It's the classic Southern novel: The high-born Dixie heiress falls on hard times and faces financial ruin until the town poor boy appears with a newly won fortune and marries her in the nick of time.
A version of that turnabout ending has happened in the controversial union between Chattanooga, Tenn.'s, two daily newspapers, The Times and The News-Free Press.
The long struggle between the aristocratic Times and the flashy, hometown News-Free Press is a study in success and failure in newspaper publishing. Their merger of printing operations on May 12 has created a unique challenge to the Newspaper Preservation Act, passed by Congress to permit financially "failing newspapers" to remain in business by combining operations with more powerful competitors.
Even by the standards of newspaper mergers, The News-Free Press and Times make an odd couple.
Founded in 1869 by Adolph Ochs, the Chattanooga Times was the foundation from which he later acquired and built The New York Times into prominence. Through the years, The Chattanooga Times maintained a philosophic-kinship with its more famous cousin (both it and The New York Times are controlled by Ochs' heirs): It has been regarded as Democratic, leberal, intellectual, highbrow.
The News-Free Press was born on the other side of the tracks in 1933 as a weekly "shopper," given away for free. It began daily publication three years later.
Republican and conservative, it is an unabashed hometown booster. It stresses coverage of community news at the expense of the national and international reporting favored by The Times. It aggressively promotes itself with would-be readers and advertisers -- even store openings by big advertisers are considered news events in The News-Free Press. Reporters cover sports or civic events, write their accounts, and then move to the composing room to put their stories into the paper.
"It was just not our general type of journalism," said Times' President A. William Holmberg.
But The News-Free Press appears to have known its readers' tastes better than The Times. It clearly hustled much harder to win their loyalty, as Times' executives now concede.
"The Times here for years seems to be trying to be a big-city paper when we are only a big overgrown town," said George L. Bressler, a Chattanooga reader in a letter to the Justice Department. "If The Times would come down a notch or so and give us more pictures and print local news more, they could grow."
In 1970, the two papers were in a virtual dead heat in daily circulation at about 63,000 each, while on Sunday The Times was miles ahead: 70,915 to The News-Free Press' 46,143.
By 1976, The News-Free Press had overtaken The Times in both areas and the margin has grown steadily. Last year, The Times trailed in Sunday circulation, 70,915 to 54,492, and in daily circulation, 58,632 to 51,072.
The competition became bloody in the 1960s. In 1966, the two papers angrily severed a 24-year joint agreement covering advertising and other noneditorial operations. There was "a lot of bitterness" on both sides, said Arthur O. sulzberger, chairman of The New York Times Co. "The anger was really beginning to bubble underneath the surface. And each one wanted to go out and do battle with the other."
With the end of the joint arrangement in 1966, The News-Free Press immediately launched a Sunday paper in competition with The Times -- which counterattacked by publishing a new afternoon newspaper to take on The News-Free Press.
The result was a tactical catastrophe for The Times. It wound up facing lawsuits in 1970 by the Justice Department and The News-Free Press charging it with illegal, predatory pricing aimed at doing in its rival. p
To settle the suits, The Times had to pay $2.5 million to The News-Free Press, which used the money to buy a modern press, capable of printing four-color pictures and of giving it a cleaner, more appealing appearance than The Times.
"It was an error and a defeat," said Holmberg, "and of course some of the advertisers reacted accordingly."
When two newspapers compete head-on in the same market, the No. 2 contender often finds itself on a slippery downhill slope that makes recovery progressively harder. As The Times lost ground in the 1970s, defections by advertisers increased, multiplying the paper's financial losses. Between 1976 and 1979, the Times lost $2.7 million, nearly half of that occurring last year.
Finally, The Times arrived at The News-Free Press' doorstep this spring, seeking a partial merger that would permit it to survive.
In March, the publishers of both papers asked Attorney General Benjamin Civiletti to approve a combination of their advertising, circulation and publishing operations, using the more modern presses of The News-Free Press to print both the morning Times and the afternoon and Sunday News-Free Press. A decision by Civiletti that The Times is a "failing newspaper" under the terms of the Newspaper Preservation Act would give the merger immunity from antitrust suits.
The Times would maintain its editorial staff, but its printers and production staff would be fired and its distribution, advertising, circulation, and business operations combined with its rival's, saving more than $1.3 million a year and permitting the paper to be marginally profitable, its managers say. In return, The News-Free Press demanded a $500,000, interest-free loan and an undisclosed share of The Times' profits. Finally, The Times agreed to drop its Sunday paper, leaving that field to its competitor.
Two months later, the case still had not reached Civiletti, so the two papers went ahead and combined printing operations to slow the growing financial losses at The Times, they said.
The May 12 printing agreement stops short of the more comprehensive joint arrangement the papers initially proposed, the publishers say, and they still need approval of the remainder of the plan. But their "live-in" arrangement has complicated Civiletti's decision on a future marriage.
The International Typographical Union formally opposes the merger on behalf of the printers and mailers who lost their jobs when The Times shut down its presses May 12. They aren't likely to find a home at the nounion News-Free Press.
The ITU's attorneys say The Times hasn't shown it couldn't survive without a joint operating agreement, the threshold test of the Newspaper Preservation Act. The union claims The Times has turned its back on other remedies for its financial problems short of merger.
In an attempt to avert a joint arrangement, The Times' union and nounion employes have offered to accept wage cuts of 5 to 10 percent a year and give back vacation time, cutting costs by an estimated $500,000 annually. The ITU attorneys claim this offer hasn't been taken seriously.
Sulzberger said The Times' unions knew the paper was in financial trouble years ago. "And when they come running in at the last minute, saying 'Oh my God, we didn't believe you. Here's what we will do,' it strikes me as being a little bit after the fact."
Poor management has been The Times' greatest handicap, according to ITU consultant John R. Malone. It did not invest in cost-saving technology until the late 1970s, too late to deal with the News-Free Press challenge. It disregarded sampling campaigns to give prospective readers low-priced copies for brief periods to what their appetites.
Holmberg counters that The Times did try to rescue itself in the end. New editors were hired, local news received more emphasis, a TV magazine was added. But the results have been negligible, he said.
The News-Free Press is simply more in tune with Chattanooga, he said.
The Justice Department's Antitrust Division opposed an immediate approval of merger, saying The Times hadn't yet made its case. Last month, however, it recommended approval. "The Times' history of accelerating losses has continued in 1980, and there appear to be no reasonable prospects that this trend can be reversed" unless operations are combined, it said.
Although Civiletti's final decision hasn't been announced, the message from Chattanooga seems to be: the faster a paper slips financially, the better its chances of an approved merger under the Newspaper Preservation Act.