The owners and managers of United Press International, feuding over who should control the financially troubled wire service, went before two of its key constituencies today to plead their cases.
Co-owner Douglas Ruhe and President Raymond Wechsler met with creditors in New York to explain their differing versions of who controls the company. It was Ruhe's first meeting with the creditors since the company filed for Chapter 11 bankruptcy protection last week.
Meanwhile, Chairman Luis Nogales, who claims that Ruhe and co-owner William Geissler no longer have any say in the company's affairs, was trying to assure the newspaper publishers who pay UPI's bills that the wire service was still a going operation -- and needs a rate increase of 9.9 percent to remain so.
But even as ownership and management squared off, a number of high-level news executives meeting here for the annual American Newspaper Publishers Association convention said privately that UPI's problems are beginning to look insurmountable.
"Many of us are really exhausted by this whole thing. We are just waiting for UPI to die," said one newspaper marketing executive, who asked not to be named.
The battle for control of the news service, which filed for Chapter 11 bankruptcy protection last week, was one of the major topics of discussion at the ANPA convention. Nogales has claimed that Ruhe and Geissler signed over control of the company to Nogales' management team during a financial crisis in March; Ruhe says the bankruptcy filing voided that agreement.
Ruhe, who accused Nogales of trying to "hijack" the company, said he and Geissler plan to ask the bankruptcy court to return control of UPI to them so they can fire Nogales and other members of top management and sell the company.
UPI's owners and managers have accused one another of "incompetency," and the battle has become so intense and bitter that Business Week quoted one UPI staffer last week as saying, "It's like a plane going down for a crash landing and having a fight in the cockpit for the controls."
Nogales, in a speech to newspaper executives here, emphasized that despite the feud, UPI's wire machines are still ticking in the 2,000 or so newspaper and broadcast newsrooms UPI serves. "Throughout this time, you have received UPI's report," he told the convention. "There have been no disruptions." He added that even with turmoil, delayed paychecks, uncertainty and layoffs, many of his clients had told him that the UPI service seemed to be "enhanced."
Ruhe, however, claimed in an interview in New York Monday night that the upheaval has sent many UPI subscribers running to arch-rival The Associated Press. "It's been very damaging to UPI," Ruhe said.
Newspaper executives here also grumbled about UPI's unilateral imposition of a 9.9 percent rate increase last week as an effort to increase revenue. Nogales admitted that reaction to the rate increase was "mixed" and indicated that it might be voluntary. "I want to make clear that it is not an assessment that is due to us necessarily under our contractual agreements with you," he told the publishers. "It is an assessment that we believe is needed to keep UPI alive."
With the two sides already fighting in the boardroom and the courtroom, the battle for control of UPI took a new twist last weekend when the wire service transmitted a 2,300-word investigative piece that quoted UPI management officials as saying that Ruhe and Geissler had diverted $2.3 million of UPI money to a management company they owned and used millions more scarce UPI dollars to set up "questionable venture deals" for the ailing company.
The article, by UPI investigative journalist Gregory Gordon, also accused the two, who bought UPI for $1 in 1982, of reneging on a pledge to invest $2 million in the company in 1983.
Ruhe, however, said in an interview in New York Monday night that while "we've made our share of mistakes," there has been no wrongdoing. "There are no illegal or unethical things that we did," he said, pointing out that Nogales had participated in many of the actions cited in the story.
Ruhe said there was nothing improper or unusual about the payments to the management company, that the new divisions were set up to provide UPI with needed services without putting them under existing union contracts and that there was no specific requirement for the $2 million investment -- which Ruhe said fell through because he and Geissler were unable to sell a Chicago TV station, proceeds from which they had planned to put into UPI.
"It's just a grab-bag," Ruhe said of UPI's weekend story. "It's like throwing a lot of accusations out there."
Ruhe claimed that the story did not fully report his refutations of the allegations, but its author, Gordon, said yesterday, "I don't think that's true. There was a refutation of every charge that we had."
Apparently, UPI's management was not completely pleased with the story either. UPI's top managers reportedly were upset that the story had fueled the company's internal fireworks and provided new questions about who was running UPI.
Maxwell McCrohon, UPI's editor-in-chief, told reporters here today, "I don't think the story was as professional as it should have been. It was done too hastily." Gordon said that while the story was done under deadline pressure, "I stand on it. I thought it was a well-reported story."
Ruhe charged that the very appearance of the story on the UPI wire raised questions about the use of the wire service and its resources during the battle for control. "I personally think the issue is how UPI is being used to sling mud at us," he said.
But Nogales, who said that he did not see the UPI piece until after it was sent on the wires last Saturday, said that throughout this turbulent period, "there has been a clear division between management . . . and editorial on these matters."
Ruhe said he wanted to get the management dispute over with so that he and Geissler can go ahead and sell the company. Most observers agree that the rift makes it difficult for potential buyers to figure out just who would be able to accept an offer for the company -- the owners, the managers or even the creditors.
An investor group led by the chairman of a Florida savings and loan institution surfaced last week with an offer for the company that was criticized by Nogales as insufficient, while Ruhe said he would take it under consideration. Ruhe said other parties also had indicated their interest in buying UPI, and he said he planned to negotiate with them while in New York this week.
"We want to sell it," he said. "The company really needs to be in new hands. It needs to be not only owned but managed by a new team."
And in a reference to Nogales' statement last week that the owners should be "fired for incompetency," Ruhe said, "The owners are selling the company, which is tantamount to firing themselves."