Gannett Goes for the Gold

The nation's biggest chain combines profits with a Pulitzer

To mark his birthday last year, friends roasted Allen Harold Neuharth, 56, with a bogus interview printed under the logo of the Cocoa (Fla.) Today, a newspaper he helped launch in 1966. "We're pushing for a Pulitzer this year," the fictive Neuharth remarks at one point. In what category? "Profit. Er, make that 'progress.' "

Er, make that "public service." Last week the Gannett News Service, which provides national reporting for the 82 Gannett-owned dailies, won the prestigious Pulitzer Gold Medal for its investigation of financial improprieties committed by the Pauline Fathers, a small order of monks in eastern Pennsylvania. The award was sweet vindication for Al Neuharth, Gannett's chairman and president. Best known for making the chain the largest and most consistently profitable in the U.S., Neuharth has lately been on a tireless campaign to make it one of the most respected as well. "The Gold Medal," he says, "is gratifying recognition of the pretty professional work that Gannett News Service has been doing for quite a while."

In the 74 years since the late Frank E. Gannett purchased the Elmira (N.Y.) Star-Gazette, the chain has steered clear of big-city competition. Instead, Gannett has concentrated on small-and medium-sized towns with only one daily. The stereotypical Gannett paper has a circulation of 40,000, profit margins that dazzle Wall Street and a reputation for editorial lassitude. Defending his preference for local monopolies, Neuharth once said: "I don't dislike fighting, I just like winning."

Gannett is beginning to grow its reputation for thinking small. It became a true press giant last summer when it merged with Combined Communications Corp., a Phoenix-based firm that owned the Cincinnati Enquirer (current circ. 190,000) and Oakland (Calif.) Tribune (current circ. 165,000), seven television stations, twelve radio stations and extensive outdoor-advertising interests. Among chains, Gannett is the longtime leader in number of papers, and last year passed the 55-paper Knight-Ridder chain in weekday circulation. Gannett's total is now 3,580,000 (vs. Knight-Ridder's 3,492,000), more than double that of a decade ago.

Neuharth is perhaps the highest-paid newspaper executive in the country ($1,160,000 in salary, benefits and stock options last year) and is currently finishing his second one-year term as president of the American Newspaper Publishers Association. He has used his ANPA position to exhort fellow journalists to defend the beleaguered First Amendment and to hire more women and minorities. These are heartfelt concerns, but Neuharth's passionate pursuit of them is constantly put to use in his crusade to recast Gannett's image. The company trumpets its commitment to journalistic freedom and excellence in expensive and seemingly ubiquitous corporate advertisements, and a skillful p.r. staff lets no Gannett achievement go unheralded. The chain has even adopted a new motto: "A World of Different Newspapers" has become "A World of Different Voices Where Freedom Speaks."

More than cosmetics is involved though. Says a reporter for the Gannett News Service of his employer: "I really get the feeling that they're trying to take their wealth and put it back into quality." Nowhere is this more evident than in Washington, where the G.N.S. bureau's budget has been raised from $250,000 in 1967 to $3.3 million today. Once content merely to keep Gannett papers posted on the good deeds of their local Congressmen, the Washington editorial staff now numbers 33, covers national and international news in some depth and undertakes a variety of investigative projects. "The attitude at present seems to be 'spend now and ask questions later,' " one bureau member says.

Gannett's Pulitzer-winning investigation required a commitment of time and resources that would have been unthinkable only a few years ago. Three reporters, William F. Schmick, 38, John M. Hanchette, 37, and Carlton Sherwood, 32, were detached from regular duties for nine months to find out what had happened to money raised by the Pauline Fathers for a national shrine. The reporters traveled to 17 states and four foreign countries and ran up nearly $100,000 in expenses. They finally loosed an 18-part, 40,000-word series alleging that the order squandered a substantial portion of $20 million in charitable donations, loans, investments and bond proceeds. The series had the temerity to suggest that officials of the Roman Catholic Church including Pope John Paul II had engaged in a cover-up--a charge that brought angry denunciations from Catholic pulpits and, in a few cities, calls for anti-Gannett boycotts.

The prestige of winning the Gold Medal (the chain or its papers have received four previous Pulitzers, the last in 1971) should help Gannett fend off critics of chain ownership. More than 63% of the nation's 1,769 dailies are now owned by groups, double the percentage in 1960, and independent papers are being gobbled up at a rate of 50 or 60 a year. What bothers critics most is a reduction in the diverse, often lively voices of independent newspapers. There are complaints, too, that chains tend to be obsessed with profits and indifferent to editorial excellence. Says Congressman Morris Udall, an Arizona Democrat who is an outspoken opponent of chains: "I think you are losing something pretty precious when you have a large organization ... that is more interested in the bottom line than what's good for the community."

