Who Owns the Southern Media?

The Raleigh News & Observer (N&O) is one of the South’s best newspapers. Its reporters are among the most skilled in their profession. They have been honored with the highest awards in journalism, including the Pulitzer Prize. They rarely miss a story.

But on May 18, 1996, even they were caught off guard by a news story—a story involving their employer. Just before the paper was about to go to press, publisher Frank Daniels, Jr., walked into the newsroom and informed the staff that the paper had just been bought by the McClatchy Newspaper group, a newspaper chain based in California. The news of the buyout was startling to most of the staff since management had never hinted at a sell. Rumors had surfaced, but management was quick to dispel them. Frank Daniels, Jr., had even once criticized corporate ownership of newspapers. And in 1990, the N&O sold off a number of other newspapers that it owned to McClatchy for $74.1 million to prevent a takeover. But things changed in 1996. Daniels told the Durham Independent, “We had no desire to sell in 1989. Business was extremely good,” he said. “Business is still good, just not as good.”

The N&O was one of the last remaining family-owned papers in the South. Josephus Daniels bought the paper in 1894 for $10,000, and ran it for 50 years. His children and grandchildren continued the tradition. Frank Daniels, Jr., publisher at the time of the McClatchy purchase, was the third generation Daniels to be publisher. Frank Daniels III was the paper’s executive editor. The McClatchy purchase ended the 116-year ownership of the Daniels family. The family, however, still maintains a limited relationship with the paper. Frank Daniels, Jr. now serves as a board member of the N&O.

 

Free Press, Free Markets

The selling of the Raleigh News & Observer reflects a growing trend among newspaper and other media chains across the country. In the last few years, an unprecedented number of media buyouts and mergers have occurred. The resulting concentration has many observers worried that fewer independently owned papers means less focus on local news, fewer diverse voices and opinions and news content being driven more by the corporate bottom line.

Fred Crisp, editor of the N&O, doesn’t see it that way. Using his paper as an example, he says that hardly any changes have occurred since the change from family to corporate ownership.

“They [McClatchy] have never questioned or had any problems with us,” Crisp said. “They told us that they are a hands-off company in terms of coverage or editorial direction.” Readers of the paper may not have noticed a change in the editorial content of the paper, but other news outlets in the Raleigh-Durham area were visibly nervous when the McClatchy chain bought the N&O. They note that McClatchy has waged aggressive advertising wars against competitors in other cities, driving several of them into decline.

So far that hasn’t happened in the Triangle area, but as Erwin Potts, chair of McClatchy board of directors, told the Independent, “We are a public company and we do have financial disciplines that haven’t been as pronounced at Raleigh as they might be with us.”

The trend toward concentration of the media is not new to the Southern region. In 1975, when Southern Exposure first explored the question of media ownership in the South, chains owned 248 daily newspapers. Just five years ago, when Southern Exposure published a followup report, the number was 318. Today 344, or 84 percent of all dailies, are owned by chains.

This concentration of media has not happened only in newspapers. Television, where the majority of people get their news, has also been affected. Thanks in large part to the Telecommunications Act of 1996, which increased the share of TV stations a single company could own from 25 percent to 35 percent, media chains also own 40 percent of all Southern television stations.

For some in the media, chain ownership of papers in the South is a plus. “The effect of national ownership of dailies is that regional prejudices and predilections are less dominant than they were with family-owned papers,” says Gil Thelan, editor of The State, a Knight-Ridder owned newspaper in South Carolina. “National ownership has made papers in the South more open minded in some ways.”

Critics of conglomeration disagree. “What it [media consolidation] means is that there’s rapid decline in the number of independent avenues by which people can have access to the media, which is necessary for a true democracy,” says David Kirsh of Balance & Accuracy in Journalism, a media watchdog group in Chapel Hill, North Carolina. “For the South in particular it means that there are even less available sources of non-corporate news.”

 

Merger Mania

Former Washington Post editor and author Ben Bagdikian first raised the alarm about the concentration of the media in fewer hands when he published his now famous study of media concentration “The Media Monopoly” in 1982. According to the original study, 50 individuals and companies owned the majority of media accessed by most Americans. In a later edition, the number of owners dropped to 19. Media concentration has since become the topic of numerous conferences and research and news reports.

Even media mogul Ted Turner, founder of the Atlanta-based Turner Broadcasting System, warned of the conglomeration of media ownership. Speaking to a cable TV convention in 1995, Turner told the audience,” It would be a very, very sad day if we just had four or five big companies controlling all the programming and all the pipelines in the country.” Ironically, weeks later Turner Broadcasting merged with Time-Warner to form the world’s largest media company.

Two months prior to the merger of Turner and Time-Warner, Walt Disney Co. and Capital Cities/ABC merged, making it the world’s largest media company. During the same period, Westinghouse, one of the nation’s largest suppliers of nuclear power, bought CBS for $5.4 billion. Another nuclear power supplier, General Electric, owns NBC. And in 1996, NBC and Microsoft, the nation’s largest supplier of computer software, jointly formed a 24-hour cable channel and Internet online service.

