CONCENTRATION OF OWNERSHIP AND CONTROL IN THE AMERICAN DAILY NEWSPAPER INDUSTRY

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CONCENTRATION OF OWNERSHIP AND CONTROL IN THE AMERICAN DAILY NEWSPAPER INDUSTRY

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COPYRIGHTED by ROYAL HENDERSON RAY

1951

c o nc en tra ti on

o?

ownership a n d control

IN THE AMERICAN DAILY NEWSPAPER INDUSTRY

By Royal Headerb on Bay

A Dissertation Submitted in Partiel Fulfillment of the Requirements for the Degree of Doctor of Philosophy

Under the Joint Committee on Graduate Instruction Columbia University October, 1950

PREFACE Decline in the number of units and concentration of ownership and control in the daily newspaper industry is not a new trend.

Such

eminent studenta of the industry as Oswald Garrison Villard, even be— fore 1920, were making public statements in which public and industry were warned of the dangers of reduction in the number of outlets for public eaqpression. The author first became interested in the trend in 1930 when the Kokomo (Ind.) Pi snatch of which he was business manager was merged with the Kokomo Tribune.

This study was begun in 1941 but was inter­

rupted by World War IIj research was resumed in early 1546. Previous studies have emphasised the fact that reduction of daily newspaper units is leading to a monopoly of public expression to a dangerous degree.

Another important question is:

brought about the reduction and concentration?

What factors have

The implication has

persisted that newspaper publishers are responsible for concentration of ownership and control*

This issue must be faced*

Since newspapers

are business institutions operated for private profit it should be expected that individual publishers would be concerned with protecting their investments by strengthening their competitive positions in order to increase profits or minimize losses. As this study progressed, however, it became apparent that many forces, predominantly economic, contributed to integration and suspension

iii

of existing daily newspapers and restricted entry of new units.

Res­

ponsibility for suspension of dailies and sale of individual newspapers to competitors for integration or combination must be borne by individual owners.

Most of these actions either were prompted by

inability of publishers to operate at a profit or because of tempting offers received for their properties from more prosperous or ambitious competitors. Although individual publishers must assume responsibility for the disappearance of specific units, many national, sectional and local economic forces beyond the control of any one publisher or group of publishers, have placed almost inexorable burdens upon both large and small owners.

These forces often were of such intensity that all

but superior managements were forced to capitulate. The author is indebted to many individuals, newspapers, libraries, and associations for assistance in providing information and source data for this study.

Dr. James 0. Bonbright, Graduate School of

Business; Professor Boscoe Ellard, Graduate School of Journalism; and Dr. Arthur Robert Burns, Department of Economics, Columbia University, have given many hours to counsel and advice.

Dr. Eli Ginsberg and

Dr. R. Parker Eastwood of Columbia have criticised field case studies and advised concerning statistical treatment. The American UewBpaper Publishers Association provided lists of daily newspaper mergers and suspensions for the period 1930 to 1948, inclusive, and new dailies from 1940 to 1948, inclusive.

The Hew

York City division of the Standard Rate find Data Service allowed use of library and directories for many weeks.

The extensive library of

iv

the Bditor and Publisher trade Journal and the International Year Ssfik published by that flra were indispensable sources. Son. American ffftwiPftPftC

The N. W. Ayer and

*&£ ItofflftJg. »nd since 1930» BltSffiJfefiBL

of Newspapers and Periodicals was an invaluable source since that directory was the only one issued throughout the whole period covered by this study. The New York 01 ty division of Media Becords, Incorporated, provided helpful data concerning advertising linage and ratios of advertising to news published by newspapers.

Mr. B. S. Kellogg of the News Print

Service Bureau made available prices for newsprint.

Mr. J. 0. Capt,

Director of the Bureau of the Census, released an unpublished recapitu­ lation of forms of daily newspaper ownereh ip during 1939. Without the cooperation of newspaper executives and retail mer­ chants, field case studies would not have been possible.

Nelson P.

Poynter, Lester 0. Gifford and Carl Cramer, former executives of the Kokomo (Ind.) Dispatch, gave assistance with the Kokomo case.

Norman

B. Baker, Bditor of the Barack (N.Y.) JglWBiiHffftWf * end Frederick B. Miller, Busines Manager, granted interviews and suggested sources for information concerning the consolidation of the Jonrnol and yews. Assistance with the Syracuse study was given by Bdward A. 0*Hara, Publisher of the Herald-Journal and

AAfidaw*

P. 0. Iarson,

General Manager, and B. L. Jones, Jr., Business Manager of the News­ paper Printing Corporation, Tulsa, Oklahoma, were most helpful with the study of the combined publishing venture of the Tulsa World and the Tulsa Tvibiina. Several former executives of the Norwalk (Conn.) Sentinel, inreluding Percy Stone, LeEoy Downs and Leigh Dannenberg, rendered

V

valuable assistance' in the study of the suspension of the Sentinel. A. W. Ferrine, veteran publisher of the Siloam Springs (Ark.) Herald and Journal, granted an interview and provided file copies of the Herald and Journal.

Several persons who supplied information for

field case studies must remain unidentified because of the positions they now hold,

their confidence must be respected, but their help

is greatly appreciated. the author is indebted to Dr. Archibald M. Me Isaac, professor of Economics, Syracuse University, for his constructive criticism concerning certain passages relating to pricing and integration. Esther Shirk Bay, wife of the author, assisted in the com­ pilation of statistical data.

Her assistance was most helpful,

particularly so because of the considerable amount of spade work which was necessary in order to complete this study.

Boyal H. Bay Syracuse, Hew York October, 1950

TABUS OF CONTENTS

Page PREFACE....................................................



SECTION I CHAPTER I THE PROBLEM AND THE SETTING......... 1 I. Introduction ............... 1 II. Pattern of Newspaper Competition Changes . . . . . . . . . 2 A. Newspaper Contraction and Concentration Trends . . . . 2 1. Net Decrease of 454 Daily English Language News­ papers Occurred From End of 1909 Through 1948 . . 2 2. Daily Newspaper Circulation Was Twice As Large 5 in 1948 As in 1909 ............................ 3. Contraction Trends Were Sectional in Character . . 5 4. Three—Fourths of Net Decrease of Dailies Occurred During Late Nineteen Thirties and Two World War Periods......... 6 5. Integration, Suspensions, Fewer New Units Established Resulted in Increased Concen­ tration of Ownership and Control . . . . . . . . . 6 B. Competition Between Newspapers and Other Media Increases . . . . . . ................. . . . 7 1. Magazines Increase in Numbers and Circulation . . 7 2. Broadcasting Stations Triple Since World War II . 8 III. Research Accomplished by Other Investigation Concerning Integration, Concentration of Ownership ........ 9 IV. Research Methods Employed in This Study . . . . . . . . . 11 CHAPTER II DAILY NEWSPAPER ORGANIZATION AND F I N A N C I N G ....................... 14 I. Evolution of the Newspaper ................. 14 II. Newspaper Organisation.................................. 16 A. Types of Ownership........... 16 B. Operating Organisation ...................... 19 III. Newspaper Financing .................... 23 A. Evaluation........................ 23 1. Circulation and Good Will . . . . . . . . . . . . 23 2. Other F a c t o r s . 27 B. Capital Requirements ...... 29 C. Sale ofNewspaper Securities . . . . . . . . . . . . . 32 1. New York Times ................. 32 2. The Hearst Organisation ................ 33

vii

Page

IV.

3. The Chicago Daily H e w s ................ 4. The Tulsa Newspapers ................ D. Income and Expense T r e n d s .......................... .............. 1. Income 2. Expenses ................... . . . . . . . . . . Conclusion . . . . . . . . . . ......... . . . . . . . .

