DETROIT, JAN. 21 -- Owners of the Detroit Free Press launched a campaign today to persuade the public and Attorney General Edwin Meese III that they will close the newspaper unless Meese approves a controversial joint operating agreement (JOA) with The Detroit News.
Alvah Chapman, chairman of Knight-Ridder Inc., said that if Meese decides against the quasi-merger of noneditorial functions for the newspapers and the decision is upheld on appeal, the company will shut down the Free Press and divide its presses and other assets among the chain's other newspapers.
Chapman said Knight-Ridder's board of directors has authorized company officers "to take all steps to make sure the consequences are understood . . . and the dire and disastrous consequence is that, if the JOA is not approved, the Free Press does not continue and this becomes a one-newspaper town."
In Washington, Meese declined to indicate what action he will take. "We are following the process prescribed by law," he said.
Meese said that, because he is sitting in "a quasi-judicial role" regarding the agreement, "it's improper for me to say anything to anybody or have any discussion with anybody about it and certainly not to say anything publicly until such time as the process has reached me . . . in the sense of receiving the evidence and then making the decision."
Chapman, asked at a news conference why efforts would not be made to sell the Free Press before closing it, said its difficulties have been "in the public record for a long, long time."
Saying the newspaper's operating losses over the last decade have been about $100 million, he added: "In all my years at Knight-Ridder, we have never had any offers to buy the Free Press."
The Free Press and The News, owned by Gannett Co. Inc., asked the Justice Department in May 1986 for a 100-year antitrust exemption that would be expected to turn heavy losses at both newspapers into substantial profits. From 1981 to 1987, the two newspapers estimated their losses at more than $140 million.
The antitrust division of the Justice Department and an administrative law judge appointed by Meese have recommended that Meese turn down the JOA request.
Judge Morton Needelman said some of the losses occurred not because the newspapers were failing but because both were expending funds and cutting advertising and subscription rates to gain market "dominance."
At the Free Press, which its owners have said is a "failing paper" as defined by the Newspaper Preservation Act, the plan for resurgence was called "Operation Tiger." It included a $22.3 million expansion of printing facilities.
In his first public comments about Needelman's report to Meese, Chapman said the judge had addressed the issues correctly but moved to "a legal never-never land" in his conclusion.
Needelman accused Knight-Ridder of "flip-flops" in the way it waived and then charged management fees to the Free Press after the company decided to apply for a JOA as a failing newspaper. He said one such change "smacks of slippery accounting."
Asked about Needelman's assessment, Chapman said, "I don't think it's any more accurate than anything else he said."
Until mid-February, the Justice Department is to receive comments on the requested JOA, which would allow the quasi-merger of papers owned by the nation's two largest newspaper chains.
Gannett, whose newspapers have a daily paid circulation of 6.1 million, is largest, and Knight-Ridder has 3.7 million daily readers.
Knight-Ridder's campaign has drawn on some of Washington's most powerful lobbyists. Timmons & Co. Inc., with Tom C. Korologos, has offered advice on "constitutencies" that Knight-Ridder could court. Timmons' involvement was arranged through Chrysler Motors Chairman Gerald Greenwald.
Timmons Executive Vice President Howard Paster stressed today that, although Korologos has been a longtime consultant to the Reagan administration, "We have not nor will we contact anyone in the Justice Department on this matter.
"No money is changing hands," he said. "All we are doing is providing a courtesy for Chrysler, a client of long standing."
Asked whether such an arrangement puts the Free Press in a difficult position because its employees cover Chrysler, Chapman said he had "every confidence in the editors" of the newspaper.