Following UPI’s Fall ‘Down to the Wire’ : Books: Former staffers document how bad business decisions and a changing news market devastated the once-vital wire service.

After about 25 years in the news business, Ron Cohen was used to late-night emergencies and early-morning phone calls. But the message that jarred him awake at 5 a.m. on March 4, 1985, was one he would never forget.

Cohen, managing editor of United Press International, listened in disbelief as an aide told him that the company’s two owners had ordered a story to be run on the wire without consulting the news staff. That was unforgivable, Cohen thought, a clear breech of journalistic independence.

But the story itself was even more of a bombshell: Amid rumors that UPI was facing bankruptcy, the company’s owners announced that they had abruptly fired President Luis Nogales, a man who was thought to be doing a credible job of rescuing the wire service from financial chaos.

Worse, the owners blandly announced that UPI was turning a profit, even though many employees feared their paychecks would soon begin bouncing. The once-proud wire service--a journalistic institution since 1907--seemed to be spinning out of control.

“I couldn’t just let this pass,” says Cohen, a normally genial man who was boiling mad when he arrived an hour later in UPI’s Washington headquarters. “I decided that if UPI was going down, we were going to cover it as a news story. We, not the owners, were going to write the obituary.”

Cohen assigned Greg Gordon, a UPI investigative reporter, to cover the company’s financial crisis. In the following months, the wire service’s clattering machines spat out a story of incompetence, greed and boardroom treachery that raised eyebrows throughout the media world.

The outspoken coverage showed how UPI--which once fed breaking news from around the globe to hundreds of American newspapers--had come to the brink of fiscal ruin. It also cost both men their jobs.

A new owner who took over UPI in 1985 fired Cohen five months later, in large part, according to Cohen, because of his decision to treat the company’s fiscal mess like any other story. Last June, Gordon was fired after he refused to let the owners review an advance copy of “Down to the Wire,” an outspoken and highly readable account of UPI’s decline that he co-authored with Cohen.

“We had no intention of letting anyone pre-review or censor this book,” said Gordon, 39, as he relaxed in a Manhattan hotel coffee shop with Cohen.

“UPI was a great institution and it was a great force worldwide for the free flow of information. But today it’s a shell of what it once was, and there’s a reason for that. UPI was and is a public trust, and the people who run it ought to be accountable for their actions.”

Was the decision to air the company’s dirty laundry a wise career move? Cohen, 52, said he and his partner had no other choice, given the story they pieced together with more than 700 interviews and numerous internal documents.

“Down to the Wire” (McGraw-Hill, $19.95) is anything but an authorized company history. In highly critical language, the authors document how two idealistic but naive entrepreneurs took over UPI for no money in 1982, drained off millions in company funds and then lost control of the faltering wire service when it was forced into bankruptcy. Although succeeding owners tried to revive the company, they, too, made costly errors, the authors say.

All the while, shifting economic forces made it more difficult for UPI to sell its services to American newspapers. The emergence of television news, the growth of other wire services and the ability of newspapers to cover far-flung corners of the globe on their own made it harder for UPI to compete with the larger, more established Associated Press.

As a result, Cohen and Gordon say, it would be almost impossible for UPI to regain its former glory.

The world’s second-largest wire service, which in 1982 counted more than 1,737 employees, for example, had only 650 staffers last summer, according to the authors. While UPI served more than 800 newspapers in 1982, it had fewer than 200 such clients this year, most of them small publications paying low rates.

Although UPI’s new owners are optimistic about turning the company around, they concede that previous corporate blunders have taken a heavy toll. Not surprisingly, they are also concerned by the continuing flap over Gordon’s termination and “Down to the Wire.”

Milton F. Capps, a UPI spokesman, says the company had no wish to censor the manuscript. But he notes that Gordon was bound by a union contract preventing him from engaging in “outside activity” that constitutes a “conflict of interest” with his duties at UPI.