33 34 35 35 36 42

CHAPTER III CHANCE IN PATTERN OP NEWSPAPER COMPETITION.............. 44 I. Introduction ......... 44 II. Some Qeneral Causes of Monopolistic Tendencies in the Newspaper Industry . . . . . . . . . . . . . . . . 46 A, Technological Causes of Decline in the Number of Daily Newspapers . . . . . . . . . . . .......... 47 B. Social Policy and the Decline in the Number of Daily Newspapers . . . . . . . . . . . 48 1. Corporation l a w s ......... ................... 48 2. Newsprint Rationing . . . . . . . . . . . . . . . 49 3. Anti-Trust l a w s ......... . 50 4. Other Laws . ............................... 52 III. General Influences Affecting the Operation of Daily Newspapers................. ..................... 54 A. Conditions of Sale .......... 55 B. Conditions of Production......... 56 IV. Conclusion . . . . . . . . . . ........... . . . . . . . 57 CHAPTER IV BEHAVIOR PATTERNS UNDER IMPERPECT COMPETITION ................... 60 1. Introduction ........... . . . . . . . . . . . . . . . . 60 II. Stabilization of Prices . . . . . . . . . . . . ......... 63 A. Pactors Affecting Advertising Rate Rigidity . . . . . 63 B. Some Consequences of Advertising Rate Rigidity. . . . 65 ...................... 67 III. Price Discrimination A. Advertising Sate Discrimination............ 69 1. Evidence of Advertising Rate Discrimination . . . 69 a. National—Local Differential ............69 b. Discrimination According to Local Trade Classification . . ... . . 70 2. Conclusions. Advertising Rate Discrimination . . . 71 S. Discrimination in Subscription R ates ............. 74 1. Evidence of Discrimination in Subscription Rates . 75 2. Conclusions: Discrimination in Subscription R a t e s ...................................... 77 IV. Non—Price Competition . . . . . . . . . . . . . . . . . . 78 A. Circulation Promotion . . . . . . . . 78 1. Pactors Affecting Non-Price Competition 81 in Sales of Newspaper Subscriptions . . . . . . . 2. Some Consequences of Non-Price Competition in Sales of Newspaper Subscriptions ............82

viii

Page B,

V.

Advertising Promotion 1. Serviceb to Advertisers 2, Pactors Affecting Non—Price Competition in Sales of Newspaper Advertising . . . . . . . . 5, Consequences of Non^Frice Competition in Sales of Newspaper Advertising Space . . . . . . a. The Effect on the Organisation of Production.............................. b. The Effect on Sales Promotion Personnel, Advertisers and Owners of Newspapers . . . . c. The Effect on Newspaper Subscribers . . . . . Conclusions . . . . . .................... . . . . . .

82 88 85 86 87 89 80 80

CHAPTER V LOCAL MERGERS, CONSOLIDATIONS AND COMBINATIONS . . . . . . . . . . I. Introduction . . . . . .............................. II. Local Mergers, Consolidations .............. A. Majority of Consolidations Occurred in Cities Below 80,000 Populations.............. B. 8mall Circulation Group Predominated Among Consolidations . . . . . . . . . ........... C. Most Consolidations Produced Lower National Advertising Rates ............ D. Substantial Majority of Consolidated Units Survived . III. Local Combinations A. Number of Combinations Formed . . . . . . . . . . . . B. Comparison of Consolidation and Combination ............. Movement by Geographical Areas C. Majority of Combinations Occurred in Cities Over 80,000 Population . . . . . . . . . . . . D. Circulations of Combining Newspapers Exceeded Those Involved in Consolidations . . . . . . . . . . E. Majority of Combinations Lowered Advertising Rates . F. Majority of Combinations Formed Since 1909 Survived . 17. Conclusions . . . . . . . . . . . . . .............. . .

93 83 84 86 83 100 102 104 108 109 110 118 114 115 ISO

CHAPTER VI GROUP OR CHAIN NEWSPAPER OWNERSHIP ........................ 181 I. Introduction . . . . . . . . . . . ........ . . . . . . 181 II. Chain Developments Before 1910 . . . . . . . . . . . . . 183 A. Scripps-Brothers Founded First Modern Group . . . . . 133 B. Hearst Employed Sensational News Treatment While Building Second Modern Chain . . . . . . . . . 124 C. Munsey Predicted Three Or Four Chains Would Dominate Dally Newspaper Industry ............135 III. Twentieth Century Group Ownership ................. 136 A. Expansion Methods........................ 126 1. Scrlpps-Howard . . . 126 8. William Randolph Hearst ......... 129

ix

I’age

IT.

3. Trask Mousey ................ 131 4. Trank S. Gannst t ........................ 133 5. John H. Ferry ............ 135 6. Growth of Tour Chains Compared .......... 135 B. Chain Growth Trends Changed During Nineteen Thirties . 136 C. Chain Corporate (Ownership) Organisation . . .......... 139 1. Trank 2. Gannett................. , .......... 140 2. Hearst Group . . . . . . . . . . . . . . ....... 141 3. Scripps-Howard............................. 141 D. Chain Operating (Management) Organisation . . . . . . 142 1. Trank 2. Gannett . ............ 143 2. ScrippsnHoward . . . . . . . . . . . . . . . . . . 144 146 3. Hearst Group . . . . ....... . . . . . . . . . . Summary . . . . . . . . . . . . . . . . . . . . . . . . . 147 CHAPTER VZI

ANALYSIS OF NEWSPAPER INTEGRATION............ 149 I. Adequate Analysis Requires Careful Distinctions . . . . . 149 II. Vertical Integration . . . . . . . . . . . . . . . . . . . 151 A. Contemporary "Forward" Integration Confined Primarily to Publishing and Distribution of Newspapers . . . . . 151 1. Factors Affecting "Forward" Integration of International Paper Company . . . . . . . . . . . 153 3. Backward Integration . . . . . . . . . . . . . . . . . 154 1. Factors Affecting "Backward" integration of Newspapers 156 2. Some Consequences of "Backward" Integration . . . 159 III. Integration of Production of Substitute Services . . . . . 161 A. Newspapers and Local Broadcasting Combinations . . . . 161 1, Factors Affecting Newspaper and Broadcasting Combinations . . . . . . . . . . . . . . . . . . . 162 2. Some Consequences of Newspaper and Broadcasting Combinations ........... 164 IV. Horisontal Integration .. ......... . . . . . . . . . . 165 A. Local Amalgamations ....... . 166 1. Motives Peculiar to Local Amalgamations . . . . . 166 3. Local Mergers, Consolidations.............. 167 1. High Value of Associated Press Franchise, Circulation and Good Will Stimulate Mergers and Consolidations ................. . . . . . . 16? 2. Consequences of Mergers and Consolidations . . . . 168 0. Local Combinations . . . . . . . . . . . 168 1« Idle Plant Capacity Stimulates Formation of Local Combinations . . . . . . . . . . . . . . 168 2. Some Consequences of Local Combinations . . . . . 169 D. Chain Or Plural Units Organization , ............... 170 1. Economies of Intellectual Overhead Costs Constitute Chief Advantage of Chain Organisation . 170 2. Consequences of Chain Or Group Organisation . . . 171

s

Page V. Daily Newspaper Integration Summarised

.......... .

173

CHAPTER VIII ESTABLISHMENT AND SUSPENSION OF DAILY NEWSPAPERS................ 175 I. Introduction ........... 175 II. New Dailies Established................................175 A. Less Than One-Fourth of Dailies Established After 1908 Survived by 1949 175 B. Two-ThirdB of Dailies Established in Cities Under 10,000 Population............. 176 C. Proportion of New Dailies Which Suspended During First Year of Publication Increased During Subsequent Decades . . . . . . . . . ............... 177 III. Daily Newspaper Suspensions . . . . . . . . . . . . . . . 188 A. Suspensions for Period 1909 to 1948, Inclusive, Totaled 1,957 182 1. Almost Sixty Per Cent of Suspensions Occurred in Cities With Lese Than 10,000 Population . . . . 184 2. Three-Fourths of Dailies Suspending Publication Had Less Than 3,000 Circulation . . . . . . . . . 187 3. Life Span of Newspapers Suspending Publication Increased With Succeeding Decades . . . . . . . . 188 B. Daily Newspaper Industry Eaqperienced Less Turnover Than General Business, Industry During World War II . 190 C. Analysis Showed Newspaper industry Attained Greater Stability in All Geographical Areas . . . . . 193 D. Statistical Tests Indicated Adverse Business Trends Were Not Paramount Cause of Newspaper Suspensions . • 195 IV. Summary • ............... . . . . . . . . . . . . . . . 198 CHAPTER IX ANALYSIS OF FIELD CASE S T U D I E S ................................. 200 I. Introduction . . . . . . . . . . . . . . . . . . . . . . .200 A. Advantages, Limitations of Case Studies . . . . . . . 201 B. Selection of Case S t u d i e s ........... 202 II. Market Characteristics................................. 202 A. Description of Markets ................ 202 3. Analysis of Trends in Markets .......... 205 III. Newspapers Involved in Field Case Studies . . . . . . . . 206 A. History ....... . . . . . . . . . . . . . . . . . . 207 B. Merchants' Preferences of Newspapers for Advertising Media . . . . . . . . . . . . . . . . . . 208 C. Circulation and Advertising Linage Trends . . . . . . 208 D„ Newspaper Executives' Reasons for Consolidation, Suspension of Units 209 E. Evaluation of Newspaper Files . . . . . . . . . . . . 209 1. Kokomo Dispatch Versus Kokomo Tribune ........ 210 2. Nyack Journal Versus Nyack News ............ 211 3. Syracuse Herald Versus Syracuse J o u r n a l ........ 212

xi

Page

IV.

