Business of News

The backstory of Gannett’s bid to buy Tribune

April 29, 2016

This week’s announcement that Gannett is seeking to purchase Tribune Publishing seems, at first glance, to encapsulate the plight of the newspaper industry in the wake of the internet. The size of the proposed merger might be surprising–it would leave Gannett with a circulation of 62 million–but its logic feels inevitable. As the newspaper industry has been buffeted by the collapse of advertising revenue, publishers have merged, newspapers have closed, and newsrooms have been downsized. Publishers, and their shareholders, seek efficiencies of scale in tough times. The internet is killing newspaper diversity. 

In fact, the origins of the current round of consolidation lie in forgotten clashes over newspaper regulation in the 1930s and 1940s, when New Deal reformers sought policy solutions that would promote a more diverse newspaper economy. These efforts were fought and ultimately defeated by newspaper publishers, who argued that an unregulated newspaper market was essential to a free press. Among the chief opponents of the reforms were Robert McCormick, the larger-than-life publisher of the Chicago Tribune, and Frank Gannett, president of Gannett Newspapers.

Newspaper consolidation is not new. The US actually had its highest number of papers in 1909, and newspaper diversity has been declining ever since. In 1914 alone, 54 newspapers merged. Between 1919 and 1942, the number of papers in the US fell by 14 percent, despite a 29 percent increase in the nation’s population, and those remaining papers were increasingly joined in chains. By 1933, 63 newspaper chains controlled 37 percent of the nation’s daily circulation.

Most of these closures and mergers happened in the 1910s and 1920s, and they were not attributable to the Great Depression or the impact of radio. Smaller newspapers simply found it difficult to compete with the most successful papers in each city, or with chain publications. Well before World War II, larger newspaper companies were already benefitting from a virtuous cycle: They were more attractive to advertisers, which brought in more revenue, which meant that they could spend more to draw in readers, which meant they were more attractive to advertisers, which brought in more revenue, and so on. As early as 1900, one industry observer wondered whether newspapers were “natural monopolies.” In 1944, Oswald Garrison Villard was writing about “The Disappearing Daily.”

By the time of the New Deal, there was widespread concern that the consolidation of the newspaper industry posed a significant challenge to American democracy. New Deal politicians and leftist activists alike made speeches and wrote articles decrying the shrinking number of independent newspapers, the rising number of chain papers, and the power that a small group of wealthy businessmen could exercise over the nation’s press. 

Under the National Recovery Administration, for instance, there was an effort to write a code of fair trade practices for the newspaper industry. Reformers and small newspaper publishers hoped that bans on “unfair competitive practices” might break apart chains, or prevent large publishers from manipulating advertising rates to drive their competitors out of the market.

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Similarly, there were hopes that antitrust action might be used to create a more diverse newspaper market. In 1942, the Justice Department brought such an action against the Associated Press. At the time, the Associated Press tightly limited membership in its service. Existing members could veto rivals’ applications, which is what happened when Marshall Field III started a new paper, the Chicago Sun, to challenge the Chicago Tribune.

McCormick, the Tribune publisher, blocked Field’s application, and Field complained to the Justice Department that the AP rules were anti-competitive. The case went to the courts, where Judge Learned Hand suggested that antitrust litigation in the newspaper industry could help guarantee that the public would have access to a diverse array of newspapers with a variety of owners.

The newspaper industry responded to these New Deal efforts with what now seems like hyperbole. The American Newspaper Publishers Association argued such regulatory efforts were violations of the First Amendment because they threatened to shackle American press freedom and create a dictatorship under Franklin Delano Roosevelt.

Frank Gannett and Robert McCormick were members of ANPA’s Freedom of the Press Committee, and central figures in the newspaper industry’s attack on the New Deal. McCormick called the proposed National Recovery Administration code an assault on the Constitution, supported AP’s appeal of the antitrust case to the Supreme Court, hired lawyers and historians to promote his theory of press freedom, and even lobbied Congress for an antitrust exemption for the AP. In speeches and articles, he was particularly fond of comparing economic regulation of the press to censorship practices in absolutist England. Other members of ANPA preferred totalitarian comparisons, such as general counsel Elisha Hanson, who argued in 1943 that antitrust actions against the press would mean that “the people of the US will be confronted, just as the people of Germany today are confronted, with a government-controlled press.” 

