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This week, we’re featuring Kerry’s conversations with two giants in Arkansas publishing, Walter Hussman and Alan Leveritt! Did the outcome of the infamous "1974 Newspaper War" lead to the creation of the Arkansas Times?
In 1974, Alan Leveritt and a few friends launched the Arkansas Times, an alternative monthly magazine that provided political and cultural news to the state. Leveritt had gotten his start in the media business during his college days in the early 1970s at Little Rock University, now the University of Arkansas at Little Rock (UALR). He founded and operated an independent student newspaper, Essence. On its editorial page, Essence supported Leveritt’s personal politics, which embraced the ideas of libertarianism and the Young Americans for Freedom party. Using a $200 donation from a local bookstore, Leveritt and his associates published the first edition of the Union Station Times on September 5, 1974, so named because it was headquartered near Union Station in Little Rock. In July 1975, the name of the monthly publication was changed to Arkansas Times.
Walter Hussman was born in Texarkana, Arkansas but moved to Camden, Arkansas in 1949 and has been involved in the newspaper business in Arkansas for all of his adult life. He earned his bachelor’s degree of journalism from the University of North Carolina and his master’s degree in business administration from Columbia University. In 1970, Hussman worked as a reporter for Forbes magazine. He returned to Camden to become the general manager of The Camden News. In 1973, he moved to Hot Springs accepting the job of vice president and general manager of Palmer Newspapers, which is a division of WEHCO Media.
EPISODE 203
INTRODUCTION]
00:00:08] GM: Welcome to Up in Your Business with Kerry McCoy, a production of flagandbanner.com. This weekly radio show and podcast offers listeners an insider’s view into starting and running a business, the ups and downs of risk-taking and the commonalities of successful people. Connect with Kerry through her candid, often funny and always informative weekly blog. There, you'll read, learn, and may comment about her life as a 21st century wife, mother, daughter and entrepreneur.
EPISODE]
00:00:35] ANNOUNCER: On today’s special edition of Up In your Business with Kerry McCoy, we meet and compare two giants in the journalism business in the State of Arkansas, Walter Hussman and Alan Leveritt. Let's begin with Kerry's patented biographies, which begin each program. First, Walter Hussman.
00:00:55] KM: A third generation newspaper man and the publisher of the Arkansas Democrat-Gazette in Little Rock, the largest newspaper in Arkansas. Hussman is known nationwide for his David versus Goliath win in a 17-year newspaper war between the Democrat and the Arkansas Gazette. That in 1991, culminated into a merger between the two, thus creating the now known Arkansas Democrat-Gazette.
Hussman’s other notable accomplishments came during the dotcom restructuring of readership from print to online. In 2007 for the Wall Street Journal, Hussman penned an article, How to Sink a Newspaper, urging newspapers to stop providing free content online. He warned that the online posting of newspapers would become a self-inflicted wound.
Walter was born in Texarkana, Texas, raised in Camden, Arkansas, and schooled in North Carolina and New York. Before returning to Camden, Arkansas and hiring on as the general manager of the Camden News, he cut his teeth as a reporter for Forbes magazine. It was in
1973 that Walter accepted job in Hot Springs, Arkansas, as Vice President and General Manager of Palmer Newspaper, a division of WEHCO media, a family enterprise.
The following year, his parent company, WEHCO Media, purchased the Arkansas Democrat newspaper and Hussman moved from Hot Springs to Little Rock to manage this new acquisition. As circulation for his democrat newspaper dwindled, Hussman reached out to his main competitor, the Arkansas Gazette newspaper, requesting a merger of the two. When then publisher, Mr. Hugh Patterson refused, Hussman vowed to work hard and revitalize his fledgling democrat newspaper.
By 1980, a mere five years after his merger request, the democrat had become the fastest-growing newspaper in the United States. By 1986, under Hussman’s management, the democrat led the Gazette in Sunday distribution and was tied in daily circulation. In 1991, WEHCO Media purchased the Gazette from its more recent owner, Gannett, and did what Hussman had proposed two decades earlier. They combine the two papers into a new publication named simply, the Arkansas Democrat-Gazette, which Hussman, Walter Hussman, Jr. remains at the helm today.
00:03:26] ANNOUNCER: Now a quick profile of our other guests on this program, Alan Leveritt.
00:03:30] KM: Who in 1974, with a few friends launched the Arkansas Times, an alternative monthly magazine about political and cultural news in Arkansas. Following the 13 year-war between the two newspapers, Arkansas Gazette and Arkansas Democrat, which resulted in the closing of the Gazette in 1991 and the renaming of Democrat to the Arkansas Democrat-Gazette, Alan said and I quote, “We wanted to keep the Gazette’s voice alive in the community.” Last but not least, when Alan is not trying to change the world, he is a second-generation farmer, or third?
00:04:07] AL: Third.
00:04:08] KM: Third generation farmer. Already started your media career in college. Can you tell us a little bit about that?
00:04:14] AL: Well, actually, I started a newspaper at North Little Rock High School called Essence. I was actually a conservative activist, a conservative political activist in high school. I came from a very conservative family politically, and was active in young Americans for freedom. I started Essence in high school, my senior year and into college with me. It was a libertarian independent student newspaper.
00:04:37] KM: That's not conservative.
00:04:38] AL: Well, it is actually.
00:04:39] KM: Libertarianism is conservative? What’s the definition of that?
00:04:42] AL: Well, libertarians believe in very, very limited government. They want to keep the government out of your pocket book. They also want to keep the government out of your bedroom.
00:04:52] KM: Well, I agree with that.
00:04:53] WH: I respect libertarians the way I respect the Catholic Church. I don't agree with their stance on abortion, but it's very, very consistent with their pro-life stance on the death penalty. I respect the catholic church, because even though I disagree on abortion, they are very, very consistent in their pro-life. Not like many evangelical conservatives who say, “Well, we're pro-life when it comes to abortion, but we're all for the death penalty.”
00:05:20] KM: I never thought about that.
