Citizen failed but Gannett doesn't lose

By David Hatfield, Inside Tucson Business
Published on Tuesday, May 26, 2009

The Tucson Citizen was a failing newspaper. I don’t think anyone will argue that point. If it were any other business, it would have been gone long ago. 

But in 1970 Congress passed the Newspaper Preservation Act to preserve two independent newspaper voices in a market if one of them were in danger of failing. The act specifically allows two newspapers to circumvent such things as price fixing and other antitrust laws to combine business functions — printing, selling advertising and distribution — so long as they keep separate editorial functions.

In Tucson that combination is Tucson Newspapers, or as it is officially named TNI Partners. It made a profit of $21 million in the 12 months ending Sept. 30, 2008.

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Last week, U.S. District Judge Raner Collins appears to have set a precedent in a ruling that allowed Gannett Co. to let its newspaper, the Tucson Citizen, really fail, yet allowing it to continue to keep its half of the profitable TNI Partners — the very entity that was allowed to be created by a special act of Congress to preserve two newspaper voices. In his ruling, Judge Collins even admitted the Citizen qualifies as a failing newspaper.

Unfortunately, the lawsuit brought by Arizona Attorney General Terry Goddard’s office focused on trying to get a preliminary injunction to resume printing the newspaper claiming Gannett and the Arizona Daily Star’s owner conspired to shut down the Citizen.

I understand the business decision behind closing the Citizen‘s printed newspaper. It was a money loser. I would further argue the Citizen had already abdicated its position as a separate independent voice in the market.

The part I don’t get is that the Newspaper Preservation Act wasn't enforced to try to keep two newspapers publishing. There were people willing to talk about buying all of the Citizen’s assets, including the partnership in Tucson Newspapers. One of those was developer Don Diamond. For 10 years he owned KVOA 4, the TV station where I worked. I know there are those who have their issues with Diamond but he lives in Tucson and when it comes to media I think he genuinely believes the region should have strong credible voices. During the time he owned KVOA, the station’s news ratings grew from also-ran status into a dominating No. 1. During that same time, the station was quite profitable as the market’s top-billing TV station for advertising.

The U.S. Department of Justice spent seven months investigating Gannett’s planned sale of the Citizen but obviously didn’t insist the one thing that might have insured its survival under the Newspaper Preservation Act be included in the sale. They still might not have agreed on a price but now we’ll never know.

 E-mail comments for publication to editor@azbiz.com. Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.
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