Screwed by the Tribune, Part 3

Al Von Entress saw it coming in 1981. If Chicago’s newspaper distributors signed the contract the Tribune was waving at them, sooner or later they’d get screwed. And sooner or later the Sun-Times–where Von Entress worked–would see its delivery system torn to pieces.

The Tribune wanted to put an end to the old handshake agreements between the papers and the distributors. Most of these independent businessmen chose to believe the Tribune’s terms would make their businesses more secure. Example–the ten-year renewable contract. Example–the seeming hedge against new technology: the Tribune could nullify the contract in order to change the system of sales and delivery–which many distributors took to mean a change from newsprint to electronic transmission of data–but then the paper would have to buy out any distributor who wanted to sell. If necessary, an arbitrator would set the price.

Don’t sign, said Von Entress, chief of Sun-Times circulation. Forget the ten years; see that the Tribune can give you 30 days’ notice and dump you. And if that happens how’s the Tribune going to figure what your business is worth?–where’s the formula? And if you’re dumped, where’s the power an arbitrator should have to reinstate you?

In a letter to distributors, Von Entress sounded tough: “Obviously the Sun-Times must consider other options when faced with the prospect that the Tribune could eliminate the present system and immediately create a monopoly whenever it decides. . . . Our attorneys believe the proposed contract raises serious antitrust questions. These are being reviewed with a view towards a possible suit against the Tribune.”

But three of every four distributors came to terms. The Tribune, after all, with three-quarters of its circulation home delivered, produced better than 70 percent of most distributors’ profits. If one paper or the other had to get mad at them, better it be the Sun-Times.

Von Entress, who now lives in New Jersey, admits that when he wrote the letter “I didn’t tell them my inner thoughts.” His inner thoughts were that in the Tribune’s shoes he’d have done exactly what the Tribune did. Distributors, he thinks, belong on a short leash. As a later Sun-Times circulation chief put it, the interests of a newspaper and its couriers are inimical. “The independent route dealers want low volume and high unit profits,” Robert Debono told us. “The publisher wants high volume and low unit profits.”

Last October the Tribune gave that short leash a yank. It would shift to an “agent” system in April of ’88, thus voiding the contract. Now instead of the distributors, the Tribune would set the subscription price; agents would merely deliver the paper for a set fee. If a distributor accepted the Tribune offer for his “tags” (subscriptions), fine–he could then become an agent. If not, then on to arbitration–but that route would mean kissing agent status good-bye. Either way, he had to turn over the tags.

Distributors felt vised. By the time arbitration ran its course, many feared, they’d be out of business. Von Entress had been right as rain.

The independents invited the Sun-Times to join in their lawsuit (they have charged the Tribune with breaking its contract and violating antitrust laws). They reminded the Sun-Times of the suit Von Entress had pondered back in ’81.

That was then and this is now, said the Sun-Times brass. We’ll handle this situation our own way.

Their way has turned out to be somewhat brutal.

Screwed by the Sun-Times

Early casualties:

Henry Hirschauer, owner of the Stratford News Agency in Lake View. Used to deliver 1,650 Tribunes and 375 Sun-Timeses a day. No longer carries Tribune, which won’t buy his tags for a price he likes. “I just left the Tribune a few minutes ago,” he said the other day. “Their offer was so low it could go under a snake’s belly without standing up.” Headed for arbitration.

Went on distributing the Sun-Times, but dropped Saint Joseph Hospital from his route after the Sun-Times began delivering papers directly to a new gift shop there. Hirschauer had been taking papers to floors he had access to. The gift shop had access to every floor.

“You have abandoned portions of the area that have [sic] been assigned to you,” Jack Hogan, circulation manager of the Sun-Times, wrote him, although “we are entering a phase which requires increase [sic] competitiveness on the part of our distribution system.” Hogan told Hirschauer he was through.

In 1984 Hirschauer received a plaque with this inscription: “For over 30 years of dedicated newspaper distribution to Sun-Times readers.”

