Arizona's Tucson Citizen won't resume publication

By ARTHUR H. ROTSTEIN
TUCSON, Ariz. (AP)

The Tucson Citizen won't be forced to resume publication.

A federal judge ruled Tuesday that the Arizona attorney general's office failed to show that the Citizen's owner, Gannett Co., violated antitrust laws.

The state has contended that closing the Citizen with Saturday's issue is eliminating competition and fostering a monopoly situation for Gannett and Lee Enterprises, publisher of the city's Arizona Daily Star.

The two companies own Tucson Newspapers Inc., which runs the non-editorial functions for both newspapers. They split costs and profits.

The state contends Gannett stopped publishing the Citizen simply to make more money for the partnership.

The state hasn't decided whether to appeal.

Gannett will continue the Citizen as a commentary Web site, without news coverage, and distribute a printed Citizen editorial weekly with the Star.

Tucson Citizen - Decision Likely Today on State Restraining Order

'Tucson Citizen' Was Losing $10,000 a Day, Court Told in Lawsuit Challenging Closing

By Renee Schafer Horton with Mark Fitzgerald

Published: May 18, 2009 8:40 PM ET

CHICAGO The Tucson Citizen was losing $10,000 a day before it was folded last weekend -- money that would be better spent making a "vibrant" Arizona Daily Star, lawyers for Gannett Co. and Lee Enterprises Inc. argued before a federal judge Monday.

Arizona's Office of the Attorney General is asking for a temporary restraining order that would force the chains to operate the Citizen as a print publication or find a buyer who would keep it publishing.

U.S. District Court Judge Raner C. Collins sitting in Tucson said he would rule on the state's motion Tuesday (May 19th) before 2 p.m. local time.

In the hearing Monday, Nancy M. Bonnell, a lawyer for the attorney general's office, argued that by folding the Citizen, but continuing its business partnership with Lee Enterprises, publisher of the Star, Gannett "wants to have its cake and eat it, too."

Gannett and Lee Enterprises operated their papers under a joint operating agreement (JOA) first established in 1940, nearly three decades before the Newspaper Preservation Act was law. When Gannett announced the folding of the print Citizen -- and its replacement by a "modified" online-only operation with little news coverage -- it said it was terminating the JOA but continuing as a partner with Lee in Tucson.

"We understand that a temporary restraining order is an extraordinary remedy," Bonnell told the judge, adding that it was necessary because of the "harm to competition" of having no print Citizen.

The Citizen Web site -- which will rely heavily on blogs and has just two permanent editorial employees from the former newspaper staff of 60 -- does not provide true competition, Bonnell said.

But Don Kaplan, a lawyer representing Lee Enterprises, argued that the Citizen was a "failing paper" that cost the partnership more than it earned. He said the paper was losing $10,000 a day as a print publication. There is a "greater good" in getting rid of a paper that is failing in order to save the more "vibrant" remaining paper, Kaplan said.

Bonnell responded that the Citizen was not a failing paper because there was someone willing to buy it, California publisher Stephen Hadland, whose bid for the paper was rejected. Gannett had been seeking $1 million for the assets of the Citizen, not including its stake in the JOA. Hadland offered $400,000.

"The fact of the matter is, there is no obligation to sell at any price," Kaplan said.

Kaplan and Gordon L. Lang, representing Gannett, also made the argument that their Tucson partnership has always been "one entity," and that therefore there are no competitive issues. They noted that each pays half of the editorial cost of the other's newspaper.

It also emerged at Monday's hearing that the Arizona attorney general's office, the antitrust division of the U.S. Justice Department and the two chains had an understanding that the newspapers would give the Justice Department three day's notice before folding the Citizen. Gannett had announced a May 1 deadline to sell or close the paper, but delayed it on a day-to-day basis while negotiating its sale.

The reason the Arizona authorities filed for its temporary restraining order just hours before the last edition hit the streets Saturday morning -- and minutes before the federal court was closing Friday evening -- was that the state did not get any word of the closing from the Justice Department, Bonnell said. The state attorney general had prepared a lawsuit to block the paper's closing.

Also Monday, the staffing of the Citizen Web site was settled. It will have six temporary employees as it transitions from print, and two permanent employees: former assistant managing editor Mark Evans and Ryn Gargulinski, a general assignment reporter at the newspaper.

Tucson Citizen - Conversion Plans to Arizona Daily Star

Depending the outcome of the Tucson Citizen closing, and the temporary injunction requested by the Arizona Attorney General (see yesterday's post), there would be a transition process involved for those inserts already placed and shipped. The following is from an advertising letter from Susan Cantrell, VP of Advertising, of the Tucson Advertising, sent on May 15th, 2009.

Dear Valued Client,

I’m sure you have many questions concerning today’s announcement made by Gannett that The Tucson Citizen will cease publication with tomorrow’s issue on May 16th, 2009. I hope to clarify our current situation with you.

