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A newspaper's survival was publisher's career

Upon exit, Hussman recalls its battles by Bill Bowden | January 4, 2023 at 5:00 a.m.

After 48 years, Walter E. Hussman Jr. has retired from his position as publisher of what is now the Arkansas Democrat-Gazette.

His daughter, Eliza Hussman Gaines, took over as the new publisher today.

Hussman, 75, will remain chairman of WEHCO Media Inc. and all of its subsidiaries. Hussman said he will maintain his office in the WEHCO building in downtown Little Rock.

During his tenure as publisher, in 1991, Hussman won what was known as the "Arkansas newspaper war," defeating the Arkansas Gazette, which was the oldest newspaper west of the Mississippi River.

To many Arkansans, it was unfathomable that anybody could take on the Pulitzer Prize-winning Gazette, much less win.

More recently, Hussman converted the Democrat-Gazette subscriber base to digital delivery. The newspaper furnished iPads to thousands of subscribers to get them over the digital hump.

It was a matter of survival.

At a time when newspapers are losing circulation and being sold to hedge funds or private equity firms that bleed them dry, Hussman has managed to keep the Democrat-Gazette as a locally owned, viable business operation.

But the covid-19 pandemic has made it a struggle.

HISTORY

Walter Edward Hussman Jr. was born Jan. 5, 1947, in Texarkana, Ark., to Walter E. Hussman Sr. and Betty Palmer Hussman.

The family has been in the newspaper business since Betty's father, Clyde Eber Palmer, bought the Texarkana Courier for $900 in 1909 and renamed it the Four States Press. Later, Palmer bought The Sentinel-Record in Hot Springs, El Dorado News-Times, Camden News, Banner-News in Magnolia, and Hope Star.

Before long, Clyde Palmer was diversifying. He put the first radio station on the air in Texarkana in 1933, and he soon began to invest in television stations.

Walter Hussman Jr.'s father was born in a blue-collar German neighborhood in St. Louis. Hussman said his family dropped a second "n" from the end of their last name in the wake of anti-German sentiments during World War I.

Hussman's parents met while they were journalism students at the University of Missouri in Columbia. They married in 1931.

When Hussman was 2 years old, his parents bought the Camden News from Betty's father and moved the family there.

In Camden, Hussman's Sunday School teacher was a young David Pryor, who later became governor and a U.S. senator.

At the age of 10, Hussman got his first job stuffing comics and advertising inserts into the Camden News. He made 25 cents per hour. That first half day, he earned $1. Hussman treated himself to lunch at the Chatterbox and had money left over.

When he was 13 years old, Hussman's father decided to take him on a trip to Europe, along with the boy's mother Betty and grandmother Bettie.

"My mother used to fix me spaghetti or grilled cheese or something at night," said Hussman. "So we got on that ship, the Queen Elizabeth, to sail over there. I remember going to dinner the first night. It was unbelievable."

Hussman said the buffet was the length of the WEHCO building, front to back.

"You've never seen so much food in your life," he said. "I didn't even know what it all was, but I knew what those cakes were."

After spending 10 weeks in Europe, the family returned to Arkansas.

Hussman had missed part of his eighth grade year because of the trip so his parents enrolled him at Phillips Exeter Academy in New Hampshire for summer school. His sister Gale's husband, Richard S. Arnold, had attended school there.

Hussman spent his ninth grade year in Camden. For high school, he moved back north to attend the Lawrenceville School in New Jersey.

Walker Blanton, a popular history teacher at Lawrenceville, had graduated from the University of North Carolina at Chapel Hill in 1960 with Hussman's other sister, Marilyn.

Hussman said Blanton and his sister Marilyn influenced him to attend UNC.

"If you're a Southern kid and you go to school in the Northeast, a lot of them want to get back in the South when they go to college," said Hussman.

"They had a good journalism program [at UNC]," said Hussman. "I thought, 'Well, maybe I'll learn something about journalism.' ... I didn't know for sure what I wanted to do."

Hussman said he was spending so much time on the social part of college, he was kind of neglecting his studies.

Walter Spearman, a journalism professor at UNC, called Hussman into his office one day.

