Thomson Grabs Cox

Times have long been tough at the Valley's No. 2 daily newspaper chain, the East Valley's Tribune Newspapers.

They may be about to get tougher.
The occasionally feisty papers that provide the Valley's only significant daily alternative to the Arizona Republic are tough places to work. Reporters and editors get relatively low pay, and turnover is high. Advertising lineage and circulation have stagnated in an otherwise booming market.

For journalists at the papers operating in Mesa, Tempe, Chandler, Gilbert and Scottsdale, there was always a glimmer of hope that the wealthy owners of the chain, Atlanta-based Cox Newspapers, would someday spend the money necessary to transform the community papers into a powerful metropolitan operation.

Last week, those dreams vanished, and yearning for better days was replaced by the simple hope that things won't get any worse.

"The status quo is what everyone is hoping for," says one of the paper's senior writers.

The gloomy forecast comes in the wake of last week's announcement that Toronto-based Thomson Newspapers is purchasing the five East Valley newspapers that fall under the Tribune umbrella, and the Yuma Daily Sun, from Cox Newspapers for an undisclosed amount. The deal is expected to close October 31.

Thomson Corporation, a $7 billion multinational that owns newspapers, magazines and electronic publishing services, is well-known for slash-and-burn management practices, a style its executives have vowed won't be used in Arizona.

But previous tactics employed by Thomson's newspaper division throughout its far-flung, 103-newspaper empire are well-documented; they generally feature layoffs.

"Thomson has a reputation as a tight-fisted pencil counter, obsessed with the bottom line instead of quality," the Financial Post, a Toronto daily business newspaper, commented earlier this year.

Not surprisingly, unions look unfavorably at Thomson's operations. The Communications Energy and Paperworkers Union attacked Thomson after it sold several newspapers in Saskatchewan last spring.

"Thomson Corporation has sucked what it can out of these communities in terms of company profits and now it's bailing out," the union said.

For decades, Thomson's detractors complained that news and community service were afterthoughts, with its managers pressured to run extremely high ratios of advertising to news and editorial copy.

Thomson executives say the corporation changed that strategy several years ago when it began to sell off scores of small papers across North America and in their place purchase papers that were clustered together in regional markets that could share printing facilities and develop common marketing strategies.

The Tribune papers, which are all printed at the Mesa facility, appear to fit nicely into that strategy.

"Cox's six Arizona dailies provide solid foundations for the development of businesses that will eventually offer broadly based marketing and communications products and services," says Dick Harrington, president and chief executive officer of Thomson Newspapers.

Thomson's purchase of Cox comes just a few months after it paid a hefty $3.4 billion to acquire West Publishing Company. West publishes a wide range of legal publications and has been historically very profitable. But some analysts say Thomson paid too much for the company, which faces an uncertain future as more courts turn to the Internet to post legal decisions.

Thomson's purchase of West Publishing fits with its focus in recent years of acquiring specialty publications and expanding electronic publishing. Thomson's largest newspaper is the Toronto Globe and Mail, a 300,000-circulation newspaper that is well-regarded.

Sandy Schwartz, Tribune Newspapers publisher, says he expects no reduction in the editorial quality of the East Valley publications, which had a combined circulation of 103,720 as of March 1, 1996, up slightly from 102,704 on March 1, 1993, according to the Audit Bureau of Circulations.

"I don't think anybody needs to be concerned about what these papers are going to look like," Schwartz says.

Schwartz, who has held just about every job at the newspaper, ranging from sportswriting to circulation duties, says he has no indication that there will be cutbacks in any department, including the sports desk, one of the paper's strengths.

"I don't anticipate any change in our newsgathering and newsroom except to try to get better," he says.

Schwartz, however, says that he's only had preliminary conversations with Thomson. "I haven't gotten down to the nitty-gritty," he says, although he expects to remain as publisher.

The tough talks will likely come later, after Thomson gets a chance to run the operation and see if it can figure out a way to boost circulation.

Although the East Valley, and Phoenix in general, is among the fastest-growing regions in the country, Tribune Newspapers, as well as the Valley's largest daily newspaper, the Arizona Republic/Phoenix Gazette, has not capitalized on rapid population increases the past three years.

Thomson apparently hopes to recoup its investment in the East Valley by riding the tide of growth, says John Morton, a newspaper analyst with Lynch, Jones & Ryan Incorporated of New York.

"What they are hoping to profit on in the long run is the growth of the Phoenix market," he says.

While Tribune employees might wring their hands, there is some common ground between Cox and Thomson. Both companies are controlled by some of the richest individuals in the world. The Cox sisters, Barbara and Anne, oversee a vast, privately held company and are reported to have combined personal wealth exceeding $5 billion.

The Thomson Corporation is controlled by Canada's richest man, Kenneth Thomson, who receives an annual salary of more than $1 million. But that's a pittance compared to the dividends he earns: In 1993, Thomson's 415 million shares of stock paid more than $187 million in dividends.

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John Dougherty
Contact: John Dougherty