4. Tulsa World Tersue Tulsa Tribune . . . . . . . 5. Siloam Springs Herald and Democrat . . . . . . 6. Norwalk Sentinel Versus Norwalk Hour . . . . . Conclusions . ......... . . . . . . . . . . . . . .

. . . .

214 215 21? 218

CHAPTER X ANALYSIS AND SUMMARY OF DOMINANT FORCES.................... 220 I. Introduction .................. 220 II. National F o r c e s ......... 225 A. Contraction Accelerated During Two World Wars ............... 225 Periods and late Nineteen Thirties B. Technological Change Increased Capital Investment. Restricted Entry . . . . . . . . . . . . 227 1. What Is Optimum Scale .......... 227 2. Newspaper Industry Compared with Total Industry . . . . . . . . . . . ....... . . . . 229 C. Preferences of Advertisers for Evening Newspapers Caused Greater Decline of Morning Dailies . . . . . 232 D. Population Shifts to Urban Areas Accentuated Decline of Small City Dailies . . . . . . . . . . . 233 3. Extension of Communication, Transportation Facilitated Infiltration of large City Dailies Into Suburban A r e a s ............... 237 F. Further Decline of Political Party Press Contributed to Suspension, Integration of Newspapers . . . . . . 237 III. Sectional Forces . . . . . . . . . . . . . . . . . . . . 239 A. Expansion and Contraction Trends Moved From .......... 239 East to West, North to South IV.Local Forces ............... 248 A. External F o r c e s ............................ 248 1. Industrial Decline . . . . . . . 248 2. Decreases in Population......... 249 3. Local and Area Competition . . . . . . . . . . . 249 B. Internal F o r c e s .......... 250 1. Inferior Editorial Product . . . . . . . . . . . 250 2. Inadequate Operating Capital............. . . 251 3. lack of Technical Knowledge ............. 251 V.Conclusions • • • . . . . . . • • • ................... 252

SECTION II FIELD CASE STUDIES CASE I

.

Market:Kokomo (Howard County) Indiana ...................... 257 Action:Merger of Dispatch and T r i b u n e ................... 365

xii

Page GAS38 II Market: Nyack (Bockland County) New York ........... 281 Actions Merger of Journal and News . . . . . . . . . . . . . . . . . 286 CASS III Market: Action:

Syracuse (Onondaga County) New Y o r k .............. .. Merger of Herald and Journal........

299 306

CASS IV Market; Action:

Tulsa (Tulsa County) Oklahoma . . . . . . . . . . . . . . . ...... Combination of World and Tribune . . . . . . .

325 332

CASS 7 Market: Action:

Siloam Springe (Benton County) Arkansas Suspension of Bally Herald and Democrat

. . . . . . . . . .

361 365

CASS VI Market: Norwalk (Fairfield County) Connecticut . . . . . . . . . . . Action: Suspension of Norwalk Sentinel................

374 381

APPENDIX Table I:

II:

III:

IV:

V:

Number of Mergers and Consolidations, Suspensions, and New Daily Newspapers in the United States by Years by Geographical Divisions by States From 1909 to 1948, Inclusive

401

Number and Per Cent of Existing Dailies at Beginning of Period Compared to Number and Per Cent of Mergers and Local Combinations by Geographical Areas by Decades Or Periods, 1909 to 1948, Inclusive . . . . . . .

409

Number and Per Cent of Existing Dallies at Beginning of Period Compared to Number and Per Cent of Dailies Established and Dailies Suspended by Periods by Geographical Areas, 1909 to 1948, Inclusive . . . . . . .

411

Morning, Evening, Total Daily and Sunday Circulations of United States Daily Newspapers for 1909, 1S14 and 1918 to 1948, Inclusive ................... 413 Number and Per Cent of Existing Daily Newspapers in the United States by Circulation Groups for Years 1909, 1919, 1929 and 1939

414

xiii

Page Table VI:

VII:

VIII:

IX:

X:

XI;

Decade Or Period Recapitulation of lt094 Daily Newspapere Involved in Mergers Or Consolidations by Circulation Croups 1909 to 1948, Inclusive . . . . . . .

415

Decade Or Period Recapitulation of Daily Newspapers Involved in Local Combinations by Circulation Croups and Number of Combinations Formed, 1909 to 1948, Inclusive . . . . . . . . . . . . . . . . . . . . . . . . .

416

Number and Per Cent of Dally Newspaper Suspensions by Circulation Croups by Decades Or Periods, 1909 to 1948, Inclusive . . . . . . . . . . . . . . . . . . . .

417

Number and Per Cent of Existing Daily Newspapers in the United States by Population Croups for Tears 1909, 1919, 1929 and 1959 ......................... 418 Number of Daily Newspaper Mergers and Consolidations by Population Croups by Decades Or Periods, 1909 to 1948, Inclusive . . . . . . . . . . . . . . . . . . . . . .

419

Number of Cities and Number of Daily Newspaper Local Combinations Formed by Population Croups by Decades Or Periods, 1909 to 1948, Inclusive . . . . . ...........

430

XII:

Number and Per Cent of New Daily Newspapers Established by Population Croups by Decades 1909 to 1948, Inclusive . . 431

XIII:

Number and Per Cent of Daily Newspaper Suspensions by Population Croups by Decades, 1909 to 1948, Inclusive . . . 433

XIV: XV: XVI: XVII:

XVIII:

Number and Index Number of Morning, Evening and Total Daily Newspapers, 1909 to 1948, Inclusive . . . . . .

433

Ratio of Advertising to Total Content of Daily and Sunday Newspapers for 1941 to 1946, Inclusive . . . . . . .

434

General and Total Newspaper Advertising for 52 Cities, 1938 to 1947, Inclusive.......................... 435 Average Contract Price for News Print Paper Per Short Ton, New York City Delivery, 1909 and 1914 to 1948, Inclusive .............

436

Average Contract Hours Per Week, Hourly Wage Rates, Day and Night Shifts, Typographlcel Workers, ANPA Member Newspapers, 1918 to 1948, Inclusive . . . . . . . .

437

xiv

Page Table XIX:

XX:

Number of 3 b tablialiments, Value Added, by Manufacture, Wage 3&rners and Value Added by Manufacture Per Worker for Manufactures of Continental United States ........... by Census Tears, 1925 to 1947, Inclusive

438

Number of Establishments, Wage Earners, Value Added by Manufacture, Value Added Per Wage Earner by Sise Groups for Total Industry in Continental United States, 1939 ........... . . . . . . . ...............

429

XXI:

Number of Xstablishments, Value Added by Manufacture, Production and Belated Workers and Value Added by Manufacture Per Worker for Newspaper Industry of Continental United States by Oensus Tears, 1925 to 1947, I n c l u s i v e ...................................... 430

XXII:

Value Added by Manufacture by Newspaper Industry, Total Industry and Per Cent of Total Contributed by Newspaper Industry by Census Tears, 1935 to 1947, Inclusive . . .................................. 431

XXIII:

XXIV: XXV: XXVI: XXVII: XXVIII: XXIX: XXX: XXXI:

Number and Per Cent of United States Urban, Bural and Total Population for Decade Tears, 1900 to 1940, Inclusive....................

438

Daily Newspaper Cities of 2,500 Population Or Above, Per Capita Sales At Betail, 1933 . . . . . . . . . . . .

