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Arkansas Media Outlets Hope To Capitalize On Gazette's Demise

During the Little Rock newspaper war, other Arkansas media outlets complained they were being forced to charge unreasonably low advertising rates in order to compete.

Now that the Arkansas Democrat-Gazette is the only statewide newspaper, are those media outlets going to raise their advertising rates?

Not a chance.

Suddenly, the same people who were complaining they were losing money because of deflated advertising rates are saying their prices have been reasonable considering the size of the market.

In other words, no one is ready to risk a backlash from rate increases.

They're letting Democrat-Gazette Publisher Walter E. Hussman Jr. test the water. But even Hussman is cautious when it comes to structuring advertising prices.

Hussman and his advertising staff examined the rate cards of 35 newspapers, some of similar circulation size and some from comparable markets. They then decided to set rate cards for the Democrat-Gazette 5 to 15 percent lower than national averages.

Even then, the new rates will be phased in over two or three years.

"These advertisers helped us win this newspaper war," says Paul Smith, vice president and general manager at the Democrat-Gazette. "We wanted to be as considerate as we possibly could."

The other media outlets can't wait to see how advertisers respond.

"We don't have a handle on how much advertising is going to be freed up," says John Signaigo, sales manager at Little Rock radio station KMJX-FM, 105.1. "We're kind of in a wait-and-see situation. Obviously, we're not going to ignore it. But we're not going to all of a sudden develop a battle plan."

Signaigo says the rock station is taking a methodical approach to winning new advertisers.

Other broadcast outlets are actively soliciting new accounts.

Jay Werth, vice president and general manager at KSSN-FM, 95.7, says the country powerhouse will do "aggressive prospecting" of former Gazette clients. KSSN hopes to show potential advertisers how to combine radio and television advertising with existing newspaper advertising.

Advertising Alternatives

It's Monday, Oct. 21, the first full working day after Hussman's announcement that he purchased the assets of the Arkansas Gazette.

Stephen Buel, editor and publisher of Spectrum Weekly, says, "There isn't an ad salesman in the office, and that's the way I like it."

Spectrum is a 6-year-old weekly alternative newspaper in Little Rock that was born when the newspaper war began to heat up. It has never turned a profit.

But Buel says the only change will be that Spectrum, which normally does production work for 85 to 90 percent of the ads it publishes, will no longer charge for production costs. Ad rates will remain the same.

Spectrum is attempting to attract midsize retailers looking for an advertising outlet other than the Democrat-Gazette.

And if the plan doesn't work?

"That will be disappointing," Buel says.

After six years of weathering the newspaper war, a continued slump in sales would seem more than disappointing.

Buel says Spectrum rates will hold until the fall of 1992.

"I feel confident it's going to work," he says.

Spectrum isn't the only publication that isn't immediately increasing its rates.

Arkansas Business Publisher Wythe Walker Jr. says he knows advertisers are concerned about rate increases. He's offering to re-sign them at current prices.

"Hopefully, it will help build the advertising base and build good will," Walker says.

An increase of 5 to 7 percent is probable for 1992, according to Walker.

The Democrat-Gazette, which prints Arkansas Business, raised printing rates last spring, and Walker expects another increase soon.

Across the state, newspapers are anticipating at least minor changes.

Charles Berry, publisher of the Pine Buff Commercial, says his newspaper received at least 15 telephone calls the day before and the day of Hussman's announcement. Potential advertisers wondered what the Commercial's rates are and if its circulation area would be expanded.

"Some of it may be a protest move," Berry says. "People are upset at the closure."

Berry wants to allow the market to shake out before instituting major changes.

Joe Fox, who distributes national and regional publications such as The New York Times and The Dallas Morning News, says in the three days following Hussman's announcement, he received 17 subscription orders for the newspapers, compared with one or two in a normal week.

Fox says Little Rock residents have told him, "I have to have an alternative" or "I need a decent editorial page."

Fox plans to capitalize on the need for news.

"We're putting updated subscription forms in Sunday papers," he says.

The cards read, "Fill the Arkansas Gazette void with The New York Times."

Fox is planning to increase the number of out-of-state newspapers he orders. In addition to new subscription orders, he expects to see rack sales increase.

Market Strategies

KARK-TV, Channel 4, began receiving telephone calls from potential advertisers weeks before the Gazette folded.

Bob Denman, the Little Rock station's general sales manager, says he will wait at least a couple of months before making any rate changes.

"Rates are pretty much driven by supply and demand," Denman says. "If rates move, it will be because demand increases."

"You will see a lot of people completely re-evaluating their market strategies," says Brad Davis, local sales manager at KATV-TV, Channel 7, in Little Rock. "That's where we see our opportunity. We'll be able to show them how to use the same dollars more efficiently with better results."

KSSN's Werth plans to target advertisers who have not previously relied on radio as an outlet. He says the success of that effort depends on the Democrat-Gazette. If the newspaper substantially raises its rates during the next several years, advertisers may be driven to broadcast outlets.

No matter what happens, it will be easier for media outlets to position themselves with one less competitor.

If the Democrat-Gazette increases rates to an intolerable level, some advertisers say they could have a weapon in group blocks that refuse to advertise in the newspaper. That approach has been used by automobile dealerships, grocery stores and furniture outlets in other cities.

Tim Hall, sales manager at Little Rock's Bale Chevrolet, admits the low advertising rates during the newspaper war were wonderful.

"There's nothing we can do," Hall says of the rate increases at the Democrat-Gazette. "It's back to average."
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:media outlets hope to capture advertising business of defunct Arkansas Gazette newspaper
Author:Rengers, Carrie
Publication:Arkansas Business
Date:Oct 28, 1991
Previous Article:The financial forecast.
Next Article:The legal war: attorneys, brokers helped decide the future of the Arkansas Gazette.

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