Newspapers vs. Monopolists!

Who do publishers envy?

They envy other plutocrats who have it even better, the ones whose profits are surer, whose grip on the marketplace is firmer, whose technologies promise to dominate the future.

Publishers envy monopolists. The publishers of America’s daily newspapers are often called monopolists themselves, but that, sir, is a slander. The National Newspaper Association represents some 5,000 newspapers in smaller American markets, and when we asked an NNA spokesman how many of these papers stand unchallenged in their communities, his voice crackled. “I think from our vantage point all markets are competitive. To say a market is noncompetitive is not even naive but untrue. Each newspaper faces a myriad of competitors on a daily basis–radio, TV, cable, free-distribution newspapers . . . ”

A publisher’s idea of a true monopolist is the guy who runs the local telephone franchise. And in a publisher’s eyes, this franchise has lately gone from cushy to dangerous. Publishers wake up at night sick with fear that they are spiritual descendants of buggy-whip barons; they dread a future in which the news that now thumps up onto our front porches each morning will come humming into our homes along the fiber-optic cables the regional Bells are unspooling across the nation.

Actually, this future seemed tolerable enough so long as publishers handled the journalism and the Bells contented themselves with unspooling and maintaining. But the Bells were always much hungrier than that, and now they’re free to do the worst thing the publishers can imagine. They’re free to provide information themselves–to compete!

When AT&T was broken up in 1984, the new regional Bells were forbidden by federal judge Harold Greene to move into what’s called information services or electronic publishing. But last July Judge Greene, under instructions from the U.S. Court of Appeals, reluctantly ended the ban. Greene made it clear that he thought he was doing something terrible.

He wrote: “The most probable consequences of such entry by the regional companies into the sensitive information services market will be the elimination of competition from that market and the concentration of the sources of information of the American people in just a few dominant, collaborative conglomerates, with the captive local telephone monopolies as their base.

“Such a development would be inimical to the objectives of a competitive market, the purposes of the antitrust laws, and the economic well-being of the American people.”

This is exactly what the newspaper industry has been arguing ever since. The U.S. Supreme Court refused to hear an appeal of Greene’s decision, and now the industry is making its case in Congress. Remember the days when “coalitions” consisted of political fringe groups who had managed to convince themselves that banding together would turn them into juggernauts? Well, today there’s a coalition–the word they use–in Washington that consists of the NNA, the American Newspaper Publishers Association, the Consumer Federation of America (which accuses the Bells of overcharging customers by $30 billion since 1984), Dun & Bradstreet, Sears and IBM’s Prodigy Services Company, even AT&T, plus other interests with nothing in common but high anxiety over the ambitions of the BOCs, or Bell Operating Companies, or Baby Bells.

The newspaper industry has retreated to higher ground. If the BOCs are bound to enter electronic publishing, then for the sake of the nation Congress must make the conditions of entry steep and narrow. Publishers want Congress to forbid any Bell to offer its own information services in its own market as long as it enjoys what publishers call a “bottleneck monopoly” there. It would have to wait until local competitors rose up to offer transmission alternatives, or else open its new operation in another Bell region. Publishers also want the Bells to have to form separate subsidiaries to provide information services, with plentiful safeguards to keep the Bells from milking a captive public to finance these ventures. (It’s their suspicion that the Bells would happily soak their customers if they could that has caused groups like the Consumer Federation of America and Illinois’ Citizens Utility Board to line up with the publishers. These watchdogs don’t necessarily think electronic info systems are a bad thing or much care who provides them.)

Testifying two months ago before the House Judiciary Subcommittee on Economic and Commercial Law, the president of ANPA, Cathleen Black, outlined a “doomsday scenario.” She spoke at length; in a speech last October she put her grim forecast more succinctly. “If these huge protected companies are allowed control over both the transmission lines and the information sent, they will be able to take advantage of this monopoly position to hamper other information services. Maybe even drive them out of business.”

But both sides can play the monopoly card. A couple of weeks later a Bell-backed ad in the Washington Post observed: “Why are newspaper rates so high? Because America’s largest newspapers have a virtual monopoly on daily print advertising.”

