On July 22, an executive committee of the board of directors of Time Inc. voted to close The Washington Star. The unanimous decision, reached at 12:18 p.m. in the 34th-floor Chart Room of the Time-Life Building in New York took only a few minutes, since the full board had agonized over the fate of the struggling newspaper for four hours the week before.
"It's the saddest day since we put Life to rest," Time President J. Richard Munro had observed at the end of that first meeting.
"Yeah, but we revived Life," board chairman Ralph P. Davidson responded.
In Washington, on July 23, the calls began at 6 a.m. "Sorry to wake you at this ungodly hour," Star Associate Editor Sidney Epstein apologized as he telephoned editors of The Star, summoning them from their sleep to an emergency meeting an hour later in the office of Editor Murray J. Gart. "All I can say is the news is not good."
"But Sid, what is the news?" one editor recalls asking. Epstein was overheard asking Gart if he could tell. Then came the answer: "Just get here."
Within an hour, 16 editors had crowded into Gart's office, groggily propping themselves against the wall, in the windowsills, on the couch and in two overstuffed chairs. The stern, 56-year-old Gart, without explanation, passed out a three-page, typed press release from Time Inc. The Washington Star was to close in two weeks, it said. Losses had grown too large for Time to support. The same statement would be distributed by Time executives a few hours later at a crowded press conference across town.
One by one, the stunned editors looked up from their press releases. Standing beside his marble-topped desk, a wall-sized map of the world behind him, Gart at last began to speak. Briefly, and without emotion, he told of his efforts to save the paper. "We did everything we could," said Gart, a 26-year veteran of Time Inc.
Gart's deputies stared at him in silence. Some said they felt angry, some sad, some numb. Executive Managing Editor William F. McIlwain asked a routine question: How much severance pay and benefits would the staff receive after being laid off? Gart said he did not know. He called for Star board chairman James R. Shepley, retired president of Time Inc., who was waiting in his office one floor above Gart's. Shepley said he did not know the answer either. "Time will honor its contracts," he said.
Suddenly, McIlwain, a usually soft-spoken southerner, exploded in anger. "What kind of shabby, f talk is that?" he demanded. "You mean the president of the company is going to go out and have a press conference of what's happening and you haven't bothered to find out the answer to the most important question for your people?"
Gradually, the mutiny built as other editors took on Shepley and Gart in a sort of symbolic standoff between The Star and the corporation that had once promised to rescue it. Associate Editor Eileen Shanahan left the room in a rage. By 7:45, the meeting was adjourned. Fifteen minutes later, the announcement went out on the wire services. Washington awoke to news of the demise of its 128-year-old afternoon newspaper.
These two scenes, reconstructed here from the accounts of participants, marked the final act in a 3 1/2-year, $85 million battle to save the second newspaper in the nation's capital. What had begun as a dream and a dare for one of America's biggest communications corporations was ending with boardroom anguish and newsroom rancor.
At the heart of it was The Washington Star, a struggling, afternoon newspaper that many Wall Street analysts had concluded was beyond financial salvation long before Time Inc. came along. In 1978, it had only one-fourth of the Washington area newspaper advertising revenues, and it was losing circulation. Its competitor, The Washington Post, having bought The Times-Herald in 1954, had a morning monopoly in an economy that favored morning newspapers and was growing in readers and advertisers. No afternoon newspaper in the country had ever recovered from such a position.
But Time Inc. was undeterred.
"The Star has a bright future," proclaimed Time president Shepley when the company bought The Star for $20 million in February 1978. He focused less on the hurdles ahead than on Time's corporate self-confidence. Marrying the company's bounteous resources to a newspaper -- even a struggling one -- in the wealthy and influential realm of Washington could not help but produce another in the line of Time Inc. publishing successes, he and his colleagues insisted.
Without that confidence, Time probably would never have bought The Star, leaving it to die earlier than it did. But in the end, the self-confidence may have hurt more than it helped. Consider:
* Time Inc. executives came to Washington without a plan for turning around the failing newspaper. They had done little market research and had not performed an accurate assessment of The Star's financial condition. A few months after the purchase, they realized that the newspaper's losses were three times as much as they had estimated. They embarked on their first and only daily newspaper venture with a philosophy that proved to be idealistic and naive. Recalled corporate vice president Charles B. Bear in a recent interview: "We thought the editorial product could be improved and that the editorial product gets translated somewhere along the line into profits."