00:05:21] AL: Libertarians are the same way. Whereas, the social conservatives, they want to get the government out of your pocket, but they would have put the government back in your bedroom. Libertarians are very consistent in saying that we want as little government as possible.
00:05:34] KM: I've never thought about either of those issues. After you got out of college, you started another newspaper.
00:05:41] AL: Jim Bell, the owner of Publishers Bookshop gave me $200. I asked him if he wanted to buy stuff. He said, “Well, how much you’re looking for it?” I said, “What do you got?” He says, “Well give you $200.” I said, “Great.” Been down to park and printing company and that bought me a blank stock certificate. I filled it out, gave it to him and he gave me $200. Found out years later, he'd written down this checkbook donation, because he never expected to see the $200 again.
00:06:04] KM: That newspaper was called?
00:06:06] AL: Union Station.
00:06:07] KM: That's right.
00:06:08] AL: Which eventually morphed into Arkansas Task. Realized we couldn't make a living as a neighborhood newspaper. We were down on this little railroad house, down to second street about the train station, Union Station. David now live in the back and then we put out – our volunteer staff put out –
00:06:24] KM: Was it conservative?
00:06:25] AL: No. It was moving in a more liberal direction. It wasn't so political. It was really focused on investigative reporting. We weren't near peggable, if you will. Although, I remember Saber Distributing. They were the magazine distributor here in Little Rock back then. Mr. Saber decided we were communist. Where he came up with that? He said we were communist, and so he wouldn't distribute us. That's when we started having to put out boxes and come up with all kinds of ways to get the newspaper in people's hands.
00:06:56] KM: That Union Station Newspaper, was investigative reporting, morphed into the Arkansas Times.
00:07:04] AL: Right. It became Union Station Times and Arkansas as Union Station Times.
00:07:08] KM: In 2015, you did a really big investigative story and you broke some news in Northwest Arkansas. They got picked up nationally.
00:07:15] AL: Oh, yeah.
00:07:15] ANNOUNCER: You may have heard Kerry McCoy refer to Alan Leveritt as being a third-generation Arkansas farmer. Well, there's a third-generation aspect of Walter Hussman as well.
00:07:25] KM: Three generations of newspaper men in your family, you're the third. I read also about your father. To get to know you, and for our listeners to get to know you, let's start with your father and tell us a little bit about him.
00:07:40] WH: Well, he was born in 1906, in Bland, Missouri. Their family was German. The ancestors come from Germany, and a lot of Germans settled in Missouri. My grandfather was a railroad engineer. They lived in the German section of St. Louis. I remember growing up there. Never really good with my grandfather, but my grandmother I did. We'd go up to St. Louis, and they lived in row houses. It was Stoops. I still remember that very vividly.
He grew up in a lower working-class neighborhood and that's what his family was. My dad dropped out of high school, and went to work out in the wheat fields of Kansas, etc. He later went back to high school, and I think he was maybe 20-years-old, when he went back to high school. It was so embarrassing, said to him. He was in there with a bunch of 14, 15-year-old kids. He realized that he made a big mistake. Then he went on to the University of Missouri, and he was studying journalism. That's where he met my mother. She was from Texarkana and she'd gone to Lindenwood College and St. Louis, and then she transferred over to University of Missouri. She was in journalism school. Anyway, they met in the journalism school, and he also was in journalism school with his college roommate, who is a fellow named Donald W. Reynolds.
00:09:14] KM: I know. Wow.
00:09:16] WH: Now Don Reynolds, of course is the man who has made so many incredible philanthropic gifts in Arkansas, and Oklahoma and Nevada and other places, but mainly those three states. Anyway, they were lifelong friends. Anyway, that's a little bit about the start of my dad.
00:09:33] KM: I think it's interesting that a guy who dropped out of high school goes off to go to college in journalism. He obviously didn't have a reading problem.
00:09:42] WH: Yeah. No. He was a very smart fella.
00:09:47] KM: He joined the service in World War II at 35?
00:09:50] WH: Yeah. I can't remember his age. I remember, he came from Camden up to Little Rock and he was over at Camp Robinson. He was the public affairs officer. Then his friend Don Reynolds asked for him to be transferred over to Europe, where the war was going on. Don was the publisher of the Yank Magazine, which was a publication known by the United States Army, or United States Armed Forces. It was for the entertainment of information for the troops. It's the newspaper, was Stars and Stripes, well, there was also a Yank Magazine that came out less frequently.
Anyway, they were co-publishers of Yank Magazine and Paris at the time. I remember going, when I was 13-years-old, I got to go to Europe with my mom and dad and grandmother. We stayed in the hotel and my dad was telling me, when he was in Paris, it had been liberated by the American forces, but there were still snipers. They were still Nazi sympathizers, so it was still a little bit dangerous being there.
00:10:53] KM: I guess, yank doesn't stand for Yankee?
00:10:56] WH: I’m not sure how they got. Yeah.
00:10:58] KM: Then your father-in-law is interesting. Your father met your mother in journalism in Missouri. Turns out, her father was Mr. Palmer. Tell our listeners.
00:11:11] WH: Yeah. He was from Clear Lake, Iowa and somehow ended up working for the railroad in Fort Worth. My grandmother was from Cleveland, Tennessee. I don't know how she ended up in Fort Worth, but they met, they got married, and they decided to go on their honeymoon. They got on the train. I guess, back in those days if you worked for the railroad, you get to ride the trains for free. Back in 1909, the railroads only ran during daylight hours, because there wasn't enough fencing in the United States. There was a lot of livestock that roamed around and the train didn't want to run into some cattle or anything.
They stopped the first night in Texarkana. They got off the train and they went into town and apparently, met some people, had a great time and they thought, “Gosh, let's stay here a couple of nights. There'll be another train coming through and we can get on the train going down on our honeymoon down to Florida, or Cuba, or wherever they were going.”
Anyway, they liked Texarkana so much that I decided to settle there. He went to work for one of the newspapers. There were a number of newspapers in Texarkana then. He eventually got to buy into it and eventually, got to buy all of it. Eventually, ended up being the only newspaper in Texarkana.