Hussman remembers the conversation. "He said, 'Walter, you're not making very good grades here. You're not applying yourself very well. Ah, you probably figure you don't even need to worry about this. You can always go back to Arkansas and work for your daddy's newspapers, play golf every day, hang out at the 19th hole [i.e. the bar] with buddies. You've got it made.'

"I walked out and thought, 'Man, that does not sound like what I want to do with my life,'" said Hussman. "Of course he was doing it intentionally as a reverse psychology kind of deal. So that was a formative experience."

Hussman said he started taking school more seriously.

After he graduated from UNC, Hussman got a master's degree in business administration from Columbia University in New York City. He also took courses in Columbia's journalism school and law school. A law school course on contracts turned out to be particularly helpful, said Hussman.

"When we get a contract, I read the whole thing," he said.

After graduate school, Hussman went to work as a reporter for Forbes magazine in New York City.

Meanwhile, back in Arkansas, Clyde Palmer had died in 1957, and Walter E. Hussman Sr. became president and publisher of each of the Palmer newspapers in Camden, Texarkana, Hot Springs, El Dorado and Magnolia.

While Walter Hussman Jr. was living in New York City, he got a call from his father.

Walter Jr. was 23 years old at the time. His father was 63.

"He wanted to retire probably when he was 65 and travel," said Hussman. "Mother loved to travel."

Hussman's father told him he could move back to Arkansas and run the family business.

"If you don't like it, you can always go back to New York and get another job and you can pursue that as a career, but if we end up selling the business, that option is gonna be gone forever," Hussman remembers his father telling him.

"That just made incredibly logical sense to me," said Hussman. "I had decided having gotten a journalism degree and a business degree that I was really more interested in journalism than I was in business. My theory then was journalism was the creative side of the business, and business was duller but necessary. But it was good to know something about the dull, necessary part of the business, especially if you were an owner."

He moved to Camden and started working with his father. It was so quiet, Hussman found it hard to sleep at night.

The Hussmans learned that the general manager of the Camden paper was using company funds to build himself a swimming pool. So he had to go.

Hussman's father assigned his son to find a new general manager, and to serve in that capacity until he hired one.

"So I became acting general manager," said Hussman. "That's when I started realizing how interesting it was. It was just fascinating."

Hussman said he got Paul Smith to come up from the El Dorado paper to Camden to help him. Smith became the advertising manager for the Camden News.

Hussman said he eventually hired a general manager for the Camden News.

His father then assigned him to build a new building for the Hot Springs Sentinel-Record, so he moved there for a year.

The younger Walter Hussman became vice president and general manager for the Palmer Newspapers in 1973. That same year, his father came up with the name WEHCO, which stood for Walter E. Hussman Company.

NEWSPAPER WAR

The Arkansas Democrat, an afternoon paper in Little Rock, came up for sale in 1974. That appealed to Hussman.

"What really appealed to me in business school, when you would do case studies and everything, would be about somebody going in and taking over a struggling business and turning it around and then having it be successful," he said. "So, a turn-around situation was appealing, and ours was definitely a turn-around situation."

WEHCO bought the Democrat that year and the younger Walter Hussman moved to Little Rock to run the paper.

The next year, he married Robena Louise Kendrick of Water Valley, Miss. They now have a son, Palmer Hussman, and two daughters, Eliza Hussman Gaines and Olivia Hussman Ramsey.

Taking on the Gazette was a monumental challenge.

"The Gazette had gotten so strong and the Democrat so weak," said Hussman. "The Gazette had gotten pretty arrogant in the way they sold advertising and treated the business community. People were eager for another voice. So we got a lot of backing. All of a sudden, we started getting lots of advertising."

But there was a problem. The more advertising the Democrat sold, the more money it lost.

"And that's not really the way it was supposed to work," said Hussman.

The Democrat's variable costs were too high, he said.

Persuading union workers to vote to decertify over the next few years helped, said Hussman.

"But we still were not making money because the Gazette was so strong they kept gaining advertising and we kept losing advertising," he said. "When they would have a rate increase, it would hurt us because they were the must-buy and we were the complementary-buy."

Hussman said he expected the Democrat to lose money for a couple of years.

"We said, 'This thing may be too far to turn around,'" he remembers.

His father suggested a three-year deadline. If the Democrat wasn't profitable by then, they would go to another plan.