* While directing most of their attention and money to the editorial product, Time officials did little to correct the paper's enormous and critical circulation problems. There is evidence that The Star was losing some 70,000 subscriptions a year simply from customers who complained that they could not depend on getting the paper on time -- or every day.
Some 20 percent of those dissatisfied customers claimed that the newspaper was never delivered at all. The circulation department was caught in a never-ending cycle of cancellations, new subscriptions and cancellations again, picking up some 200,000 subscribers every year but losing even more. This placed an extraordinary burden on newsboys and route managers who are the backbone of any newspaper distribution system.
* To run The Star, Time followed its cherished "church and state" tradition of making the publisher the chief of the business side and the editor the chief of the news side. The idea was that these two executives would have equal stature and clout; working in tandem, they would pull the newspaper out of its troubles. This concept had worked at Time magazine for decades, but there was a serious flaw when it was applied to The Star.
The two Time Inc. insiders assigned to the jobs -- Editor Gart and Publisher George W. Hoyt, neither of whom had ever before run a metropolitan daily -- disagreed on matters large and small and were constantly sniping at each other. They were locked in such a bitter feud that, in the end, they had to communicate through a go-between.
Gart, generally disliked by his troops, has so far shouldered much of the blame for The Star's ills, not only in the newsroom, but also in articles in respected national journals.But against the backdrop of the paper's deep financial problems, the clashes between Gart and his troops pale in significance as a factor in The Star's demise.
Confrontations between editors and subordinates are not uncommon in newsrooms around the country, and low newsroom morale -- while it can hurt a paper's quality -- rarely determines whether it lives or dies.
The spotlight fell naturally on Gart because Time's prescription for saving The Star was fundamentally an editorial one. But The Star, ranked among the best papers in the country at the time of its death, did not lack for editorial quality. In fact, some analysts suggest that the paper might have survived if Time had been willing to make it less sophisticated and flashier. But that, Time executives said, would not have fit the company's vision of a newspaper in the nation's capital.
And so, Time Inc.'s trials and failure at the Washington Star were much larger than Murray Gart. They reached into the corporation's history and self-image, particularly into the personality and judgment of one of its longest serving executives. Shepley's Baby
"Brass knucks," his subordinates called him.
James R. Shepley, 60, president of Time Inc. for the last decade, had helped lead the company through an array of ventures that doubled its net income to $90.5 million between 1975 and 1977. He was steeped in the traditions of Time Inc. and Washington, having joined Time magazine in 1942 as a Washington bureau reporter, broken into management as the magazine's Washington bureau chief, and risen to the summit of the company in 1969.
There he joined Andrew Heiskell, chairman of the board of directors, and Hedley Donovan, editor in chief, in a ruling triumvirate that trimmed the paternalism and budget fat from the old Time Empire while expanding its holdings to take in a $360 million forestry products division, an $80 million video group, a $260 million book group and several prosperous new magazines. The empire had revenues of $1.25 billion in 1977.
He was assertive, sometimes abrasive. As former Time magazine White House correspondent Stanley W. Cloud put it, "Half of Time Inc., when he was in power, quaked in its boots."
After 10 years as Time's president and chief operating officer, the Number 2 executive behind Heiskell, Shepley had earned enough credits, by all accounts, that it was going to be hard for the board of directors to say no to something he really wanted.
What Shepley wanted, in early 1978, was The Washington Star.
The faltering afternoon paper had an almost irresistible lure for the giant corporation and its president, who wanted Time to have its own voice in the nation's capital. "He was head of the Washington bureau for eight or 10 years and was very much involved in Washington affairs. He always liked Washington as a place to be," Heiskell recalled in an interview with The Post last week.
And, for all its access to the inner circles of Washington power, Time magazine's Washington bureau could not rival the influence of a famous newspaper.
