Hot chain nixes wingo, buscapades - nabs Pulitzers, big bucks; Knight-Ridder show that newspaper chains can be profitable - and good.

• Author: Cooper, Matthew

HOT CHAIN NIXES WINGO, BUSCAPADES--NABS PULITZERS, BIG BUCKS

When Walter Annenberg was publisher and owner of The Philadelphia Inquirer, there was a lot of news he didn't see fit to print. For a time, the city's pro basketball team, the 76ers, made his enemies list--and barely made the paper, given just one paragraph when they lost and two when they won. Why? "Sometimes people would be on the list and you would have no idea why,' recalls Frank Dougherty, a veteran of the Philadelphia Daily News, Annenberg's tabloid.

Then there was the Shapp Gap. Annenberg, according to a biographer, regularly called Milton Shapp a "sleazy sone of a bitch' and made it clear to his reporters that if they had to write stories on Shapp, they had better not be flattering. Philadelphians might not have noticed, except it was 1966 and Shapp, besides being a noted philanthropist, was a leading, and ultimately successful, candidate for governor of Pennsylvania. What did appear in the papers usually had to do with crime. On staff, the paper had court reporters, police reporters, and a criminal. The Inquirer's top investigative reporter was convicted for extortion after he had accepted kickbacks for suppressing stories.

Those halcyon days ended in 1969 when Annenberg sold both papers to Knight Newspapers, now Knight-Ridder, for $55 million. With the competing Philadelphia Bulletin holding a grip on the city's readers and advertisers, rivals chortled that Knight had been suckered. John Purcell, then-Gannett's vice-president for finance, told Business Week that Knight would have been better off crossing the river to Jersey. "Look at our Camden paper,' he said. "It serves Cherry Hill, and look at the statistics. The two Philadelphia papers have steadily declined and we have steadily increased.'

With the Inquirer and News bleeding red ink, Knight executives did what they had done in other cities. They spent more money. The new editor, Jim McMullen, replaced Annenberg flunkies and enlarged the staff with 80 new reporters. His successor, Eugene Roberts, got Knight to finance five new foreign bureaus, a 20 percent larger news hole, several wire services, and more than a dozen comic strips, including Doonesbury. "We wanted to become dependable and solid and readable and engaging,' says Roberts.

Philadelphians seemed to like it. By July 1980, the Inquirer had closed a 173,000 circulation gap to overtake the Bulletin, forcing it to fold two years later. Rather than stop there, Knight-Ridder increased the news budget another $5 million. It's been money well spent. Philadelphia accounted for almost half of Knight-Ridder's newspaper division's growth last year. The Inquirer has hauled in 13 Pulitzers since Annenberg left and the Daily News is a scrappy, honest tabloid with ten of its own local columnists and a great sports section. They even cover the 76ers.

Knight-Ridder's Philadelphia story is dramatic, but hardly unique to the chain. The $1.9 billion company has whipped several mediocre papers into shape. With 44 Pulitzers, five this year, Knight-Ridder and its 34 dailies boast more than any newspaper chain, save The New York Times. Most have gone to its big name papers like the Inquirer, Miami Herald, Detroit Free Press and San Jose Mercury News, but its less sexy papers in Akron, Ohio and Lexington, Kentucky have won, too. Earlier this year, Adweek's jury of notables ranked three Knight-Ridder papers (Philadelphia, San Jose and Miami) among the nation's ten best, more than any other chain. But Knight-Ridder papers aren't good just because of their reporting. They have color, comics, and plenty of life.

These are triumphs worth nothing because, like it or not, more and more papers are owned by chains--almost three quarters of the nation's 1,676 daily newspapers, up from 50 percent in 1960.

The demise of the independently owned, civicminded paper is cause for concern and no small whiff of nostalgia. But Knight-Ridder shows that all newspaper chains don't have to be cheesy Murdoch or fluffy Gannett. If they're careful to restrain their worst corporate impulses, as Knight-Ridder usually is, chains can be both profitable and good.

Four-color schlock

What happens when a newspaper chain comes to town? Historically, the owner placed his ego on public display. William Randolph Hearst, Joseph Pulitzer, and E.W. Scripps published manifestos for their own political agendas, with little concern for careful, analytic reporting. While yellow journalism has often been replaced by full color, there are still a few cities where the lurid chain lives. Most notably, there's Rupert Murdoch's News Corporation, stretching from Boston to San Antonio. Everyone has their favorite New York Post headline. Mine ran when Yuri Andropov succeeded Leonid Brezhnev: "Sinister KGB Biggie Gets Brez Job.'

Other chains have adhered to the tradition of putting the owner's imprimatur on the paper. Freedom Newspapers, a booming libertarian-leaning outfit out of Irvine, California, with 29 papers and circulation approaching one million, peddles brochures with its editorial philosophy: "[In] free enterprise the gain or profit of one is the gain of all.' And, of course, Gannett has infused the up-tempo tone of owner Al Neuharth throughout all of its 93 dailies, not just USA Today. Glance at the front-page story about the horse who chugs beer in the July 11 Idaho Statesman and you know it's Gannett.

But most chains poison...