So three years later, in August 1977, Hussman approached the Gazette about entering into a joint operating agreement, or JOA.

Under his proposal, the Gazette would get most of the profits and the Democrat would be able to cut its loses.

Hussman said he proposed what would have been the most profitable joint operating agreement in America for the Gazette.

"And they said no," remembers Hussman. "And so at that point we thought, 'Well, they must figure that we're about to go out of business, and you know, they're about right. If we can't do this deal, we probably will go out of business."

All the other WEHCO businesses were successful, but "this thing was a spectacular failure," Hussman said of the Arkansas Democrat.

They began looking into the process of shutting down a business.

"It was pretty depressing," said Hussman. "We were trying to sort all this out. That's when I said, 'I just needed to take some time off.'"

He took five weeks, traveling to South America, then over to Cape Town, South Africa, up through Nairobi, Kenya, over to Greece and back to the United States.

"I just did a lot of thinking about [the Democrat]," he said. "And basically I kind of came back thinking, 'Look, we failed, and why have we failed? We failed because the Gazette had gotten so strong that it's so dominant that it's the must-read, it's the must-advertise paper."

Hussman said the fact was that people were only going to read one paper and watch television news.

"I said, 'We've got to be a substitute or we can't make it,'" remembers Hussman. "If we're going to fail, let's fail saying we tried everything we could think of. Let's throw everything into it. If it fails, it fails. If this doesn't work in 90 days, we'll throw in the towel."

Hussman traveled to other cities where the No. 2 newspaper had gained significantly on the No. 1 paper.

He went to Canada, where the Winnipeg Tribune had done that with free classified advertising.

"We didn't understand it at all," said Hussman. "When we got up there, they said, 'Look at your classifieds. Ten percent of your revenue is coming from individuals; 90% of your revenue is coming from commercial accounts. But one of the reasons the commercial accounts run with you is you've got all the individual for-sale by-owner ads. So those are the people we give the free ads to, not the commercial accounts.'"

He went to Texas to see what they'd done at the Dallas Times Herald, which was historically the afternoon paper.

"It was pretty clear [in Dallas] that there was a preference for morning papers," said Hussman. "So they said, 'We're going to keep the afternoon paper in Dallas but we're going to change to morning distribution all throughout the rest of Texas.'

"So they became a morning paper and an evening paper. And that worked."

Hussman also went to Tennessee to see what he could learn from Roy McDonald at the Chattanooga News-Free Press.

"Chattanooga was 'You've got to have more news than the other guy. You've got to have more pages than the other guy. You've got to have more in your paper. You've got to cover things they won't cover,'" said Hussman.

So, with these new ideas, Hussman launched a new offensive in the Arkansas newspaper war.

"We decided, let's throw everything at it, try everything at the same time," he said. "So we started the free want ads and we came out with the morning edition the next month. And we started publishing more pages."

The Democrat management also had some internally generated ideas.

They offered special advertising deals for the large department stores -- Dillard's, Sears, Montgomery Ward and J.C. Penny.

"If you will duplicate the ad you're running in the Gazette in our paper, we'll sell it to you for $1 an inch," said Hussman. "So, it's $7 in the Gazette or $8 in both papers. It's stupid for them to run it only in one paper then."

At $1 an inch, the Democrat was still making a small profit.

"Even at $1 an inch, we're covering our variable costs," said Hussman. "But it helps us to have more pages than the Gazette. That's the objective."

The theory was, when people saw the Democrat was larger than the Gazette -- that it had more pages -- they would start to think of it as a substitute to the Gazette rather than a complementary paper.

"So in '79, circulation takes off, advertising takes off, costs take off," said Hussman. "We're hiring all these people. Holy cow. So it's working but now it's really expensive."

The Democrat was on a roll.

"So, now, how do you surrender when you're succeeding?" said Hussman. "You've got a tiger by the tail and he's going 40 miles per hour through the jungle. If you let go of his tail, you're gonna die. How are you gonna get off of this thing?"

But then the costs start coming down, said Hussman.

The Democrat lost money in 1979 and for the next three years.

In April of 1984, the Democrat made a profit of $42,000.

