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Newspapers Urged to Be Wary of Pacts with Phone Companies

May 6, 1992

NEW YORK (AP) _ Newspapers should be skeptical about forming partnerships with ″Baby Bell″ telephone companies to deliver information services like news headlines and stock prices, a media executive said.

James C. Lessersohn, director of corporate planning for The New York Times Co., told an American Newspaper Publishers Association conference workshop Tuesday the Baby Bells are likely to wind up with the upper hand in such deals.

The seven regional phone companies that were once part of the Bell System were freed last summer to become involved in information services.

Newspaper publishers, fearful of losing advertising revenue to the powerful companies that operate the local phone service, have challenged the court ruling. They are also pressing for legislation to impose controls on phone company activity in the information services area.

The publishers group wants a prohibition imposed against the Bells offering information services in their local areas. They say the Bells could give preferential treatment to their own services in such situations.

The Bells, on the other hand, argue there is sufficient regulation in place to protect competing information services against being treated unfairly.

Dow Jones & Co., the publisher of The Wall Street Journal and a major provider of financial information delivered electronically, has struck alliances with several of the Bells to test various information services.

BellSouth Corp., based in Atlanta, and Dow Jones are testing a service in Los Angeles through which cellular telephone customers can get news reports.

Last week, Dow and BellSouth said they would develop services for other phone companies and publishers as well.

The ANPA has not objected to the agreement, noting it is being tested outside BellSouth’s local service area and that Dow Jones had control over the editorial portion of the service while BellSouth is the distributor.

But Kathleen Criner, who heads the industry development and diversity division for the ANPA, said the organization feels there are not enough safeguards to guarantee that the market for information services remains competitive.

Since last summer’s ruling, she said, the former Bells can provide content on their own.

Jim McKnight, vice president for telecommunication at Cox Newspapers in Atlanta, said the former Bell companies could develop electronic classified advertising systems that could pose significant competition for what is a newspapers’s major source of revenue.

For example, the phone company could electronically match someone looking for a specific make and year of car with people selling such models.

Lessersohn of the Times Co. said newspapers should be wary of phone company partnerships.

Dow Jones has more to bargain with than most newspapers, he said, because it publishes a national paper dealing in a specific area, business and financial information, serving a well-to-do audience.

Most newspapers are local and deal with general news, Lessersohn noted. ″It is hard for me to imagine very many newspapers negotiating favorable partnerships″ with the regional phone companies, he said.

He said newspapers should develop their own services to give readers more timely information, such as news updates during the day.

Lessersohn said publishers should also strengthen their relations with advertisers by developing more information on their own readers and allowing advertisers to reach certain select groups of readers.

For instance, a newspaper could find out which of its readers drive sports cars or which drive luxury cars, and then give advertisers ways to reach such readers.

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