A paragraph in one of the newspaper business articles that appeared on Aug. 2 misstated the total circulation for the Boston Globe. The combined daily circulation for morning and afternoon editions is 460,000. The company also owns four radio stations, not three as stated in the article.
Robert G. Marbut, 42-year-old president and chief executive officer of the Texas based Harte-Hanks Newspapers, Inc. is one of the new breed of newspaper corporate executives.
"He's a typical Harvard MBA," says an admiring industry analyst who closely observes top managers. "A systems man, deep into operations and contingency planning using case studies, who gives a lot of thoughtful, but often dull, talks."
Marbut laughs about the reference to dullness and says, "That's probably right."
Harte-Hanks, this analyst says, is well run and reflects Marbut's systematic approach. It comes across as "superserious," and lacks flair like Gannett, he says, whose top executives - particularly its president, Allen H. Neuharth - are much more into flashier salesmanship.
Whatever, Marbut converted his company from a family operated, Texas oriented enterprise into a strong and rapidly growing publicly owned corporation that operates 26 daily newspapers, 46 weekly or bi-weekly publications and three television stations in 13 states.
From 1971, when the company offered stock to the public, Harte-Hanks' (it becomes Harte-Hanks Communications in September to reflect its diversified interests) revenues have increased from $49.5 million to $116.7 million in 1976. Net income for the same period rose from $3.3 million to $10.5 million.
For the first six months of 1977, the growing company posted profits of $5.8 million ($1.30 a share) on revenues of $68.5 million compared with earnings in the 1976 period of $4.8 million ($1.09) and sales of $53.6 million.
It's now the country's largest newspaper company with a combined circulation of over 540,000 daily.
Marbut's methodical approach is recognized by the Press/Communications Committee of the American Newspaper Publishers Association, an industry trade group. For three years he has been chairman of the panel which is concerned with new communication technology, including satellite transmission and the use of the laser and fibre optics, and how it ties in with public laws and government regulation.
Marbut first got interested in the newspaper business while a student at Georgia Institute of Technology. He edited the school paper and took some journalism courses at the University of Georgia.
After a stint as an engineer with Esso Standard Oil (now Exxon) and the U.S. Air Force as a maintenance officer, Marbut attended Harvard and received an MBA with honors. He joined Copley Newspapers' engineering and planning department in California and decided he'd like to run his own publication.
He and a Harvard classmate and three other associates reached an agreement in principle to buy a New York state daily, and he approached Harte-Hanks to see if it would be interested in investing. Marbut found out that the company wanted to become publicly owned and spent a weekend telling executives how it could be done - and run. Harte-Hanks tapped him for the job in 1970, and he has been at it ever since. "Dumb luck," he has said.
Since going public, the company has met the key goals it set for itself to achieve by 1977, Marbut told shareholders this year, including doubling earnings per share (from 90 cents in 1971 to $2.41 in 1976) while boosting operating profit margin an average of one percentage point a year.
Part of the improvement stems from a $20 million investment in new production technology that cuts labor costs. But a pride and joy of the company that bears the direct Marbut imprint is a complex planning and control system.
The system, with heavy emphasis on computer, is the heart of Harte-Hanks operations and provides a framework to assess progress towards goals and offer alternatives in reaching them.
Harte-Hanks executives in April, for instance, told securities analysts at a forum for the top publicly owned newspaper companies that, "Even the . . . the smallest weeklies have available to them a computerized planning model that allows them to run six to eight different budgets every six months if they want, or every quarter . . . or every month . . . to make the planning process something that is dynamic and not static."
The forum is organized annually by John Morton, a former journalist, who researches the financial progress of the 12 major publicly held newspaper companies (out of about 20 in the U.S. for Colin, Hochstin Co. Most of the companies derive half or more of their revenues from newspaper operations.
These companies, most of which also own broadcast properties or other media related enterprises, together publish more than 23 per cent of the industry's daily circulation of about 61 million and 26 per cent of its Sunday circulation of about 51.5 million.
Another thing that distinguishes Harte-Hanks is its full entry into the field of publishing shoppers - free publications based on advertising revenues but often carrying extensive service features and reporting. The company owns nearly a dozen shoppers that compete with daily papers for ad revenues, including the 147,000-circulation California Shopper, of Riverside and San Bernardino counties, puchased in June.
As Morton assesses Harte-Hanks, "these guys are very financially oriented . . . and they don't automatically, when they look at a market and perceive a need . . . think of a newspaper. They think how can they best serve the need . . . they look at developing this concept of a newspaper company as a delivery vehicle. In effect, it's an alternate postal system," delivering preprinted brochures and printed ads by not necessarily in the traditional newspaper format.
The growth of Harte-Hanks into the business of shoppers is not going unchallenged. Last month, Adco Advertising, Inc., which publishes a direct mail ad publication in Orange and San Diego counties, charged that the San Antonio-based newspaper firm was violating antitrust laws.