I’m sure that you will want to know what will happen with your rates and what our circulation quantities will be after that time. Our plan is to convert a vast majority of the Citizen subscribers to The Star. Due to the low duplication factor between The Star and The Citizen, we believe this will be likely.

However, due to the fact that we could not contact any of the Citizen subscribers while the newspaper was up for purchase, we were not able to work on that conversion process until now. You should assume that our preprint quantities will remain the same from Monday through Sunday after May 16th. We will be converting all of our Citizen home subscribers to Star subscriptions for the same price starting on Monday, May 18th. We will continue to insert any Citizen preprints into The Star and will publish additional copies of The Star for single copy distribution to all of our racks and dealers to compensate for losses in Citizen single copy sales. We will monitor our sales closely and be able to provide you with new distribution quantity estimates as we receive them.

Regarding retail, national and classified ROP advertising rates, those rates will remain the same after May 16th except that we will not continue to offer the purchase of one newspaper at 90% of the rate. This is because we will have only one newspaper and we intend to convert the former Citizen subscribers to The Star so that our circulation will remain very similar to our current distribution quantities.

We do, however, have quite a few special offers in place from now through the end of the summer as we try to help our advertisers succeed during this rough economic environment. Please ask your account executive for details on these special discounted offers.

Please bear with us as we go through these transitionary times together. We will
let you know additional information as soon as we can. Thank you for your patience and your business.

Again, the outcome of the possible injunction will impact when and if these actions occur.

Tucson Citizen - May 16th Closure Temporarily Stopped

Arizona Attorney General Seeks Federal Court Order to Stop Tucson Citizen Closure
By Dale Quinn, Arizona Daily Star
Tucson, Arizona

The state Attorney General's Office has filed a federal complaint seeking a temporary restraining order to stop the Tucson Citizen from ceasing publication.

The complaint filed in U.S. District Court in Tucson alleges the paper should not be closed until violations of state and federal antitrust laws are examined, said spokeswoman Anne Hilby.

The announcement comes the day Citizen owner Gannett Co. Inc. announced it would publish its last print edition Saturday while continuing an online edition.

Gannett announced Jan. 16 its plans to sell the Citizen’s Web site, archives and certain other assets or shut down the paper March 20. On March 17, Gannett said it would continue publishing past the March 20 deadline on a day-to-day basis as negotiations with viable buyers continued.

Gannett’s vice president of news, Kate Marymont, said this evening she couldn’t comment on the restraining order or what it means for the paper because she had just heard about the filing, which comes on the heels of an investigation into the sale by the U.S. Department of Justice’s antitrust division.

The Justice Department conducted a thorough examination into the joint operating agreement between the Citizen and Tucson’s morning newspaper, the Arizona Daily Star, said spokeswoman Gina Talamona.

The Justice Department regulates joint operating agreements like the one that binds Tucson’s two daily newspapers. Both papers have independent editorial control but share production, distribution and advertising through a company called Tucson Newspapers.

Under the terms of the JOA, Gannett and Lee split profits from the papers. The JOA would also end Saturday under the terms of Gannett’s announcement, while the two companies continue splitting profits from Tucson Newspapers even though Gannett won’t be producing a paper. But in the sale, Gannett didn’t offer its stake in the JOA. Because of that, newspaper experts said there was little chance a potential buyer would emerge.

But at least one did.

Stephen Hadland, CEO of the Santa Monica Media Co., was interested in purchasing the newspaper. His media group publishes five papers in the Los Angeles area. He said Gannett wanted $1 million for the assets of the Citizen. He offered $400,000, but the Citizen refused to budge below $800,000.

Hadland sent a letter to the Arizona Attorney General’s office Friday requesting it file a temporary restraining order preventing Gannett from closing the Citizen and requiring it to continue printing the paper pending a sale to a qualified buyer.

“The Tucson Citizen has been systematically destroyed by its owners and I believe it remains a viable and popular newspaper in the community,” Hadland wrote in the letter.

For the Citizen to go on as announced by Gannett is a “perversion” of the Newspaper Preservation Act of 1970, he said. Hadland also pointed out that Gannett had made publishing a print edition three times a week a requirement of the sale.

Operation and dissolution of JOAs is guided by the Newspaper Preservation Act and regulated by the Justice Department.

Hadland said because the Justice Department failed to take action he turned to the Arizona Attorney General.

The case was assigned to Raner Collins, Hilby said, but the complaint did not include a deadline as to when a hearing should take place.

The complaint says that readers in Pima County have benefitted for more than a century from competition between the Star and the Citizen. Gannett and Lee are violating antitrust laws by closing the Citizen while sharing profits generated by the Star after it becomes the monopoly paper.

