Christ-Craft Industries of New York may buy The Washington Star if Congress enacts tax benefits that would enable it to recover up to 96 percent of its business losses over the next three years, the corporation's chairman said last night.
Sen. Charles McC. Mathias (R-Md.) at Chris-Craft's request, is pressing for the addition of a special amendment to the $750 billion tax bill approved in both houses of Congress on Wednesday that would allow the recovery of most of the annual operating losses that The Star has been incurring, the biggest obstacle cited by prospective buyers.
Herbert J. Siegel, head of the conglomerate that now owns two West Coast television stations and is best known for the cabin cruisers it no longer produces, said that "we would be interested in helping to save The Star. We are trying to be constructive."
The Star's current owner, Time Inc., said the paper has been losing $20 million a year. Under current tax law, only 46 percent of that would be recoverable. But under the Mathias proposal, drafted in a form that would fit no other newspaper in the country, a new purchaser would be able to take all but about $800,000 of a $20 million loss off its corporate taxes.
Mathias said he is advocating the legislation because he believes the nation's capital should not be without a second newspaper voice providing additional news, different editorial opinions and a different viewpoint from which to assess the political process.
An aide to the senator said Mathias felt a responsibility to encourage the continuation of two newspapers in Washington both in his role as a senator from a neighboring state and as chairman of a Senate District of Columbia subcommittee.
Time announced last week that it would cease publishing The Star a week from today because of the paper's continuing losses. A Time spokesman said yesterday that Time Inc. "was not involved in any way with the proposed rider to the tax bill," and he refused to say whether Time was negotiating with Chris-Craft.
Chris-Craft now has an industrial and communications empire that owns television stations and manufactures such products as insulation padding, water-disposable hospital laundry bags and plastic flexible films.
One member of its board of directors is David F. Linowes, brother of R. Robert Linowes, former president of the Greater Washington Board of Trade, who has been trying to save the paper, and a brother Sol M. Linowitz, a member of the boards of both Time Inc. and The Star.
It was not clear whether Robert Linowes' efforts were related to the possible Chris-Craft bid for the paper, because David Linowes said he knew nothing about the tax-break measure.
The proposed legislation was drafted by Ronald Lewis, a tax attorney in the firm headed by former Internal Revenue Service Commissioner Mortimer Caplin, at the request of J. Stanley Pottinger, a former assistant U.S. attorney general who is representing Chris-Craft. That is a combination of Washington experience and political connections that gives the effort some credibility.
Sen. Robert Dole (R-Kan.), chairman of the Senate Finance Committee, declined to predict yesterday whether the amendment would be tacked on to the omnibus tax bill at the last minute before it goes to a House-Senate conference today.
In an impromptu conversation with reporters in a Capitol corridor yesteday, Dole said half-jokingly that "it would have been better to have someone who voted for the bill" as sponsor of the tax-break rider.Mathias is one of only two Republicans in Congress who did not support the Reagan administration on the tax bill.
The tax brak for a prospective Star purchaser was not part of the massive tax bill when it was considered in Congress and it would be unusual to add it at the 11th hour, but it is technically possible. The bill is still on the Senate floor and can be amended until it goes to the conference that will resolve minor differences between House and Senate versions.
Once the conference begins work, House sources said, it would be extremely rare for an amendment to be added and would require a special vote by the House Rules Committee, but it could be done if Congress makes up its mnd to save The Star. If the rider is added to the tax bill, it probably would become law in the new few days, enabling Chris-Craft to make a bid before The Star actually stops publishing.
The rider does not actually mention The Star or Chris-Craft by name. It would give a 50 percent tax credit on losses to any failing newspaper in the District of Columbia with a circulation of 200,000 or more. The Star is the only paper fitting such a definition. Any profitable purchaser could take advantage of the tax brak, not just Christ-Craft.
If a parent corporation lost $20 million operating The Star, it could, under the rider, simply deduct 50 percent of that, or $10 million, from its tax liability. Then it could take its previously authorized 46 percent credit on the entire $20 million loss. The tax credit would be available for three years, presumably time for a new owner to return The Star to profitability.
The prospects for saving The Star have been slim since Time Inc. announced it was jettisoning the paper after three expensive years of ownership. Hopes alternately have risen and fallen all week as groups of potential saviors have surfaced and then abandoned the effort.
Robert Linowes said Wednesday that he was discouraged about his attempt to keep The Star alive, and until Chris-Craft appeared yesterday the only person known to be contemplating a bid was Boston real estate developer Mortimer B. Zuckerman.
All potential bidders, whether still considering it or not, have stressed throughut the week that the odds were against the survival of the paper. Most of The Star's employes have been seeking other jobs.