"The one thing they didn't have, even with all the prestige of Time, is a lot of prestige in Washington," said Cloud, who became The Star's managing editor. "It was The New York Times and The Washington Post that had the authority."
Besides, The Star seemed destined to die unless Time stepped in. And it seemed a fitting and noble mission for the nation's largest communications company -- and the man who helped lead it to unprecedented heights -- to preserve Washington as a two-newspaper town.
"He didn't think it was going to be easy, but he told me at the time, Time doesn't go into fights to lose them," said Eugene Patterson, publisher of The St. Petersburg Times, with whom Shepley discussed early plans for The Star. "He said he'd retire in five years and he expected to have it in the black."
Dozens of other publishing executives and Time Inc. board members who discussed the purchase with Shepley said they were struck by his conviction that Time's world-wide news resources would, in themselves, help set The Star on a path to recovery. Some board members had doubts about the purchase, but Shepley persuaded them to go along, stressing the importance of keeping Washington a two-newspaper town, according to sources close to the negotiations. "It was Jim Shepley's baby. He thought he could do it," one of them said. "We tended to be somewhat of a high-risk company, willing to take some long chances," Heiskell said.
The sense of mission impressed Matina S. Horner, president of Radcliffe College who had recently been appointed to the Time Inc. board. "Here was a basically philosophical discussion shaping a management decision," she recalled. "I thought decisions were made strictly and only on the bottom line. They had the courage of their convictions. That impresses me."
The Star purchase helped Time's self-image in another way. The expansion of the Shepley-Heiskell-Donovan years had taken the company far from the course charted by founder Henry Luce, who was pre-occupied with editorial products to the exclusion of almost all else. By 1978, with the impending purchase of Inland Container Corp., one of the nation's largest corrugated box manufacturers, Time Inc., owner of Time magazine, Sports Illustrated, Fortune, Money, People, Life, the Book-of-the-Month Club, and Little Brown and Co., had almost half of its assets in noneditorial ventures.
"There was a feeling among "Time, Inkers' that the company was moving away from its editorial tradition," recalled Richard Clurman, former time magazine chief of correspondents. "Why weren't they spending some of this money on the thing that made them famous and kept them famous, namely, journalism?"
Not the least of those concerned about the trend were the ruling triumvirate, all former journalists themselves. "Time is first and foremost in the business of journalism," Shepley would tell the Washington Advertising Club in 1979, when asked why Time bought The Star. "And in journalism, Washington is where it's at."
In less than two years, Shepley, Heiskell and Donovan would retire from the Time Inc. helm, to be replaced by men who, for the first time in the corporation's history, came to Time as businessmen, not journalists. One of the new leaders, Time president Munro, would be the one to announce the imminent closing of The Star, calling Time's dream of rescuing it "either naive or unrealistic."
But in early 1978, Time Inc. was ripe for a newspaper venture.
And The Washington Star was ripe for a savior. The Savior
The dominant paper in the capital until the 1950s, the establishment organ whose editorial endorsement was a ticket for federal appointments, The Star had been losing advertising and circulation for years, the victim of complacent management and dwindling afternoon newspaper readership.
Time Inc. considered buying The Star in 1974, but decided against it after a study of the paper by Otto Fuerbringer, former Time magazine managing editor. "The Star was losing something like $8 million a year, and would lose $10 million the next year," he recalled in a recent interview. "We didn't feel that we wanted to take on a losing entity like that. We were convinced that we could not come in there and make drastic savings and reductions."
The Star was rescued that same year by Houston tycoon Joseph L. Allbritton, who bought it from its founders, the Noyes and Kauffmann families. But by late 1977, Allbritton, who alse had acquired the profitable local television station WMAL (now WJLA) in the transaction, was seeking to sell the paper because of a Federal Communication Commission ruling designed to break up local media monopolies.
The continuing uncertainty over The Star's future had become a fact of life for its loyal staff, who agreed to work four-day weeks in the Allbritton era to keep the paper afloat. Unions had accepted a wage freeze, and Allbritton pared 200 people from the payroll. But for all its financial ills, The Star seemed at the time to be undergoing a renaissance. Under editor James Bellows, it had become a free-wheeling, magazine-style newspaper, filled with off-beat and aggressive reporting, a magnet for eager young writers. the audacious Ear column also had been inaugurated.