00:12:29] KM: That's where you were born. That was your grandfather?
00:12:31] WH: Yeah, that's my grandfather. C.E. Palmer.
00:12:33] KM: Well, he sure did turn that little newspaper into a media giant, didn't he?
00:12:39] WH: Yeah. Actually, it's interesting. My grandfather was a real entrepreneur. He was buying oil leases and things over in El Dorado. The story is, and I don't know how accurate this is, but the story that was handed down in the family is that he bought up a whole bunch of land leases in around the El Dorado, the smackover. H.L. Hunt bought a bunch of them too. H.L. Hunt’s was on one side of the railroad track and my grandfather's were on the other. It turns out on the side H.L. Hunt got, well, that's where the oil was. He ended up in the newspaper business, instead of the oil business.
Some people wanted to buy the Texarkana paper, and they actually – he sold it to him. I guess, he thought, “Gosh, they're offering such a fantastic price.” Anyway, they gave him some cash and they gave him some notes. I guess, because you're paying such a high price, he will take some notes. Well, along came the depression and they defaulted on the notes. He ended up with the ownership of the newspaper.
00:13:44] KM: He got other newspapers after that, too, didn’t he?
00:13:46] WH: Yeah. We literally ended up back in the newspaper industry by default, literally.
00:13:53] KM: Literally. He bought Hot Springs Newspaper?
00:13:55] WH: He bought Favor and Hot Springs –
00:13:56] KM: Camden?
00:13:58] WH: Camden. El Dorado and Magnolia. Of course, Texarkana was his home.
00:14:03] KM: When did you decide to call it WEHCO?
00:14:05] WH: He didn't.
00:14:06] KM: Oh, that was you?
00:14:07] WH: No, that was my dad. Because WEHCO stands for Walter E. Hussman Company.
00:14:13] ANNOUNCER: Now that we've got a good solid foundation for the beginnings of the careers of these two journalistic giants, let's talk about today. Here's Kerry with Alan Leveritt.
00:14:22] KM: Is the Times a magazine or newspaper. What's the difference?
00:14:25] AL: Well, the Times, I guess, I'd have to say is a newspaper, because the Times is much, much more current. The Times is right in the middle of what's going on in terms of politics, in terms of culture, in terms of weekly music, live music, entertainment, dining. We're covering the legislature. We have people out at the legislature. Max Brantley with the Arkansas blog, arkansastimes.com, his blog is he'll do 20 posts a day.
00:14:52] KM: What?
00:14:53] AL: Oh, yeah. No, he'll be sitting there watching the live feed of legislature on the debates and everything. Plus, he knows where everybody is buried in the State of Arkansas. He can bring that 50 years of experience as a working journalist, his knowledge of the legislature and technology and deliver really good, insightful –
00:15:13] KM: Does anybody else do that? 20 blogs a day from the legislature? Is he the only one?
00:15:18] AL: No one's doing that now, right now in this market. No one does it as persistently as Max does.
00:15:24] KM: That’s wonderful.
00:15:26] AL: Yeah. It’s really good. If you if you're interested in breaking news and breaking news from a really, really informed left of center perspective, Max at arkansastimes.com, the Arkansas blog is the place to go.
00:15:37] KM: Is that free to be an artist on Times?
00:15:39] AL: Everything at the Arkansas Times is free, except the Arkansas blog. The Arkansas blog is a meter, has a metered paywall. You can go there 10 times a month free of charge. Then, we cut you off, because we're trying to all of us live indoors and as you said, technology is changing. We are trying to find new advertising revenues and new revenue streams. What we found is that we need to be –
00:16:06] KM: You need money.
00:16:07] AL: We need money. Yeah.
00:16:09] KM: Technology is expensive.
00:16:10] AL: Well, people are expensive. People like Max, who have the experience and the knowledge and the know-how, I've got to pay them. Readers have got to step up and help pay that bill, too, not just advertisers anymore.
00:16:22] KM: Yeah. The Arkansas times is free. It's everywhere. You can pick it up everywhere. You can't make money off of that. It's not like the newspaper where you have a subscription. You have no subscription.
00:16:30] AL: Well, Arkansas Times, we joke internally, we're aspirationally profitable. The Arkansas Time sells advertising. We sell a lot of advertising. Plus, we do other things. Like you said, El Latino, we do Arkansas Wild Magazine, which is eight times a year. It's a statewide. We do two bike magazines a year, four Arkansas Wild Magazines a year. We do paddle magazine once a year. We do a lot of things.
00:16:53] KM: How many employees do you have?
00:16:55] AL: We have 35.
00:16:56] KM: How many freelance people do you have?
00:16:59] AL: A few. We use some freelancer. On the Arkansas times, we're probably 80% staff written. We've got seven full-time staff members in the Times. This has been a rough time for newspapers all over the United States. The democrat has had to layoff, gosh, I don't know, 15, 20 reporters. We have been able to avoid that. It's been very, very different.
00:17:24] KM: Alan, the Arkansas Gazette, I read when I was doing the research for you, started in 1819 in Arkansas before it was even a state. I had no idea. When it folded in 1991, its assets were purchased by the then Democrat Newspaper. What did you think about all that, because you were already in business?
00:17:43] AL: My second job was writing weekend obituaries at the Arkansas Democrat. I could barely type. My third job was being the weekend obituary writer at the Arkansas Gazette a year later. I've worked at both papers. That's probably the lowest of the lowest entry level jobs is not only to be the obit writer, but the weekend obit writer. I knew that the Gazette was by far, the best paper in terms of reporting, in terms of journalism, had old sorry business office. Perhaps, there was nothing but order takers. One of the salesman in amongst them.
00:18:23] KM: You know, the Democrat was only a quarter of the size of customers as the Gazette had
00:18:31] AL: Right. You had a very, very dedicated publisher. You had a young guy that had very, very deep pockets for this family’s –
00:18:37] KM: Are you talking about Mr. Hussman?