Tucson Citizen - Closing (2)

April 02, 2009, 1:34 a.m.
RENÉE SCHAFER HORTON

Potential buyers of the Tucson Citizen were invited last week by Gannett Co. Inc. to visit the paper and interview employees, but apparently no one accepted the invitation.

Gannett sent two company representatives to the Citizen March 25, announcing that negotiations with "interested parties" were ongoing and that the parties had been invited to Tucson. One representative left over the weekend and the other left Thursday morning.

Gannett spokeswoman Tara Connell declined to speculate on why the interested parties did not come.

"Again, the invitation is what it is. You are likely to know more and sooner than I what is happening with that, if anything," Connell wrote in an e-mail. "Of course we will tell employees the status of the paper once it's determined. We aren't commenting on the negotiations."

Gannett announced Jan. 16 it was selling the Citizen, and would close the paper March 21 if a buyer could not be found.

The paper has about 65 fulltime employees.

Tucson Citizen - Possible Reprieve

By ARTHUR H. ROTSTEIN – Mar 17, 2009

TUCSON, Ariz. (AP) — The Tucson Citizen will not close as planned on Saturday because there are continuing negotiations with two interested buyers, the newspaper's publisher, Gannett Co. Inc., announced Tuesday.

Robert J. Dickey, president of Gannett U.S. Community Publishing, said in a teleconference that the negotiations would not be completed by Saturday, according to Editor Jennifer Boice. Two months ago, Dickey had said March 21 would be the deadline for sale or closure of the Citizen, which began publishing in 1870 and is Arizona's oldest newspaper.

"We are going to continue publishing beyond the 21st," Boice told the newspaper's staff in a meeting in the paper's lobby. A final commemorative issue that the Citizen was to have published on Saturday will be delayed, she said.

On Jan. 16, Dickey announced the planned sale or closure from the same lobby location. At that time, he said certain assets of the paper were for sale.

Those assets apparently did not include Gannett's 50 percent share in the joint operating agreement it has with the publisher of the morning newspaper, the Arizona Daily Star, owned by Lee Enterprises Inc.

The two companies jointly own Tucson Newspapers Inc., the subsidiary that handles all non-editorial operations for both papers. Gannett and Lee share operating costs and profits of both papers under the JOA, which runs until 2015.

The Citizen has struggled for years against the Star, a 117,000-circulation morning newspaper. During the Citizen's heyday in the 1960s, circulation was about 60,000; today, it's 17,000.

In a statement Tuesday concerning the Citizen, Gannett said it "has been engaged in discussions with parties who are interested in continuing to publish a printed daily paper in Tucson.

"In light of these ongoing discussions, Gannett will delay a decision regarding the potential sale or closure of the Tucson Citizen, but expects to make a decision in the very short term."

Boice said Dickey gave no details concerning potential buyers, what was being negotiated or how soon a decision would come.

The announcement threw the staff into turmoil, with a series of questions concerning how much longer the paper would be staying in business, what would become of promised severance packages and what would happen if the paper were sold and not all present employees were retained.

"There is some hope that could come out of this ... that we could have a new owner with a functioning newspaper, with the staff employed," science writer Alan Fischer said. "On the other hand, it's very disconcerting to be told that you're going to be closing down."

"We have people here who made plans, who have new jobs that start on Monday and who could potentially lose their severance packages because of that, so it's kind of thrown everything into kind of an uproar here," he added.

If it closes, the Citizen would be another casualty of a newspaper industry struggling to survive despite the tough economy, dwindling advertising revenues and Internet competition.

The battle has been especially tough in two-newspaper towns, including Seattle, Tucson and Denver.

Hearst Corp. printed the last edition of Seattle's oldest newspaper, the Seattle Post-Intelligencer, Monday night, turning it into an Internet-only news outlet. Hearst also has said it will close or sell The San Francisco Chronicle if it can't slash expenses.

E. W. Scripps Co. closed the 150-year-old Rocky Mountain News, one of two daily newspapers in Denver, in February.

Four newspaper companies, including the owners of the Los Angeles Times and Chicago Tribune and The Philadelphia Inquirer, have sought Chapter 11 bankruptcy protection in recent months.

On Monday, House Speaker Nancy Pelosi asked the Justice Department to broaden its view of media competition when reviewing merger proposals. She said antitrust concerns that arise from proposed newspaper mergers should take into account online news sources and nearby daily and weekly papers "so that the conclusions reached reflect current market realities."

Her effort to help struggling newspapers stay in business did not mention her hometown paper, The San Francisco Chronicle.

Pelosi said a House Judiciary subcommittee would hold a hearing soon to discuss the trend's implication for antitrust policy.

