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HonoluluNewsBlues
February 2000

The Year of
Stalemate and Sitzkrieg
It's the Racks, Jack!

Dispatches from the Front by Burl Burlingame
2/4/00 Chinese New Year! But the dancing lion/dragon that appeared for good luck in our news building every year chose not to visit the Star-Bulletin side, nor, apparently, the Advertiser news room. The wishes for good luck were confined to Gannett's executive spaces.
2/7/00 Alas, well-liked sports editor Paul Carvalho decided to slink next door and join the staff of the Gannett Advertiser. It's claimed that this was in the works since before the announced closure and subsequent injunction. Since Gannett took advantage of the injunction to renege on job offers to Star-Bulletin staffers, this came as a nasty surprise. It's difficult to wish him well under the circumstances.

2/8/00 University of Hawaii students are being aced out of half-price subscriptions to the Star-Bulletin but still being offered good deals on the Advertiser by HNA. The Gannett paper is even being given away free on campus, an obvious attempt to artificially boost circulation figures. Annoyed by this, I wrote an examination of the street-sales issue for the SOS site:

Put the Racks Back, Jack!
Call them street racks, honor boxes or news stands, the metal and glass newspaper dispensers scattered throughout a community are a direct reflection of a newspaper's capability of reaching their readers. The removal of Star-Bulletin racks -- and grudging, tardy replacement -- by the Gannett-owned Hawaii Newspaper Agency is a serious issue that illuminates deeper problems in the tangled relationship between Honolulu's daily newspapers.

When the Honolulu Star-Bulletin and the Honolulu Advertiser merged operations in 1961-'62, a third company was formed, the Hawaii Newspaper Agency, in order to handle all the tasks involved in producing a newspaper that did not involve the editorial content, such as advertising sales, production, printing and distribution. HNA provided Hawaii businesses an opportunity to advertise in both newspapers, and in return were promised full-market coverage.

The Failing Newspaper Act (FNA) of the late '60s gave a governmental stamp of approval on this collusion between separate corporate entities. A Joint Operating Agreement, or JOA, between the two newspapers and the government allowed Star-Bulletin owner Gannett Inc. to reap huge profits from the relationship and post these monies to corporate headquarters during the 1970s and '80s. The amount of these profits has never been made public, but conservative estimates by the Hawaii Newspaper Guild during this period figure a 40 to 50 percent profit margin.

The Hawaii Newspaper Agency, or HNA, was jointly owned by the Advertiser and the Star-Bulletin/Gannett, and the Advertiser used their position to leverage distribution concessions from the Star-Bulletin, who gave up distribution of the product to the neighbor islands in the early 1970s. They had little choice: if Gannett opposed this move, they would be in violation of the spirit of the FNA and the legal status of the JOA would be jeopardized. Besides, the move did not cut into their profits, which came from a percentage of advertising sales from both papers.

So matters stood for two decades. In that time period, the public's general preference swung toward morning rather than evening newspapers, and the Advertiser gained on the Star-Bulletin. Since the market slide didn't affect Gannett's bottom line, the newspaper giant made no efforts to rebuild Star-Bulletin circulation.

The situation changed dramtically in 1992, when Advertiser owners offered the morning newspaper to Gannett. Gannett, in the position of being able to seize not only the competition but able to pick and choose their own future partner, transferred all of the physical assets jointly owned by both newspapers to themselves, making it impossible to sell the Star-Bulletin to any responsible business other than a Gannett puppet -- which they provided in Rupert Phillips and Liberty Newspapers.

This arrangement, created in secrecy by Gannett and Liberty, was not examined by the Justice Department, although it would seem to be in violation of the principles and purpose of the FNA. The primary reason Justice allowed it to pass without scrutiny was that when the deal was completed, there were still two newspapers in Honolulu, and the the partners had publically pledged to maintain the status quo for many years to come.

The 1992 pact, however, left the Star-Bulletin voiceless in matters of crucial importance to any business, such as promotion, scheduling and product'delivery. The Hawaii Newspaper Agency, now wholly Gannett-operated (Liberty is a 'limited partner'), began further steps to cripple the Star-Bulletin, so that they could later claim that declining circulation would trigger Liberty's 1999 sell-out. Gannett's claim is that market forces beyond their control created the sell-out scenario, when in fact Gannett completely controlled the market.

The irony is that the Star-Bulletin's production and distribution is now in the hands of a corporation that is going to court in order to kill the Star-Bulletin.

Because these actions were conducted under the aegis of the 1992 JOA between Gannett and Liberty and the Justice Department, a case can be made that the 1992 agreement and sale represents an attempt to defraud the U.S. government, using the FNA as cover.

Evidence of motive and opportunity continues to pile up, throwing a spotlight on Gannett's possibly illegal -- and certainly unethical -- attempts to strangle the Star-Bulletin:

* The 1992 agreement removed the Star-Bulletin from the Sunday edition, which had been previously co-produced by both newspapers. The Sunday Advertiser is forced upon Star-Bulletin subscribers. The Star-Bulletin does not even have say over which color comic strips are run on Sunday. This meant not only that the Star-Bulletin ceased to be a daily newspaper in 1992, but that Gannett completely dominated the most lucrative day of the week, in advertising, editorial content and promotion.