00:18:38] AL: Yes. He was young then. He had very deep pockets. His family had been doing cable television for years and years. He was able just to out-lose the Gazette. Then when the owners of the Gazette sold out to Gannett, we thought, “Well, that's the end of the Democrat.”
00:18:58] KM: Yes. Right.
00:18:59] AL: What we didn't realize is that for Gannett, this was a business decision. How many millions of dollars they were going to lose, they had to answer to stockholders? For Mr. Hussman, it was a lifestyle decision. I mean, do you want to be publisher of the daily newspaper in Little Rock, Arkansas? That's a life. That's hard to put a value on. Evidently, he put a greater value on it than Gannett and their stockholders did. Ultimately, they walked and he took over.
I will tell you, I think the Democrat today is a very good newspaper. We're lucky to have a local owner. You see some of the sorriest papers in the world in some cities much larger than ours, because their daily papers, business is tough. You don't have a publisher that will commit personal resources to keep that paper alive and keep it doing what it ought to be doing for its community. I don’t think the Democrat does.
00:19:53] KM: We are lucky to have a local owner for our newspaper. It's not some big corporation in New York that run –
00:19:57] AL: Exactly.
00:19:59] KM: When I read about how good Walter Hussman did, and what a great businessman he was and how competitive he was, and how he just was not going to fold, when his subscribers were low, he went to the Gazette and said, “Do you want to buy my paper?” They said no. 13 years later, they're folding, and he's buying their assets for probably 10 cents on the dollar.
00:20:23] AL: I'm sure it's frustrating, though, because when he took that over, basically, he had a printing press for money when he was able to finally win that newspaper award. It wasn't five or six years later, the bottom fell out of the newspaper business. I'm sure he's made it back. I’m not worried about Walter.
00:20:39] KM: Arkansas Gazette is one of the newspapers that is solvent across America, when everybody was not – it was solvent and is sometimes used as an example of how to do business.
00:20:47] AL: Oh, the Arkansas Gazette? Oh, it was it was wildly profitable.
00:20:51] ANNOUNCER: There's that phrase, the newspaper war between the Arkansas Democrat and the Arkansas Gazette. Let's hear Walter Hussman's perspective on those years.
00:21:01] KM: I remember it. It was a war. They called it the newspaper war, and was probably the most aggressive newspaper war in the United States.
00:21:10] WH: Well, it really didn't start out that way. Really, we tried to reduce expenses a lot in the newspaper. I remember when we bought the paper, there was a union organizing attempt in both the Democrat and the Gazette. The first thing we need to do is try to win that election. We won a 31 to 15. Still remember all these years later. The Gazette won their election 50 to 50. That tells you a little bit incident in event of a tie, management always wins. The interesting thing, they had a 100 people that voted in their news room. We had 31 to 15.
00:21:49] KM: What does that tell you?
00:21:51] WH: They had a newsroom that was double our size. Obviously, there was a lot more news and lot more information in the Gazette. At first, we just tried to be more clever, do more local news, maybe just edit the paper in a more interesting way than the Gazette. We tried to be a complement to the Gazette. We knew the Gazette was dominant. We tried to be a complement. We tried to be profitable. That strategy didn't work.
After about three years, my dad had said – when we bought it, he said, “This is a long shot.” We got to have enough business discipline to realize after three years, if this doesn't work, we need to realize it and not throw any good money after bad.
00:22:35] KM: You've come to your three-year mark.
00:22:36] WH: We come to the three-year mark and it was discouraging, because we had made so much progress. For example, our production cost per page had gone from about a $100 per page in labor to about $20 a page in labor.
00:22:51] KM: Is that from automation?
00:22:52] WH: Yeah. Yeah, definitely some automation. Some of the unions are decertified, and so we had more flexible work rules. We were still losing money. We were losing market share. At that point, we tried to throw in the towel. That's when we went to the Gazette and said, “Why don't we do a joint operating agreement, which was an exemption from the antitrust laws to allow two newspapers to combine their business operations?”
Our proposal was we'll still put out a newspaper in the afternoon, you put out one in the afternoon, but you run everything. You run all the business operations, only one company to come to to buy newspaper advertising and then be the combined company and we’d take 10% of the profits, give you 90% of the profits, etc.
00:23:37] KM: Were you offering the paper cheap?
00:23:40] WH: Yeah. Oh, yeah. I mean, we weren't –
00:23:43] KM: Why do you think they didn't take it?
00:23:44] WH: They thought we were going to go out of business. That's what I think.
00:23:46] KM: They were just going to wait it out.
00:23:49] WH: I can't blame them, really. They were right. We were about to go out of business We thought about shutting the newspaper down.
00:23:58] KM: I've read this two different ways and I don't know which one's right. Was the Democrat, the one you owned was an afternoon paper. It had half the circulation as the Gazette, which was the morning paper. Which one was liberal and which one was the conservative?
00:24:10] WH: The Gazette was more liberal and democrat when we bought it was not really conservative. I mean, it was middle of the road, I guess. Because we were more conservative, the editorial page became more conservative.
00:24:26] KM: When Hugh Patterson, the managing, or the publisher of the Gazette turned out, declined your offer, what made you decide that you were going to just go for it? You did three things that really turned your paper around?
00:24:40] WH: Yeah. Well, basically, we said at this point, we're looking at shutting the paper down. We got legal opinions about what will happen. How do we do this? What are the liabilities we'll have to pay off, etc. We did all notes on the paper, which we would had to pay off.
00:24:57] KM: How old are you right now, when this is happening?
00:24:59] WH: This is going on, see, I was 27 when we bought the paper, so I was 31.
00:25:04] KM: He's a child.
00:25:07] WH: Basically, we sent out a figure. My dad said, “We've always been successful. We've always been successful publishing newspapers.” We got into the radio business in the 1930s. We were always successful at that. We got in the television business 1950s and we've been successful at that. We got into the cable television business at 1964. In the history of our company, this is a pretty spectacular failure.
