Detroit Paper to Shut if U.S. Spurns Plan : Knight-Ridder Pushes Meese to Allow Joint Operating Agreement

Knight-Ridder’s board of directors voted Thursday to close the nation’s eighth-largest newspaper, the Detroit Free Press, if its proposed joint operating agreement with the rival Detroit News is ultimately rejected.

The decision is part of a public lobbying effort to persuade Atty. Gen. Edwin Meese III to approve the controversial plan, which requires granting the paper a special exemption from federal antitrust laws.

Knight-Ridder Chairman Alvah H. Chapman Jr. also said he hopes that the threat of the nation’s fifth-largest city being left with only one newspaper would persuade Mayor Coleman Young and others here to drop their opposition to the plan.

That opposition apparently played a key role in persuading the Justice Department and an administrative law judge to oppose the plan.

Opponents’ View

Most of these opponents, Chapman told a crowded press conference in the 156-year-old paper’s conference room, “were focusing on the JOA versus maintaining the status quo” of two competing papers. “I think at this point they understand . . . the status quo is not an option.”

The plan is the biggest such joint operating agreement ever proposed, a merger of the seventh- and eighth-largest papers in the country, which are owned by the country’s two biggest newspaper chains, Gannett Co. and Knight-Ridder.

Yet opponents claim that approval would clear the way for similar mergers in those remaining cities with two papers, including Los Angeles.

Under the Detroit plan, the two papers would merge business operations but maintain separate news staffs, with the Free Press publishing mornings, the News afternoons.

If Atty. Gen. Meese accepts the recommendation of his antitrust division and Administrative Law Judge Morton Needelman and rejects the proposed merger, Knight-Ridder could appeal in federal court, an option it did not rule out Thursday.

But Chapman dismissed as “completely unrealistic . . . that Knight-Ridder could sell the Free Press at a price that the board would find acceptable, given the value to Knight-Ridder of using presses and other equipment” elsewhere in its chain.

Knight-Ridder’s board directed the company to move the presses to the Philadelphia Inquirer if the JOA is rejected.

In his ruling Dec. 30, Judge Needelman, who presided over public hearings on the matter, dismissed as an idle threat Chapman’s vow that the paper would close.

Chapman said Thursday that Needelman, whose ruling is only a recommendation, “went off into a legal never-never land” in his decision.

Legally Bound

If the JOA is approved, Knight-Ridder would eventually share half of the profit from the Detroit newspaper market, estimated to exceed $50 million annually within three years. If the JOA is rejected, Gannett would have the Detroit market to itself.

Chapman said Gannett is legally bound to back the JOA proposal as long as Knight-Ridder wants to appeal it, and he read aloud a brief letter from Gannett Chairman Allen H. Neuharth to the Knight-Ridder board reaffirming his support.

But since Judge Needelman’s ruling, Gannett has remained largely silent, and no top officials from Gannett were present at the press conference, save for William Keating, who would run the joint agency for the two papers. Keating sat silently in the back of the room.

In addition to announcing the board’s vote, Chapman said the company had retained the Washington law firm of Clark Clifford, a Knight-Ridder director, to help in its appeal to the attorney general.

Jan. 29 Deadline

And Chrysler Corp., one of Detroit’s major employers, also arranged to provide the services of its lobbyist, the law firm of Timmons & Co.

“All I can do is advise them as to how they can best present their case to the Justice Department,” Clifford said in an interview.

By law, Knight-Ridder cannot appeal to the attorney general except by filing formal responses to Judge Needelman’s recommendation by Jan. 29.

Chapman also has arranged to meet with the paper’s unions to persuade them to change their opposition to the JOA.

The company’s effort to build a last-minute wave of public support for the plan also included a gushing front-page appeal Jan. 10 by Free Press Publisher David Lawrence for readers to write in saying what the Free Press meant to them.

“I care about the 2,200 people who report, edit, sell ads, keep the books, run the paper on the presses . . . all the steps it takes to bring the paper to almost three-quarters of a million people,” Lawrence wrote. “Each has a home; each has a family. Each has dreams and aspirations.”