Newspaper Ownership - 2006 Annual Report

Little noticed in a climate of anxious concern over Knight Ridder’s future, joint operating agreements (JOAs) recorded another dismal year in 2005.

Three of the remaining 12 agreements were renegotiated or dissolved. A fourth was already set to expire at the end of 2007. In Birmingham , E.W Scripps closed the five-day afternoon Post-Herald.17 That left Advance’s Birmingham News the only paper in town. In Las Vegas , the JOA continues, but the Sun, also an afternoon publication and known for freewheeling commentary, has been downsized to a 6- to 10-page mini-paper delivered daily along with the Review-Journal.18

As noted elsewhere in this section, Knight Ridder sold the Free Press to Gannett. Gannett sold its Detroit News to Singleton’s MediaNews. With the renegotiated JOA giving MediaNews just 5% of the profits, a diminished role for the News appears inevitable.

Gannett, which owns the Cincinnati Enquirer, decided in 2004 not to renew a JOA with Scripps’s Cincinnati Post. The Post continued to operate and share in the profits of the combined operation. But it seems highly likely that the paper will fold at the expiration of the agreement on December 31, 2007.19

JOAs picked up steam, after a strong lobbying push from the industry, when the Newspaper Preservation Act of 1970 formalized special antitrust exemptions for such deals. At their peak there were 28 JOAs.20

But industry economics generally trumped the good intentions of maintaining two distinct editorial voices in as many communities as possible. The majority of the “failing newspapers” have now folded, just more slowly than they might have without the law. In several of the remaining agreements — for instance, those in Albuquerque and Tucson — the trailing paper has only a small fraction of the circulation of the dominant one.

The year also closed with a continuing legal fight between the Seattle Times and the Post-Intelligencer over their JOA. It began in April 2003 when the Times claimed it had experienced three consecutive years of losses and could thus evoke an escape clause and exit the arrangement.

The Post-Intelligencer, besides contending that it could not operate independently, argued that 2001 and 2002 losses should not be counted because of a strike. The Washington Supreme Court unanimously ruled against the PI and its parent, Hearst, in June 2005. That’s not necessarily the end of the matter, though. Hearst has indicted it may refile, resurrecting a different argument — that the Times manipulated a loss in 2002 by adding 65 full- and part-time people to its news staffs and expanding newshole.21

In summary, while industry prospects darkened in 2005, the future of JOAs looked even dimmer.