I thought, “You know what? If we're going to fail at this, let's just don't whimper out. Let's say, we gave it everything we could. Let's see if there's any other strategy that would work.” We
said, we really haven't tried to put out as good a newspaper as the Gazette. We've tried to edit it more cleverly and emphasize more local news and things like that. We are not giving people as good a product. We don't have as much news in the paper. We don't have as much advertising in the paper. Is there something that could work where we would actually try to do that? At that point, we went around, took four or five places in the country and one in Canada, where the number two newspaper had pursued a successful strategy to try to catch up with the number one newspaper.
We went to Dallas, where the afternoon paper become a morning paper. We went to Chattanooga where the number two newspaper become the number one newspaper, mainly by putting a lot more news in their paper than the other paper. We went to Winnipeg, Canada, which had gone with free one ads for classified advertising, so they'd be more readership for the classified ads and the competition.
00:26:44] KM: You took notes on all of that.
00:26:45] WH: Yeah. We amalgamated a strategy and thought, “Why don't we try to do all of it at one time? If this fails, we can say at least, we tried everything.”
00:26:56] KM: Be an epic failure.
00:26:58] WH: Yeah.
00:26:58] KM: You did. You offered free one ads. First time I ever heard of it. You switched to a morning distribution and you brought on new talent, so you'd have better content.
00:27:09] WH: Right. Yeah.
00:27:10] KM: You know all three of those from your research.
00:27:12] WH: Right. From looking at what had worked in other markets.
00:27:16] KM: Wow. That's really impressive. It only took five years, I think, for the Democrat to be noted as the fastest-growing newspaper in the United States and you were tied with the Gazette.
00:27:29] WH: Well, yeah. We were not tied with them in circulation and been five years, but we were gaining. We were gaining on them. I'll tell you, the most amazing part of that whole story is our classified advertising revenues in 1978, before we went to free one ads were $796,000 a year. Five years later, our classified advertising revenues were over 5 million dollars a year.
00:27:56] KM: You were giving away for free.
00:27:57] WH: I know. everybody says, “How could that happen?” We only gave the ads away free to individuals who had for sale by owner. If they want to sell a pad, if they want to sell a car, if they want to sell a boat. All of a sudden –
00:28:12] KM: Garage sales.
00:28:12] WH: Yeah. This is what they did in Winnipeg, Canada. All of a sudden, we had a lot more cars for sale in our newspaper than the Gazette had cars for sale in their newspaper. Now, the car dealers decided they wanted to start running with us. Of course, the car dealers paid for their advertising.
00:28:31] KM: Was that unexpected?
00:28:32] WH: No, that was the whole plan.
00:28:34] KM: You knew it?
00:28:35] WH: Well, no. Wait. We knew that's what it would work like if it was successful. We didn't know if it'd be successful. In fact, the paper in Colorado Springs several years later came down and they copied everything we did. They copied our TV ads, they copied how we man the phones, everything, and it never worked in Colorado Springs. Why? I don't know, but it worked here in Little Rock.
00:28:59] KM: You were willing to share all of this with a fellow newspaper.
00:29:04] WH: Newspapers have been great all over the country, because typically, they don't compete with one another. They're in different markets. Newspapers always pretty much shared anything they've done with other fellow newspaper owners.
00:29:16] KM: I thought there was a time, and I may be completely wrong about this. I thought there was a time when there were some sort of rules in place that no one person could have a monopoly in media, and that that was deregulated, maybe during the Clinton years. You know what I’m thinking, talking about?
00:29:31] WH: Yeah. Well, there's the cross-ownership rules. Basically, you couldn't own a newspaper and television station in the same market.
00:29:38] KM: But WEHCO did. It was different markets?
00:29:41] WH: Well, certain markets were grandfathered in. We owned a newspaper and television station in Texarkana. Actually, that we got grandfathered in, then later they decided, well, we shouldn’t own it. We actually went to court and we won that in court in the Fifth Circuit. We were able to keep our television station.
00:30:01] KM: Now, those rules – what do you call that rule?
00:30:03] WH: Cross-ownership.
00:30:04] KM: Now, those cross-ownerships don't apply anymore, right?
00:30:07] WH: Yeah. They're actively considering allowing newspapers and TV stations to be on the same company.
00:30:14] KM: The reason you couldn't have cross-ownership is because they didn't want any one person to have too big of a voice for propaganda?
00:30:20] WH: Yeah. Well, that was the one of the main reasons. Also, if you own the television station and a newspaper in the same market, you'd have an inordinate amount of the advertising revenue.
00:30:30] KM: Control over the media.
00:30:32] WH: Yeah, control what you charge for advertising.
00:30:35] KM: Oh, well. I'd see, I never thought of it like that I thought of it is more like, you'd have too much control over what you told them.
00:30:44] WH: That's true. That was a major reason for –
00:30:47] KM: Propaganda that you could sway public opinion and you would never write about yourself if you were a crook, because you own everything. That’s what I would do. It’s like, don't tell anything about the family in the newspaper. When you had this great success and you decided to turn it into the Arkansas Democrat-Gazette, how did you picked that name? Arkansas Democrat-Gazette. How did you decide to just merge those names?
00:31:14] WH: Because the Gazette had had a great tradition in Arkansas, had been a great newspaper, the oldest newspaper west of the Mississippi, won Pulitzer Prizes. I just didn't feel like it was right to let the Gazette name go away.
00:31:28] KM: You added the Democrat to it.
00:31:29] WH: Yeah.
00:31:31] KM: Right before you bought it, WEHCO was big. WEHCO Media was a big company in Arkansas, but Gannett bought the Gazette, the Arkansas Gazette, and they are a nationwide big company. Were you shaking in your boots now?
00:31:52] WH: Oh, yeah. When they came to town – you say, we're a big company. We had about 60 million dollars a year in revenue. I think Gannett had 2 billion dollars a year in revenue.
00:32:02] KM: Yeah. That’s really big.
00:32:05] WH: We were pretty small compared to them.
00:32:06] KM: Yeah. Compared to them.
00:32:08] WH: Yeah, they made it now when Al Neuharth came to Little Rock. He said, “We're here to use our considerable resources to prevail in the newspaper market here.”
