The Washington Star, losing $20 million a year, will cease publication Aug. 7 -- eliminating 1,427 jobs and leaving the nation's capital with only one daily newspaper, The Star's owner, Time Inc., announced yesterday.
Unless a buyer is found in the next two week -- which Time executives said was unlikely -- The Star, one of the great institutions in American journalism, will go out of business after 128 years, a victim of declining circulation, abandonment by advertisers, and a nationwide trend toward the demise of evening newspapers in large cities.
The Star was the dominant newspaper in the nation's capital during the first half of the 20th century, establishing a reputation as an award-winning, impeccably accurate newspaper. Its workers were treated better than any others in the business and its tone mirrored the values of an older, more established Washington society of wealth and privilege.
The announcement of The Star's imminent death caught the city by surprise.
In a black-bordered statement on the front page of yesterday's late edition, J. Richard Munro, president of Time Inc., said that although Time has invested $85 million in The Star, "the newspaper continues to lose money and shows no prospect of financial improvement. Regrettably, we have no choice but to close it."
Munro and other Time executives, appearing at a 10:30 a.m. press conference at the Madison Hotel, held out no real hope that anyone will buy The Star and keep it alive.
"We put a lot of resources into this effort," Munro said, and if an industry giant such as Time could not turn The Star around, "it's going to make it very tough for any afternoon paper."
James R. Shepley, chairman of The Star's board of directors, said there had been no inquiries from any potential buyer with sufficient resources to be considered serious. He said the door was being kept open for any would-be buyer. Wall Street analysts and publishing executives unanimously agreed, however, that no one is likely to walk through.
Nevertheless, officers of the Washington-Baltimore Newspaper Guild, a union representing editorial and commerical employes of The Star, said they had begun an effort to study possible acquisition of the newspaper by employes and local business interests.
Donald E. Graham, publisher of The Washington Post, said, "This is a sad day for Washington and the newspaper business. Time has indicated that it is looking for a buyer who would continue publishing The Star, and we wish them success."
Time Inc. bought The Star from Texas financier Joe L. Allbritton in 1978 for $20 million. Munro said that arrangement was quite reasonable. But unfortunately for Time Inc. it did not include the lucrative radio and television properties once owned by The Star -- among them, WMAL-AM, WMAL-FM (now WRQX-FM) and WMAL-TV (now WJLA-TV).
The newspaper itself was losing money before Time bought it and continued to lose money. Its daily circulation, which went over 400,000 when The Star bought the old Washington Daily News nearly a decade ago, dropped to 323,000, and Sunday circulation fell below 300,000. The Post's circulation is over 618,000 daily and 845,000 on Sundays.
Time Inc. executives and directors said they had been talking for months about how to cut their losses and had inexorable come to the conclusion that they could not restore The Star to profitability.
The announcement of their decision to close the paper, however, came as a surprise to Star employes and to journalists and publishers around the country, who expressed grief and dismay over the paper's demise because Time had pledged to keep The Star going for five years.
Munro said yesterday that the five-year commitment was based on the assumption that Time would have to invest $60 million in The Star in that time. "Unfortunately," he said, "we went through the $60 million in a lot less time than five years." Time says it has invested $85 million in The Star, $35 million of which has been declared after-tax losses.
Time's decision to shut down The Star followed the collapse last week of negotiations with The Washington Post over a joint production agreement under the Newspaper Preservation Act, which permits separately owned newspapers to pool production and business operations to cut costs.
Once those negotiations failed, Star editor Murray J. Gart said the newspaper had run out of options and the end was inevitable. The executive committee of Time's board of directors made the formal decision of a meeting in New York on Wednesday.
Executives of Time, The Star and The Post all declined to specify on the record why those negotiations were unsuccessful.
Shepley said The Star initiated them, and offered to reduce itself to a weekday-only paper, leaving the weekends to The Post. But The Post "had projections of profit margins and benefits to their paper that they wanted to ensure," he said. "I don't fault them for that in the slightest. They have a successful paper and they wanted to make sure they kept it that way."
A Post executive said the talks failed because The Star's losses are so great -- more than those of any newspaper elsewhere that has entered into a joint production agreement -- that it would have been a burden to The Post.
Both Donald Graham and Katharine Graham, chairman of the parent Washington Post Co., declined to comment on the possibility that The Post itself would publish an evening newspaper as has been done in other cities.
Time's decision to jettison The Star concludes a period about 15 years under three owners in which Star circulation declined, its dominance of local advertising collapsed and experiments with new features and revised publications schedules failed to stem the erosion. This came despite the high regard in which the paper's news reporters and critics were generally held.
Under Gart and Shepley, Time Inc. veterans brought in to run The Star, it became virtually an all-day paper, challenging The Post with new morning editions but also complicating its own distribution problems.
Time magazine's foreign correspondents were conscripted into double duty and filed daily copy for The Star. The format of the editorial pages was revised, localized editions were created for news from the city and the suburbs, additional reporters were hired and new features were launched. But, as Time executives acknowledged yesterday, none of those innovations could cut into The Post's three-to-one leadership in advertising lineage.
"We were either naive or unrealistic enough to think that we could come in and steal some of the market share from one of the most powerful papers in the country," Munro said. He said that "we didn't pay very much for it, and that coupled with maybe our arrogance that we could come down here and make an inroad in this market is what came a cropper."
"We're not blaming anybody," Shepley said, "except our own shortcomings."
So unexpected was the timing of the announcement that prospective employes were still arriving for interviews yesterday. Gart broke the news to The Star's senior editors at a 7 a.m. meeting, and it was on the radio before 8, while many of the newspaper's employes were en route to work.
Reporters and photographers interviewed on their way into the building expressed anger at the way in which they got the word, but there appeared to be an air of resignation about an event that had been rumored often in the past.
The outlook was grim yesterday for the paper's commerical and blue-collar employes. Munro said Time Inc. would honor all its union contracts and their provisions governing severance pay, but lawyers are still studying the details. That left unclear what will happen to Star pensioners.
The Star's plant at 225 Virginia Ave. SE, a highly desirable site near two Metro stations and Capitol Hill, presumably will be put up for sale.