readership) that initially drove one newspaper into unprofitability have continued. The failing paper has continued to lose readership, although the effects of this for a long time were muted by the agency's high profits.

In time, though, the weaker paper's fading circulation becomes a drag on the agency's earnings, just as a weak afternoon paper hurts earnings of a commonly owned morning-and-afternoon company. This is the core reason for the closings of many afternoon papers published by morning papers, and it is also the reason some joint agencies, one way or another, have cut back to one newspaper a day. …

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