00:32:18] KM: They ended up suing you over antitrust laws, didn’t it?
00:32:20] WH: No. Gannett did. That was a suit filed by the previous owner, the Patterson, Hugh Patterson.
00:32:28] KM: Oh, okay. You won that lawsuit.
00:32:30] WH: Yeah. What happened is that we were gaining market share with our new strategy, morning newspaper, free one ads and all these things. I know it must have been frustrating to the owners of the Gazette, because at one time they could have had 90% of the whole thing to themselves. Now, what I think frustrated them the most was in 1984, we finally gained enough market share, where we had some profitable months. Okay, so that was big, because we lost a lot of money during the turnaround in ’79, ’80. Every year, we lost less and less and less money. In ’84, in April 1984, we made a profit of over $14,000 after depreciation, after interest, after tax, everything.
00:33:18] KM: That’s not very much.
00:33:20] WH: I know, it is not much. But when you've lost a lot of money, it seemed great. We printed up these buttons and said, we're in the black. I thought, what are we going to do with $14,000? That's not much compared to – We took it and we divided it about 352 employees, and we gave everybody a check for $40 or something and said, we're going to take our first profit and give it to our employees.
00:33:43] KM: That's awesome. Did the owner of the paper when you began to take over market shares, do the owner of the Arkansas Gazette come to you and say, “Okay, remember that offer you made me a while back?”
00:33:53] WH: No.
00:33:54] KM: He didn’t. His ego was too big.
00:33:56] WH: Now, that was in April of ’84, when we made a profit in December of ’84, they filed an anti-trust suit, saying we were trying to drive them out of business. When we finally got all the records through the anti-trust, we had about 36% of the revenue and they had about 64% of the revenue, yet we were trying to drive them out of business. It didn't make sense. It didn't make sense to the jury either. That's when we won the case in ’86.
00:34:20] KM: They sell to Gannett, and then you still continued to grow, even though Gannett had deep, deep pockets. They finally, how many years did they stay?
00:34:30] WH: A little under five years.
00:34:31] KM: They just decided to give it to you.
00:34:34] WH: Well, I'll tell you what happened to the Gazette. Under the previous owners, the Gazette had been profitable every year. In fact, I remember at the trial, we introduced an exhibit and the Gazette had never lost money in a single year, even during the Great Depression. Really, pretty remarkable.
00:34:52] KM: That is remarkable.
00:34:54] WH: Once it was sold to Gannett, the strategy was just a scorched earth all out, we're going to become the only paper in town, and our losses went way up, too, to try to match him. With that going on, the Gazette that started losing money. More importantly, we continued to gain market share. They lost market share. Until about 1988, a couple of years later, and they got so frustrated, they cut their subscription price from $2 a week to 85 cents a week for every single one of their subscribers.
If we had cut our price like they had, we would’ve lost so much money, we would have gone out of business. We couldn't do that. In the final analysis over the five years they had the paper,
they lost more money every year than they lost the previous year. They lost market share every year with the previous year. One of the things I learned from this whole experience is think about profitability. You're either making money, or you're losing money. Think about market share, you're either gaining market share, or you're losing market share.
There are four different scenarios you can find yourself in. You can be making money and gaining market share, that's the best of the four. You can be making money and you could lose market share, and you're going to keep your business open, because it's still profitable. I don't know how long it's going to be profitable, but still profitable. Now, you could be losing – I just mentioned it, be profitable losing market share. You can be losing money and gaining market share –
00:36:37] KM: In a growth mode.
00:36:39] WH: That's where the democrat was. It's still worth continuing to operate, because you can say, if we keep gaining market share, eventually we're going to be profitable, if it makes sense. The only scenario that it is a lose-lose is if you're losing money and you're losing market share. If you're in that situation, it doesn't matter whether you're a newspaper, or I remember, Exxon got into the office products business in the 70s. They lost money. They lost market share. It doesn't matter how big you are. If you lose money and you lose market share, you're not going to survive. That's the situation Gannett found themselves in with the Gazette.
00:37:17] ANNOUNCER: You're listening to Up In your Business with Kerry McCoy special edition of the program, where we're getting historical perspective and commentary on today's journalism from two journalism giants in our state. Alan Leveritt from the Arkansas Times and Walter Hussman, Jr. from the Arkansas Democrat-Gazette. We'll be back with something from Alan in just a moment.
00:37:36] KM: Time to take a break. When we come back, we're going to ask Alan his opinion about the future of media in America.
00:37:43] ANNOUNCER: It's the time of year to splash your home with as much red, white and blue as possible. The patriotic season in the USA, it runs from Memorial Day, all the way through Labor Day. This year, you'll want to do it more proudly than ever before. Whether you're
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00:38:23] KM: You're listening to Up In your Business with Kerry McCoy. I'm speaking today with Alan Leveritt, publisher of the Arkansas Times, EL Latino newspaper, Arkansas food and farm magazine and Savvy Kids. We had a question during the break. It is, with so many people getting their news online, is it hard to be competitive while keeping quality content?
00:38:45] AL: Well, first of all, we published arkansastimes.com, which had 450,000 unique visitors last month, according to Google. Its first or second largest new site in the state. We have tremendous traffic there. We put a lot of resources into it. Max is there with the Arkansas blog doing breaking news and perspective all day.
00:39:07] KM: There’s only Arkansas news too, right?
00:39:09] AL: Yeah, it's primarily Arkansas. Tell you, I have a subscription to The New York Times. It comes every day, the newspaper. Then also, I subscribed to the Arkansas – in the New York Times website. I will read during the day, when I get a moment, I'll check and see what's going on. I'll read a little bit of the New York Times website. Then at lunch, I will take my newspaper by myself and I'll sit down and I'll read the newspaper.
I really have so much that I missed, just from almost a technical point of view, looking at that website, not being able to turn a page and see a story. It's hard to find stories on the web. Even on a good website, like the New York Times. I get so much more from sitting there reading my newspaper, but I also read the New York Times. I've always found there’s plenty of stuff that I miss that I can sit down at lunchtime and spend an hour.
