The owners of States News Service, who rescued the struggling news organization from bankruptcy court a year ago, announced yesterday that they will close the District-based venture March 11 because of continuing losses.
Leland J. Schwartz, founder, former owner and editor of States, who sold out last year to Pulitzer Publishing Co. and Indian Head Inc. and is still connected with the operation, said the two companies apparently didn't want to continue sustaining the news service's $1,000-a-day losses.
"Their reasons were that the financial reality was just too severe," said Schwartz. Pulitzer and Indian Head "gave it their best shot, there's no question about that," he said. "They walked into a firestorm, and the fire's still raging."
Pulitzer and Indian Head officials could not be reached for comment.
The decade-old news service--whose 30 staff members supplied regional angles on Washington news for about 70 papers nationwide, including The New York Times and Chicago Tribune--had been in financial difficulty for several years. It filed for bankruptcy protection a year ago, listing $700,000 in debts. Pulitzer and Indian Head did not pay off all of the company's debts, but did provide management talent and capital in an effort to save States, Schwartz said.
"We could just not make the numbers work to turn it around," he said yesterday. "I'd say we're clearly a recession victim."
Schwartz said he would renew his search for new ownership for the news service, conceding, "as always, we'll need a miracle or two."
Schwartz said that, although it was known that the news service was foundering, the staff was "shattered" by the announcement.
Pulitzer and Indian head struck an agreement last night with States' employes, according to Robert A. Steinke, executive secretary of the St. Louis Newspaper Guild, which had been seeking for the past 11 months to organize States. In return for "modest severance pay" and medical benefits, Steinke said, guild members agreed to withdraw a union certification petition pending before the National Labor Relations Board and that the guild would not attempt to represent States employes.