Harte-Hanks has acquired three ad publications in California since 1972 and Adco asked for unspecified damages. Harte-Hanks denied that antitrust laws were violated and claimed the charges were apparently without merit.
In any event, the Harte-Hanks expansion into direct mail is seen as just one example of new directions for publicly owned communications firms, as they seek to maintain growth that will attract investor interest. Times Mirror of Los Angeles, for example, has built a similar delivery system for preprinted advertising matter at Newsday, on Long Island, described as one of the best total market saturation programs in the industry.
The end result is a further threat to the U.S. Postal Service, with direct mail volume being siphoned away by newspaper companies - the very firms that complain about high postage rates.
Last year, when Morton measured the progress of 13 companies (one of them, Speidel, has since merged with Gannett), they averaged $308.1 million in revenues, a gain of 19.3 per cent from 1975, and spent an average $258.4 million, up 16.6 per cent, according to Morton statistics.
Net income averaged $25.7 million, up an average 35.8 per cent, with all companies sharing in the increase. The Department of Commerce, by comparison, Morton said, reported that after-tax corporate profits as a whole gained 29.2 per cent. Pretax profit margins last year averaged 19.4 per cent, up 2 percentage points from the year earlier, Morton calculated.
Seven of the companies are profiled as part of this series of articles. The others Morton follows are:
Affiliated Publications, Inc., publisher of two newspapers, one of them the highly regarded Boston Globe, with circulation of almost 293,000. The company, which last year earned $5.5 million on revenues of $121.8 million, also owns three radio stations, a marketing research company and three newspaper distribution companies.
Capital Cities Communications, Inc., New York based owner of five newspapers, six television stations, nine radio stations and Fairchild Publications, publisher of Women's Wear Daily. The company earned $35.6 million last year on revenues of $212.2 million.
Capital Cities' latest purchase was the employe-owned Kansas City Star Co., publisher of the evening and Sunday Kansas City Star and the morning Kansas City Times, with combined circulation exceeding 600,000.
Some of the Kansas City Star Co. employees became millionaires when their stock was purchased for $125 million, believed to be one of the biggest prices ever paid for a one-newspaper company.
Lee Enterprises, Inc. of Davenport, Iowa, owner of 15 newspapers with a combined daily circulation of over 455,000. It also owns and operates four television and five radio stations and is 50 per cent owner of a company that manufacturers and sells photo-sensitive polymer printing plates. In the fiscal year ended last Sept. 30, Lee had revenues of $67.4 million and a net income of $9.4 million.
Multimedia, Inc., a Greenville, S.C., company, that owns seven dailies in four states plus 12 radio and television stations that last year earned $10 million on $79 million in sales.
Some newspapers are owned by conglomerates with other interests that are not strictly media related. One of these is Blue Chip Stamps, a California trading stamp company with interests in securities, savings and loan and candy businesses.
Blue Chip is a new entry in the newspaper business with the purchase this year of the Buffalo Evening News, the largest newspaper in upstate New York, for about $33 million. Its principal shareholder is Warren Buffett of Omaha, Ne., recently named as board chairman of the Buffalo paper, who is also a director of the Washington Post Co. and a 10 per cent owner of its Class B nonvoting stock.
Another company that owns newspapers - and broadcasting stations - with holdings outside the communications field is Jefferson-Pilot Corp., an insurance company.
Among other large publicly owned newspaper companies are:
Combined Communications Corp., Phoenix, Ariz., based, that owns the Cincinnati Enquirer and recently purchased the faltering Oakland (Calif.) Tribune in a stock and cash deal valued at $17.8 million. The Tribune was owned by the Knowland family, two of whom, Joseph R. Knowland and William F. Knowland, were U.S. Senators who later devoted a lot of time to the paper. Tribune publisher Joseph Knowland was fired soon after the purchase.
Combined Communications also owns seven television stations, seven radio stations and a string of outdoor and indoor advertising companies in the U.S. and Canada, and has agreed to buy WJLA-TV in Washington from the Washington Star in exchange for stock and 2 TV station in Oklahama. The company last year earned $16.3 million on revenues of $185.8 million.
Thompson Newspapers, Ltd., of Toronto, owner of 57 dailies in the U.S., most of them in small towns, and 35 Canadian dailies. It also owns six weekly papers in the U.S. and 13 in Canada. In 1976, Thomson earned $41 million on sales of $217 million.
Heading Thomson Newspapers is Kenneth R. Thomson, son of the late Lord Thomson of Fleet Street, the British press baron who controlled a vast network of companies and overseas newspapers, including the Times of London and the Scotsman. Kenneth Thomson inherited the title (which he doesn't use in Canada) and his father's interests abroad last year.
While there is no official connection between the Canadian company and the London based Thompson Organization, Ltd., the late Lord Thomson was honorary chairman of the Canadian concern and Kenneth was cochairman with his father of the British organization.