New UPI Management Pledges to Reverse Losses
New UPI Management Pledges to Reverse Losses
Feb. 23, 1988
WASHINGTON (AP) _ The new operators of United Press International pledged Monday to reverse the news agency's financial losses but said they have not decided how to achieve that goal.
''It's a dynamic situation now,'' Paul Steinle, UPI's new president, said at a news conference. Hirings, firings and management changes are frozen for the next four to six weeks while the team draws up a business plan, he said.
Dr. Earl W. Brian, chairman of WNW Group Inc., the media investment group that assumed control of UPI late Friday, said he and his associates will ''listen to everybody'' in devising a survival plan for UPI.
''We are going to employ the the best skills we have to come up with a plan to take this business into the future,'' Brian said. ''And I don't know what that is today.''
Steinle, 48, said he believed the market would support two general wire services, UPI and The Associated Press. ''I hope that is true,'' he said, adding he would not know the answer until he had interviewed current and potential clients.
''We think it can survive in some form or another,'' Steinle said.
Brian, 45, is a physician who served as health and welfare commissioner in California under then-Gov. Ronald Reagan. He formed WNW group for the purpose of taking control of stock owned by Mario Vazquez Rana, the Mexican publisher.
''We purchased for cash - a substantial cash payment - an irrevocable proxy for control of UPI,'' Brian said. Vazquez Rana owns 95 percent of UPI.
Brian refused to say how much money was involved over the 10-year agreement, but he said the amount Vazquez Rana receives will be influenced by what WNW finds in its study.
Vazquez Rana, who paid $41 million to bring UPI out of Chapter 11 protection proceedings in U.S. Bankruptcy Court in June 1986, relinquished all control over the stock. Brian had waged an unsuccessful effort to buy UPI before the company emerged from Chapter 11.
Brian and Steinle said Vazquez Rana reportedly sank $50 million into UPI, which is thought to losing about $1 million a month.
While the new management studies UPI's financial picture and talks with news executives around the country, Brian said his company will underwrite UPI's losses. ''Yes, its going to cost a million a month to sit here and do a plan,'' he said.
Brian said it is possible WNW may conclude there is no way to turn around UPI's finances, which presumably could lead to shutting down the agency. He called that scenario a ''low probability.''
Brian is chairman of Infotechnology Inc., also known as Infotech, an electronic communications company based in New York. Infotech's subsidiaries include Financial News Network, a 24-hour cable television service providing stock prices; Data Broadcasting Corp.; Questech Capital Corp.; TV Value Mart Corp.; and Comtex Scientific Corp.
''UPI is into a number of areas that are very synergistic to what Infotech does,'' Brian said. They include computer translations, electronic data base marketing and electronic publishing.
Infotech, which will be a minority shareholder in WNW, is a public company. Brian owns about 13 percent of the company and Merrill Lynch Co., owns about 14.5 percent.
''From Infotech's perspective, we see this as an investment opportunity,'' Brian said. ''We believe this company has a value greater than the amount of money it is losing.''
Brian, who wore a UPI pin in his lapel, said he had other reasons for wanting the company to survive.
''As a conservative Republican, as far as I'm concerned, UPI is an extremely important asset to the American people,'' he told The Los Angeles Times over the weekend.
Once a plan is in hand, Brian said he will look for new investors. They could include UPI's employees, he said. Ultimately, Vazquez Rana's ownership share will be reduced by the infusion of new stockholders, he said.
Brian was prohibited from buying UPI outright partly because of an agreement the Wire Service Guild, representing the agency's editorial employees, made with Vazquez Rana. That deal calls for the union to have the right of first refusal to buy UPI should Vazquez Rana sell it.
Dan Carmichael, the guild's secretary-treasurer, said the union will ask Brian to maintain the money-losing company as a ''general, international news'' organization. The company has about 1,400 employees after laying off about 100 people in recent month.
Al Rossiter Jr., UPI's executive editor, said ''morale has soared'' since the staff learned of the deal. ''I am very optimistic,'' he said.
Steinle, a former president of Financial News Network, has a long career in journalism, mainly the broadcast industry. Before joining FNN in 1983, he was a news director of KING-TV in Seattle, Wash., and at WIXT-TV in Syracuse, N.Y.
A native of Chillicothe, Ohio, he has also worked for Westinghouse Broadcasting Corp., between 1969 and 1974, covering events in both Hong Kong and Saigon. He has an MBA from Harvard Business School.
UPI was formed in June 1907 by The E.W. Scripps Co., which sold wire service in 1982 to Media News Corp. The company filed for protection from creditors in April 1985, more than a year before it was bought by Vazquez Rana.