Expose of Gannett as Nasty, Unscrupulous Corporation

To celebrate 25 years of publishing Whatcom Watch, we will be printing excerpts from 20 years ago. The below excerpts are from the December 1996 issue of Whatcom Watch.

Editor’s Note: When this article was written, the Gannett Corporated owned The Bellingham Herald. Knight Ridder acquired the paper in 2005. The McClatchy Company became the owner when it purchased Knight Ridder in 2006.

Book Review

One Newspaper Versus the
Gannett Empire
by Richard McCord
University of Missouri Press, 1996
290 pp. $24.95
ISBN 0-8262-1064-3

Reviewed by Greg Heffron, media reporter

Think of a chain gang and you can imagine the clinking of the dull metal shackles, the prisoners’ feet marching in a forced unison, bodies straining in work that they do not and would not choose if not for the guns and wary, cat-eyed guards. If you imagine these men, these workers, one thing becomes clear. With a near scientific precision, chain gangs keep these indentured servants under absolute control.

In contrast, Richard McCord’s “The Chain Gang” reads like a revolution. In page after suspenseful page, author Richard McCord tells the story of how he and his small weekly newspaper ran up against the cold force of the Gannett newspaper chain, how he fought back, and how he took his experience on the road to help another small paper fight for its survival. The Gannett Corporation — owner of nearly 100 daily papers in cities across America, including of course Whatcom County’s only daily paper, The Bellingham Herald — reveals itself to be both ruthless and merciless. In cities across America, McCord through firsthand research reveals Gannett to have used such tactics as running even small competitors out of business through illegal and unethical business practices; raising advertising prices once competing papers have been eliminated; cutting costs by purposely shorting thousands of newspaper customers on their subscriptions — along with a quiver of other cynical tactics in a single-minded quest for monetary profit.

Gannett Eliminated Competition
McCord, who polished his journalistic skills as a reporter for New York’s Long Island newspaper Newsday under then editor Bill Moyers, provides a detailed personal account of the damage wrought by Gannett. In 1981, McCord’s award-winning weekly paper, the Sante Fe Reporter, was targeted by Gannett. When rumors filtered in that the media giant had just finished wiping out the competition in Salem, Ore., McCord flew to investigate.
His account of the Salem case takes up the first third of the book. Upon arriving, McCord met with the owner of the Salem Community Press, a small paper that had just been driven out of business by the local Gannett-owned daily. In response, the owner was suing Gannett for monopolistic business practices. While bound by the court-mandated gag rule (requested by Gannett to protect “trade secrets” which helped the corporation maintain a “competitive position in the marketplace”), the owners of the Salem Community Press hinted as much as they felt they legally could. Following the narrowest of leads, McCord ended up at the federal courthouse. Knowing the case was sealed and expecting to be rebuffed, he asked to see the file. Through an astonishing series of mistakes, the file was handed over to him, but on the condition that he not take it out of the judges’ chambers. As luck would have it, McCord spent the next three days hand-copying the secret file.
Gannett memos in the secret file revealed a calculated campaign to destroy the Salem Community Press by eliminating its advertising — usually the bulk of a newspaper’s revenues.

The program was titled Operation Demolition; its staff was known as the Dobermans. The secret file further showed that these Gannett employees were given financial bonuses for getting businesses to drop their advertising accounts with the Salem Community Press. Tactics ranged from giving Thriftway six months ($l7, 000) of free advertising if the store would switch to the Gannet paper to offering the local Kmart store $12,000 worth of “rebates” the store had previously “overlooked.”

The Dobermans offered free vacations to their advertisers — in exchange for “loyalty,” i.e., that they abandon advertising in the Salem Community Press. They spread rumors that the Community Press was going out of business and implied that unfaithful advertisers might be refused advertising space then if they didn’t switch now. In a darkly ironic turn, after one advertising manager for Kmart failed to succumb to Operation Demolition, Gannett representatives spread rumors at Kmart headquarters that he’d been swayed into making unwise business decisions because one of his advertising heads had accepted a free car from an employee at the Community Press. After Kmart investigated, it was revealed that the man had purchased the car for a fair price.

Throughout the file were indications that these were not the actions of a rogue advertising manager or the sinister scheme of an over ambitious managing editor. Memos from the highest Gannett executives praised the program and jokingly asked how the “demolition derby” was going.

The secret file was a gold mine which McCord was lucky enough to stumble upon. Lucky indeed. McCord was the only member of the public to see the file. A week before trial, Gannett settled out of court with the Salem Community Press for an undisclosed amount.  Newspapers were limited to covering only the bare bones of the case’s settlement: that Gannett had settled out of court in an anti-trust suit where unfair practices were alleged. As for the secret file, it was returned to Gannett and remains private.

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