Capital Buy

Time Inc. acquires the Star

When Joe L. Allbritton purchased the long-suffering Washington (D.C.) Star in 1974 from the families that had owned the afternoon paper for most of its 125 years, he had no illusions about what lay ahead. "Financially, the Star was on the ropes, and its morale was low," the Texas banker recalls. "Readers and businessmen viewed the Star with the sad concern one feels for a dying friend."

Though he had no experience in publishing, Allbritton set energetically to work on the resuscitation of the paper, no easy task considering that his competition in town was the Washington Post.

The Star endured $30 million in losses before Allbritton last year edged it to with in a few picas of profitability. But finally, Allbritton concluded, he could not continue to do it alone.

If the Star was to reach its full potential, he felt, it must be backed by resources beyond the reach of a single investor. So last week he reached agreement to sell the Star for $20 million to Time Inc., publisher of TIME, PEOPLE, SPORTS ILLUSTRATED, MONEY and FORTUNE magazines. The company, which also has extensive book, cable television and forest-products operations, last year had profits of about $90 million on revenues of $1.25 billion.

The sale, effective Feb. 19 and subject to approval by directors of both companies, was first proposed a year ago by Allbritton to Time Inc. President James R. Shepley. Under the agreement reached last week, Allbritton will stay on as publisher, Time Inc. will be represented on the Star's board and will assume $8 million in Star debts. Allbritton will continue to run the paper and set its editorial policy with, he said, the help of Time Inc.'s "publishing, promotional, advertising and editorial strength." He added: "If my resources made it possible for the Star to survive, Time's would assure that it truly prospered, that it fully served the people of Washington."

Said Shepley: "It is vitally important that the Greater Washington area be served by two strong, competitive newspapers," adding his conviction that over time the Star would become "a highly successful paper."

Though the Star's market is heavily populated by job-secure Government workers and blessed with one of the nation's highest per-household incomes ($28,611 a year), the capital had for a time been in danger of becoming a one-newspaper town. Long Washington's leading daily, the afternoon Star two decades ago began slipping behind the aggressive morning Post in both circulation and advertising revenues. When sold to Allbritton in 1974, the Star's losses were close to $8 million. Allbritton installed tighter financial controls, trimmed the staff by about a third, persuaded the paper's unions to accept a reduced work week and a pay freeze, and hired Jim Bellows away from the Los Angeles Times to be the Star's editor.

Bellows rallied his demoralized troops and thoroughly redesigned the paper, adding such successful features as a front-page Q.-and-A. column and "The Ear," a racy and much-copied gossip column.

Those innovations, together with a long and bitter Post strike in 1976, enabled Allbritton eventually to cut the rate of reader losses, though the present circulation of 350,000 is far below the Post's 540,000. Allbritton expects the paper to show an operating profit for fiscal 1978, v. last year's $1.3 million loss.

In Washington, where the Star's possible sale has long been a leading cocktail-circuit topic, last week's announcement was welcomed. Said NBC Anchorman David Brinkley: "It means the Star will survive, so I'm very pleased." The chief Washington correspondent of the St. Louis Post Dispatch, Richard Dudman, observed: "The new ownership means Washington will know it's got a second paper." According to Ben Bradlee, executive editor of the Washington Post (whose parent company also publishes Newsweek): "It's good news for the city, good news for the Star, good news for the newspaper business." It was also very well-kept news, particularly in view of the capital's penchant for gossip. Said Los Angeles Times Washington Bureau Chief Jack Nelson: "We didn't even read about it in 'Ear.' "

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