The recent purchases of newspapers in Baltimore and Louisville by big chains underscore the increasing concentration of ownership of U.S. daily papers in the hands of publishing groups.
In 1970, chains controlled 63 percent of the newspaper circulation and about 50 percent of the dailies in the United States, according to the American Newspaper Publishers Association.
By the end of 1985, groups controlled 77 percent of circulation and 71 percent of newspapers, according to Lynch, Jones & Ryan -- a Washington brokerage firm that follows the newspaper industry.
"A very large degree of control of the newspaper industry is in the hands of relatively large companies," according to Ben H. Bagdikian, dean of the school of journalism at the University of California at Berkeley. "Politically and socially, that is something to be concerned with. It gives them enormous political power."
"I am not as worried about this as some people are," said Brian Brooks, professor of journalism at the University of Missouri. "The newspaper industry remains diverse. There are 1,700 daily newspapers in this country. The biggest chain [Gannett Co. Inc., which purchased the Louisville papers] controls 90 of them. It is possible to envision a scenario, sometime down the road, when the industry becomes so concentrated that there is a problem, but that is a long way off."
John Morton, the chief newspaper analyst for Lynch, Jones & Ryan, said, "Anybody who cares about the quality of public discourse has to be concerned that more and more newspapers are falling into fewer and fewer hands." So far, Morton said, newspaper managements have honored local autonomy and have not tried to dictate editorial or news policies to individual newspapers. "But that is up to the discretion of the people who run the companies."
"On the other hand, that would mean less today than 50 years ago because there are alternatives to the daily newspaper -- like radio, television and the suburban newspapers," Morton said.
Securities analysts and academicians agree that further concentration of the U.S. newspaper industry is almost inevitable.
Analysts said the prime targets are newspapers that have monopoly or near-monopoly positions in medium-sized and bigger cities -- as do the Baltimore Sun papers and the Louisville Courier-Journal and the Louisville Times.
An analyst for a New York securities firm said he had developed a list of 60 newspaper properties that represent potential takeover opportunities, although he said the owners of many of the properties might not be interested in selling.
John Reidy, who follows the newspaper industry for the securities firm Drexel Burnham Lambert Inc., said, "Properties in the right market are very attractive businesses on a long-term basis. . . . There is an increasing recognition that there is no electronic replacement for newspapers, and many see the attraction of doing business as the only newspaper in town."
Most of the bigger newspapers that have sold out to chains in recent years were family-controlled enterprises in which a large number of the heirs had no interest in the newspaper business and wanted to convert their interest in the newspaper to cash.
Historically, many media companies always are looking for others to acquire, according to J. Kendrick Noble, the chief newspaper analyst for the Wall Street firm PaineWebber Inc. "In periods of long economic recovery, the acquirers build up cash reserves and feel confident assuming the debt" required to buy out other companies.
"On the other side, owners see prices going up. There are real problems [staying independent] for newspapers with multiple generations owning it, most of whom are not actively involved in management," Noble said. The heirs who run the newspaper still might desire to keep it independent, but they might be outnumbered by brothers, sisters, nephews and cousins who are interested in money.
"For years, the family running a newspaper has been well-to-do, well rewarded for their efforts. But many of them now recognize that the only thing that separates them from becoming part of the idle rich is saying 'no' [to potential acquirers]. It's the difference between being wealthy and being filthy rich," said analyst Morton.
In some cases, the University of California's Bagdikian said, the onus of estate taxes prompts the sale of privately owned newspapers.
In early 1985, the Cowles family interests sold the Des Moine Register, the dominant paper in Iowa, for about $200 million to Gannett, which is based in Rosslyn. Less than two weeks ago, Gannett paid $315 million to buy the Louisville Courier-Journal and the Louisville Times from the Bingham family.
Last week, the Times Mirror Co. paid $600 million to the A. S. Abell Co., publisher of the Baltimore Sun and Evening Sun. The Baltimore price undoubtedly was enhanced because the only competition, the Hearst Corp.'s News American, folded the day before Abell agreed to sell to Times Mirror, which has headquarters in Los Angeles. Times Mirror owns 11 newspapers, including the Los Angeles Times, New York's Newsday, the Hartford Courant, the Denver Post and the Dallas Times-Herald.
Among Gannett's major newspaper holdings are USA Today, the Des Moines and Rochester, N.Y., newspapers, and the Detroit Evening News, which it purchased from the Scripps family last August.
A family squabble nearly resulted in the sale this year of a major portion of the St. Louis Post-Dispatch, founded by legendary newspaper publisher Joseph Pulitzer. But Pulitzer family shareholders who controlled the majority of the stock in the Pulitzer Publishing Co. bought out dissident minority shareholders.
The buyout has been challenged in court by Taubman Media Inc., the company headed by Michigan financier A. Alfred Taubman, which said it had an option to buy some of the stock sold back to the Pulitzer company by dissident shareholders.