Mary Spencer, president of the Spencer Mokena-Frankfort News Agency, Ltd. Like Hirschauer, Spencer couldn’t come to terms with the Tribune. Left with only her Sun-Times subscribers, she faced a 35-mile roundtrip to deliver to four of them. Spencer says she told Hogan she intended to drop these from her route, and Hogan replied that the Sun-Times would take over the delivery.

Spencer thought he meant those four distant customers. No, he meant her entire route. “It has come to our attention that you have abandoned portions of the territories that have been assigned to you,” Hogan wrote Spencer. So she was out.

Joseph Stolfa, owner of the Riis Park News Agency. Became a Tribune agent in April and later that month got a letter from John Cimaroli, vice president for circulation of the Sun-Times, pointing out the “obvious conflict of interests.” Stolfa could go on delivering the Sun-Times “on a trial basis,” but Cimaroli wanted an updated subscription list “so that we can track any shifts in our subscriber base.”

That list was his stock-in-trade. Why should he give it away? Stolfa refused and he got the heave-ho. “If you want to continue to sell the Sun-Times as a Tribune agent,” wrote Hogan, “you must find another source for the Sun-Times.” Another source?

We single out Hirschauer, Spencer, and Stolfa because they already have had a day in court. Hirschauer got a temporary restraining order keeping him in business for the time being; Spencer and Stolfa weren’t so fortunate. But they’re far from being the only independents who complain that the Sun-Times is beating up on them.

Take Donald Hartman of D & R Sun News Agency on North Bernard. Hartman is 60 and he wants to retire. The Tribune’s offer was decent enough and he took it. He says a neighboring distributor then offered him $10,000 for the balance of his business–some files and equipment and 290 Sun-Times tags. Hartman went in to talk to Cimaroli. “I said I’d like to sell this business and he said ‘No, we’re not approving any sales.’ ‘I own my own business and I can’t sell it?’ ‘No, we’re not approving any sales.'” Hartman says the Sun-Times made its own bid for those 290 subscribers–$450.

It has been next to impossible to get Cimaroli or Hogan to discuss either specific incidents or corporate strategy. Cimaroli stayed on the phone long enough to say merely that “we don’t know what our distribution system is going to look like. I’m as much up in the air with the system and where it’s going as they are”–“they” being the distributors who can’t figure it out.

Here’s how we see it. The Sun-Times doesn’t trust Tribune agents to deliver both papers impartially (and some distributors concede the Sun-Times is right not to; one called Tribune control over its agents “ironclad”). And when distributors protest that the Tribune is driving them out of business, the Sun-Times takes their word for it. The era of piggybacking on the Tribune is over; the Sun-Times must go it alone.

Where the Sun-Times sells vigorously is at the corner newsstand; its subscribers are too few and too scattered to be economically serviced. But the Sun-Times is determined to service them anyway. It’s a question of self-defense. Circulation is perched precariously just above the 600,000 mark and it can’t be allowed to slip. Advertisers are watching. To make matters worse, the Tribune cut subscription rates when it gained the power to do so, even as the face value of the daily paper rose to 35 cents. A Sun-Times subscription is priced competitively, but the daily paper is still a quarter; soaring newsprint costs could make that price impossible to sustain.

So as cheaply as it can, using any tactic, the Sun-Times is patching together a distribution system of its own. We’re told the goal is to create about a dozen superagencies, big enough to be profitable but not so big or so few that those dealers could turn on the paper and give it orders.

Can the Sun-Times pull it off? We don’t think anyone inside the Sun-Times is sure. “Each paper wants 100 percent circulation,” one large distributor told us. “They’d give it away if they could. The northern suburbs are about 80 percent Tribune and 20 percent Sun-Times. But if they destroy that 20 percent by making the Sun-Times unable to distribute there, the Tribune would have it all.”

Screws Loose

Congratulations to Bill Newman of the Sun-Times for his piece in last Sunday’s paper, which put the fiasco surrounding the Harold Washington painting in some perspective. “History,” he reminded us, “is studded with the struggles of artists bucking censorship or community disapproval.”

Of course, bad taste is no guarantor of good art. Neither is good taste.

Art accompanying story in printed newspaper (not available in this archive): photo/John Sundlof.