At Washington parties, it was becoming chic to talk about how the struggling Star was gaining on the dominant Post. The once-august Star had become the scrapper, a paper with a home-team identity. Even the newspaper plant seemed part of this underdog image. In relative isolation over at Second Street and Virginia Avenue SE, far from Washington's main streets, it provided a steady source of part-time work for the unemployed on the fringes of Capitol Hill.
Shepley handled almost all of Time Inc.'s negotiations with Allbritton. He met the Houston investor in Washington several times between September and December 1977, and he called Time board members to tell them of the possible purchase, according to affidavits filed by the two men with the FCC. Allbritton had cut losses to $1.3 million for the year, and his price was unusually low for a major newspaper.
"On the morning of Feb. 1, at approximately 6:45 a.m. Houston time, I telephoned Mr. Shepley at his home and said that I had decided to sell The Star for cash only, in the amount of $20 million," Allbritton said in his affidavit. "I asked Mr. Shepley to let me know of his decision that afternoon."
Shepley called back to say that the Time board's executive committee had approved the transaction. The next day, in New York, the deal was made final.
The day of the public announcement was Feb. 3, 1978. On that same day, halfway across the country, publisher Marshal Field V stood on a desk in the newsroom of The Chicago Daily News and announced that that afternoon paper, one of the best known in the country, could no longer sustain its losses. Even as Time was embarking on its reclamation project for The Star, the demise of The Daily News was taken by Wall Street as yet another sign of doom for America's afternoon newspapers, which were losing ground to television.
While Wall Street frowned, many Washingtonians and The Star staff eagerly embraced Time's promises that the paper would survive. Syndicated columnist Mary McGrory, a Star stalwart for more than 30 years whose writing is filled with cynicism toward American corporate power, recalls that in those early days she felt no suspicions of The Star's powerful new parent.
"All I ever asked was survival," McGrory said. "I just thought they were going to give us the chance to be the best paper we could be. I didn't ask more than that." McGrory said Shepley took her to lunch soon after the purchase, but that she was so overcome with relief that she recalls virtually nothing that he said. "I was just so glad he was there," she said. "I tended to be quite uncritical of people who were inclined to save The Star." 'The Train Is Moving'
Within months, the marriage of convenience began to show strains.
The Star drifted until June, as Time rushed specialists in and out of Washington and searched for business executives to run the paper. The newsroom also remained as it was before the purchase. "it was eerie," recalled Barbara Cohen, then a comanaging editor. "Everyone was waiting for Time, waiting for Time."
Shepley was made chairman of The Star's board of directors and, despite his heavy schedule as president of Time Inc., made many trips to Washington to woo potential advertisers and civic leaders, to dine with senior Star staffers and to meet with respected publishers and editors to discuss the paper's future.He tried without success to keep the paper from being classified within the Time empire as part of the conglomerate's "miscellaneous" holdings.
Shepley also made several efforts to integrate The Star into the Time world in Washington. The Star gave generously to local charities. Shepley and his wife hosted an elegant dinner for senior Star editors and Time corporate executives at Time's Watergate suite, at which Donovan, Bear and other Time Inc. executives were present.There were toasts to The Star's success in the penthouse roof garden. "It was very optimistic," Cohen recalled. "The tone was very much: This train is going to get moving. We don't have to apologize about being Number 2. This is a fight now."
But Phil Evans, then Cohen's comanaging editor and another guest at the dinner, was skeptical. "Time should have moved immediately to make fundamental changes," said Evans. "I was very anxious for some changes and we were having dinner parties."
Within a month, senior Time Inc. financial analysts discovered that The Star was in far worse financial condition than expected. While Allbritton had cut losses to just over $1 million a year, he had done so in large part by paring the newspaper's lifeline -- circulation -- to a critical low. "It took less than 30 days to tell people they were way off the mark," said one member of Time's crew. "[We] tripled the estimated loss for the year."