433

Daily Newspaper Cities of 2,500 Population Or Above, Per Capita Sales At Betail, 1935 . . . . . . . . . . . .

434

Daily Newspaper Cities of 2,500 Population Or Above, Per Capita Sales At Be tall, 1939 .........

435

Daily Newspaper Counties, Per Capita Sales At Be tail, 1929 ........................................

436

Daily Newspaper Counties, Per Capita Sales At Be tail, 1933 ........................................

437

Daily Newspaper Counties, Per Capita Sales At Retail,, 1935 ..................................

433

Daily Newspaper Counties, Per Capita Sales At Be tail, 1939 ..................................

439

Daily Newspaper Cities of 10,000 Population Or Above, Mean Industrial Wages, 1909 . . . . . . . . . . .

440

xv

Page Table XXXII: XXXIII: XXXI7:

Daily Newspaper Cities of 10,000 Population Or Above, Mean Industrial Wages, 1 9 1 4 ........

441

Daily Newspaper Cities of 10,000 Population Or Above, Mean Industrial Wages, 1939. . . . . . . . . . 442 Daily Newspaper Counties, Mean Industrial Wages, 1939 .....................................

443

BIBLIOGBAfHX................................................. 445

TABLE OF CHARTS AND MAPS Figure 1 2

3

4

Relative Decrease of Morning, Evening and Total Daily Newspapers in the United States, 1909 to 1948, Inclusive............................. .

234

Period of Initial Contraction of Daily Newspaper Industry in the United States from 1899 to 1948, Inclusive . . . . . . ................. . . . . . .

241

Expansion Or Contraction of Daily Newspaper Industry in the United States by Geographical Areas, Period 1909 to 1919, Inclusive . . . . . . . .

243

Expansion Or Contraction of the Daily Newspaper Industry in the United States by Geographical Areas, Decade 1920 to 1929, Inclusive . . . . . . . .

244

5

Expansion Or Contraction of the Daily Newspaper Industry in the United States by Geographical Areas,Decade 1930 to 1939, Inclusive................ 245

6

Expansion Or Contraction of the Daily Newspaper Industry in the United States by Geographical Areas, Period 1940 tc 1948, Inclusive . . . . . . . .

246

TEXT TABLES Table 1 2

Comparative Importance of Types of Ownership in the Daily Newspaper Industry, 1939 Consolidated Balance Sheet of 35 Non-Metropblitan Chain Daily Newspapers As of December 31, 1945 . . . .

.

17 25

xvi

Page

Consolidated. Balance Sheet of 35 Non-Metropolitan Chain Daily Newspapers As of December 31, 1947 . . . . . . .

36

Circulation, Advertising and Total Revenue of Newspapers for Census Years, 1909 to 1947, Inclusive . . . .

37

Comparison of Income and Expense Indices of 15 Non« Metropolitan Newspapers for Period 1938 to 1947, Inclusive ,

39

Comparison of Indices for Wages, Cost of Materials and Supplies and Value of Receipts for American Newspapers for Census Years, 1935 to 1947, Inclusive . . . . . . . . .

41

Number and Yearly Average of Daily Newspaper Consolidations and Local Combinations Formed by Decades or Periods 1909 to 1948, Inclusive . . . . . . . . . . . . . . . . . . . . .

95

Ratio of Daily Newspaper Mergers or Consolidations to Total of Existing Dailies in Cities Above and Below 30,000 Population by Decades or Periods 1910 to 1948, Inclusive . .

97

Ratio of Daily Newspapers Involved in Mergers or Con­ solidations to Total Number of Existing Dailies with Circulations Below and Above 5,000 by Decades or Periods, 1910 to 1948, Inclusive . . . . . .........

...

99

Comparison of the Combined National Advertising Rates of Two Daily Newspapers Before Merger or Consolidation Occurred with the Rate of the Consolidated Newspaper by Decades or Periods, 1930 to 1948, Inclusive . . .......

101

Number of Daily Newspaper Consolidated Units Which Were Subsequently Involved in Second Merger or Consolidation or Suspended Publication by Decades or Periods, 1909 to 1948, Inclusive

103

Comparison of the Combined Circulation of Two Daily Newspapers Before Merger or Consolidation Occurred with the Circulation of the Consolidated Unit Three Years After Action Occurred by Decades or Periods 1909 to 1948, Inclusive ............... ............

106

Comparison of the Number of Local Combinations in Existence for the Years, 1910, 1930, 1930, 1935, 1940 and 1949 .........................................

111

aprli

Table 14

Ratio of Daily Newspaper Local Combinations Formed to Total Number of Existing Dailies in Cities Above and Below 20,000 Population by Decades or Periods, 1910 to 1948, inclusive . . . . . . .

15

Ratio of Daily Newspapers Forming Local Combinations to Total Number of Existing Dailies with Circulations Below and Above 10,000 by Decades or Periods, 1910 to 1948, Inclusive « . . . ............ . . . . . . . . . .

16

Comparison of the National Advertising Rates of Daily Newspapers Before and After 321 Local Combinations Were Formed by Decades or Periods, 1930 to 1948, Inclusive . . . . . . . . . . . . . . . . . . . .......

17

Recapitulation by Decades or Periods of Daily Newspaper Local Combinations Formed During the Period, 1910 to 1948 Which Subsequently Were Merged or Consolidated, Suspended or Combination Was Discontinued or Interrupted .

18

Number of Daily Newspapers Established, Purchased, Total Owned; Number of Units Sold or Suspended, Consolidations, and Units Owned During 1949 by Scripps^Soward, Hearst, Munsey, and Prank X, Gannett Groups . . . . . . . . . . .

19

Number of Chain Daily Ownerships, Number of Unite, Average Number of Units Per Chain and Per Cent of Total Dailies for Selected Tears, 1910 to 1949, Inclusive . . .

30

Average Number of Daily Newspapers Established or Suspended Annually by Decades or Periods, 1909 to 1948, Inclusive . . ........ . . . . . . . . . .......

31

Ratio of New Dailies Established to Total Number of Existing Dailies in Cities Above and Below 10,000 Population by Decades or Periods, 1910 to 1948, Inclusive.

33

Life Span of New Daily Newspapers Established From 1909 to 1948, Inclusive, Recapitulated by Decades or Periods .....

33

Ratio Total Below 1948,

of Daily Newspapers Suspending Publication to Number of Existing Dailies in Cities Above and 10,000 Population by Decades or Periods, 1910 to Inclusive

xviii

P age

Table 24

25

26

2? 28

29

30

31

32

33 34

Ratio of Dally Newspapers Suspending Publication to Total Number of Existing Dailies With Circulations Above and Belov 3,000 by Decades or Periods, 1910 ........................ to 1948, Inclusive

186

Life Span of Daily Newspapers Suspending Publication Prom 1909 to 1948, Inclusive, .Recapitulated by Decades or Periods............ ..... . . . . . . . . . . . . . .

189

Comparison of the Number and Batio of Daily Newspapers Established and Suspended to Existing Units With the Number and Batio of Estimated Total Business Firms Established and Discontinued to Existing Firms, 1940 to 1944, Inclusive.... ................. . . . . . . . .

191

Daily Newspaper Cities of 2,500 Population or Above, Per Capita Sales at Betail, 1929 . . . .........

19?

Number of Establishments, Number of Workers, Value Added by Manufacture and Value Added Per Worker by Size Croups in the Newspaper Industry, Continental United States, 1939

230

Number of Establishments, Number of Employees, Value Added by Manufacture and Value Added Per Employee by Size Croups in the Newspaper Industry, Continental United States, 1947

231

Comparison of Value Added by Manufacture Per Wage Earner in Newspaper Industry With Total Industry in Continental United States by Sise Croups, 1939 . . . . . .

233

Comparison of Trends: 1. Average Number of Industrial Workers: 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products, Kokomo, Indiana, with the State of Indiana, 1899 to 1939, Inclusive . . . .

262

Comparison of Trends: 1. Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products, Howard County, Indiana, with the State of Indiana, 1899 to 1939, Inclusive ............

263

Circulation Comparison for Kokomo Dispatch, Tribune and News and Circulation Detail for Dispatch, Tribune

. . 271

Comparison of National, Local, Classified and Total Advertising Linage, Kokomo Dispatch and Tribune, 1924, 1926, 192? and Tribune for 1928 and 1929 ........