00:39:59] KM: It's hard to navigate websites, because an ad will come up and you'll shoot off in another direction. People to put a lot of thought into actually, the print of the newspaper, what stories go together and how it flows. You can't really see that on a website as well.
00:40:12] AL: Yeah. Sometimes the web makes you have the attention span of a squirrel. You're just bouncing all over the place. No. I think for long-form journalism, print is far superior. It's hard to sit there and read a 3,000-word story online. Just very, very seldom happens, where as you can sit there with a magazine or newspaper. If the story is engaging and the design is engaging, you very likely will get through it.
00:40:39] KM: I feel smart when I'm reading a newspaper. I don't necessarily feel smart when I'm reading – although I’ll read on a Kindle, but I do feel smart when I'm holding a book.
00:40:46] AL: There you go.
00:40:46] KM: I don't know why. That leads us into the next question. What do you see for the future of American journalism and news reporting?
00:40:53] AL: I don't think I really have any great insights on where journalism is going. People want news.
00:40:59] KM: We've already said that print is not out. We both agree on that.
00:41:03] AL: Yeah. In whatever form, whatever technology does, or doesn't bring us, people are still going to want news. One of the things that I find interesting is a lot of people, sometimes you go to this particularly small business people that say, “Well, we're doing all of our promoting on social media, Facebook and Twitter and that sort of thing.” It's so interesting. Here you have platform that has been so discredited. I mean, you can look at the presidential election, fake news, all the stuff, all the incredible untruths that have shown up on Facebook, and all these different sites, the pope endorses Trump and all this stuff.
If a newspaper did that, no one would read it. They would not trust it, or a magazine, or TV news, or whatever. Yet, people who are operating a credible business, who know that trust is an integral part of their relationship with their customers, they're relying on a platform that has real credibility problems, which social media has developed. I think, Zuckerberg is absolutely aware of this, that they have got to do something to get control of the garbage that is showing up on social media, because otherwise, people are not going to want to advertise on it.
I was talking to a friend of mine who published the Memphis Flyer and he was with some bankers in Memphis the other day, and they were moving their budget back into his newspaper. Because they said, “Look, we're a bank. We've got to have credibility. After this presidential election and what's been on social media, we don't want our bank and our advertising associate. We don't know where our ads are going to show up on, what they're going to be next to.” They're wanting something that's curated and that's what newspapers and magazines do is they deliver curated news that you have someone with a brain, and who knows the difference between blighting untruths and truth.
00:43:03] KM: That’s a great advertising tip for people out there. That a lot of people feel they're being pressured to do Facebook advertising and to do Internet advertising. You just gave some great advice.
00:43:13] AL: You have no control what you're editing. Your ad to be sitting next to porn. Your ad could be sitting next to some troll from Russia. By Lord, you can't go through all this effort to keep control of your message, your company's image, and you're going to put it up on Facebook. Are you crazy?
00:43:30] ANNOUNCER: Speaking of the Internet, let's get Walter Hussman’s perspective on newspaper content online.
00:43:38] KM: You wrote an article for the Wall Street Journal, and you said, and you titled it, How to Sink a Newspaper. You were urging newspapers to stop providing free content online and warned that free online posting of newspapers would become a self-inflicted wound and people listened.
00:43:58] WH: Really, more than the dotcom boom, it was the fact that when the Internet came along, a lot of newspapers thought, “Gosh, this is going to be great. We'll put all of our news up on our website. All these people will read it and we'll sell advertising and we won't have the cost of printing, we won't have the cost of the carriers distributing the paper. Gosh, this is going to be an economic Bonanza to us.”
Actually, we did the same thing in 1999. We started putting all of our news up for free. After a while, I went to our people and said, we seem to be getting a lot of traffic on our website, but
we don't seem to be getting much revenue. They said, “Yeah, that's right.” I said, “Well, why?” They said, “Well, we got so much competition.” I said, “Let's just raise our rates.” I mean, newspapers typically would raise their rates if they money. Actually, we tried that, but there are literally thousands of places people can go now to get information, get news, advertising, etc.
It doesn't work to raise your rates. I would go to a civic club meeting, or I’d go somewhere in town and I'd see somebody and they'd say, “Yeah, I love that website of yours. I get all that news and it's free. I used to subscribe to your newspaper. I really appreciate you doing that.” I thought, “What are we doing here? I mean, we're losing these subscribers.” During the newspaper competition, we thought blood, sweat and tears for every subscriber we could get. Now, we're just encouraging them to leave the paper. I thought, look, someday, maybe this online thing will be an economic Bonanza, but it's not now, so we're just going to stop giving our content away for free.
We did that in 2001. That's when people thought we were crazy for doing it. “Oh, you're just living in yesteryear, etc.” From 2001 to 2011, the Arkansas Democrat-Gazette lost no print circulation. During that 10 years, Atlanta, Dallas, places like that, they lost between a quarter and a third or more of their circulation, their print circulation, because they were giving it away free.
That's when I was on the board of the Associated Press from 2000 to 2009. I wrote that article in 2007 saying, this is just doesn't make any economic sense to give all your news away for free. The publisher, The New York Times, even though they're giving their news away free, said, I'm concerned, we're raising a whole generation of people who don't even expect to pay anything to get news. I think, after that 2007 article, one didn't happen right away, but over the next few years, more and more papers came to recognize that. Now, most newspapers do have a charge for content. A lot of them, including ours now, give you a few articles a month for free. After that, you're asked to pay.
00:46:58] KM: Well, how are you going to pay your staff?
00:47:01] WH: Well, I'll tell you what, it’s even become more critical today, because there's been a big drop in advertising in all mass media; newspapers, magazines, radio, television.
00:47:12] KM: I think that that's going to come back around and I'll tell you why. Because at Arkansas Flag and Banner, we were dotcom in 1995. We got flagandbanner.com in 1995. We were part of that bell curve. We came right out of the gate, got to the top, got lots and lots of competition. Got knocked off the top. Now to stay on the top of the Internet, or to even get seen is so incredibly expensive. We did a survey of our customers not too long ago, because I have a guy in my marketing department who kept saying, “Newspaper is dying. Newspaper is dying.” 50% of our customers read the newspaper. It's amazing.
