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Gannett Agrees to Buy Famed Arkansas Paper

October 31, 1986|THOMAS B. ROSENSTIEL | Times Staff Writer

Gannett on Thursday said it agreed to buy the Arkansas Gazette, the Little Rock newspaper that won two Pulitzer Prizes and risked financial ruin by supporting Arkansas school desegregation in the 1950s.

The purchase, for $51 million in cash, also aroused speculation that Gannett, the nation's largest newspaper chain, would try either to declare a truce with the rival Little Rock Democrat or to employ its superior resources to vanquish the Democrat.

Little Rock is one of last American cities with two competing, locally owned newspapers.

"It is a sad day for journalism in Arkansas," said Walter E. Hussman Jr., publisher of the rival Little Rock Democrat. "We were very lucky to have two locally owned papers."

Gazette Publisher Hugh B. Patterson Jr., however, praised the sale because it assured "the preservation of the Arkansas Gazette as an institution."

The family of Judge Carrick White Heiskell has owned the Gazette since 1902, and the paper, founded nearly a century before that in 1818, claims to be the oldest journal west of the Mississippi River.

In the 1950s, the paper gained fame by supporting school desegregation as a matter of conscience --a position so unpopular that a public boycott of the paper was organized.

This year, however, Patterson concluded that his family could afford to fight no longer--despite still being the biggest paper in town. In the last decade, the Democrat has gained on the Gazette by switching to morning circulation--like the Gazette--and cutting advertising rates.

Its share of Little Rock's newspaper revenues in that time has grown from 20% to 39%, while the Gazette's share has shrunk from 80% to 61%.

Although the Gazette still dominates weekdays--circulation 125,383 versus 83,330 for the Democrat--the two papers are nearly even now on Sundays--Gazette 160,493, Democrat 155,516--according to figures as of March.

A Tough Market

Estimates by the brokerage firm of Lynch, Jones & Ryan show that the Gazette is breaking even this year on revenue of about $34 million. The Democrat is losing money on revenue of $24 million.

Patterson first tried to fend off the Hussmans in court, filing a lawsuit accusing the Hussmans of an illegal cut-rate pricing strategy. The Pattersons lost, and soon after received an offer to sell the paper to Ingersoll Publications, a newspaper group from New Jersey.

When talks fell apart, the Gazette pursued other buyers, finally finding Gannett, the Arlington, Va.-based communications giant that publishes USA Today and 91 other daily newspapers, as well as owning the country's biggest billboard company and a satchel of TV and radio stations.

Newspaper industry analysts were quick to speculate on Gannett's motives. Gannett, which in the last 15 months also bought the Des Moines Register, Detroit News and Louisville Courier-Journal, historically avoids cities with competing newspapers.

Situation in Detroit

Even before it bought the Detroit News, for instance, it had talked with the rival Detroit Free-Press about a truce under which the two papers would share business costs and profits, an arrangement now pending before the U.S. Attorney General.

"I suspect Gannett might not only have the same thing in mind (in Little Rock) but might have some indication the Democrat was amenable," said Victoria Butcher, a securities analyst with the brokerage firm Eberstadt Fleming.

Other analysts were more skeptical. "One proposed joint-operating agreement on their plate is enough right at the moment," said J. Kendrick Noble, a newspaper analyst with the brokerage firm of Paine Webber Mitchell Hutchins in New York.

Hussman, who had offered Patterson a truce in 1978, said he has had no contact from Gannett regarding a joint-operating plan.

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