The Baby Bells don’t like to think of themselves as monopolies either. (Does anybody?) Cable-TV companies (some owned by publishers) have also been wiring the nation, and the Bells eye them warily as the taproots of interactive, fully competitive communications networks of the future. Small big-business-oriented competitors–such as Chicago’s Teleport, whose cables run along the old coal tunnels that flooded last Monday–already exist. To deepen the Bells’ sense of persecution, they’ve had to hire PR firms and lobbyists and buy expensive advertising to plead their case to congressmen and the public. A publisher can quickly command the attention of either with his own editorial page.

Illinois Bell (whose parent Ameritech just last week announced a new Chicago-based subsidiary called Ameritech InfoServe, Inc.) has kept a file of the pulpit pounding around the state. From Sterling’s Daily Gazette (the only daily in its area, it belongs to Thomson Newspapers, North America’s biggest chain, which owns 163 dailies in the United States and Canada): a canned editorial from the Scripps Howard News Service that warns of a history of “market chicanery” on the Bells’ part and advises, “We should learn from the past, even as it repeats itself.” From the Herald & Review (the only daily in the Decatur area, it belongs to Lee Enterprises, which wholly owns 17 daily papers, plus seven TV stations as far west as Honolulu and as far east as Huntington, West Virginia): “The problem is the Bells, as owners of the lines, could very well undercut their competitors’ prices by shifting revenue from other ventures to cover their costs. And they also will control how much their competitors must pay. That’s too much power for a regional monopoly to have.”

Said the New York Times last July 27 (two days after Judge Greene ruled): “Newspapers . . . oppose telephone entry into information services because, in part, they fear competition for advertising revenues from electronic yellow pages. But there are other, more important issues at stake. . . . The public’s right to know should not be left to the mercy of a monolith.” And said the Times last November, touting a bill in Congress to check the Bells: “Newspapers, including The New York Times Company, support the bill for competitive commercial reasons. But there is a much more important reason for the public to favor, and Congress to adopt, the Cooper bill: to protect the free, diverse flow of information on which democracy depends.”

In other words–we dissociate ourselves from the motives of our money-grubbing owners. Yet they are not wrong.

But not every editorial page has taken the publishers’ line, and not every newspaper notable thinks the Bells must be stopped. The most conspicuous contrarian is Allen Neuharth, a former chairman of the Gannett chain and former chairman of ANPA. In a speech last month Neuharth accused ANPA of “spitting into the winds of change.” He marveled, “Can you imagine the gall of any newspaper owners or publishers screaming ‘monopoly’ at anyone else?” and pointed out that the Bells enjoy the same First Amendment rights as anybody else.

ANPA responded: “This is not a First Amendment issue, this is an antitrust issue.”

Last week the American Society of Newspaper Editors met in Washington, D.C. To the certain disappointment of the owners of their papers, the editors turned the topic of electronic publishing over to ASNE’s freedom of information committee but declined to take a formal position, despite a speech by Cathleen Black. An ASNE official told us the editors feel vised between their papers’ economic interests and the First Amendment. Jim Cooper, a Tennessee congressman who introduced the bill the New York Times was touting, thinks editors have made a “terrible mistake” by not formally supporting it. He’s said, “It may well be that ANPA will lose this battle because it can’t marshal its troops the way the Bells do.”

Executive Pay

When Ryne Sandberg became the $7 million man last month, Tribune sportswriters had the decency not to embarrass their bosses by pointing out how little they make in comparison. The trade magazine NewsInc. tells us that former Tribune Company CEO Stanton Cook received just $2,414,694 last year in salary, bonuses, incentives, stock options and dividends, and other forms of compensation. Charles Brumback, who took over as CEO in August, received even less–$2,048,351. Sandberg will be earning much more than both of them earned together.

And it’s not as if Sandberg had a lot better year. It’s true that Tribune Company net income fell 126 percent in 1991. But the pennant-favored Cubs finished six games below .500. Japanese critics take note: these figures flatly contradict the idea of yours that executive salaries in America are wildly out of line with the workers’.