Newspaper groups have an energetic defender in Neuharth, a wiry (5 ft. 7 in., 150 lbs.) imp with an athletic walk, a lopsided grin and a supremely self-confident air. Born and raised in South Dakota, he made a name for himself at the Miami Herald, a Knight (now Knight-Ridder) paper, where he rose from reporter to assistant managing editor in four years, and later at Knight's Detroit Free Press. Neuharth joined Gannett in 1963 and was president by 1970, leading some colleagues to snipe that his rise came a little too fast. "When Al wears a sharkskin suit," a friend once observed, "it's hard to tell where the shark stops and he begins."

Part of this uneasiness doubtless stems from Neuharth's style. His sense of humor is barbed, sometimes tactless, and he is a notorious practical joker. His first wife, Loretta, was once arrested after he devilishly reported their car stolen. At a party a few years ago, he persuaded all 19 men present to give him their ties and then left; he never did return the ties. Neuharth dresses expensively, and always in black, white and gray. He jogs at dawn--in a black-and-white track suit. Associates call him the Black Prince. Says Ron Martin, editor of the Hearst chain's Baltimore News-American and a former colleague: "He just goes for clothes that shine and glow in the dark. But it's also a statement of a kind. It's him saying, This is me, and I dare you to do anything about it.' "

Like Neuharth, Gannett papers are invariably well packaged, smartly designed and slickly promoted. In overall quality they run several furlongs behind Knight-Ridder but ahead of just about every other large chain. Neuharth argues that Gannett has never acquired a paper it did not improve. This is testimony partly to the sorry quality of medium-sized papers in the U.S. But it is also true that Gannett has expunged the rabid right-wing excesses from a few of its papers--notably those in Springfield, Mo., and Nashville --and dramatically upgraded other properties, like the Camden (N.J.) Courier-Post. As even Morris Udall admits, "If you're going to have chain newspapers, you're not going to do much better than the kind of aggressive, community-minded, broad-based operation that Gannett has."

Beyond such generalized praise and the vague objections of chain haters, it is difficult to characterize Gannett journalism. The firm's home office in Rochester approves budgets, buys certain syndicated features and offers design and editorial assistance. Otherwise, Gannett editors are allowed wide latitude. Most would probably agree with Tom Callinan, managing editor of the Little Falls (Minn.) Daily Transcript (circ. 3,800), when he says: "I stay within my budget, put out a good product and they don't bother me."

Critics find many Gannett papers parochial and uninspired, as wholesome as enriched bread but often just as bland. Even many Gannett hands are frustrated by the company's failure to produce one truly outstanding daily. A comparison is often made with Knight-Ridder, which purchased the struggling Philadelphia Inquirer in 1969 and spent millions righting it. The Inquirer, which last week won its sixth consecutive Pulitzer, now stands comfortably in the black and high in the esteem of U.S. journalists. For some of Gannett's employees, it will take more than last week's Pulitzer to make them proud of their logos.* "Most of us feel we are too good for Gannett," grouses Joe Trento, investigative reporter for the Wilmington (Del.) News Journal, which Gannett purchased in 1978. Says a reporter at the Nashville Tennessean, which was acquired last year: "We've been a breeding ground for good young writers, but now those people aren't going to come to the Tennessean any more. Who wants to write for Gannett?"

Many surely would if the chain's newspapers read as well as its balance sheet. At a meeting of investors and security analysts in New York City some years ago, Neuharth was asked whether his company's name was pronounced Gannett or Gannett. "Money," he replied. Says J. Kendrick Noble Jr. of Paine Webber Mitchell Hutchins: "I was there, and looking back it's obvious that Al wasn't kidding." With the addition of Combined Communications, Gannett last year passed the billion-dollar mark in revenues for the first time. Earnings were $134 million, up 19% over the previous year and 486% for the decade.

Neuharth is ever ready to pounce when a newspaper comes up for sale, but lately he has become anxious to broaden Gannett's base. Some probable targets: magazines, book publishers and cable-television companies. "We're going to stay in related fields, but that's the only limitation," he says. Gannett would be willing to bid for a big-city daily if it were the dominant paper in town. Says Neuharth: "We are not interested in acquiring a weak or losing newspaper simply to be able to say we're in a top market."

Amid all his First Amendment crusading, Neuharth's capitalistic stride is as quick as ever. Last year he logged 315,000 miles in Gannett's four private jets, visiting the firm's papers, scouting new acquisitions and shuttling between company headquarters and offices in New York City and Washington. He wears two watches, one set to local time, the other to Rochester time. Deals are always in the air, and Al Neuharth is up every dawn, black and white and read all over, running toward a shining goal. Says he: "There is no reason why Gannett can't be the biggest communications company in the world."

qed

*The proudest newspaper of all is the Boston Globe, which last week received three Pulitzers.

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