Tucson Citizen Closing

AP 03/16/09

TUCSON, Ariz. (AP) -- Marshall Wyatt Earp's fabled 1881 shootout at the OK Corral in Tombstone was reported this way:

"A day when blood flowed as water, and human life was held as a shuttlecock, a day always to be remembered as witnessing the bloodiest and the deadliest street fight that has ever occurred in this place, or probably in the territory."

For nearly 140 years, the Tucson Citizen has told the stories of Southern Arizona, but on Saturday (March 21), the state's oldest newspaper will tell its last -- its own.

Gannett Co. Inc., the nation's largest newspaper publisher, announced in January it would close the Citizen if it didn't find a buyer for certain assets. Robert J. Dickey, president of Gannett's U.S. Community Publishing, said the paper was losing money and was a drain on Gannett operations.

The Citizen becomes the latest casualty of a newspaper industry struggling to survive despite the tough economy, dwindling advertising revenues and Internet competition. The battle has been especially tough in two-newspaper towns.

E. W. Scripps Co. closed the 150-year-old Rocky Mountain News, one of two daily newspapers in Denver, in February. Hearst Corp. has said it will close or sell the San Francisco Chronicle if it can't slash expenses, and has laid out plans to close the Seattle Post-Intelligencer if a buyer isn't found before April.

Four newspaper companies, including the owners of the Los Angeles Times and Chicago Tribune and The Philadelphia Inquirer, have sought Chapter 11 bankruptcy protection in recent months.

The Citizen, an afternoon newspaper, has struggled for years against the Arizona Daily Star, a 117,000-circulation morning newspaper owned by Lee Enterprises. During the Citizen's heyday in the 1960s, circulation was about 60,000; today, it's 17,000.

Editor Jennifer Boice said the Citizen's closure is a loss for the Star, the community and journalism.

"It's a loss because what we do makes the Star better, the Star makes us better, and because of that, the community gets better information," said Boice, who started at the paper 25 years ago as a business writer. "It's more than the sum of the parts."

The Arizona Citizen was founded on Oct. 15, 1870, by John Wasson, a newspaper man from California, with behind-the-scenes help from Richard McCormick, the territory's governor and later territorial delegate to Congress.

The paper changed ownership several times over the next 100 years until Gannett bought it in 1976, just a few years after a U.S. Supreme Court case involving the Citizen led Congress to pass the Newspaper Preservation Act and new rules for joint-operating agreements for competing newspapers doing business together. Gannett also changed the name to the Tucson Citizen.

During its lifetime, the Citizen reported on Arizona's biggest stories, including the 1881 gunfight at the OK Corral and the 1934 arrest of bank robber John Dillinger and three other gang members hiding out in Tucson.

"It has such a long history," Arizona historian Marshall Trimble said. "That makes it part of Arizona history, and it's just another piece of our history that's going away."

Michael Chihak, the Citizen's former editor and publisher who retired last summer, spent a significant portion of his life with the paper. His grandfather was a pressman at the Citizen in the 1940s. As a boy, Chihak delivered the paper on his bicycle and was a high school stringer. He later became a reporter and editor, working for other news organizations along the way, and returned to the Citizen as its publisher and chief executive in 2000.

"It was more than a career, more than a job, it was part of my life," said Chihak, who is now executive director of a nonprofit foundation in San Francisco.

He said it's heartbreaking to see the demise of the Citizen, and "the loss of all the jobs of the finest journalists I knew."

Newspapers remain at the forefront of gathering and disseminating information, Chihak said, "but obviously the emphasis has shifted to other means of distribution, and of gathering, for that matter."

More than 60 newsroom employees will lose their jobs because of the closure, but Tucson Newspapers Inc., which oversees the Gannett-Lee Enterprises business operations under the JOA, will continue until at least 2015.

Star publisher John Humenik couldn't comment on the Citizen's closure because of pending legal issues related to the JOA, but Lee spokesman Daniel Hayes said, "it's always unfortunate when a community voice is lost."

The final Citizen will be a 24-page commemorative edition delivered on Saturday. About 20,000 copies will be printed and available in news racks for a couple of days.

The Citizen's staff continues to work as hard and as skillfully as ever in its waning days, said Bruce Johnston, who joined the Citizen 36 years ago.

"We're professionals," he said. "We're treating every day like it normally is, even though there's a lot of gallows humor around here."

Except for the stacks of boxes and large trash bins lining the newsroom to catch years' worth of notebooks and paper stacked atop desks, it was business as usual. Reporters continued to call sources, plan coverage and share laughs.

But they also shared tidbits about mostly fruitless job searches, punctuated by sighs and knowing nods as they prepared for their final week at their newspaper -- and for many, likely their final week in the business.

Associate Editor Mark Kimble, a 34-year veteran, said he worries about what closures like the Citizen's mean for the future of journalism.

There are "fewer sets of eyes looking at what government is doing and keeping an eye on the things that I think we all take seriously," Kimble said. "That's very unfortunate."