00:47:54] WH: Yeah, they do.
00:47:55] KM: If your demographics that you sell to are 40-plus, they're still reading the paper.
00:48:02] WH: Yeah, absolutely.
00:48:05] KM: I never used to read the paper, but now I do. I enjoy it. I enjoy sitting down and reading the paper.
00:48:10] WH: Well, we've been able to maintain generally, the quality of our paper. We've had to have some reductions, but nothing like most newspapers have. A lot of people tell me, they travel around the country and they can't believe what's happened to other newspapers. The quality's gone down so dramatically.
00:48:26] ANNOUNCER: One more broad historical perspective from Alan Leveritt of the Arkansas Times, that takes the inspiration for the weekly newspaper back 64 years.
00:48:37] AL: If you go back to 1957 immigration crisis, what saved Little Rock, in my opinion, terms of the soul of Little Rock was while the community and the Arkansas Democrat, basically had turned themselves over to the mob, the Arkansas Gazette took a very principled stand with a very, very difficult advertiser boycott, and said, “Basically, we need to follow the law here, law, land, this integration, we need to integrate Central High School.”
For that reason, all the banks, the retailers, the department stores all walked out on the Gazette. They lost a million dollars that year and that was when a million dollars was a million dollars. The Gazette won the admiration of most of the journalists in the nation that time, because of the family's willingness to take that hit. When that newspaper was shutting down and its assets were being taken over by the old segregationist afternoon paper that was the Democrat, or that was their heritage. It was a very conservative paper. I just felt like, we needed to keep that voice here in the community. I went out and Moira Leveritt, my wife at the time, she said, “Well, why don't we take the magazine and turn it into a weekly newspaper?” I looked at it and I said, “That's a great idea.”
I raised $680,000 from 22 business people here in the community. We took the monthly Arkansas Times Magazine to weekly and hired the senior staff, the Arkansas Gazette, as they were hitting the streets.
00:50:06] KM: Oh, so you gave people jobs.
00:50:07] AL: Oh, yeah, yeah. We did. Didn't give everybody a job, but we gave –
00:50:11] KM: The best.
00:50:12] AL: We gave a lot of people. George Fisher came to work for us and Ernie Dumas and Max Brantley and a lot of people.
00:50:18] KM: I bet that was really exciting time in your life.
00:50:20] AL: That's still exciting.
00:50:22] ANNOUNCER: It's time to wrap up our conversation about journalism in the state of Arkansas and the state of newspapers today, with a terrific quote from Walter Hussman’s father.
00:50:31] KM: He said, a newspaper has a number of constituencies. Among those are readers, advertisers, employees, creditors and stockholders. If a newspaper and its publisher always keep those constituencies in that order, readers first, advertiser second, employees
third, creditors fourth, and shareholders last, then the newspaper will do well journalistically and financially, and the interest of all constituencies will be well served. That is flipped from the way many CEOs operate today. They put their stockholders –
00:51:09] WH: First.
00:51:10] KM: That's exactly right. That was very –
00:51:12] WH: That's why a lot of them are doing so poorly. Because that doesn't work. In a lot of businesses, yeah. You say, we're going to put stockholders first and that's why we're going into business. It doesn't work in the newspaper business.
00:51:27] KM: I don't think it necessarily works, ever.
00:51:29] WH: Well, most good businesses put their customers first. Our customers are our readers, and then our advertisers.
00:51:35] KM: Starbucks puts their employees right up there.
00:51:39] WH: Oh, yeah. Southwest Airlines says their employees come first. If it can work for you, fine, but this is what's worked for us.
00:51:47] KM: The man that owns Starbucks, he has had his stockholders come to him over and over and over and say, “You need to cut these expenses. You need to change your philosophy, because we've got to make more money for the shareholders.” He just holds his ground and will not budge on that.
00:52:09] WH: Well, it’s good. It may stick into some core values.
00:52:11] KM: Everybody loves Starbucks. It's a very hard business. When I read about your family's business through the three generations, I realized, it's a very challenging, hard, fluid occupation.
00:52:28] WH: It is. Amazing thing is we've got a fourth generation now. My son and my daughter both work at the newspaper.
00:52:35] KM: Oh, congratulations.
00:52:37] WH: I told them. I said, “You got to realize this is really – it's a lot tougher business. Probably not tougher than when we're competing against the Gazette, but it's a lot tougher business than it used to be.” They both said, “That's fine. We want to work with the family business.”
00:52:50] KM: Everything old is new again. When I told my son that you owned cable companies and newspapers, he said, “That's like retro business.” He said, “No young people read the newspaper, or watch TV, or watch cable anymore.”
00:53:11] WH: Yeah. A lot of those people who watch Netflix and things, they do it over high-speed Internet, which goes over our cable television.
00:53:18] KM: There you go. Oh, look, he's writing me a note. Oh, king of the old media. That's what he called you. We got you a new name Walter. King of the old media. I like it.
00:53:34] ANNOUNCER: Our thanks to Walter Hussman and Alan Leveritt for their perspectives on journalism in the world today. Another very interesting show on Up In your Business with Kerry McCoy.
OUTRO]
00:53:43] KM: If you think this program's been about you, you're right. It's also been for me. Thank you for letting me fulfill my destiny. My hope today is that you've heard or learned something, and that it's been inspiring or enlightening, and that it whatever it is, will help you up your business, your independence or your life. I'm Kerry McCoy and I'll see you next time on Up In your Business. Until then, be brave and keep it up.
00:54:04] GM: You've been listening to Up In your Business with Kerry McCoy. For links to resources you heard discussed on today's show, go to flagandbanner.com, select radio and
choose today's guest. If you'd like to sponsor this show, or any show contact me, gray@flagandbanner.com. All interviews are recorded and posted the following week.
END]