* Gannett's HNA withdrew the Star-Bulletin from many outlying districts on Oahu, cutting into home delivery.

* Even so, home-delivery figures for both the Advertiser and the Star-Bulletin remain pretty-much neck-and-neck, making street and rack sales for both newspapers vitally important in determining circulation.

* Immediately upon announcement of the closure, HNA removed more than 150 Star-Bulletin racks from the streets, approximately a fifth of the total number. Although HNA head Michael Fisch claimed -- without offering substatiation -- that these racks were slow earners in outlying distracts, a glance at the map above shows that the locations of these missing racks are in the highly trafficked urban core of Honolulu. Fisch also publically fudged the numbers. And even if they were only selling a few papers a day, this adds up to hundreds of lost Star-Bulletin sales a day.

* The racks remained missing during the planned January Audit Bureau of Circulations survey of Honolulu. Fisch claimed they would be replaced in February -- after the damage has been done. Some of those that have been replaced are in different locations.

* Of the few racks that have been replaced, some have been repainted in Advertiser white (possibly at the request of fast-food operators), further reducing the Star-Bulletin's public presence.

* Far more Advertiser racks than Star-Bulletin racks are in place, and they dominate prime traffic sites such as malls and bus stops. The actual number of racks is a Gannett secret, even though they are placed on public property.

* Following the 1992 agreement, the Star-Bulletin's street and home editions were combined into one 'night final' edition. Street sellers complain that the Star-Bulletin's small-type home-edition layouts are extremely difficult to hawk to drivers and passersby.

* Citizens complain that outside sales and marketing businesses used to promote subscriptions use rude salespeople, that special deals are offered to lure Advertiser readers only, that HNA circulation managers lie about where the Star-Bulletin is available, that free Advertisers are given away wholesale, particularly during ABC's audit months.

* The Star-Bulletin's promotional budget vanished with the closure announcement and the ad agency that created the Star-Bulletin's campaign was hired away by the Advertiser.

* 'Banner' ads for websites were offered by HNA for the Advertiser site first, even though starbulletin.com was set up to handle banner ads a year before.

* Mysterious slow-downs have delayed the Star-Bulletin's printing schedule on an almost-daily basis since the closure notice.

* HNA president Fisch has reacted to public complaints about Star-Bulletin circulation with hostility -- even though increased Star-Bulletin sales mean a higher profit margin for HNA.

2/9/00 Perhaps in anticipation of widespread negative publicity concerning Gannett business practices, an internet pornography business in Secaucus, NJ, registered the web address GannettSucks.com. It's the same outfit that runs the notorious WhiteHouse.com porno site! Later, it turned out to be a corporate-complaint catch basin.
2/10/00 Gannett and Liberty lawyers and accountants were seen wandering the building, reading notes on bulletin boards and asking directions to the executive washrooms. They were easily spotted. They had on suits.
In the old days of thre British empire, the swells would dress up and go out into ghettos and slums of India and peer at the dying and impoverished, a way of reminding themselves of how superior they were.
Don Baker
Ian Lind photo
2/11/00 Attorneys for SOS flying in for settlement conferences included anti-trust specialist Don Baker, a Washington D.C.-based lawyer retained by the Communications Workers of America. This indicates how our case has created ripples among unions nation-wide. On the Gannett side is notorious union-buster Alan Marx.
In an interview with Ian Lind, Baker explained that the Justice Department NEVER approved the 1993 agreement between Gannet and Liberty.
"The DOJ never approved the 1993 amendment to the Honolulu JOA. As you know, you've got the two categories of JOAs. Amendments to the grandfathered ones (like Honolulu) are, under the statute, exempt unless they add additional parties. The post-1970 JOAs must be approved by the Attorney General and hence amendments to them are different. So the Justice Department would have said in 1993 that they had no approval function on the Honolulu JOA and didn't approve the new Gannett deal with Liberty."
2/14/00 The Honolulu Weekly's appallingly mean-spirited Bob Rees, whose head is usually burrowed firmly up the backsides of the corrupt (or stupid) Bishop Estate trustees, rails against the ACLU for supporting the Star-Bulletin fight to provide an independent editorial voice in Honolulu. Since the Weekly's stated mission is the death of the Star-Bulletin -- in publisher Laurie Carlson's overheated imagination, that means the Weekly would rule Hawaii -- this rings as particularly self-serving.
2/26/00 During a trip to Kona, Ian Lind commented on the lack of Star-Bulletins but spotted what appeared to be Star-Bulletin news racks containg other papers.Inspired, I called the Circulation Department -- could I buy a used Star-Bulletin rack? I'd put it in my front yard and sell papers. After all, there were no Star-Bulletin news racks within a mile of where I live.
No soap, was the reply. No racks available, and certainly not to private citizens. The Kona racks are owned by a Big Island distributor who sneakily painted the boxes the Star-Bulletin's official color. Or so Gannett's Circulation Department claimed.
NEXT! March 2000
An Offensive Defense

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