Word: needelman
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Administrative Law Judge Morton Needelman was not impressed. He noted that Knight-Ridder, one of the country's richest and most distinguished newspaper chains, had invested tens of millions of dollars in the Free Press and had never before folded any of its papers. Thus, Needelman concluded, "I have assigned little weight to this threat." But last week, less than a month after Needelman issued his report to Attorney General Edwin Meese recommending against the controversial J.O.A., Chapman pursued his threat further. Emerging from a Detroit meeting of the 17-member Knight-Ridder board, he solemnly announced that...
...troubling is the fact that it is far from certain that either Detroit paper is in immediate danger of failing. While Knight-Ridder executives insist the Free Press (circ. 639,312 daily; 735,000 Sunday) cannot survive continued competition from the News (circ. 686,787 daily; 840,000 Sunday), Needelman's report paints a different picture. Both papers, he says, spent "extravagantly" in the expectation that they would either triumph over the competition or be rewarded anyway with a lucrative J.O.A. Monies currently cited by Knight-Ridder as part of the Free Press's $100 million losses were once accepted...
...while Chapman is pleading near bankruptcy, one of his own memos (to Gannett Chairman Al Neuharth) included in Needelman's report makes a strong case that the Free Press should receive an equal share of the J.O.A.'s future earnings. "The Detroit Free Press is a well managed newspaper with a loyal readership base and a proven and continuing capacity to expand its reach," Chapman wrote, before listing several favorable statistics not usually associated with failing newspapers...
...Needelman blames both papers' losses on their keen competition; only in Detroit does a metropolitan paper still cost 15 cents. "At higher circulation and advertising prices," he writes, "Detroit can sustain two profitable papers." He concludes that the Free Press is not dominated by the News and cannot yet be classified as a failing paper...
Knight-Ridder executives hotly dispute Needelman's report, arguing that he contradicts his own conclusion by admitting that neither paper can unilaterally raise prices without risking a huge loss in circulation. Many industry analysts agree. "Needelman completely missed the point about competitive newspaper economics," says Bruce Thorp of Provident National Bank. Without the J.O.A., adds Thorp, "there is little question in my mind that one paper will disappear...