DETROIT, AUG. 6 -- Less than three weeks before Knight-Ridder Newspapers Inc. said an antitrust exemption was needed to save the Detroit Free Press from failure, a Free Press official was at a Knight-Ridder management conference citing readership gains, he said today.

Robert J. Hall, Free Press executive vice president and general manager, said that at the time of his March 26, 1986, presentation he knew nothing of negotiations between Knight-Ridder and Gannett Co. Inc., owner of The Detroit News, that led to a proposed joint operating agreement between the newspapers.

"I didn't know they were even occurring," he said at a U.S. Justice Department hearing on the proposed agreement.

Hall said the presentation he and other Free Press executives made touted the success of "Operation Tiger," an effort to overtake the more successful News, and cited some readership gains.

On April 14, Knight-Ridder and Gannett said the Free Press was in danger of failure and a limited antitrust exemption would be sought to allow a cost-cutting merger of advertising, circulation and production operations. The newspapers applied for the exemption in May.

Knight-Ridder and Gannett have said the newspapers lost $142 million from 1981 through the first quarter of 1987.

U.S. Attorney General Edwin Meese III can approve a joint operating agreement under the Newspaper Preservation Act of 1970 if he finds one paper is in probable danger of failure and the agreement would ensure survival of independent editorial voices.

Retired administrative law judge Morton Needelman was named by the Justice Department to conduct the hearings that opened Monday in Detroit's federal courthouse and make a recommendation to Meese.

Under a joint operating agreement, the two newspapers would retain separate news and editorial departments but publish combined weekend editions. There are 21 jointoperating agreements in the United States.

The proposal is challenged by Mayor Coleman Young, who says it would curb editorial independence, and by newspaper unions that fear job losses. Each paper has 2,200 employes, including 1,900 in the business and production departments.

The News, founded in 1873, has a circulation of 678,399 daily and 839,319 on Sundays. Circulation of the Free Press, founded in 1831, is 639,720 daily and 724,342 Sundays, according to publishers' statements for the six months ended March 21