272

xix

Page Table 35

36 57

38

39

40

41

42

43

44

Comparison of Trends: 1. Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products* Rockland County* New York, with the State of New York, 1899 to 1939* Inclusive .........

284

Circulation Gorapariaou for Nyack Journal* News and Star and Circulation Detail for Journal and News . . . .

390

Comparison of Trends: 1. Average Number of Industrial Workers; 3, Average Wages of Industrial Workers; and 3, Value of Manufactured Products, Syracuse, New York with the State of New York, 1899 to 1939, Inclusive . . .

304

Comparison of Trends: 1. Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products* Onondaga County* New York with the State of New York, 1899 to 1939, Inclusive . . . . . . . ............. . . .

305

Circulation Comparison for Herald, Journal * Post Standard and Courier and Circulation Detail for Herald* Journal and Post Standard ............................

311

Comparison of Advertising Linage for the Syracuse Herald, Journal, American and Post Standard for ............. Selected Years* 1939 to 1946, Inclusive

313

Comparison of Trends: 1. Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products* Tulsa, Oklahoma with the State of Oklahoma* 1909 to 1939, Inclusive . . .

327

Comparison of Trends: 1. Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products* Tulsa County* Oklahoma with the State of Oklahoma, 1909 to 1939* Inclusive ................

328

Circulation Comparison and Circulation Detail of the Tulsa World and Tribune for Selected Years, 1910 to 1946* Inclusive .........

340

Advertising Linage Comparison of the Tulsa World and Tribune for Selected Years* 1929 to 1946* Inclusive . . .

341

xx

-Rage Zable 45

Comparison of Trends: 1, Average Number of Industrial Workers; 2. Average Wages of Industrial Workers; and 3. Value of Manufactured Products, Benton County, Arkansas with the State of Arkansas, 1899 to 1939, Inclusive............................. . ................ 364

46

Circulation Comparison for Siloam Springs Herald, Democrat, Republican, and Register for Selected Years, 1895 to 1945, Inclusive . . . . . . . . . . . . . .

366

47

Comparison of Trends: 1. Average Humber of Industrial Workers; 3. Average Wages of Industrial Workers; and 3. Value of Manufactured Products, Horwalk, Connecticut with the State of Connecticut, 1914 to 1939, Inclusive . . 378

48

Comparison of Trends: 1. Average Number of Industrial Workers; 2, Average Wages of Industrial Workers; and 3. Value of Manufactured Products, Fairfield County, Connecticut with the State of Connecticut, 1899 to 1939, Inclusive .......... . . . . . . . . . . . . . . . .

49

50

Circulation Comparison for Norwalk Hour, Sentinel, Qasette and News and Circulation Detail for Hour and Sentinel • ....... . . . . . . .....

379

387

Comparison of Advertising Linage fof the Norwalk Hour and Sentinel for Selected Years, 1936 to 1945, Inclusive ........................................... 388

chapter z m s PROBLEM AND THE SETTING

I.

INTRODUCTION

Investigation of the economic causes and consequences of utie decline in the number of units and the increased concentration of ownership and control in the American daily newspaper industry con­ stitutes the basis for this study.

The social significance of these

trends, however, is considered for the most part beyond the scope of this investigation.

The study falls into 3 parts:

Eirst, basic

statistical trends; Becond, field case studies; and third, analysis and interpretation. in character.

The third part is both statistical and economic

Examination of the extent and types of integration

(vertical, competitive media, and horizontal), the number of dailies suspending publication, and the number of new dailies established is considered neceseary.

This procedure is adopted because the basic

trends in all of these categories determine not only the number of existing daily newspapers but also the degree of concentration of ownership and control.

The period covered is from 1909 through 1948*

Contenqporary vertical integration is for the most part "backward" in character while the local merger or consolidation, the local combination, and the chain or plural units combination constitute the basic patterns of horizontal integration.

Combination of daily

newspapers and broadcasting (conqpetitive media) —

other than

2

recognition and analysis of the basic pattern —

II.

is omitted.

PATTERN OP NEWSPAPER COMPETITION CHANGES

Although competition within the daily newspaper industry has declined since 1909 through decrease in units and concentration of control, competition of newspapers with other media, particularly radio, television and magasineB, has increased sharply.

Competition of newspapers and

radio broadcasting stations and television has been reduced to some extent through integration. A.

Newspaper Contraction and Concentration Trends 1.

Net Decrease of 454 Daily English Language Newspapers Occurred Prom End of 1909 Through 1948

In 1909 there were in the United States 2,202 daily English language 1 newspapers with “paid circulations’1 devoted to general news. By the end of 1948 the number of daily newspapers of this type declined to 1,748, a net decrease of 454 units.

2

During the period studied a

minimum of 547 mergers and consolidations occurred.

Incomplete records

do not permit differentiation between mergers and consolidations, but in each case 2 local newspapers were amalgamated and publication con1 Based on an actual count of the daily newspapers of that type listed in the N. ff. Ayer and Sons, American Newspaper Annual. 1910, 2 The figure, 1,748, represents the result after adding 1,951 new dailies to 2,202, the 1,909 total, and after deducting 5S2 mergers and consolidations (where one newspaper absorbed another) and 1,873 suspensions (where newspaper ceased publication or changed from daily to weekly, semi-weekly, or tri-weekly publication). The 1949 Sditpr and Publisher. International Year Book lists 1,781 daily newspapers for 1948. That directory contains several publications, however, which are not in the strict sense of the word, English language newspapers of general circulation.

3

tinned as 1 unit.

3

An additional 1,957 dailies suspended publication

outright or changed from daily to weekly, semi-weekly or tri-weekly publication.

During this same period, 3,060 new daily newspapers

were established; a number of these units previously were published with less than daily frequency. The partial merger or local combination constitutes an Important type of horisontal integration.

There are many variations.

These

variations range from 3 newspapers in a single city completely inde­ pendent of one another, except that they sell advertising in combinaition, to situations where 2 or more newspapers in a single city are owned by the same corporation, published in the same plant and where the business and mechanical divisions are fully integrated.

In some

cases, even though the staffs and facilities of these local newspapers owned in common are integrated otherwise, editorial staffs either re­ main entirely independent of one another or enjoy varying degrees of editorial independence.

The Joint publishing plan of operations, first

established in 1933, apparently was inaugurated because of the criticism directed against common ownership of newspapers in a single city.

In the Joint publishing plan the 2 newspapers remain corporately

and editorially independent while business and mechanical divisions are consolidated and operated for the benefit of both newspapers. In 1910 there were 9 known cities in which 18 daily newspapers 4 were involved in some type of partial merger or combined operation. g

By 1930 there were 24 such cities, 3 Cf. Table I, Appendix. 4 Ayer, 1910 edition. 5 Ayer, 1921 edition.

but it was during the following

4

decade that this form of integration had its greatest development.

In

1930 there were 144 known cities in which this type of daily newspaper operation prevailed.

6

The movement spread to 196 cities hy 1949.

7

In

several cases the partial merger or combination type of operation of 2 independent daily newspapers in a single city ultimately led to outright merger or consolidation; in such instances. 1 newspaper commonly suspended publication. Chain newspaper operation, usually defined as 2 or more news­ papers in different cities under the same ownership and control, con­ stitutes the remaining form of horizontal integration.

In 1910 there

were 13 known newspaper chains controlling 62 newspapers; and by 1923 there were 31 chains which operated 153 newspapers.

8

Like the local

combination movement, however, chain newspaper ownership experienced its greatest development after 1920.

In 1949 there were 386 chain 9 daily newspapers operated by 70 chain organizations. It is apparent that suspension of units (publication discontinued or changed to less than daily frequency) is important since the number of suspensions waB more than 3 times as great as the number of mergers and consolidations (l newspaper absorbed by another and continued as 1 publication).

Luring the period 1937 througjh 1945 the number of

suspensions also outnumbered considerably the number of new dailies 10 established. 6 Raymond B. Nixon, "Concentration and Absenteeism in Laily News­ paper Ownership," Journaliqm 22:101, June, 1945. 7 Editor and Publisher International Year Book. 1949. 8 Ibid.. p. 215. 9 Warren £. Agee, "Cross-Channel Ownership of Communication Media," Journalism Quarterly 26:415, December, 1949. 10 Cf. Chapter VIII.

