Printer Friendly

The financial forecast.

What The Gazette's Closure Means For Employees And Little Rock's Economy

When the Arkansas Gazette ceased operations after almost 172 years, Little Rock didn't just lose a newspaper.

It lost more than 700 full- and part-time jobs.

Like a factory shutting down?

Charles E. Venus, a Little Rock economist and former Gazette business columnist, says the loss is more like six factories shutting down.

Venus says the average manufacturing plant employs 78 people. Even considering the almost 200 Gazette employees hired by the Arkansas Democrat-Gazette, about 500 people remain without jobs.

Employees and Gannett Co. stock are about all Arkansas Democrat Publisher Walter E. Hussman Jr. didn't purchase from the Gazette.

He also did not acquire the paper's long-term debt.

For $68 million, Hussman bought Gazette assets ranging from the expensive -- land, two buildings, printing presses valued at $25 to $30 million and typesetting equipment -- to the less costly -- trucks, computers, cameras, desks and everything in the two buildings down to the paper clips.

Gannett, which owned the Gazette, estimated the newspaper's assets at just less than $60 million. Hussman paid the extra money for the respected Gazette name, its subscription list and some of its smaller contracts.

The Bank of New York, which Hussman has used since 1971, was the lead lender. The bank then farmed parts of the seven-year loan out to four other lenders -- Bank of Hawaii, The Bank of California, First Maryland International Banking Corp. and The Connecticut National Bank

Hussman has a two-year revolving loan on which he won't have to make principal payments. He'll then have a five-year term with quarterly payments required.

Hussman was charged an interest rate of 7.88 percent beginning Friday, Oct. 25.

While Hussman attempts to turn his newspaper into a profitable operation, his editorial staff is left to decide such questions as which Gazette news services to use.

Meanwhile, at least 500 Gazette employees are looking for jobs, and Little Rock is preparing to handle the economic repercussions.

"Little Rock is a large enough business center that the impact is not going to be devastating, but it is important," Venus says.

And business people know it.

"It's substantial," says Walter Smiley, the founder of Systematics Information Services Inc. who assisted Gazette employees in their attempted purchase of the newspaper. "Look at how hard we work to get 700 jobs here."

Predicting The Future

"Why did Gannett buy it and think they could turn it around?" Venus asks. "To an economist looking back through time, that's the interesting question."

Venus says the lost jobs and wages reduce spending in the city by two to three times the actual number of people out of work. It's known as an economic multiplier. Money spent in a city usually turns over more than once before leaving town.

"And Little Rock hasn't grown significantly in the past five to six years," Venus says.

The August total of non-agricultural jobs was 256,500 for the four-county Little Rock metropolitan area. That's an increase of 2,900 jobs from August 1990.

"The number of jobs created has been on the upswing," says Bill Gaddy, director of the state Employment Security Division.

Does that mean former Gazette employees will be able to find work?

"Not in journalism," Gaddy says. "Many of them are going to have to look for related occupations, and sizable numbers are going to have to look for unrelated occupations."

"I can empathize with people who have been in a profession for years," says Paul Harvel, president of the Greater Little Rock Chamber of Commerce.

Harvel, who has been president of the chamber for seven years and held similar positions in other cities, says he doesn't know what he would do if forced into another career.

He agrees there is an economic multiplier.

"When we bring in an industry, we feel like 300 employees impact like 900," he says.

Gaddy says, "The best of all worlds would be for the Democrat-Gazette, in its combined coverage, to need the services of a number of |Gazette employees~."

The Reality

"Our business is helping organizations manage transitions," says China Gorman, managing director of Drake Beam Morin Inc. of Dallas, the company Gannett hired to help Gazette employees prepare for new jobs.

Workshops were conducted for four days last week with one-day sessions for hourly employees and three-day sessions for salaried employees.

Everything from how to prepare a resume to how to package oneself for a prospective employer was covered.

Paul Johnson, who was the media writer at the Gazette, says there was "no specific information on where the jobs are and how to get them."

Johnson says he picked up some helpful tips but "nothing out of this world."

Gorman is optimistic about the Gazette employees' chances for finding jobs.

"The community so supports the Gazette people," says Gorman, who was present when the Gazette staff was told of the newspaper's closure.

Less than 30 minutes after the announcement, the newspaper's personnel department was receiving calls from companies wanting to hire Gazette employees, according to Gorman.

Gaddy says things were so confused following the Friday, Oct. 18, announcement that the personnel department was not able to send out notices about the claims-processing meetings that were to begin the following Tuesday.

Spotty attendance necessitated additional meetings.

But after an almost 172-year-old institution dies, it takes more than extra meetings to overcome the economic damage.

Much more.
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.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:effect of closure of the Arkansas Gazette newspaper on its employees and on Little Rock's economy
Author:Rengers, Carrie
Publication:Arkansas Business
Date:Oct 28, 1991
Previous Article:"The fight was no longer mine." (views of John Brummett, former political editor of Arkansas Gazette and columnist of Arkansas Democrat)
Next Article:Advertising for business.

Related Articles
Who is Moe Hickey?
Advertising for business.
The legal war: attorneys, brokers helped decide the future of the Arkansas Gazette.
Arkansas Gazette. "The silence is haunting." (reminiscenses of former journalists of the Arkansas Gazette newspaper)(part 1)
The next battleground.
The essence of the Arkansas Gazette: former staffers continue to mourn her passing.
New Voices.
Departing the DemoZette.
Katie Love. (Outtakes).
Shop talk. (Publisher's Note).

Terms of use | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters