Magazine article Editor & Publisher

Blue Hawaii for the Star-Bulletin

Magazine article Editor & Publisher

Blue Hawaii for the Star-Bulletin

Article excerpt

When Rupert Phillips came to Hawaii two weeks ago to drop the bombshell that he's folding the 117-year-old Honolulu Star-Bulletin, it was one of the few times staffers had laid eyes on him. Some preferred it that way, saying the hands-off ownership let the paper be truly local. Yet they were little prepared to hear he was shutting the paper after Oct. 30, 12 years before its joint operating agreement (joa) was due to expire.

Phillips, an elusive Florida-based newspaper broker and consultant, got into the acquisition business about 25 years ago, buying small dailies and weeklies in the South and Midwest via a variety of investment groups, with a mixed record of success.

In 1991, he and other investors took the money-losing Journal Newspapers in suburban Washington, off the hands of newspaper giant Gannett Co. Inc., slashed about half the staff, and boasted that the papers turned a profit following years of losses.

That same year, his Spanish-language New York paper, El Diario/La Prensa, suffered a cash shortage, forcing employees to wait for their paychecks.

In 1992, a civil-court settlement gave control of one of Phillips' holding companies - Hometown Communications Inc. - to investors, ending Hometown's bankruptcy filing and the investors' $5-million lawsuit against Phillips and other executives.

Phillips came to Honolulu in 1993, when Liberty Newspapers Ltd., where he is general partner, bought the Star-Bulletin from Gannett. Gannett sold it to comply with antitrust law after it purchased the morning Honolulu Advertiser, the Star-Bulletin's joa partner.

The Star-Bulletin was already trailing in the afternoon slot when Phillips bought it for a reported $15 million. Circulation was 88,000, down from its high of 130,500 in 1974, to the Advertiser's 105,000. Today, the Star-Bulletin's circulation stands at 66,700, while the Advertiser's has inched to 106,900.

An amended joa gave Gannett control of the operations of both papers. It canceled the former 60% to 40% profit split in favor of a 20-year payout schedule for the Star-Bulletin.

Phillips cited declining circulation and revenues as well as investors' desire to collect a higher return as reasons for closing the paper. Under an undisclosed agreement with Gannett, Liberty gets back the initial investment in the paper. Phillips' whereabouts were unknown, and he couldn't be reached for comment.

The Star-Bulletin's demise reflects a nationwide decline in afternoon readership, and Hawaii's stagnant economy didn't help. But critics say the 1993 joa, by giving Gannett control of the business operations, seemed set up to lead to its dissolution.

"I think that there was pressure on Gannett to sell the Star-Bulletin in 1993 and they found a buyer they could totally control," said Wayne Cahill, administrative officer of the Hawaii Newspaper Guild, which represents employees at both dailies. He said that Liberty violated the spirit of the Newspaper Preservation Act by not putting the Star- Bulletin up for sale.

The union is working with Hawaii's governor and attorney general to see whether antitrust violations occurred and may seek to temporarily halt the shutdown. "We've got a lot more questions than answers right now," Cahill added. …

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