TIME: Almanac 1993/TIME Almanac 1993.iso/time/032591/0325220.000

Text File | 1992-08-28 | 9.5 KB | 189 lines

                                                                                PRESS, Page 52

Captain Bob's Amazing Eleventh-Hour Rescue


After a bitter five-month strike, the New York Daily News is
taken over by a wily British press lord, who may need to work
his most remarkable salvage yet

By WILLIAM A. HENRY III -- Reported by Helen Gibson/London and
Leslie Whitaker/New York


    When American newspapers were in their heyday after World
War II, the brassy, pictorial New York Daily News led all the
rest. Its 1947 circulation of 2.4 million daily and 4.7 million
Sunday was bigger than any daily achieves today, although the
U.S. population has nearly doubled. But like many now vanished
media giants, the News gradually succumbed to its own success:
with profits pouring in, time and again, management agreed to
union demands for unneeded jobs, overtime guarantees and
restrictive work rules, rather than risk a strike. By the 1980s,
featherbedding was so extreme that despite annual revenues
approaching $425 million, losses averaged $1 million a month.
At least twice, the parent Tribune Co. in Chicago explored a
shutdown. Both times the plan foundered on the immediate price
tag: more than $100 million, mainly for severance pay and
pensions.

    Last week, after having lost almost $250 million on the News
since 1980, half of it within the past year, the Tribune Co.
finally gave up. To end a sometimes violent five-month strike,
during which the paper kept publishing but virtually all
revenue disappeared, the News was "sold" to British-based media
tycoon Robert Maxwell, 67. In truth, the "buyer" was paid $60
million just to take the paper off the Tribune Co.'s hands. The
bulk of that will go to buyouts and severance pay. To add to
the Tribune Co.'s pain, in just six days Maxwell extracted $72
million in union concessions, more than the old owners had
demanded in provoking the strike. Union leaders gave up 800 of
2,600 jobs, accepted a one-year wage freeze and agreed to rule
changes that for many workers may amount to a pay cut. The one
thing they did not concede was what the Tribune Co. most
intransigently sought: management's right to determine how many
jobs were needed, rather than having staff levels guaranteed
by contract.

    The message was clear. Far from being grateful for the time
and money the Tribune Co. had invested, the fed-up employees
preferred almost anyone else. Not that Maxwell is just anyone.
He is both a buccaneer billionaire and a professed socialist,
renowned for a blend of macho charm and armored-tank
aggressiveness. A British union leader once ruefully observed,
"He could charm the birds out of the trees, then shoot them."
Although decorated by British Field Marshal Bernard Montgomery
for World War II valor and elected in 1964 as a Labour Member
of Parliament, Maxwell was involved in a corporate takeover
battle that led Britain's Department of Trade and Industry to
conclude in 1971 that he could not "be relied on to exercise
proper stewardship of a publicly quoted company." The rebuff
hardly stopped him: his empire embraces more than 450
companies, with interests ranging from dailies in Budapest and
Nairobi to soccer teams in Britain and a pharmaceutical house
in Israel.

    George McDonald, head of the allied newspaper unions in New
York City, conceded he had been warned by a union official in
London that "Maxwell is a rogue . . . watch out for him."
Instead, McDonald and colleagues found themselves praising the
new owner -- who at week's end still required formal
rank-and-file ratifications -- as a "tough negotiator who
understands problems fast." They enthused about how
straightforward and plainspoken he was, how quick to extend a
hand to shake on a proposed deal. Having reduced the options
to Maxwell or nothing, they did not challenge his
characterization of the cuts as "historical, unprecedented and
necessary to guarantee the return of the Daily News to the
streets of New York."

    If anything, the question is whether the cuts will prove
enough to keep the News there. Says newspaper analyst John
Morton: "Maxwell has made a very risky move." During the
strike, which led to truck burnings, beatings and intimidation
of news dealers, the unions so effectively discouraged sales
of the paper that the Tribune Co. practically gave it away. It
let hundreds of hawkers, many of them homeless, buy stacks of
100 copies for $2.50 to peddle at 35 cents each.