"Nobody at Time had any idea what bad shape that paper was in when they acquired it," said computer consultant Jonathan Seybold of Malibu, Calif., who advised The Star on its purchase of a computer system and dealt with an array of Star and Time Inc. executives in the process. "There was no competent middle management; the delivery was unreliable and always had been; they had thousands and thousands of [classified] advertising accounts carried in the computer which didn't exist. You could still place ads against them and it would never get caught. There were inventory items that could not be found. Every time you picked up a rock, a thousand creepy crawlers came rushing at you."
After looking at the books, and the problems, Time managed to negotiate the purchase price down from $20 million to $16 million.
In June 1978, Time Inc. officially arrived at The Star with the appointment of Murray J. Gart, then chief of Time correspondents, as editor, and George W. Hoyt, president of Time's suburban Chicaco newspaper chain, Pioneer Press Inc., as publisher.
On the business side, Hoyt surrounded himself with Time executives who had considerable confidence, but little experience in daily newspaper management. "I don't know anything about the newspaper business. We didn't pretend to," said Richard E. Coffey, Time's recently retired promotion director who came here to develop a marketing strategy for The Star. "I worked for 32 years as promotion director of Time. I never worked on anything that was second best in my life."
On the editorial side, there was no plan for enhancing The Star's identity -- to anchor it among Washington readers, and by extension, among advertisers. "From the beginning, and this is true, they had no unique vision editorially of what they would do with The Star," said Clurman, the former chief of Time correspondents. "They just wanted to make it a better paper."
Shepley directed several of the editorial changes. It was Shepley, for example, who called from the outset for more coverage of the Washington social scene and the use of the Time-Life news service's national and international reports. Deputy editors discovered that story ideas mentioned to them by Shepley in private were being assigned by Gart within a day or two.
But the editorial direction was entrusted for the most part to Gart, who had been picked for the job by Donovan, and who tolerated little dissent from subordinates. Gart's vision of how to improve The Star was to dismantle most of what remained of the Bellows legacy, to make The Star, as he put it, more of a daily newspaper, less of a daily magazine. He called for shorter, straighter stories, fewer investigative and enterprise pieces, more national and foreign news. Later that first year, he pushed through a plan to create separate, "zoned" editions for the suburbs. These changes, he and others predicted, would attract more affluent readers and, with them, lucrative advertising business.
But Gart's vision and style did not square with that of the longtime staff. "Murray wanted to put his imprint on the paper, but he threw out everything, the baby with the bath water, and some things Bellows had done were brilliant," said political columnist Jack Germond.
Still, it was the financial problems that loomed largest at year's end, when Shepley, noting that the paper was expected to lose $10 million in 1978 and $16 million in 1979, threatened to fold The Star unless its 11 unions renegotiated their contracts by midnight Dec. 31.He warned that Time Inc. "was not irretrievably on the hook" with The Star.
The unions, sensing that Shepley was not bluffing, agreed to new contracts just before the midnight deadline. Gart had been in the newsroom all that night, pacing back and forth as the negotiations wore on. When the agreement came at last, he and other editors broke out vodka and scotch from his liquor cabinet. Then came the call from Shepley: "We're not publishing," he decreed. He wanted to see the agreement in writing, and that would not be possible before the deadline for the New Years Day edition.
So on Jan. 1, 1979, there was no Washington Star, a void that did not recur until Aug. 8, 1981, the day after The Star folded for good. But by Jan. 2, 1979, Time's outlook for The Star was once again bullish. "We are here to stay," The Star's lead editorial proclaimed, and Time promised to pump $60 million into the paper over the next five years. Hoyt predicted the paper would "turn a profit" by 1983.
Management invited all 1,500 Star employes to a delayed New Year's party at the elegant sheraton-Carlton Hotel. There were tuxedo-clad bartenders, a seemingly bottomless liquor supply and hors d'oeuvres in abundance. In the middle of the room, atop a three-foot base, stood a giant ice sculpture of a star. While some employes, embittered by Time's tough-fisted stance against the unions, groused that the decoration was melting away as they celebrated and that the money would have been better invested in the paper, there were once again hopes of a new beginning.