Paper Assets: Eager Buyers in Gary; A Motivated Seller in Waukegan | Media | Chicago Reader

Paper Assets: Eager Buyers in Gary; A Motivated Seller in Waukegan 

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Paper Assets: Eager Buyers in Gary

No newspaper chain in America enjoys a better reputation than Knight-Ridder, and Gary's Post-Tribune is a Knight-Ridder paper. It's a serious paper in a region that needs one. If you want to cover race, poverty, political corruption, and the brutal power of big industry, go to Gary. Dig into Lake County, Indiana.

In northwest Indiana, there's no ten o'clock news to switch on for a dose of the day's events. The Chicago papers only glance at the region. The burden of informing rests on the local press. A friend who spent some time there in '87, while Richard Hatcher was running his last, losing race for mayor, marveled at the Post-Tribune:

"They were pushing city government all over the front page. They were doing the stories that needed to be covered. You could feel a new breeze blowing in Gary and there was a sense the paper was moving this along--'OK, we need something different.' A paper does that, it catches the spirit in town. The paper was doing its job."

Will it continue to? We don't know. The Post-Tribune is for sale.

Last August, Knight-Ridder spent $353 million to buy Dialog Information, a data-base distributor, and now it wants to reduce its debt. A Knight-Ridder paper in Pasadena, California, is also on the block, and so are all eight of the chain's TV stations. The Post-Tribune turns a modest profit, but long-range prospects are chancy. Competition is fierce, with the Hammond Times up the toll road and the Chicago Tribune likely to enlarge its presence in the region. And Gary--to which the Post-Tribune has tried to loosen its ties, dropping the city from the paper's name and starting up zoned editions that reach out to the bucolic white heartlands beyond the steel town--is as distressed as ever.

Knight-Ridder is a Miami-based corporation that reported $2 billion in revenues and $155 million in profits for the '87 fiscal year. The Post-Tribune, circulation 76,000, is a lot more important to northwest Indiana than it has ever been to its owners.

The announcement by president James K. Batten was boilerplate: "We will be most inclined to consider offers from American publishers . . . whose track record suggests that they would take seriously the newspapers' responsibility to readers, advertisers, and the communities to be served." But what chain takes that responsibility as seriously as Knight-Ridder itself?

"They rode with us," said reporter Joe Conn, 37, who covers Lake County government. "The steel industry's been bad since 1980, so they've weathered the storm with us for eight years." These have been hard times. Circulation dwindled steadily from 1980 to '87 before finally rising a bit. All the labor contracts expired--Newspaper Guild members haven't seen a raise since 1985. But Knight-Ridder did not cheap out the product. "No way am I going to throw a stone at Knight-Ridder," said Conn. "They're a good company. But they are driven by different motives than I am. I want to have my own paper."

The idea hit Conn immediately.

"When Jim Batten came in and announced it on the 12th of January to a cafeteria full of people that they were going to sell the paper, it was like a punch in the stomach," Conn told us.

"After a while, he kept talking, and he didn't announce who the buyer was. Then hope started to glimmer. When he finally said he didn't have a buyer, I wanted him to stop talking right then and leave the room so we could get started on a buyout."

Conn's allies are copy editor Barbara Thomas, who just stepped down as president of the Gary Newspaper Guild, and Chris Isidore, a business writer. They're touting a congressionally created arrangement known as an ESOP, for Employee Stock Ownership Plan. Last Sunday, at a series of meetings at a Gary union hall attended by a hundred of the paper's 250 full-time employees, they described the process. A couple of local politicians showed up to lend support. A steelworker who saved a plant in Nitro, West Virginia, by leading an ESOP takeover described that experience.

The employees have already incorporated--NWI/ESOP Publishing Inc. Under the law, the next step to take, before they can make a bid, is to run a feasibility study. This will cost up to $50,000, Thomas told us, and NWI/ESOP hopes some state economic-development money can be found to pay for it. Then they'll look for local investors.

The tax advantages available to ESOP investors are part of what makes ESOPs fly, Conn explained. The other part of it is that the employees cut their own wages. "We've been telling our people it might be a little bit painful to become "owners," he said. "But the point is, if someone else comes in and buys us, we might suffer the same economic shock.

"So it's just a question-of, who do you want to suffer for? For yourself, or somebody else?

