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Nightmare at Third and Louisiana.

Nightmare At Third And Louisiana

John Curley, president and CEO of Gannet Co. Inc., declared 1989 as the Year of the Shareholder. With all the red ink spilled in operating the Arkansas Gazette, Al Neuharth's successor might want to consider renaming it Nightmare At Third And Louisiana.

Year-end losses hit $20 million at the oldest newspaper west of the Mississippi, according to Eric Philo - a research analyst with Goldman Sachs in New York who was contacted this week by Arkansas Business. This performance represents the third annual installment in what has become a series of consecutive losers in Little Rock, each more bloody than the one before.

And 1990 losses will likely surpass the $20 million mark - falling somewhere between $21 million and $25 million in Philo's estimation.

The negative numbers came as quite a surprise for Philo who had forecast losses of $11.1 million in 1989 and $11 million in 1990. In a report dated Jan. 11, 1989, he was a lot more upbeat about Gannett's chances of defeating the Arkansas Democrat - owned by the Hussman family's Camden News Publishing Co.

"While the Little Rock newspaper battle seems at a stalemate for now, Gannett's far greater staying power versus the very small company it is fighting augurs well for the ultimate outcome. Meanwhile, we do not expect a material increase in Gannett's losses there.

"The swing between Gannett's current Little Rock losses and profits if it ran the only paper in town would be worth about 10 cents per share. Our estimates assume steady losses in Little Rock."

Philo describes the losses as negligible in terms of Gannett's overall earnings picture and staying power although losses in Little Rock have increased sharply. Since buying the Gazette in December 1986, Gannett management has racked up losses of $5 million in 1987 and $10 million in 1988 with respective sales of $37 million and $36 million.

Yes, that's right. The Gazette has effectively doubled its losses each of the past three years - an accomplishment Gannett would like to see end in 1990.

Where are the Gazette's big losses coming from in the newspaper war? According to media watchers, a big chunk can be attributed to the cost of starting up and producing new sections and redesigning existing ones. It ain't cheap to put out a nice looking newspaper.

On the revenue side of operations, advertising suffered its ups and downs. Losing the Dillard's account alone cost the Gazette between $1.5 million and $2 million in annual sales.

Changes in the appearance of Gazette and its advertising base have been accompanied by changes in personnel. Among the old troops shipped out and new ones shipped in are some folks at the top.

* Out: Ed Major, Gazette VP and advertising director, has moved on to become president and publisher of the Muskogeee Daily Phoenix and Times-Democrat.

* In: Patricia Keil, former retail advertising director at the Cincinnati Enquirer, is now the Gazette's advertising director.

* Out: Bill Malone, former president and publisher of the Gazette, holds the title of Gazette chairman.

* In: Craig Moon, former president and publisher of the Fort Myers News-Press in Florida, has taken over the duties of president and publisher of the Gazette.

* Out: Walker Lundy, former editor and VP at the Gazette, has migrated to Arlington, Va. where he will work at Gannett's Corporate HQ.

* In: Keith Moyer, former editor of the Fort Myers News-Press, is editor and VP of the Gazette these days.

Gannett was finally successful in hammering out a joint operating agreement to end its losses in the Motor City, effectively merging Gannett's Detroit News and Knight-Ridder's Detroit Free Press.

It doesn't look like a similar deal will be struck anytime soon with Democrat publisher Walter Hussman either. "The fact of the matter is we're making more progress against Gannett than we did against the Pattersons," Hussman remarked in Arkansas Business Nov. 20-Dec. 3.

In terms of spilling more blood at the Gazette, Hussman has certainly made progress. The results of the Little Rock newspaper war so far have been a recurring nightmare for Gannett.
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Title Annotation:Arkansas Gazette loses $20 million in 1989
Author:Waldon, George
Publication:Arkansas Business
Date:Apr 9, 1990
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