Throughout, the publishers argued that freedom of the press required economic autonomy. In a nationally broadcast 1939 debate about the state of the press, Frank Gannett asserted that New Deal criticisms of the corporate consolidation of the press were little more than an effort to undermine the free market basis of American press freedom. As a result, New Deal efforts to regulate newspaper consolidation withered on the vine. 

While publishers did ended up writing their own code for the National Recovery Administration, it was the weakest of any industry in the country. Tellingly, it included no fair trade practice provisions, out of fears that these would interfere with press freedom. And while the Justice Department did eventually win its antitrust case against the AP, it did so only in a narrow Supreme Court decision that would ultimately limit the use of antitrust actions in the postwar newspaper industry. (Commentators have written that there is little chance that a Gannett-Tribune merger, for instance, will raise antitrust questions.)

It is important not to overstate the importance of either the NRA code or the AP case, for neither was going to singlehandedly redirect the development of the American newspaper industry. But they represented the first tentative steps in an effort to imagine a policy response to the consolidation of the newspaper industry in the middle-decades of the twentieth century. The success of the newspaper industry in opposing and limiting even these efforts was crucial in undermining the possibility of more robust regulatory action.

We can see this in the discussions of the Hutchins Commission on Freedom of the Press, an illustrious and influential group of 13 intellectuals who gathered in the 1940s to come up with policies that would promote a more diverse newspaper industry. In their first meetings, the commissioners were enthusiastic about using economic regulation to break apart newspaper chains, to challenge monopolies, and to promote the interests of small publishers. But over time, they became concerned that such regulations would open the door to interferences with press freedom.

Their final report, published in 1947, advocated resignation to the consolidation of the newspaper industry as the necessary cost of a press free from state meddling. Even reform-minded liberals had been convinced by the newspaper industry’s arguments. In the coming decades, there would be few policy efforts to promote newspaper diversity.

In the boom years after World War II, newspaper consolidation continued apace. In urban centers, once famous papers continued to go out of business, undermining diversity in these media markets: the Philadelphia Record (1947); the New York Sun (1950); the Washington Times-Herald (1954); the Brooklyn Eagle (1955); the Boston Post (1956); and so on. By 1950, press critic A.J. Liebling was already observing that “the end-of-a-newspaper story has become one of the commonplaces of our time.” And while the rise of new papers in the suburbs and the southwest kept the overall number of newspapers in the nation fairly steady in these decades, the new publications were likely to be owned by monopolies. In 1910, 689 American cities had competing daily newspapers. By 1960, only 61 did.

The monopoly papers of the 1960s were large and highly profitable enterprises, and they were soon listed on the stock exchange and forming into ever-larger chains. The Gannett Company was an innovator in both realms. In 1967, it became one of the first newspaper companies to publicly trade stock, and it was active in expanding its holdings in the years that followed. Two decades later, it held 93 papers and routinely reported healthy profits. Seeing success, other papers followed suit. The Tribune Company went public in 1983. The stage was set for the last decades of the 20th century and the first decades of the 21st: Newspapers were economically dependent on monopoly profits; stockholders demanded growth and returns on investment. From there, it was a short-step to Gannett’s $815 million offer to purchaseTribune Publishing.

The current newspaper industry crises are only the most recent installments in a long history of declining diversity. Could it have gone differently? While we can never know, it’s tempting to wonder how the newspaper industry might have developed if some efforts were made in the middle decades of the 20th century to promote a more diverse newspaper economy. In that sense, the news that Gannett intends to buy Tribune Publishing is a fitting capstone to the long history of newspaper consolidation. It is a direct consequence of the efforts of McCormick and Gannett, many decades ago, to protect the newspaper industry from economic regulation.

Sam Lebovic is an assistant professor of history at George Mason University and author of Free Speech and Unfree News: The Paradox of Press Freedom in America, published in March by Harvard University Press.