"You see, I was born in Gary. I went to high school in Hobart. I went to college in Valparaiso. Aside from four years I spent in the Peace Corps in Africa, I've spent my whole life here. There comes a time when you have to make a stand for your homeland, I guess. And this is my time."

A Motivated Seller in Waukegan

Ward Just, who lives in Paris now, returned to Chicago to promote his new novel, Jack Gance. It's a fine book, but we wanted to ask him about an earlier novel, the autobiographical A Family Trust, based on his family's ownership of the Waukegan News-Sun. "What you get from there," said Just, who hadn't thought about this 1978 work of his for some time, "is the whole notion of a family newspaper where the newspaper becomes inseparable from the family and the family inseparable from the newspaper. It becomes almost a human being."

Just's grandfather bought his first newspaper around the turn of the century, and he was an editor until he died. "In the early 1920s, he bought either the Waukegan News or the Waukegan Sun, I can't remember which," Just said, "and then the gambling interests from Chicago founded either the Sun or News. And he fought them tooth and nail for eight or nine years.

"The mob bought the paper, so legend has it, to facilitate the entry of slot machines into Lake County. They went out of business because the advertisers remained loyal to my grandfather. Advertising dried up on them and my grandfather bought them out.

"My grandfather was not an especially able businessman," Just went on. "He was a terrific editor in that old-style Colonel McCormick way. He was a right-wing Republican, 'rock-ribbed' was the phrase we used to use back then. My grandfather virtually ran Lake County, in the same way that the Colonel used to run Chicago. But he was not terribly adroit on the business side. My father was a natural businessman. My father came to work for it in '31, and he died in 1970. So he worked for it for about 40 years. And then I came in."

Ward Just's career was out east. But as chairman of the board, he flew in periodically to go over the News-Sun's books. By 1983 he'd had enough. He sold his father and grandfather's paper to the Copley Press.

"It was absolutely classic what happened to my family," he said. "My grandfather was the editor, my father was the publisher, and I was the writer. And of all of those three, the editor can fit in, and the publisher can fit in. There's no way for a writer to fit into Waukegan. What are you going to write about? Very early in my career I took a different turn. I quit the paper in '59 and went to work for Newsweek. I was chairman for whatever the hell that was--13 years. I did my duty. But I don't think I was a very good chairman."

We asked Just what the News-Sun meant to him. "It was this thing that was around from my earliest days," he said. "We'd sit around the dinner table at night and talk about the paper. Was circulation up or down? What was newsprint? I can remember as a young kid, the telephone ringing at dinner, my father going to answer it, there are a few muttered words on the telephone and he comes back and says 'Some son of a bitch wants his divorce kept out of the paper again.' He muttered about that for a while. And for that reason, my father insisted that when my uncle was divorced that the item be run, and when I was divorced that that item be run also. So he'd be clean on that issue!"

What did the News-Sun mean to your dad and grandfather? we asked Just.

"That paper meant as much to them as my books do to me," he said.

Why'd you sell it? we asked. "A lot of reasons," Just said. "One of them being we had a generational problem. None of the children were old enough to come into it. . . . The second thing was, it became harder and harder and harder, with the competition from throwaways, television, radio, the Chicago press, direct mail, to make a buck."

If the News-Sun hadn't been in the family for half a century, he'd have sold it a lot quicker. "I hate to set the newspaper business up as somehow superior to any other kind of business," Just reflected, "but there is a certain camaraderie about the business. It carries more force, somehow, than other businesses, So the family . . ."

It's a kind of public trust, we broke in. "Trust," after all, was his word, from his title.

"No, it's a business," Just said quickly. He'd made up his mind about this one, "It's nice to think of it in such nice sentimental thoughts--as a public trust. It probably ought to be. But the truth of it is it's a business like any other. . . .

"If a paper's not economically strong it can be pushed around by anybody. Therefore the paper has to make a lot of money. If it's going to make a lot of money it's got to be run on business principles. The Washington Post would not be the kind of paper that it is if the profits were not as high as they are."

Publishers get calls, Just said, from people who bellow, do this, do that, or I cancel my advertising. "You've just got to be strong enough to say 'Fuck you! We can survive without it.' And if you can't do that, you're in trouble."

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

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