5

Although the number of new dallies established from 1909 through 1948 exceeded the number of suspensions, the number of dailies estab­ lished decreased with succeeding decades, and after 1936 the decrease was sharp.

During 1946 for the first time in ten years the trend

was reversed when the number of .failles established was almost twice 11 as large as the number of suspensions. 2.

Daily Newspaper Circulation Was Twice As Large in 1948 As in 1909.

While the number of daily newspaper units decreased, the total circulation of existing dailies more than doubled.

In 1909 the total

circulation of daily newspapers in the United States was 24,211,977, while by 1948 it increased to 52,285,297.

12

These trends indicate

clearly that in 1949 we have fewer but larger newspapers. 3.

Contraction Trends Were Sectional in Character.

Expansion and contraction trends in the industry were sectional in character and tended to move from east to west and north to south. The New England area for the most part experienced contraction after 1900 although the greatest number of daily newspapers published in the United States did not occur until 1909.

Expansion continued in

the West South Central states with the exception of Louisiana until the nineteen thirties.

Contraction followed.

H Ibid.. p. 155. 13 Circulation data are from Editor unri Publisher. IntftrnatlniuQ ISSJL Igfife, 1949, for 1948 data, and Haiisi SSai&fl Census. 1910. for 1909 data.

6

4.

Three-Fourths of Net Decrease of Dailies Occurred During Late Nineteen Thirties and Two, World War Periods.

Although the industry lost units during each of the four decadee or periods covered by this study, more than half of the net decrease occurred during the period 1937 to 1944, inclusive.

The World War I

period (1915-1918) accounted for another net decrease of 113 units, approximately one-fourth of the total.

During the World War II

period (1941—1944) the net decrease amounted to 120 units.

The 2

World War periods and the period (1937-1940) accounted for approxi­ mately 76 per cent of the net decrease of daily newspapers. 5.

Integration, Suspensions, Fewer New Units Established Resulted in Increased Concen­ tration of Ownership and Control.

Not only were there 454 fewer daily newspapers in 1949 than in 1909, but integration, suspension and a decline in the number of new units established brought about an ever-increasing tendency toward concentration of ownership and control.

According to 1 source, the

number of daily newspaper cities having only 1 newspaper in the United States increased from 43.9 per cent in 1910 to 85,9 per cent in 1940, Another investigator found that the total number of non-competitive cities increased from 1,114 (74.9 per cent) in 1930 to 1,277 (91.6 per cent) in 1945.

14

Non-competitive cities, it should be explained,

included not only those cities in which 1 daily newspaper was pub­ lished, but also 197 other cities in which some form of local mmmmm

13 Morris L. Ernst, The First Freedom. (New York: The Macmillan Company, 1946), p. 284. 14 Nixon, o]£. cit,. p. 101,

13

7

combination existed.

It was shown that "daily newspaper competition,

certainly in the full economic meaning of the word, has been eliminated from all but 117 American cities."

B.

Competition Between Newspapers and Other Media Increases

Competition between newspapers, magazines, radio and television for advertising and consumer audiences has increased tremendously since 1909.

During and since the nineteen thirties, radio and magazine

competition —- already formidable in the case of magazines — come more intense, 1.

has be­

television competition of course is post War 11.

Magazines Increase in Numbers and Circulation.

During 1947 more than 6,000 magazines were published in the United States; 32 (in a broader sense 39) of these have circulations of 1,000,000 or more.

16

One source spoke of the number, circulation and

variety of magazines in 1900 being meager when compared with 1947.

17

Because directories and the United States Census combined newspaper and periodicals data in 1909 accurate information concerning the number of magazines is not available.

Available data indicate approximately 18 4,500 magazines were published during 1909.

15 Loc. cit. 16 Frederick Lewis Allen, "The American Magazine Crows Up," The Atlantic Monthly 180:81, November, 1947. 17 Ibid.. p. 83. 18 N. W. Ayer and Son, Newspaper Annual and Directory. 1910, p. 9.

a

2.

Broadcasting Stations Triple Since World War II.

Competition of 'broadcasting with daily newspapers —

intense since

the nineteen thirties — • has more than tripled insofar as the number of stations are concerned in the three years since 1945.

On October

31, 1948, there were 2,103 standard (AM), 996 frequency modulation (FM) and 124 television (TV) broadcasting stations authorised by the Federal Communications Commission.

During 1945 there were only 955 19 (AM), 53 (FM) end 9 (TV) stations authorised. Professor Borden concluded that the proportionate share of the

national advertising pool earned by network broadcasting increased from $19,500,000 (4 per cent) during 1929 to $150,200,000 (23 per cent) during 1943 while national non-network broadcasts increased from $3,500,000 (1 per cent) to $71,300 ,000 (11 per cent) during the same period.

20

Local radio advertising data are not available but the

increase in radio expenditures has been large. Agee found that 785 of the broadcasting stations (AM, FM, and TV) 21 on the air during early 1949 affiliated with newspapers. Newspapers, through integration, were to some extent neutralising the competition of these new media.

19 Fourteenth Annual Heport, Federal Communications Commission, (Washington, U. S. Government Printing Office, 1948), pp. 9, 26, 20. Neil H. Borden, Malcolm D. Taylor, and Howard T. Hovde, Bevenues fiBft Expenses of Newspaper Publishers i& 1941. (Boston; Harvard University Graduate School of Business Administration, 1946), Bxhibit 15, p. 29. 21 Agee, pp. cit.. p. 411.

9

III.

BESmSCH ACCOMPLISHED BY OTHER INVESTIG&TQRS CONCERNING INTEGRATION, CONCENTRATION OF OWNERSHIP

Extensive research already has been accomplished by other investi­ gators concerning absentee ownership, chain or plural units combinations, and the degree of concentration of ownership and control.

The earlier

comprehensive sociological study of Professor Lee provides considerable material on chains and the degree of local monopoly.

William Wein-

feld*8 article, "The Growth of Daily Newspaper Chains in the United States," represents another major contribution.

Mr. Welnfeld invest-

gated the importance of the chain newspaper insofar as trends of developog ment, per cent of circulation and general influence were concerned. Dr. Raymond Nixon in his excellent article, "Concentration and Absenteeism in Ownership" reviewed earlier works of Lee, Weinfeld and others.

24

His major contributions were to bring the former studies

up to date (1945) and to focus attention on the degree of absentee ownership in the industry.

Dr. Nixon raises questions concerning

economic aspects of concentration trends. Morris Ernst in the section devoted to the press in his book, The First Freedom, presents data which emphasise the increased concentration of control of the daily and weekly newspaper.

Summarising

the earlier works of Lee and Nixon, Mr. Ernst adds data concerning 22 Alfred McClung Lee, The Daily Newspaper in. America, (New York: The Macmillan Company, 1937), Chapter VIII, and pp. 66, 77, 273, 657, especially are considered pertinent. 23 William Weinfeld, "The Growth of Daily NewspaperChains in the United States," Journalism Quarterly 13:357-380, December,1936. 24 Nixon, SSL. cit. f pp. 97-114. 25 Ernst, cit., Chapter IV, and pp. 279-290.

10

not only dally and weekly newspapers, but also press associations, syndicated services, magazines and books,

This book is a crusade

against monopolistic trends in the newspaper and other communication fields. Studies of the mass communications undertaken by a commission ap­ pointed by the president of Chicago University represents 1 of the latest comprehensive investigations published.

The major report, "A

Tree and Responsible Press,11 in the words of the commissions chairman, Robert M. Huthcins, "deals with the responsibilities of the owners and managers of the press to their consciences and common good for the 26 formation of public opinion.1* The commission's observation that "the economic structure of the press" constitutes one threat to its 27 freedom has some relationship to this study. Another report in this series, "Government and Hass Communications," presents excellent material concerning paper rationing during World War II, the Associated Press and anti—trust case, and concentration.

38

Certain chapters in the University of Illinois study, "Communications in Modern Society," provide helpful background.

29

Charles 7.

