Tuesday, April 15, 2008

The Gannett Media Conglomerate's Hidden History--Part 3

(The following (slightly updated) article originally appeared in the May 8, 1991 issue of the Lower East Side alternative newsweekly, Downtown).

Around the same time Gannett decided to go into the television production business with PBS’ MacNeil and Lehrer, it also decided to use its windfall newspaper chain profits and Wall Street money to launch a national newspaper, USA Today, in the early 1980s.

Gannett began publishing USA Today in September 1982. The newspaper was primarily sold in 135,000 USA Today vending machines around the United States. Despite the opposition of some urban environmentalists, Gannett “stormed the city and bolted three thousand vending machines to the sidewalks of New York,” according to Neuharth’s Confessions Of An S.O.B. book.

Since the journalistic quality of its new national newspaper was not considered too great by most literate news junkies, Gannett was forced to spend huge sums of money promoting USA Today before it could be converted from an annual money-loser into a profitable media operation. It was also necessary to offer potential advertisers six-and-a-half months of free advertising in USA Today to induce them to advertise in the new national newspaper. And wherever it could, the multi-billion dollar conglomerate always sought to hire cheaper non-unionized workers to distribute USA Today to its vending machines and to newsstands.

According to The Making of McPaper: The Inside Story of `USA Today’ by Peter Prichard, USA Today’s managing editor in the 1980s, when Gannett started to distribute the newspaper in New York City in April 1983, USA Today spent $100,000 on its launch party—including $70,000 for food and liquor—and “saturated local television, radio, billboards and newspapers” with a USA Today ad campaign. Gannett also worked out a deal in 1985 with General Mills in which consumers who sent in proof-of-purchase seals for eight of 12 General Mills products could receive USA Today free for six months—at a cost of $12 million to Gannett. Only 93,000 of the 512,000 people who chose to sample USA Today for free, however, chose to take out paid subscriptions after six months of evaluating the Gannett national newspaper.

Despite the huge sums of excess profits that Gannett spent to push USA Today on people in the United States, as late as 1986 it was still a big money-loser for Gannett. Between 1980 and 1986 (including pre-publishing years), Gannett’s total pretax operating losses from its USA Today national newspaper operation exceeded $458 million, which was “by far the greatest deficit any newspaper had ever run up,” according to The Making of McPaper book.

Yet despite the initial unprofitability of its new national newspaper, Gannett found it politically useful to continue to circulate millions of copies of USA Today during the politically conservative Reagan Era of the 1980s. And by 2008, USA Today’s current daily circulation was around 2.3 million, making it the largest-selling daily newspaper in the United States.

(Downtown 5/8/91)

Next: The Gannett Media Conglomerate’s Hidden History—Part 4