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ADG Completes Partnership with Stephens in Northwest


BILL BOWDEN
ARKANSAS DEMOCRAT-GAZETTE

The U.S. Department of Justice has closed its investigation of the proposed joint venture between Stephens Media LLC and the Arkansas Democrat-Gazette, Inc., allowing the two companies to merge operations in Northwest Arkansas.

In finding there would be no antitrust violations, the Justice Department is allowing the two to form a new company.

During the investigation, The Morning News was put up for sale, but no buyer came forward. Both companies have an equal financial interest in the new company, Northwest Arkansas Newspapers LLC.

“I think this is in the best interests of both companies and our readers and advertisers, too,” said Jeff Jeffus, vice president with the Arkansas Democrat-Gazette, Inc. and president of the new Northwest Arkansas Newspapers. “We were both losing millions of dollars. You had to have a model that would succeed.”

The Morning News and the Arkansas Democrat-Gazette, Inc.’s Northwest Arkansas publications have been losing money in a heated battle primarily for advertising revenue. Newspapers nationwide have been suffering because of the recession.
Arkansas Democrat-Gazette, Inc. properties involved in the merger include the Northwest Arkansas Times in Fayetteville, the Benton County Daily Record in Bentonville, a twice-weekly newspaper, nine weekly publications in Benton and Washington counties, and the Northwest Arkansas edition of the Arkansas Democrat-Gazette zoned for the 12 counties of Northwest Arkansas.

The Morning News is Stephens’ flagship newspaper in Northwest Arkansas. Other Stephens publications that are part of the merger include two weekly newspapers in Washington County, a weekly in McDonald County, Mo., a Spanish-language weekly and Hawgs Illustrated, a monthly magazine that covers Arkansas Razorbacks athletics.

Under the plan, Stephens Media is responsible for editorial control of all publications except for the Northwest Arkansas edition of the Arkansas Democrat-Gazette, which will provide regional, state, national and international coverage and will remain under the statewide Arkansas Democrat-Gazette.

Both Stephens Media and the Arkansas Democrat-Gazette share coverage of the Arkansas Razorbacks.
The Arkansas Democrat-Gazette, Inc. controls advertising, business, production and circulation for all of the merged publications.

CIRCULATION CHANGES

The Morning News is now circulated with the Arkansas Democrat-Gazette primarily in Springdale and Rogers, where it is zoned as a local edition for each of those cities. It will be wrapped around the Arkansas Democrat-Gazette similar to the way the Northwest Arkansas Times and Benton County Daily Record have been circulated in Washington and Benton counties, respectively. Bentonville readers will continue to receive the Benton County Daily Record and Fayetteville readers will receive the Northwest Arkansas Times.

The merger resulted in four distinctly separate local newspaper editions covering Fayetteville, Springdale, Rogers and Bentonville, Jeffus said. All of those sections will be circulated with the Arkansas Democrat-Gazette.

Tom Stallbaumer, publisher Northwest Arkansas Newspapers, said each local paper will carry “primarily” its own stories, although editors at each publication are able to share stories with other newspapers in the company. Stallbaumer said the flag, or design of the newspaper’s name, may change across the front page of The Morning News’ two editions to state “Springdale Morning News” and “Rogers Morning News.”

Under the federal Worker Adjustment and Retraining Notification Act, letters were delivered to all staff at the companies to be merged telling them their jobs would be eliminated by Oct. 31. An unspecified number of those employees were immediately hired by Northwest Arkansas Newspapers.

Staff members who weren’t hired by Northwest Arkansas Newspapers will be paid severance based on the amount they normally earn in a two-month period. Some employees will be paid more severance, depending on how long they have worked for the newspapers. Some of those employees may be asked to work during that 60-day time period.

Arkansas Democrat-Gazette, Inc. has 369 employees in Northwest Arkansas, including 101 who are part-time. Stephens Media has 188 full- and part-time employees in Northwest Arkansas.

Newspapers have been suffering the worst recession for the advertising industry since World War II.
Advertising revenue for the statewide Arkansas Democrat-Gazette has dropped by 18.5 percent in the first nine months of 2009. Ad revenue at the paper was down 13.2 percent last year, but that was better than the national average of a 17.8 percent decline.

Through layoffs and attrition, the Arkansas Democrat-Gazette has reduced its staff by about 10 percent over the past year.

SIGN OF THE TIMES

Stallbaumer, publisher of The Morning News, is now publisher of all the merged publications except for the Arkansas Democrat-Gazette’s Northwest edition.

Rusty Turner, editor of The Morning News, has an expanded role that includes being editor of all publications involved in the merger except for the Northwest edition of the Arkansas Democrat-Gazette. Susan Scantlin continues in her role as editor of the zoned Arkansas Democrat-Gazette in Northwest Arkansas.

The move means the end of editorial competition between the papers. However, it’s unlike a joint operating agreement.
Conrad Fink, a professor of journalism at the University of Georgia, said the Northwest Arkansas merger may set an example for other newspapers around the country.

“I don’t know of anything like this,” he said. “It’s unique.”

To establish a joint operating agreement, in which newspapers merge some operations but compete editorially, one paper has to be in danger of closing, said Fink. But the Northwest Arkansas merger is a joint venture, not a joint operating agreement.
“This form of relief will be very welcome by the two parties involved,” Fink said, “but I think it would also be perceived by the rest of the industry as a sign that we are in special times.”

Fink said he believes newspaper advertising revenue has hit bottom and is starting to recover. “When retail businesses sneeze in a local community, the newspaper industry gets pneumonia,” he said. “That’s what we’ve done for a couple of years now.”

Stallbaumer said employees of The Morning News and Arkansas Democrat-Gazette, Inc. have been interviewed to work for Northwest Arkansas Newspapers. He said the company hopes to retain the best employees. If two exceptional reporters, for instance, covered the same beat for different newspapers, both might be rehired but one would be reassigned to another beat.
“We hope to hire the best of both worlds,” Jeffus said.

Jeffus said he expects about 10 percent of subscriptions to be duplicated as a result of the merger. Clearing up the duplicated subscriptions will probably result in a slight decrease in total circulation. He said combined circulation in Northwest Arkansas will be about 63,000 daily, 65,000 on Fridays and Saturdays and 74,000 on Sundays.

“We won’t know until we blend all our routes,” Jeffus said, “but that’s our best estimate at this time.”

The local sections will be delivered by carriers in their respective cities and counties. Readers in Fayetteville won’t be able to subscribe to The Morning News, and the Northwest Arkansas Times won’t be delivered in Springdale. Those papers will be available in newspaper racks, however, in cities other than the one they primarily cover.

Jeffus said subscription and advertising prices will go up over time.

“The reader and the advertiser have enjoyed subscription and advertising rates at lower than what would sustain a quality newspaper,” he said.

Stallbaumer said he didn’t know yet how The Morning News’ Web site, which is free, would be affected. He said it may fall under the Arkansas Democrat-Gazette’s Web site umbrella, which means readers would be required to subscribe to view newspaper content online.

Based in Las Vegas, Stephens Media owns three daily newspapers and 20 weeklies in Arkansas. The company owns another 44 newspapers in Hawaii, Missouri, Nevada, North Carolina, Oklahoma, Tennessee, Texas and Washington.

WEHCO Media, owner of the Arkansas Democrat-Gazette, owns 11 daily newspapers, including seven in Arkansas.

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