“We know this as a fact, that this sort of review would be a fairly routine thing, especially given the fact that UPI had earlier cooperated in Gordon’s research,” Capps says. “It seemed a perfectly fair and equitable request. Because of his refusal . . . he was dismissed.”

Cohen and Gordon respond that UPI’s new owners refused to be interviewed for their book. Yet, despite their criticism of the new regime, the authors insist that they did not write the book to settle old scores. Both men, who have since found new media jobs, stress that “Down to the Wire” is a cautionary tale.

“The point is that a great news organization fell into disarray,” says Cohen. “And the public is entitled to understand why.”

Founded in 1907 by the E.W. Scripps newspaper company, the United Press wire service established a tradition of aggressive reporting that made it a worthy rival to the more affluent Associated Press. The company merged with the International News Service to form UPI in 1958.

Despite its smaller staff, the new wire service periodically beat the AP on some of America’s most important news stories, including the first urgent reports out of Dallas about the shooting of President John F. Kennedy. And it did so in a crisp, colorful style that, as one reporter observed, was “written for the milkman in Omaha.”

Some of journalism’s most influential reporters honed their skills working for UPI, including Walter Cronkite, Harrison Salisbury, Helen Thomas, William Shirer, David Brinkley and Eric Sevareid. American newspapers grew to rely on the wire service as a solid alternative to AP coverage, an important “second voice” with which to compare and evaluate stories from around the world.

But UPI’s profitability was threatened in the early 1960s by the explosive growth of television news. Suddenly, Americans had an instant news source in their own homes that made a service such as UPI seem obsolete, especially when afternoon newspapers began dying out across the nation. As profits declined, coverage begin shrinking as well, and newspaper editors who could afford only one wire almost always chose the better-funded Associated Press.

Soon, E.W. Scripps officials began to question the value of propping up UPI. In 1981, faced with the need to invest millions in a satellite transmission system, they decided that the wire service had become an economic albatross and began looking for a buyer.

The news sent shock waves through UPI offices across the nation, but reporters and editors believed the company would somehow correct its course. After all, their wire service was the stuff of journalistic legend, something that would live forever.

“We all knew the place was a mess, that money was tight,” says Gail Collins, a UPI staffer from 1980 to 1985 who is now a columnist for the New York Daily News. “Still, there was always the hope that some white knight would come riding out of the wings and set things right.”

Those hopes were dashed in 1982, when the company was all but handed over to Douglas Ruhe and William Geissler, two young, unknown businessmen from Nashville, Tenn., who put up a token $1 of their own money to gain control of the faltering wire service.

Ruhe, then 38, and Geissler, 36, had virtually no background in journalism except for the fact that they had been trying to acquire low-power television stations across the country. Both had been political activists in the ‘60s, with experience as civil rights organizers and opponents of the Vietnam War.

The brash young owners pledged that UPI would soon return to its former glory. But it quickly became clear that they had no intention of investing in UPI, even though they had been given $5 million by E.W. Scripps as part of the sale. Unfamiliar with the wire service, they were ill-equipped to deal with its precarious market situation.

“This was the gang that couldn’t shoot straight,” says Cohen. “Truly, they may have had good intentions at the beginning. But they were in way over their heads. They bit off more than they could chew.”

Ruhe, for example, bungled the task of installing a satellite transmission system for UPI, according to the authors. Although an incomplete version of the system was eventually put in place, needless delays cost the company millions in construction and operation.

Soon, UPI began piling up losses of more than $2 million a month. Owners scrambled to meet the payroll and pay their bills by selling off some of the company’s valuable assets, such as its renowned photo archives. Eventually, employees were forced to accept 25% pay cuts and the staff was reduced by 20%. Paychecks actually bounced at one point in 1985.

Why were Ruhe and Geissler able to acquire UPI in the first place, when other, more experienced bidders were reportedly interested, such as Los Angeles businessman Peter Ueberroth?

There is no clear answer provided in “Down to the Wire,” but the authors speculate that Scripps officials were desperate to unload the wire service by the early 1980s. Although exploratory talks were held with several individuals, Scripps could not find a well-heeled buyer who would take the wire service completely off its hands.