"You look at where we came from and $42,000 doesn't sound like a lot of money, but that's tremendous progress," said Hussman. "This was so depressing I'm sure to the people at the Gazette. They had us on the ropes. They could have done a JOA that would have restricted the Democrat to Pulaski County. They could have had 95+% of the profits. They thought we'd go out of business, and now we're actually making money. 'How are we going to get rid of these people now that they're making money?'"

Hussman said it was just a classical turn-around situation that was working.

"And then the next month, we made even more money in May," he said.

The Gazette started getting more competitive, so there were months when the Democrat lost money.

In December of 1984, the Gazette filed an antitrust suit against the Democrat. The litigation went on until the trial in March 1986.

Hussman said the lawsuit cost the Democrat $1.2 million in legal fees.

"But that wasn't the worst of it," he said. "The worst of it was it took us completely off trying to run the business to trying to win this lawsuit."

But the Democrat did win.

The Gazette's legal team tried unsuccessfully to prove that Hussman wanted to monopolize the market and run the Gazette out of business.

"They had been losing market share consistently," said Hussman. "Our theory was they're going to try to regain in the courtroom what they lost in the marketplace."

GANNETT

At that point, the Patterson family, which owned the Gazette, decided to sell it. Gannett bought the Gazette in 1986, paying $51 million and assuming a $9 million debt.

Under Gannett's ownership, the Gazette began to lose money for the first time, said Hussman.

"They were losing more and more money every year, and they were losing market share every year," he said.

The Democrat was also losing more money than it ever had before trying to compete with Gannett in Little Rock.

But Gannett did the Democrat a big favor, said Hussman. They completely changed the Arkansas Gazette, which was known for its staid look and hard news coverage.

"Instead of being hard news, they were running [University of Arkansas - Little Rock] cheerleaders in Spandex on the front page in color, and people thought 'Well no wonder they're charging less because the paper's not as good as it used to be,'" said Hussman. "In people's minds, Gannett had now changed the whole content of the newspaper."

In focus groups, readers said they might switch from the Gazette to the Democrat if the Gazette was changed so dramatically that they didn't even recognize it.

"And that's what they did," said Hussman. "See, we could not have done that. So they did something for us we couldn't do for ourselves. Gannett was a nightmare financially but Gannett ended up probably being the reason we prevailed."

After Gannett was unable to find another buyer, it closed the Gazette and sold its assets and name to the Arkansas Democrat for $68 million On Oct. 19, 1991, the first issue of the Arkansas Democrat-Gazette was published.

Hussman's parents died around that time -- his father in 1988 and his mother in 1990.

DIGITAL DELIVERY

WEHCO Media has newspapers, cable television, broadband and digital services.

Hussman said WEHCO's newspaper division has been struggling since the covid-19 pandemic began in early 2020. WEHCO has 11 daily newspapers and eight weekly newspapers.

"Our papers are not profitable," he said of the newspaper division. "They were going to be profitable had we not had covid. Our profits were going to be about a fourth of what they used to be. We used to make a ton of money, after the Gannett Gazette closed and everything."

Hussman said he knew WEHCO would take a hit after buying thousands of iPads to distribute to subscribers.

"What happened is we finished the iPad program in January of 2020," said Hussman. "And within six weeks, covid hit. We lost 40 to 50% of our advertising. We still needed that advertising to make a profit. And we haven't made a profit yet."

Hussman said some of WEHCO's papers are profitable but not many.

"Most of them are losing money, including the Democrat-Gazette," he said. "The Democrat-Gazette is not losing a lot of money, but we're losing some money."

Hussman said many people love the iPad edition of the Democrat-Gazette. He said going digital has eliminated the vast majority of newsprint and delivery costs. The Democrat still prints and delivers Sunday editions of the paper. And weekday copies are printed for single-copy sales at some locations.

If the Democrat-Gazette hadn't gone digital, the company would be spending $6 million a year more printing and throwing all those papers, said Hussman.

He said the only place to recoup that money would be to shrink the size of the newspaper and the news hole, as other papers have done around the country.

Hussman said WEHCO has distributed 55,000 iPads to its daily newspaper subscribers. He said the company has spent $18.7 million on iPads and another $9.4 million on conversion costs, which include meetings with readers around the state and walking them through how to use the iPad to read the paper.

Of that amount, Hussman said $12 million was spent on iPads for readers of the Arkansas Democrat-Gazette, and $3 million was spent on conversion costs for those readers.