Sinter*b treatise, "Economic problems in private ownership of com­ munications," and Raymond S. Nixon's report, "Implications of the decreasing numbers of competitive newspapers," are especially pertinent. 26 The Commission on Treedom of the Press, 4 Tree and Responsible Press. (Chicago: The University of Chicago Press, 1947), p. vi. 27 Ibid., p. 2. 28 Zechariah Chafee, Jr., *nd Mass Communications. Vol. II, (Chicago: The University of Chicago Press, 1947). 29 Wilbur Schramm, Editor, Communications in Modern Society. (Urbana: University of Illinois Press, 1948).

11

A series of Journal articles concerning newspaper advertising and circulation in relation to the business cycle also by Mr* Kinter 30 are most enlightening* These articles are based on his research at the University of Chicago on "The Effects of Business Cycles on the Newspaper Publishing Industry*11

XV.

RESEARCH METHODS EMPLOYED IN THIS STUDY

So far as known, however, none of the other investigators compiled detailed statistical evidence concerning the number of mergers and con­ solidations, local combinations, suspensions and newly established daily newspapers before 1930*

Another limitation is that data for the

period after 1930 for certain categories is incomplete.

Such evidence,

although requiring considerable time for compilation, was necessary if statistical analysis were to be undertaken.

A comparison of trends

which prevailed during World War I with those of the Becond World War was considered important.

Field case studies concerning specific

instances of daily newspaper consolidation, combination and suspension constitute a form of investigation not undertaken heretofore in the newspaper industry.

The case studies serve to complement the statistic

cal techniques; because, through this type of investigation, certain local factors characteristic of individual newspapers and their markets can be revealed which are not possible through statistical methods 30. Charles V. Kinter, "Effect of Differences in Income on Newspaper Circulation,11 SffltttttlSLf 23:335, September, 1945; "Cyclical Considerations in the Marketing Problems of the Newspaper Industry," Tfra Journal Marketing. 11*66, July, 1946; "Bigidity of Advertising Bates in Depression and Boom YearB," Journalism 24:123, June, 1947.

12

alone,

When undertaking these case studies it was felt that It was

necessary to examine not only the newspapers concerned, hut also the markets in which they circulated.

This position is taken because

local market conditions obviously influence the ultimate success or failure of a given newspaper. Lists of mergers and consolidations, combinations, suspensions and new daily newspapers for the period 1909 through 1919 were com­ piled from the N. W. Ayer and Sons, American Newspaper Annual. Mergers, consolidations and suspensions occurring during 1909, for example, were obtained by comparing the daily newspaper index in the 1909 edition of the directory with that of 1910.

Individual cards were

used for each newspaper involved. A similar procedure was followed for the years 1930 through 1929; however, except for 1920 and 1921, subsequent annual editions of both the Ayer directory and the Sditor and Publisher International Year Book were compared from which potential lists were compiled.

These lists

first were cross-checked and further verification was achieved through the Standard

and Data Service. This procedure was considered

necessary in order to determine definitely that a given action occurred during a specific year. The American Newspaper Publishers Association provided lists of daily newspaper mergers and consolidations and suspensions from 1950 through 1948 and liBts of new daily newspapers established from 1940 through 1948.

A comparatively small number of foreign language and

technical newspapers included in these lists were excluded from this study.

Newspapers included in these lists were verified through

is

directoriee.

Three additional mergers and 52 additional suspensions,

most of them constituting newspapers published only for a short period, found by the author were included in this study.

Hew daily

newspapers established from 1930 through 1939 and local combinations from 1930 through 1948 were determined by employing the same pro­ cedure used in compiling lists from 1920 through 1929. The author has no illusions concerning the infallibility of the data which he has collected pertaining to individual actions.

It is

appreciated that there are efrors despite the extensive search and cross check of more than 60 Ayer and Editor and Publisher annual directories, and a considerable number of the quarterly and monthly issues of the s t a n d Bate and Data Service. There seems to be little doubt about the major number of these actions after 1921 because there is general agreement of directories concerning them. There are many other instances where 2 of the 3 directories are in agreement.

In a few cases after 1921 there is some doubt concerning

the reliability of the data since the action could be verified only in one directory.

Before June, 1919, only 1 directory, Ayer, was

available as a source, which made cross checking impossible from 1909 to 1918 inclusive*

The author is confident, however, that data

collected indicate accurately the major trends. Besults of this study are presented in two sections.

Section I

comprises the main body of the dissertation while Section II is devoted to 6 field case studies completed during 1946 and 1947.

CHAPTER II DAILY NEWSPAPER ORGANIZATION AND FINANCING

I.

EVOLUTION OF THE NEWSPAPER

Daily newspaper publication is basically a manufacturing process. For that reason, perhaps more than any other, the evolution and develop­ ment as well as the major divisions of present day newspaper processing may be compared with the evolution and development and the contemporary organisation and operations of many other manufactures. Publishers of early American newspapers were for the moBt part 1 printer*. Publication of newspapers under Buch circumstances often was secondary to a more profitable commercial printing business.

Many

early weekly newspapers and the more recent ventures in small scale daily and weekly newspaper

publishing were launched with Bmall capital,

only to suspend after a Bhort time because of lack of support from advertisers and readers.^ Early ventures in small scale newspaper publishing may be compared with the household manufactures stage of aany industries in colonial America.

Weeklies or small-dailies were in many cases family operated

Just as the members of 1 family often constituted the whole industrial force in other early small scale industries. 1 2

Willard Groevenor Bleyer, Main (barrents in the History of (Boston: Houghton Mifflin Company, 1927), p. 75. liiA., p. 153.

15

She forerunners of large scale present day newspaper publishing, 3 however, originated with the "penny press" in the eighteen thirties. Prominent "penny papers" were the Sun, established by Benjamin Day in New York in 1833, and the Morning Herald established by James Gordon Bennett in that city in 1835. with small capital.

Both men established their newspapers

Day was a commercial printer while Bennett was an

experienced reporter and Washington correspondent.

It has been told

many times how Bennett established the Morning Herald with $500 in a basement room with 2 flour barrels, supporting some planks, constitu4 ting the only office equipment. The rapid growth of these publica­ tions soon necessitated expansions in personnel and increases in capital investment, largely through internal growth. Joseph Pulitser, who purchased the New Yark World in 1883 for $364,000 and William Handolph Hearst who purchased the New York ^Tmirnal in 1895 at a price not disclosed, established further the daily newsg paper

sb

a mass advertising medium and a segment of big business.

During thiB era of trust formation and development of giant industrial enterprises the intense rivalry that developed between these newspapers led to sensational methods which attracted mass readers.

During the

Spanish American War the circulations of both the World and the Journal exceeded 1,000,000 daily.

Hearst had millions of capital through

profits of his California newspapers and family Inheritance, while Pulitser possessed substantial capital accumulated from the St. Louis 3 Ibid., p. 154. 4 Ibid., pp. 185-186. 5. Ibid.. Chapters XIV-XV.

«

16

Poet Dispatch and 12 years successful publication of the World news­ papers.

Hearst, in particular, spent lavish sums for personnel and

mechanical equipment. The twentieth century newspaper, like certain other types of industrial enterprise, became more standardised in its mechanical division organisation and operations and the content of its finished product.

Two developments in particular contributed to this somewhat

standardized editorial content:

the organization and expansion of 6 the news services and the syndicated feature services. Horizontal integration influenced the size and to some extent the corporate and operating organization of the daily newspaper.

The

local consolidation and the local combination phases of integration which became more prevalent during the twentieth century tended to increase the size.

The chain organization appeared during the latter

part of the nineteenth century but experienced its greatest develop­ ment after 1920.

II.

NEWSPAPER ORGANIZATION A.

Types of Ownership

Daily newspaper organization may be considered from 2 points of view: type of ownership and operation or management.

These 2 dis­

tinctions sometimes are referred to as the primary and secondary phaBeB of organization. Almost universally, early newspapers were sole proprietorships 6

Ibid.. pp. 389-390.

17

with an occasional partnership.

Such forme of organization prevailed 7 rather generally during the period of personal journalism. As news** papers increased in size and required larger capital investmentsr in­ corporation became more common.