Ruhe and Geissler may have thought they were pulling off a coup, Cohen suggests, but in reality the two may have been “patsies” because Scripps sold them UPI free and clear. According to the terms of sale, the parent company had no liability for future losses, a fact that would haunt the new owners in future years.

Looking back, the key players have varied reactions to that theory.

Reached at his home in Murfreesboro, Tenn., Geissler said he had not yet read “Down to the Wire” and would have no comment until he did. Asked for his reaction to Cohen and Gordon’s arguments, he also declined, saying, “I’ve been down that route before, and there’s no percentage in it.”

Toward the end of the book, however, Geissler is quoted in a 1988 interview as saying: “The weight of the evidence is that Ruhe and Geissler were incompetent. They didn’t have the ability, the grasp, the intelligence, the skill, the forcefulness to weld it (UPI) together and push it to health.”

Ruhe, who lives and works in Nashville, could not be reached for comment.

As for the E.W. Scripps Co., spokesman Rich Boehne said his firm did not care to comment. The decision to unload UPI on Ruhe and Geissler “is documented in the book. We wouldn’t be interested in rehashing the history.”

Regardless of their qualifications, Ruhe and Geissler realized that UPI was in financial trouble soon after they took over. In 1983, after a string of unsuccessful managers, they hired Luis Nogales, a Los Angeles businessman with media experience, as president. Although the authors credit him with trying to reverse the company’s steady decline, it was an almost impossible task.

Unknown to most employees, Ruhe and Geissler had transferred millions of dollars in UPI funds to another media business they controlled, and hired cronies as consultants on projects that rarely bore fruit. There were no reliable records of the company’s monthly cash flow, and the owners at one point hit upon the idea of withholding payment of employee taxes from the Internal Revenue Service, according to bankruptcy records.

“Most employees had no idea these things were going on,” says former UPI reporter Collins, who covered business news at the time. “But we knew there were terrible problems. Reporters couldn’t get simple expenses reimbursed, and there were some who were always fighting with the phone company to keep phone lines working, because the company didn’t pay its bills. It was insane.”

Early in 1985, Nogales decided that UPI could only survive with new owners and protection under Chapter 11 bankruptcy laws. In what the authors describe as a “crap-shoot mutiny,” he and other allies wrested control of the wire service away from Ruhe and Geissler and began searching for a new owner.

Several potential buyers were contacted, but the man who eventually agreed to take over UPI, Mexican press magnate Mario Vasquez-Rana, was no more up for the task of reviving the wire service than his predecessors.

The new owner paid more than $41 million to bring UPI out of bankruptcy. But he angered editors by interfering in their hiring and firing decisions. Unfamiliar with the give and take of newsroom politics, he sacked Nogales and two other presidents, four editors-in-chief and three managing editors in less than three months.

As confidence in UPI plummeted, more newspapers dropped the wire service and the money drain continued. Overall, Vasquez-Rana lost more than $70 million in the venture.

“Down to the Wire” ends shortly after UPI’s purchase in 1988 by Dr. Earl Brian, a former California surgeon and venture capitalist with political ties to the Reagan Administration. Cohen and Gordon say that Brian’s intention to restructure UPI and diversify its wire service for more specialized customers makes sense, but suggest that it may be too late.

“These are changes that UPI should have been getting into 23 years ago,” says Cohen.

Both authors say a key lesson of “Down to the Wire” is that American journalism isn’t what it used to be.

Fewer news organizations are run by families these days, Cohen explains, and corporate owners are not likely to support the kind of journalism which, however briefly, enabled UPI to cover its own financial mess.

Should journalists take heart from his experience and cover their bosses like any other news story? The veteran editor shrugs his shoulders.

“I think, unfortunately, it all depends on the management. Maybe we couldn’t have gotten away with this at another company.

“But when we first learned of the trouble surfacing in 1985, I said to myself that we had to do this. We had to cover the UPI story. It was the only honorable thing to do.”