After being caught up in controversy on issues ranging from religion to finances, the new owners of United Press International said last week they've already begun to put the news service back on its feet.
The mood was decidedly upbeat at UPI's 23rd annual conference of editors and publishers here as the new owners rolled out facts, figures, and a new life in the old wire-service. In fact, they even had the temperity to predict that UPI would turn a profit soon.
"We feel we've rounded the corner," says 36-year-old William Geissler, a co-owner of Media News Corp., which acquired the wire service from the E. W. Scripps Co. last two weeks, six newspapers dropped [the Associated Press] and signed withUPI. And we got $1 million in new broadcast clients while AP says it has 10,000 subscribers.
Geissler and Douglas Rube, the 37-year-old managing director of Media News, own a small Nashville-based communications company called Focus Communications that has television interests. Another partner, Len R. Small, 39, who became chairman of the board of UPI, is editor and publisher of the Daily Dispatch in Moline, Ill., and a vice president of his family-owned Small Newspaper Group. The senior member of the quartet, Cordell J. Overgaard, 48, is a Chicago attorney specializing in communications who reportedly has become a multimillionaire by investing in cable television properties.
No sooner had the acquisition been announced than the four came under intense scrutiny from newspapers around the country. The buyers were relatively unknown, and questions were raised about the source of their funding. This distrust was further fueled by the four partners' refusal to disclose the terms of the UPI acquisition.
Rube and Geissler are members of a little known religion called Baha'i, which some persons took to be a cult. (Founded by Moslem reformers in Iran in the 19th century, the faith stresses the unity of all races and nations and an acceptance of other great religions.) Then the Nashville Tennessean disclosed that Geissler had volunteered for noncombatant status but went to jail for being a conscentious objector during the Vietnam war. (He later was pardoned by President Ford.)
Since both companies involved are privately owned, they were not required to disclose the terms of the transaction. The new owners said they didn't to go to outside sources for capital, but said they couldn't disclose details because they had promised Scripps not to reveal the terms.
UPI has a rich history in American journalism. Founded as United Press by E. W. Scripps to provide news for his evening papers, it was merged with the Internationl News Service in 1958.
In 1935 it was the first service to offer news to broadcasters, and several of its reporters -- including Walter Conkrite and Eric Sevareid -- later became household names on the airwaves.
The service also has been strong in news photography, for which it has eight Pulitzer Prizes.
For years, E. W. Scripps Co. carried UPI at a loss, which had mounted in recent years and was expected to reach $4 million in 1982. Adding to the pressure on the company was the fact that the news service was held in a trust for E. W. Scripps' grandchildren -- the oldest of whom is in his late 50s -- and the company bore a fiduciary responsibility to them.
In 1978 Scripps tried to work out an arrangement whereby its clients would invest in and become co-owners of the news service. When that failed, Scripps began seeking a buyer in earnest, but wanted to be sure a new owner kept the news service intact. However, a series of would-be buyers, including Reuters Ltd., considered and then rejected the purchase of UPI until Media News appeared on the scene.
If Media News does succeed, it may tell less about the four entrepreneurs than it does about Scripps. Scripps in recent years has seemed to treat UPI like a poor relation, with the Cincinnati company operating it almost as an invisible parent. One 28-year UPI employe, who was discovered by the new group and elevated to vice president, says he never saw any officials from Scripps until three years ago when they came to discuss selling the news service.
It didn't take long for the buyers, whose experience is in modern communications techniques, to realize that UPI was being consumed by telephone long-lines bills. It spends a staggering $14 million annually in the United States ($30 million worldwide) transmitting some 12 million words daily over telephone lines.
The answer was satellite transmission. Media News figures it will enjoy a net savings of $7 million a year by bouncing messages off satellites rather than running them through cables.
Scripps had made a modest effort in this direction; 600 UPI customers already own receiving dishes and related equipment. Media News will add 1,400 new earth stations at a cost of $11 million. The 2,000 domestic stations will allow the news service to get signals into all the telephone rate centers where UPI has subscribers.
The satellite financing package was put together by Ruhe, a self-described "deal-maker." The problem, he says, was that Media News had to make a substantial investment in modernizing the system, but the investment couldn't be paid off from operations because the service was losing money, and the new owners did not want a big bank debt so soon.
Ruhe's answer was a third-party lease. A leasing company will finance the ground stations--manufactured by Harris Corp. and compatible with the 600 already in place. Part of the predicted $7 million savings will go to paying off the leasing company, which means no out-of-pocket expense to Media News.
The four partners also think that the savings will erase the red ink on UPI's balance sheet. If all goes as Ruhe expects, UPI could soon earn a modest profit -- the first in a quarter of a century.
To learn what subscribers think about UPI, the new owners contracted for two major opinion surveys. According to Geissler, whose interest is marketing, "the studies showed that one area where we are least competitive is state and regional coverage."
To help bolster this area, Media News announced at the editors meeting that they are adding 19 new bureaus. "The only way out of this muddle is growth," says Geissler.
The company also plans to increase UPI's business, medicine and science coverage.
Major bureaus, such as New York, Washington and Dallas, are being studied to see if manpower is properly utilized. But the four partners say they are impressed with the quality and productivity of UPI personnel, and that there will be no widespread dismissals.
Otherwise, they are careful in speaking of editorial matters to defer to their new president. The hiring of William J. Small, former president of NBC News and for 17 years a CBS news executive, is considered a major boost to UPI's recently sagging image. Small -- no relation to Len R. Small -- expressed delight with his new job.
"It's one of the great opportunities in journalism," he said, adding that there has been an outpouring of congratulations from former "Unipressers." "People who worked for UPI remember complaining about pay and working conditions, but none of them would have missed the opportunity."
Another area under study is the pricing of the news service. "It's been deadly," says Geissler. He says that rates have been rising too rapidly, often 100 to 200 percent a year. "This was happening at a time when clients perceived UPI as the weaker service. But nobody from UPI ever visited them."
Meanwhile, the new owners are trying to give UPI a quick public relations fix while they quietly attempt to improve the operation. Their new logo -- designed by New York image-maker George Lois, creator of the CBS "eye" -- carries the legend, "One Up on the World," which a spokesman said is intended to reflect the news service's "bold and brash new management."