Because of the advantages of the

corporate form of ownership, twentieth century newspapers tended more and more to incorporate. By 1939 approximately three-fourths of all daily newspapers were incorporated, less than 10 per cent were partnerships and approximately 8 15 per cent were sole proprietorships. One authority recommends that 9 newepapers with circulations of 5,000 or more he incorporated.

table

1

COMPARATIVE IMPORTANCE OP TYPES OP OWNERSHIP IN THE DAILY NEWSPAPER INDUSTRY 1939 Type of Ownership

Es tab1ishmen ts Number

Per Cent

Corporations Partnerships Proprietorships Other

1,367 175 273 6

75.07 9.61 14.99 .33

Total

1,821

100.00

Source: Unpublished data from U. S. Department of Com­ merce, Bureau of the Census, J. C. Capt, director, December 20, 1948.

7 James E. Pollard, Principles of Newspaper Mpmie-emftnt (New York: McGraw-Hill Book Company, Inc., 1937), p. 17. 8 Of. Table 1. 9 Prank Thayer, Newspaper MnnagByr't (New York: D. AppletonCentury Company, Inc., 1938), p. 30.

18

Advantages of Incorporation for newspapers are much like those for other industrial and business concerns.

These include:

limited

liability of shareholder’s, continuous life, credit strengthened by continuous life, and greater flexibility which facilitates expansion and ready sale and transfer of shares. Corporations in the newspaper industry, in the great majority of cases, are close corporations. 1°

Ordinarily these corporations are

authorised to issue 3 kinds of securities: stock and mortgage bonds or debentures.

common Btock, preferred

Preferred stock and bonds

sometimes are offered for public sale but rarely is common stock so offered.

The reason for infrequent sale of common stock apparently

is because control of common stock ordinarily enables the holder to control the corporation. One unique feature of newspaper corporate organization is that corporate officers frequently do not participate in actual operation of 11 the newspapers. The increase in the number of chain ownerships ap­ pears to have encouraged incorporation and increased the number of corporate officials who are inactive in operating organizations.

News­

paper corporate officers, however, in some cases do hold 1 or more titles in the operating organization.

Presidents of the corporation

hold the title of editor and general manager, (£i£mifighgm Age. Herald and Hews): editor, (Berkeley California Gazette): or publisher, 10 Pollard, 0£. cit.. p. 18. 11 D. J. Hornberger and Douglass W. Miller, Newspaper Qr^niy.fttionr (Delaware, Ohio: Bureau of Business Service, Ohio Wesleyan Univer­ sity, 1930), p. 26.

19

(Bichmond Virginia Kewe Leader and Times Dispatch),

Vice-presidents

are editors, general managers, publishers, business managers.

Cor­

poration secretaries are circulation managers, publishers, business managers, general managers*

Treasurers are business managers, pub­

lishers or general managers.

B.

Operating Organization.

Operation problems faced by the daily newspaper are similar to those faced by many other industrial enterprises.

Like other indus­

trial enterprises the newspaper finds it necessary to coordinate its operating organization in such fashion that technical, sales, pro­ duction and service functions are accomplished with minimum delay and friction. Hornberger and Miller, following their extensive study of news­ paper organization, explained how the newspaper operating organization is concerned with these functions: 13 The newspaper is organized around these four functions. The general management is usually under the control of a publisher or general manager. (Exception noted) The technical divisions consist of those engaged in the edi­ torial and news functions presided over by the editor, managing editor, or both. The sales division is responsible for newspaper’s advertising and circulation and in some cases for the sale of radio time. The production departments usually include the engraving, composing, stereotyping and press roomB. These departments are headed by foremen or a mechanical superintendent. (Several exceptions noted) The servicing department consists of the office group engaged in accounting, finance, credit, and management. Bdltor ami Publisher. 1947 International Year Book. Vol. 80, Ho. 5, January 31, 1947. 13 Hornberger and Miller, cit.. p. 13.

20

Perhaps in no other industrial or business institution, however, is the individual so important as in newspaper publication.

For that

reason the operating organization frequently is warped to utilise to best advantage talents of key personnel.

Scientific management prin­

ciples require careful organization of a business operating organisa­ tion with each position defined carefully and with a clear indication of specific duties and responsibilities. selected to fill the position.

The individual then is

In all types of American industry end

business enterprise these principles at times are violated, but the newspaper industry violates these principles frequently, if not always with conspicuous success.

Qualifications of key personnel

have a profound influence on operating organisations in this industry. Because of the personal factor —

perhaps more than any other —

there is no standard method of organising newspaper operation and management.

It seems obvious that size, type of ownership and control,

personal eccentricities of owners, and prevailing customs in the in­ dustry influence operating organizations. No matter what its sise or how organised, however, the newspaper has 2 major operating divisions, editorial and business.

In general

as newspapers increase in sise the greater the number and more specialised the subdivisions of these 3 major divisions.

Another

observation is that as newspapers increase in sise the proportion of per­ sonnel devoted to business phases increases while the proportion devoted to editorial activities decreases. Since about 1900 there has been a tendency to place the editorial

21

and. business division on a parity.

(This does not mean necessarily

that the newspaper became commercialized, but It does mean that pub­ lishers realize that a newspaper, in order to insure its editorial freedom, must be sound financially.

Since most newspapers no longer

depend upon political Bubsidy, an adequate income from advertising and circulation is essential.

Only an efficient, well trained busi­

ness staff insures such an income. Che editorial division of the newspaper, normally in charge of the editor, has the responsibility of writing editorials, news articles and headlines, planning pages and directing the composing room in the makeup of pages after the material has been placed in type.

In the Scripps-Howard organization the editor also has con15 trol over the composing room. If the size of the paper warrants the employment of sufficient personnel in that division, the editor often concerns himself solely with the editorial page, while sub­ ordinates have the responsibility of gathering and writing news. Although there is considerable variation in organisation of editorial and news division of newspapers, there are certain logical divisions of specialisation such as local (city) news, and telegraph (state, national and international) news.

As newspapers increase in

size such types as Bports, society, music, business and financial news also tend to become departmentalized with specialists in charge. Che business division, normally in charge of a business manager or general manager, usually is responsible for advertising, circula14 15

Pollard, ap. cit.. p. 19. Miller and Hornberger, ap. cit.. p. 25.

23

tion, mechanical and general business office operations.

Specialisation

in the business division also becomes more prevalent as the sise of the newspaper increases. The advertising department logically is subdivided into local or retail, national or general, and classified advertising.

The circula­

tion department alBo has logical subdivisions such as city or home carrier delivery, state or mail, street and news Btand sales, and transportation.

Some newspapers, notably those owned by the late

Paul Block, place the press room under supervision of the circular16 tion manager. Mechanical operations have 2 or more subdivisions, depending upon the size of the newspaper.

On small newspapers will be found

the composing and press divisions.

The size of the newspaper and

the type of press equipment determine whether there will be a stereo­ type division.

Medium and large sized newspapers and in more recent

years an increasing number of small daily and weekly newspapers, have installed engraving departments, a fourth mechanical subdivision* The business office has the responsibility of accounting, creditB and collections and general business procedures. The Joint publishing plan of operating organization (2 newspapers corporately and editorially independent but with consolidated business and mechanical divisions with all operations in 1 plant) seems destined to become increasingly important in the industry. the Tulsa Dally World and the Tulsa Tritm-nft in Case IT, Section II, of this study. 16

Pollard, fig.. cit., pp. 28-30.

One such operation,

is discussed in detail

Turther discussion of this

23

type of operation also will "be found, in Chapter 7. Circulation departments have assumed new importance during the last 15 years, because the newspaper reader is required to provide a larger part of the newspaper*s revenue.

It is evident that management

of all phases of the newspaper, particularly management of the 'business and mechanical divisions, requires greater competence.

Declining

revenues during the nineteen thirties and part of the World War II period, coupled with increased operating costs, make this mandatory in order for the newspaper to survive.

III.

EEWSPAPER FINANCING A.

Evaluation. 1.

Circulation and Good Will.

Authorities agree that it is difficult to place an accurate evalua­ tion on a given newspaper property.

Although the evaluation of tangible

assets is a comparatively simple process, the intangible circulation and good will factor presents a difficult problem.

It is not uncommon,

even with Bmall city newspapers, for value of circulation and good will to exceed that of tangible assets. A consolidated balance sheet for 55 non-metropolitan chain daily newspapers with average circulations of 27,500 listed an average in17 vestment of $1,213,635 as of December 31, 1945. Circulation and good will value was $834,867 or $30,36 per subscriber (69 per cent of total). 17

Two years later a consolidated balance sheet for 15 of

Cf. Table 2.