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Book Depicts UPI as Victim of Mismanagement, Industry Trends

November 19, 1989

WASHINGTON (AP) _ Two former staff members say in a book that United Press International has ceased to exist as a competitive news agency, a victim of a succession of misguided managements and of changes in the industry.

″There was no single reason for UPI’s plunge from robust competitor to cowering dwarf,″ say authors Gregory Gordon and Ronald E. Cohen in their account of the difficulties of the 82-year-old agency, once a feisty underdog competitor to the bigger, older Associated Press.

″But if the wire service indeed had any chances against these outside forces,″ the authors write, ″they were squandered repeatedly by owners and managers either inept, ill-suited or unwilling to rise to the challenge.″

Gordon, a former investigative reporter for UPI, is now with the Detroit News; Cohen, former UPI managing editor, is now executive editor of the Gannett News Service.

UPI, currently owned by Infotechnology, Inc., parent firm to a number of high-tech ventures, continues to cover the news and sell its report to media subscribers.

But in ″Down to the Wire,″ Gordon and Cohen portray the company as mortally wounded from internal battles and no longer a major player in the news industry.

They say UPI is ″staggering under the burdens of decades of management stupidity and cupidity; of neglect, low pay, miserable working conditions; of astonishing lapses in leadership and foresight; of a succession of owners who had exploited Unipressers’ love of company and professional pride.″

They estimate that the company lost $135 million in the last 25 years in attempts, under four ownerships, to regain solvency.

UPI’s current management disputes the authors’ depiction of UPI as reduced to a ″gaunt shadow of its heyday.″

″UPI is in the fullest sense a competitor in the industry,″ said spokesman Milt Capps. ″Unfortunately the authors essentially stopped their learning and reporting″ when Infotechnology took over, he said.

″They chose to mark their own departures from UPI as the point at which UPI ceased to exist as a news agency,″ Capps said. ″Nothing could be further from the truth.″

He said UPI has a staff of ″nearly 800 reporters and editors and more than 4,000 other correspondents around the world,″ has more than 3,000 clients, expects to make ″a modest profit″ in the fourth quarter of 1989 and in 1990, draws 4 percent of its revenues from government and corporate clients and projects that non-media clients will contribute 20 to 25 percent of its business base within five years.

″The turnaround has been dramatic,″ he said.

Gordon and Cohen say a blow to the company’s chances of ever regaining its old stature as AP’s chief rival occurred when UPI’s current top executives, chairman Earl Brian and president Paul Steinle, opted to ″unbundle″ - to offer to sell the wire service’s news, sports and photo reports separately instead of as a package.

That decision, a gamble rejected by previous owners, allowed the relatively few big city newspapers which still paid thousands of dollars a month to cut back in what they got from UPI and what they paid to it.

As a result, ″newspapers in places like Boston and Seattle so curtailed their service that UPI stories became a rarity,″ the book says.

But well before Brian and Steinle took over, UPI had become competitively weak, the authors say.

In 1982, an E. W. Scripps Co. family trust sold UPI for $1 after absorbing losses that amounted to $80 million over 20 years. At the time, they say, the company had more than 4,000 broadcasting subscribers and 800 newspaper clients.

By last summer, they say, there were half as many broadcaster subscribers and fewer than 200 daily papers, ″the great majority, small, single-service clients paying low rates.″

A worldwide staff that had numbered 1,737 in 1982 was diminished to 650, they write, and ″at times AP had as many people in Topeka covering the Kansas legislature as UPI had covering Congress.″

The authors list five factors, aside from internal struggles and shortages of capital, which ″wrought immeasurable damage.″

Among them is the structural differences between UPI, a private concern that sold its news report to newspapers and broadcasters, and AP, a news cooperative owned by the newspapers and broadcasters that receive its report.

AP, they write, was part of ″the chummy establishment that kept its scruffy competitor rapping in vain on the country club window.″ As a result, from the start, UPI was an underdog and ″the game was unfair, perhaps unwinnable.″

Another factor, they say, was the 1945 Supreme Court antitrust decision which required AP to provide its services broadly instead of to only one member per city. The consequence was to make UPI ″divert dwindling resources into expensive coverage of state and regional news ... a losing proposition.″

Other causes were the demise of most large-city afternoon papers, eager to receive late-breaking news from whichever agency could deliver it first, and the trend which saw national news media organizations taking over the ownership of many family-owned newspapers, with the new owners ″less interested in supporting a second wire service than amassing enormous profits for stockholders.″

Finally, the book says, a number of newspapers and news organizations began to offer ″first-rate supplemental news services at far cheaper rates″ than those charged by UPI. ″In truth, the very clients UPI needed to stay alive were competitors for shrinking industry dollars and stood to benefit from the wire service’s demise.″

UPI was organized, as United Press, in 1907 by E. W. Scripps, founder of the country’s first big newspaper group, Scripps-Howard Newspapers.

The Scripps empire was strong in the Midwest and the Pacific Coast and consisted chiefly of papers published in the afternoon. Scripps felt The AP was Eastern-oriented and dominated by morning newspapers.

In 1958, UP merged with a weaker competitor, the Hearst Corp.’s International News Service, to form UPI.

In 1981, tired of absorbing losses, Scripps looked for a buyer and finally arranged a sale in 1982 to two Tennesseans, Donald Ruhe and William E. Geissler.

They sold off some of its profitable operations - including its overseas photo operation - and couldn’t make a go of it with what was left, filing for Chapter 11 protection under the bankruptcy laws. The court approved the company’s sale to Mario Vazquez-Rana, a wealthy Mexican newspaper publisher.

Gordon and Cohen estimate that Vazquez-Rana lost $70 million before allowing the company to come under the control of Infotechnology.

Gordon, an 18-year UPI veteran, was fired by UPI in May when he refused to submit his manuscript to his employer for review. UPI said at the time that writing a book derogatory of UPI would violate the company’s contract with the Wire Service Guild. Cohen, a 25-year veteran, was fired in 1986 during a reorganization under Vazquez-Rana.

Capps said of both: ″The circumstances under which they left had to do with things quite apart from their intention to write this book,″ although he said Gordon’s refusal to submit the manuscript for review was a ″material″ factor.

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