Brehm was negotiating to buy up his no-compete agreement so he could take on the Lamplighter but apparently was unable to do this in time to keep the fast-lowing Pony Express going, despite his claims of money being no object. Orange County Superior Court Judge Lester Van Tatenhove refused to give the McGiffin attorneys a new trial and congratulated my attorney for making such a clear-cut case in my favor out of a difficult matter to prove the intent to injure aspect of the law-when he awarded me, after the trial the additional $50,000 in attorneys' fees.

I have not been able to collect this judgment and the McGiffin Corp.'s new attorneys, Ball, Hunt, Hart and former Governor Pat Brown, have offered a settlement of $203,000, which we have rejected.

I am fearful that the new proposed federal law would allow many other such willfully failing newspapers to combine with or be supported by non-failing newspapers to continue efforts to drive a third party out of business or prevent a third party from entering business.

Other than this fairly brief statement of my position, I share the feelings of the other witnesses before the Senate Committee and this committee in opposing the proposed legislation.

PAPERS PRINTED BY NOWELS PUBLICATIONS FOR OUTSIDE PUBLISHERS

Oakland Times

Livermore Independent

Foster City Progress

Millbrae Sun

Construction Center News

Philippine News

Stanford Daily

Hillsborough Boutique

Campbell Press

Sun Reporter (San Francisco)

Peninsula Observer

U-Save Shopper

Kept Press

Stanford Reporter
Carlmontor

Don Carlos
Center Post

Jewish Star

Bear Tracks

Cañada College Paper

Mr. DONOHUE. I thank you very much.

Now we will be very pleased to hear from our very distinguished colleague, Representative in Congress, Mr. Buchanan, and with your introduction goes my apology for not calling on you sooner.

TESTIMONY OF HON. JOHN BUCHANAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA

Mr. BUCHANAN. Thank you, Mr. Chairman.

Mr. Chairman, it is my pleasure to present to the committee Mr. Arthur P. Cook, of Birmingham, Ala., who is owner and publisher of the Sun papers, all serving metropolitan Birmingham. This chain includes the Shades Valley Sun, the Eastern Sun, the Western Sun, and the Bessemer Sun.

Mr. Cook is a career newspaperman who was for some 21 years in the daily newspaper field, before entering the weekly field. He is a very distinguished citizen of our city; past first vice president of the Birmingham Chamber of Commerce; director of the Birmingham Kiwanis Club: first vice president of the Sales Executive & Marketing Club. He is a director of Boy Scouts of America, and formerly of the Alabama Press Association, and is on the Baptist Hospital Advisory Board and the Advisory Board of the Salvation Army. He is former chairman of the board of deacons of the Mountain Brook Baptist Church, and has many other such activities, including being a member of the board of trustees of the University of South Alabama in Mobile, and of Tuskegee Institute in Alabama. He is also a trustee of Community

Newspapers of America, and member of the Newcomen Society of North America.

The Sun newspapers render a service to metropolitan Birmingham, not really covered by our dailies, in their thorough coverage of news about people, neighborhood events, and local news. They are, consequently, the best read publications in my area, and in my judgment are unsurpassed in their excellence, both in the Birmingham area and among other comparable publications it has been my privilege to read. Some years ago, Arthur Cook saw an unmet need in our area, and moved out with initiative and resourcefulness to meet that need within the framework of the free enterprise system, and I am privileged to present him to you today as a distinguished citizen and publisher of Birmingham.

Mr. DONOHUE. Thank you very much, Congressman. It is a real pleasure to have you here with us this morning, Mr. Cook, particularly in the company of the distinguished Representative from your area. TESTIMONY OF ARTHUR P. COOK, PRESIDENT AND PUBLISHER, THE SUN PAPERS, INC., BIRMINGHAM, ALA.

Mr. Cook. Thank you very much, Mr. Congressman.

Mr. Chairman, Members of the House of Representatives, I am Arthur P. Cook, president and publisher of the Sun Newspapers of Birmingham, Ala.

This is a case history of what happens in a monopoly daily newspaper market. I speak from firsthand experience, having worked for the Birmingham News and Post-Herald dailies 21 years, the last 6 years as retail advertising manager. Twelve years ago, after resigning from the Birmingham News and Post-Herald, I purchased the Sun Newspapers.

The Sun Newspapers consist of four separate suburban newspapers published weekly to serve 33 of 34 cities in Jefferson County or Metropolitan Birmingham, Ala. The 34th or first is the central city of Birmingham. The newspapers are Shades Valley Sun, south; the Eastern Sun, north and east; the Western Sun; and the Bessemer Sun. Total circulation is in excess of 70,000.