    This combination of controversy and unmeasurable circulation
(down  from 1.1 million before the strike) drove away
advertisers, most of whom increased their exposure in the
competing tabloids, the scandal-minded Post and the more pious
New York Newsday, a city-oriented version of the dominant paper
on suburban Long Island. While many plan to return, now that
the News has union blessing, some advertisers have cut budgets
in a slumping economy, and others are concerned about when, or
if, the News can rebound to pre-strike levels. Its rivals,
which raided columnists and the syndicated supplement Parade,
have upped their combined circulation by 300,000. By some
estimates, News losses were twice that. If past strikes are any
indication, a sizable percentage of readers who got out of the
daily habit will never resume it with any paper.

    But hundreds of thousands of New Yorkers remain loyal to the
sassy Daily News, which over the years has been celebrated in
song (by Frank Loesser and Phil Ochs, among others) and
screenplay (its Art Deco building on Manhattan's 42nd Street
was reporter Clark Kent's workplace in the Superman movies).
For the tabloid's fans, Maxwell's moxie may prove congenial.
He has shown a shrewd feel for the city's odd blend of
worldliness and parochialism. Playing to Manhattanites'
penchant for embracing almost any outsider who professes himself
instantly smitten with their metropolis, Maxwell arrived by
yacht to start negotiations and, before stepping into a waiting
Cadillac, spoke the tantric words, "I love New York." Recalling
the tradition of the News as "the people's paper," Maxwell
said, "I want it to be, first and foremost, the voice of New
York for the ordinary man. It will assist the town with its
fiscal problems. I would also hope that the News would come to
be seen as an important voice internationally to tell the world
how America feels." Maxwell insists that the News will
"certainly not" install a staple of his beetle-browed London
Daily Mirror (circ. 3 million) -- cheesecake photos of women.

    Among Maxwell's "secret admirers" is his new rival, owner
Peter Kalikow of the Post, who says, "I like his background.
His kind of rags-to-riches story happens in America a lot, but
not in England." Born Jan Lodvik Hoch of Jewish peasant parents
in Czechoslovakia, the future Maxwell left school after just
three years. At 15 he joined the Czech underground. The Nazis
shot his father and sent his mother to her death in a
concentration camp. Wounded and captured in France, he escaped
to Britain and joined its army at 16. After serving in postwar
Berlin as a press officer (he speaks at least eight languages
fluently), Maxwell acquired a small company in 1949 that he
built into Pergamon Press, an important publisher of scientific
and educational books.

    As he expanded in the print business, many firms he launched
or resuscitated were obscure, technical in orientation or
uninfluential. But since May 1990, he has spent an estimated
$40 million launching the European,  an English-language
newspaper to compete with the International Herald Tribune. A
self-made man who is reportedly Britain's ninth richest, with
a net worth of $2 billion, Maxwell has earned wide esteem in
London's business community. He is robustly satirized, however,
by the leftish Private Eye in the comic strip Captain Bob.
Among his fiercest critics are former employees. One claims
Maxwell is so manipulative that he scheduled simultaneous
lunches with former Secretary of State George Shultz and
Paramount studio owner Martin Davis in different rooms at the
same restaurant, shuttling between them on the pretext of
taking business calls.

    For the next six months, Maxwell pledges, he will stay in
New York City and serve as Daily News publisher -- a bold step,
since associates say his far-flung empire is so chaotically
structured that only he has a clear sense of it. He believes
in hands-on management of newspapers. After launching the
London Daily News in 1987 and folding it within five months in
the wake of reported losses of $50 million, he vowed never
again to leave management of a daily to its staff. At the Daily
Mirror, Maxwell sometimes wrote editorials, and says he may
do so again at the Daily News. The downside of his intensity
is that he tends to lose passion for projects and move on to
new obsessions.

    Some London business analysts question whether his interest
in the Daily News will outlast the first heady gust of
publicity. Others think he is determined to succeed where his
archrival, Australian-born media mogul Rupert Murdoch, failed.
Murdoch, who bested Maxwell in London to buy the Sun, News of
the World and the august Times, burst onto the New York scene
by acquiring the tabloid Post in 1976. During the next 12
years, Murdoch lost $150 million before being legally compelled
to sell because he also owned a local TV station.

    In one regard, at least, Maxwell starts with a huge
advantage. The first $60 million he loses will be someone
else's money.