"The [iPad] idea came from the fact that, we made money in 2017, but we looked at our 2018 budget and we were going to lose money for the first time since 1991," said Hussman, referring to the Arkansas Democrat-Gazette. "So we thought, we've got to do something. We can't lose money. It's not a sustainable business if we lose money. This is more than just a business. This is an institution the state counts on.

"So we knew we had about 4,000 subscribers that were using [their own computer] tablets ... to read the paper, and they loved it," he said.

"So we thought OK we're losing our shirt on all these subscribers out in the periphery of the state, in Blytheville, Crossett, Texarkana," said Hussman. "Blytheville is the first place we tried it. We had 200 subscribers in Blytheville, and there are 5,000 households in Blytheville. So the carrier is driving around 5,000 households to deliver 200 papers. And we've got to truck the papers up there 186 miles every day."

Across America, newspapers have cut out that unprofitable circulation, said Hussman. But he didn't want to leave Arkansans in those outlying areas without news they wanted to read.

"There's a commonality of interests of everyone in Arkansas," said Hussman. "They want to know what the governor's doing, what the state Legislature is doing, what the Razorbacks are doing, what Walmart's doing. They want the paper. They want the information. ...

"We've spent more per subscriber on trying to find a digital solution than any newspaper in America. We've actually converted our subscriber base to digital successfully, but we've got to get more subscribers."

Hussman said the iPad was a one-time expense to help readers make the transition to digital.

Hussman said he knew they'd lose money in 2018 and 2019 because of the digital conversion.

"I think it's been very successful for subscribers," said Hussman. "So far, it hasn't been successful for the shareholders. But you go back to what my dad said, 'Readers first, advertisers second, employees third, creditors fourth, shareholders fifth. If you keep the readers first, ultimately the shareholders will be taken care of. Ultimately, I think it'll happen, but it's pretty painful. It's taking a long time."

UNC

In 2019, Hussman pledged a $25 million donation to the University of North Carolina at Chapel Hill, his alma mater. In turn, the UNC journalism school was renamed the Hussman School of Journalism and Media.

Hussman said they're looking for another $25 million, and if they find it, the school could end up with a hyphenated name.

"That's fine with me," he said.

In 2020, Hussman became embroiled in a controversy over a plan by Hussman School Dean Susan King to hire Nikole Hannah-Jones, a UNC journalism graduate who was working for The New York Times.

Hannah-Jones won the Pulitzer Prize that year in commentary for the 1619 Project, which the Pulitzer committee described as "a sweeping, provocative and personal essay ... which seeks to place the enslavement of Africans at the center of America's story."

Some historians have questioned parts of the original essay, such as Hannah-Jones' assertion that one primary reason the colonists fought the American Revolution was to protect the institution of slavery.

Jake Silverstein, editor-in-chief of The New York Times Magazine, has since clarified that statement, writing: "The passage has been changed to make clear that this was a primary motivation for some of the colonists."

Hussman said the 1619 Project was controversial, and he felt the hiring of Hannah-Jones would distract from the "core values" of journalism that he has embraced. The core values are printed on Page 2A of the Arkansas Democrat-Gazette every day, as well as in other WEHCO newspapers. On Dec. 16, the core values, carved in stone, were installed in the UNC Hussman School.

Objectivity is one of the core values. Hussman said he felt that the 1619 Project was advocacy journalism, rather than objective. Hussman said he expressed his opinion to King and others at UNC, but he didn't pressure anyone not to hire Hannah-Jones.

"So anyway, I said, 'To me, it's going to embroil the journalism school in a lot of controversy,'" said Hussman. "You know, the reason I made the donation is to find one journalism school in America that says, 'Look, we're going to stand up for objectivity, impartiality, fairness in news reporting. ...

"Of course, no one can be completely objective. It's kind of like, no one can be completely virtuous, but is being virtuous something you should strive for? Absolutely. Is being fair and objective and impartial in your reporting something you should strive for? Absolutely, even though you can't be perfect at it. Don't let perfect be the enemy of the good."

The UNC board voted 9 to 4 to hire Hannah-Jones as a tenured professor, but she decided to take a position at Howard University in Washington, D.C., instead.

Print Headline: A newspaper's survival was publisher's career

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