The Sun Newspapers are family newspapers devoted to everyday happenings in local government, church, schools, and civic activities. Editorial content is 99 percent local news and pictures. Sixty-five fulltime employees work for the Sun Newspapers in Greater Birmingham, a monopoly daily market, competing for readership and advertising dollars against the Nation's two largest daily chain newspaper operations the S. I. Newhouse's afternoon Birmingham News, circulation 185,000; and the Scripps-Howard morning Birmingham Post-Herald, circulation 85,000.

The Sun Newspapers is the only locally owned media in a 776,000populated market that supports 13 radio stations, three television stations, and two daily newspapers, which are all out of State of Alabama owned.

In order for us to enjoy the local, hometown, pulse beat of newspaper business, it is necessary that we supplement our newspaper income by contract newspaper commercial printing, such as, the State

Alabama Baptist, the State Catholic Weekly, and several high school and college newspapers.

Why is it necessary for a publisher to have to resort to supplementing income to stay in the community newspaper business? The reasons are simple:

First, monopoly cutrate combination daily advertising rates.

Buy the Birmingham News advertising rate at $5.04 per inch, the Post-Herald for $2.75 per inch-total of $7.79 with combination rate and subtract the discount rate of $0.87 per inch which equals net cost of $6.92 per inch. This means advertisers buy the second paper after spending $5.04 per inch to qualify for $1.88 per inch advertising on second newspaper circulation of 85,000. Compare this $1.88 per inch advertising buy with our $2.18-per-inch, 25,000-circulation newspaper. Second, the Birmingham News publishes a zone weekly edition delivered as a part of their regular 185,000 afternoon edition to only 28,000 homes. This Birmingham News, Bessemer edition, operates in the red as a defensive publication, not to serve the real leadership needs of Bessemer, but to keep competitors from getting a hold in the market. Seventeen years ago advertising rates on the Birmingham News' Bessemer edition was figured on one-half the regular advertising rate card; today the rates remain practically the same, in order to undersell our Bessemer Sun rate. Example: $1.75 per inch News versus Bessemer Sun $2.18 per inch.

Third, the Birmingham News prior to merger of the two dailies used a 5-percent rebate factor to advertisers who would run their advertisements only in the Birmingham News, not in the competing daily. This one factor did more to destroy daily competition than anything else in the Birmingham market. Today the same 5-percent factor is used against us to a 5-percent prompt payment discount--but the original intent remains the same.

Fourth, special section preprints shipped to the Birmingham dailies are cutrate priced depending on the account and circulation desired. This is done in violation of the post office formula for standard ratecard pricing.

Fifth, business office, circulation, advertising, and printing plant is the same for both daily newspapers.

Sixth, the Newhouse's Birmingham News Co. signed a 25-year contract in 1950 to act as agents for the Scripps-Howard Birmingham Post-Herald. This means print, sell, and deliver the morning paper by the personnel of the evening paper. This contract has a very important clause a guarantee of profit on the total business carried in Birmingham News and Post-Herald to Scripps-Howard. This, also, simply means the business office of Birmingham News Co. sets the advertising rates for Birmingham Post-Herald, limits the number of pages per issue and, in turn, limits the amount of editiorial space available-a true monopoly with all business office controls in single management hands.

Interesting to note, the Newhouse newspaper chain has purchased the two dailies in Huntsville, Ala., fourth-largest in State, the two dailies in Mobile, the second-largest in State. This leave only Montgomery, third-largest market in State, safe from a statewide Newhouse major market monopoly. And when I speak of "monopoly in a major

market," I am talking about of the daily newspapers, television, and radio in these markets, in the same hands.

What is our future in the suburban newspaper field in Birmingham?

If we ask the people in the suburban areas, they would say, "the Sun Newspaper is great," for they love our big wedding pictures, Little League reporting, and personal interest in good government. But unless the big-city monopoly dailies are stopped and made return for fair business tactics, it looks real dark.

This bill should be defeated and the strangle-held monopoly, the combination advertising rates of dailies, if any, the 5-percent discounts, be removed from markets, like Birmingham, and this will add new life and voice to the last hopes of growth in American journalism, the suburban press, weekly, triweekly, and small dailies, because here is the opportunity.

Mr. DONOHUE. Are there any questions?

Mr. McCLORY. May I just ask one question.

Mr. Cook. This is not a merger situation with the Birmingham News and Post-Herald; this is a contract arrangement on the definite profit structure, with business office control.

