United Press International, one of the country's two major news services for newspapers and broadcasting stations, is seeking to raise more than $4 million of new capital by selling limited partnerships to media corporations.
Long a victim of operating losses, UPI is searching for "greater financial stamina" to compete with the Associated Press, a larger wire service owned cooperatively by the news organizations that subscribe to the service.
In contrast with the non-profit AP ownership, UPI wants to move into the 1980s as a "profit-oriented business . . . the idea is to try and make a profit on the sales to newspapers and broadcasters," UPI President Roderick Beaton said in an interview yesterday.
To accomplish this goal, UPI's current owners -- the E. W. Scripps Co. trust, which owns 95 percent, and the Hearst Corp. (5 percent) -- have mailed out offerings to buy limited partnerships to about 150 news and broadcast companies.
If the proposed United Press International Ltd. partnership is successful in attracting investors throughout the media industry, Scripps and Hearst would be general partners with a 10 percent interest.
What are being offered to other news corporations are 45 limited partnerships, each with a 2 percent share. No one company may acquire more than five partnerships, or 10 percent of the overall organization.
According to the offering prospectus, partnerships may be purchased until Dec. 3 and the new organization would be in place on Jan. 1.
Ironically, UPI's own news wires may not report on this dramatic effort to keep viable an organization that had operating losses of $21.2 million from 1974 through 1978, net losses of $8.6 million and revenues of $326 million.
Beaton said yesterday that his lawyers, after studying federal securities laws, had concluded that UPI could not disseminate any information on what is described in the business world as a "private placement."
A spokesman for the Securities and Exchange Commission said that since the limited interests are not for sale to the general public, any news report by UPI "may be interpreted as an offer."
Although Beaton could not talk about it, the prospectus mailed by UPI suggests that profitable operations are possible within five years. The partners in a new UPI organization would be liable for losses and would share in profits.
Scripps and Hearst would pay about $1.5 million a year of needed working capital and the new investors would supply $4.5 million. Beaton said that if the offering is a success, "UPI will be a stronger company," with a substantial benefit being the input of ideas and direction from new partners.
Commenting on widespread industry descriptions of UPI as "financially troubled," Beaton laughed and said: "Anyone who knows anything about us knows we've been running a tight ship for 72 years."
United Press was founded in 1907 by Scripps and merged in 1958 with Hearst's former International News Service. Beaton said UPI currently has more than 1,700 employes (a news staff of about 850) and nearly 6,000 newspaper and broadcasting subscribers around the world.
Beaton said he could not disclose the names of companies to which UPI sent offering prospectuses but at least two of the nation's leading newspaper chains -- Knight-Ridder, based in Miami, and Gannett of Rochester, N.Y. -- are among the recipients. Spokesmen for both firms said yesterday the UPI proposal is being studied.
Times Publishing Co., of St. Petersburg, Fla., also received a prospectus, where "accountants and money men are going over it now," said Times Co. President and St. Petersburg Times Editor Eugene Patterson. "I've kept my mind open," Patterson said.
To date, the New York Times Co. has not received a UPI mailing, according to spokesman Barry McCarthy. He said yesterday that Times officials had conjectured that because their firm operates a major news service of its own in competition with AP and UPI, possible antitrust questions had ruled out a possible Times partnership.
Beaton said, however, that UPI lawyers had concluded that newspapers which operate supplemental wire services would face no problem in buying a UPI interest -- especially since most are cooperative owners of the AP.
The prospectus discloses that UPI revenues last year were about $74 million, on which losses totaled more than $5 million. Improved operating results are expected because of modern transmission technology, including a new communications center in Dallas.
Beaton also noted yesterday that UPI already has moved to improve its news operations by opening new bureaus this year and hiring additional reporters.
Although potential investors are being asked to share in projected losses, a major impetus behind a financial transfusion for UPI is a desire to keep two news services in competition.
Scripps President Edward Estlow, whose firm has underwritten most losses over the recent decade, said earlier this year that "America should have two major wire services from every viewpoint . . . a monopoly is not acceptable."
An advisory group of UPI subscribers helped plan the proposed new organization. If successful, no management or policy changes at UPI are planned, Beaton said.