With record profits expected to be generated by these mergers and cross ownerships (when companies own several types of news outlets, i.e., newspapers owning TV stations or vice versa), many industry observers expect the trend to continue. According to a December 28, 1995, Associated Press article, there were 8,773 mergers in 1995 worth an estimated $466.34 billion. This was up from $347 billion the previous year. The trend continued into 1996.

But media giants like Time-Warner and Disney aren’t the only ones in the merger and expansion business. In 1996, newspaper companies also had an unprecedented rate of expansion, much of it into the television market. One of the biggest was the Southern based A.H. Belo Corporation, owner of the Dallas Morning News. The company acquired the Providence Journal company in Rhode Island for $1.5 million. Along with the prizewinning Providence Journal newspaper, A.H. Belo gained several television stations with the deal. The acquisition made the company the nation’s tenth largest TV operator in viewership and eighth in revenue. The company now reaches 12.3 percent of the nation’s television viewers. Because of the lucrative cross ownership market, other media outlets in the South may soon follow the A. H. Belo Corporation’s example.

To understand how the media ownership in the South has changed since Southern Exposure’s first survey in 1975 and the followup in 1992, SE looked at every chain that owned daily newspapers and television stations in each of the 13 Southern states.

The survey indicates that like their national counterparts, media companies in the South have enjoyed an enormous rate of growth and expansion in the past few years.

Among SE’s findings:

■ Hollinger International, a Canadian-based chain formally known as American newspapers, replaced Thompson, another Canadian company, as the largest owner of daily newspapers. Four years ago the company didn’t exist. The company now owns 27 newspapers in the South from Harlan, Kentucky, to New Smyrna Beach, Florida. Most of Hollinger’s acquisitions are papers with small circulations, says Paul Healy, a spokesman for the company.

■ Thompson, the number one owner of daily papers five years ago, sold off a number of its papers. Despite the losses, the company is still the third largest owner of newspapers in the southern region with 19 papers. Together, the two Canadian companies own more than 10 percent of all Southern dailies.

■ Canadian companies weren’t the only ones that made significant gains in the South. Media General, a Virginia company that owns the Richmond Times-Dispatch, grew from three papers in 1992 to 20 in 1997. More significantly, Media General expanded into television. In the last year, the company acquired TV stations in Birmingham, Alabama; Jacksonville and Tampa, Florida; Charleston, South Carolina; Chattanooga, Tennessee and in its hometown of Richmond, Virginia. Thanks in large part to its buyout of Parks Acquisitions, a media company based in Lexington, Kentucky, that owned 10 stations Media General now reaches 22 percent of all Southern households.

■ Though Hollinger, Thompson and Media General have the largest number of newspapers, their circulations rank well below national media chains with southern holdings such as Knight-Ridder, with a circulation of several million readers per day. Knight-Ridder is followed by Gannett, Cox, Hearst, Scripps-Howard, the New York Times chain, Tribune and Newhouse. In contrast, Hollinger’s combined circulation is 114,000.

■ As in SE’s 1992 survey, media ownership in Alabama is the most concentrated in the region. Chains now own 91 percent of all dailies in the state, up from 84 percent. Florida and South Carolina are second to Alabama in the number of papers owned by chains. Eighty-eight percent of dailies are owned by chains in these two states.

■ South Carolina leads the region with the number of TV stations owned by media chains. Sixty percent of all television stations in the state are owned by chains.

■ In January 1996, Cox Enterprises of Atlanta became the nation’s third largest cable company when it purchased Time Mirror’s TV operations for $2.3 billion. Cox is also owner of the Atlanta Journal and the Atlanta Constitution.

■ In July, 1996, Gannett, the nation’s largest newspaper chain, based in Virginia, bought Multimedia Inc. for $1.7 billion. With the purchase, Gannett gained several TV and radio stations, cable franchises and the rights to several national talk shows including Donahue, Sally Jesse Raphael and Rush Limbaugh.

 

Big Media

Though media mergers are likely to continue in the South as well as the rest of the nation, a recent survey by the Roper Center published in the March 2, 1997, issue of Parade magazine reveals public uneasiness about the increasing growth in corporate ownership of news organizations. Eighty-eight percent of those surveyed said they believe corporate ownership influenced news content. Ninety percent said advertisers influenced the news. The recent cases of 60 Minutes’ and ABC’s capitulation to the tobacco industry were cited as an example. Ninety percent of those polled in the Roper survey also felt that the corporate bottom line influenced the news.

For some observers, the poll results are a reflection of Americans’ suspicion and mistrust of the concentration of power in the hands of a few. David Lawrence, editor of the Miami Herald, Knight- Ridder flagship paper, told Parade magazine the survey “reflects a general antipathy toward bigness—big government, big business and big media.”

Frank Rich, a columnist with the New York Times, put it another way. Speaking to an audience at a forum on media consolidation, Rich said, “If you believe, as I do, that culture is also news, this consolidation of power not only affects whether stories about Phillip Morris run. It really affects our values, what we think of as our culture.”