Tribune May Seek Waiver for Paper : FCC Likely to Bar Firm From Owning Daily News, KTLA

Word that Tribune Co. may be forced to sell the Van Nuys-based Daily News in order to acquire KTLA-Channel 5 comes as the newspaper has been waging a vigorous campaign to lure more readers by adding sections, expanding the staff and launching a massive marketing campaign.

Employees were told in a meeting with Daily News officials Thursday that the paper remains a profit center for Tribune Co. and that the company may seek a waiver from Federal Communications Commission rules that prohibit common ownership of daily newspapers and major broadcast outlets in the same area, according to two newsroom employees who asked not to be identified.

But FCC officials and industry analysts said it is extremely unlikely that such a waiver would be granted.

Paper ‘Is Profitable’

“All we know is what was said in the press conference in New York,” Daily News Editor Tim Kelly said. “We have not talked to the FCC. As far as I know, no decision has been made.”

Thomas Griffiths, vice president of marketing, said that, despite the millions of dollars that Tribune Co. has poured into Daily News operations, the paper “is profitable and has been profitable since they (Tribune Co.) bought it.” But its growth in circulation and size has undoubtedly made the paper much more expensive to produce, and some analysts believe that could eventually erode its profits.

Its position in the lucrative Southern California market makes the paper attractive for acquisition, some said, but they added that its expensive efforts to expand could reduce that attractiveness. Analysts speculated that the paper is most likely to be acquired by another major publishing chain. But they said that, until the paper officially goes up for sale, it will be hard to tell which companies will seriously bid. A rumor that Atlanta-based Cox Communications was interested in buying the Daily News was denied by that company Thursday.

Paid Circulation

Last year, the Daily News posted the fastest percentage growth among the larger daily newspapers in Southern California, according to the Audit Bureau of Circulations, which is the standard auditing service for the nation’s 1,700 daily newspapers. It increased its circulation to 141,690 from 132,672 in 1983.

Since Tribune Co. bought the paper, the Daily News has been converting to paid circulation from the free delivery that built it into a highly profitable advertising medium in the San Fernando Valley.

Between 1973 and 1981, the Daily News cut the number of free subscriptions by more than 50% to 82,463 in 1981 from 215,397 free copies in 1973. Meanwhile, the paper doubled its paid subscribers to 114,099 from 57,276 in 1973.

The paper had paid weekday circulation of 145,523 as of March 10. But the easy part of that growth appears to be about over.

Now, however, there are fewer than 3,000 copies given away. In light of the difficult task ahead, the Daily News has instituted management shake-ups, editorial changes and a massive marketing campaign to lure new readers.

Last September, Kelly, who was the No. 2 news executive of the Dallas Times-Herald, was named editor, replacing Bruce Winters, who resigned and joined the Sacramento Union. His arrival was part of a change in management that began with the naming of Byron C. Campbell as publisher of the Daily News in 1983. Since then, Campbell has replaced six of the papers top officials.

The new personnel initiated an immediate overhaul of the paper.

A Sunday magazine was added, along with a free-standing business section and 13 weekly local sections called Neighbors, which contain specially prepared local news and advertising and are circulated in specific areas.

Those changes have been widely trumpeted in an expensive advertising campaign designed, according to Griffiths, to “create more awareness of the paper.”

In the ads, created by the Los Angeles advertising firm Chuck Blore & Don Richman Inc. and scheduled to continue until next month, cherubic couples banter about the paper and life in Los Angeles. At the end, an announcer declares: “The Daily News. Interesting, isn’t it?”

The promotional effort represents an about-face for a paper that for year was distributed free to most homes in the Valley.

Known for 66 years after its founding in 1911 as the Valley News and Green Sheet, the paper survived solely on support from advertisers who were eager to gain access to the affluent and expanding San Fernando Valley. True to its name, the Valley News and Green Sheet proved highly lucrative for Ferdinand Mendenhall, scion of a San Fernando Valley publishing family who purchased the paper in 1932 from founder Maurice W. Markham.

But the formula became less profitable in the 1960s and 1970s, as newsprint and production costs began to soar. To keep advertising rates within bounds in the hotly competitive Southern California media market, the Daily News began its slow evolution into a full-fledged daily newspaper to attract paid subscribers.

The rejuvenation quickened in 1973 when the paper was sold to its current owner, Tribune Co. The company tripled the size of the news staff to more than 150 employees, intensified marketing and added news sections and other expensive editorial changes such as full-color photographs.

But the absentee owner did not transform the paper so much that it overlooked its suburban roots. Though the Daily News vastly improved its coverage, it still prominently features local and state news on Page 1 and more often than not relegates national and international news to its inside pages.

In fact, while other news organizations hotly competed for information about the Daily News’ clouded future on Thursday, at the paper itself, said Griffiths, “it was business as usual.”

Tribune Co. Broadcasting Properties Sacramento: KGNR-FM, KCTC-FM Bridgeport, Conn.: WICC-AM Denver: KWGN-TV Atlanta: WGNX-TV Chicago: WGN-AM, WGN-TV New Orleans: WGNO-TV New York: WPIX-AM, WPIX-TV