Mr. McCLORY. Now, Mr. Chairman, the one question I wanted to ask is this: Except for the Birmingham operation, this bill wouldn't affect the other operations about which you have given testimony, would it? There is nothing here against mergers. The kind of arrangement that they have in Birmingham, which was made in 1950, is the only one that would be affected by this bill. Isn't that so?

Mr. Cook. That is true. Of course, there is very little difference between a merger situation and a contract situation in the total application of what happens. It is still a business office controlled media proposition. They can force anyone in other media out of business by simple business office manipulations; yes.

Mr. McCLORY. I understand. Well, you are complaining about the situation that has developed throughout Alabama, but we are concerned here solely with this one bill.

Mr. Cook. I understand; yes.

Mr. McCLORY. And insofar as this one bill is concerned, the operation in Birmingham, Ala., is the only one that is applicable; isn't it? Mr. Cook. That is true, yes.

Mr. McCLORY. Thank you.

Mr. Cook. Thank you very much.

Mr. DONOHUE. Thank you, Mr. Cook, Mr. Buchanan.

We will now hear from Carroll Stewart, publisher of the Sun Newspapers in Lincoln, Nebr.

TESTIMONY OF CARROLL W. STEWART, PRESIDENT, SUN

NEWSPAPERS OF LINCOLN, INC., LINCOLN, NEBR.

Mr. STEWART. Mr. Chairman, Mr. McClory, gentlemen, I am at the low end of the spectrum in the suburban publishing field. We had the audacity, in 1961, in a small market, which did not even include suburbia, because of the size of the city of Lincoln, to undertake to embrace the entire market in the face of a joint operating agreement represented by the two daily newspapers.

I am going to be very brief, Mr. Chairman. I am going to incorporate my testimony in the record.

Mr. DONOHUE. Without objection, it will be so incorporated.

Mr. STEWART. I am going to read one paragraph on my page 7 of the testimony. I say professional baseball and other industries enjoy certain relief from antitrust provisions, but certainly no entrenched newspaper monoply should have one iota of protection against minor intrusions, in the main, from people with no better judgment than to risk money and "inordinate effort" in a classical American sense of free enterprise. The press lords should conduct their business activities within the framework of our antitrust laws, they should improve their service and their product, and they should not petition Congress for relief.

We could, and probably will, do a book on our experiences in the Lincoln market. For all intents and purposes, we have gone through two sets of partners. It wasn't planned that way. The death rattle has plagued us. Nevertheless, our seventh year's revenues indicate 29-percent increase over the sixth year and continued use of space by a growing and satified account list indicates we are on the right track, and have been on the right track, provided Congress doesn't provide special dispensation for the joint operator.

Loosed from existing antitrust provisions, the community of Lincoln would pay disproportionately in many ways. Sun papers, who dared to undertake opposition after a succession of other such ventures had failed, would at best be reduced to a printshop, but more likely, would vanish.

We started with four men, one women, a teenaged girl; we now have 50 employees. And I thank you very much.

(Mr. Stewart's statement follows:)

TESTIMONY OF CARROLL W. STEWART, PRESIDENT, SUN NEWSPAPERS OF LINCOLN, INC., LINCOLN, NEBr.

I am the founder and president of Sun Newspapers of Lincoln, Inc. We were conceived and brought into being in 1961 in the belief the rapidly growing residential areas and the business community, which was expanding and disbursing, were entitled to services of supplemental print in a market monopolized by a joint operating/mutual ownership arrangement of two long established daily newspapers.

The dailies are the Lincoln Star, member of the Davenport, Ia.-based Lee Group, and the Lincoln Evening Journal, owned by the Seacrest Family. The joint facility from which the dailies sell, report, edit, compose, produce and distribute these dailies is the home of the Journal-Star Printing Co., which was formed in 1950 when Lincoln was about sixty percent its present population. Nineteen years earlier (in 1931) the two dailies had begun cooperatively publishing the Sunday Journal and Star.

We tooled our small Sun papers central plant with a new high-speed web offset press. There summarily appeared three "suburban" weekly newspapers in a relatively small metropolitan market in which suburban governmental entities in the popular sense did not exist. These weeklies are Northeast Lincoln Sun, Southeast Lincoln Sun, and Capital City Sun. A fourth member of the group, Lincolnland Sun, is a rural newspaper.

In the fall of 1961, when we launched Sun papers, there were no other general interest non-daily publications in the market. There are no others today. We have no affiliations with any other printing or publishing house.

To impact the market every Wednesday (commencing with 39,000 households in 1961, now 49,000), involved staggering expense and an inordinate amount of sales, editorial, production and distribution effort. The weekly frequency of