impact is a distinct handicap in selling against twice daily exposure offered by the combined dailies also offering the Sunday package. Our problem was to induce weekly readership, influence shopping habits and cause revenues to eclipse cash outlay.

Five men, one woman and a teenage girl produced the first issues (23 Nov. 61). Today we have 50 employees.

In the face of sharply rising costs (labor, taxes, newsprint, postage, supplies, etc.) and intense competition, the company in its seventh corporate year will have turned a small profit against a loss in excess of $150,000.

As recently as May of this year our company paid interest up to $40 per month per $1,000 for short-term money, to private sources, to remain afloat. During the past three years the average rate of interest paid approximated 15%.

Many advertisers have extended themselves to patronize us, particularly in our early days. This was "investment" of a sort. These advertisers were convinced the city needed us. We made no secret we needed patronage.

From the very beginning our every move has been fraught with heavy detail and extraordinary expense. Our top people convey ad proofs to Montgomery Ward, for example, to collide in the corridors with a Yellow Cab driver performing the same function for the dailies. Voluntary subscribers have been loyal and pay religiously, frequently for multiple years in advance. They too want us to succeed.

The image of Sunpapers is excellent. The community yearns for the day Sunpapers will assert themselves consistently on issues, introduce more fresh ideas, and publish bigger and better newspapers. This largely because the differences in the dailies tend to be obscured by the powerful and common economic denominators (sales, plant, production, distribution, etc.) although they make ostensible effort to maintain separate editorial identity.

When Sunpapers entered the market the Journal and Star (outside the august halls of Congress we call them P Street papers) would not accept, for example, certain types of furniture and appliance advertising from nearby towns (one major dealer 13 miles away did not have a newspaper in his own town). We did. These accounts ultimately vanished for us (1) after proving the point and, (2) after the P Street papers did a 180-degree turn. We were too deeply involved with "inordinate effort" and red ink to fish for testimony not easily accessible. We've had other accounts dry up inexplicably.

Franchise new car dealers, situated in small towns immediately adjacent to Lincoln and without newspapers in their own towns, were denied using us for franchise reasons. Their new car advertising was relegated to highway signboards. It's another example of foreclosure.

Classified pages are folksy, intimate and are used to a great extent by people who seldom have occasion to hire general display space. Last week a stranger told me a $1 (minimum, 14 words) classified ad in Sun papers had sold $185 worth of "stuff" his wife offered in a garage sale of odds and ends. We took the order, set the type, proofread it, classified it, printed and distributed it. In the dailies a similar ad would cost approximately $1 for a single insertion. But that's where frequency advantage pays off. They induce the customer to order the same ad to appear three successive days in the combined dailies, five days or a week. There's quite a difference in our margins.

Let's talk about alcoholic beverages: Lincoln Evening Journal does not accept this type of advertising. Lincoln Star does. Buyers desiring to buy daily space are obliged to page ninety percent of the combination rate and the Journal-Star Printing Co. magnanimously causes the same ad to appear twice in the Lincoln Star.

You might say we were audacious in establishing our advertising rates when I report that our "high end" (small users) and the Journal and Star "low end" users were practically equalized when we appeared on the streets to the surprise of almost everyone back in 1961. The dailies have increased their rates three times in the interim. We've taken one very slight increase on small ads and adjusted slightly lower for volume users. We offer distinct economies to neighborhood users of space who have no necessity for buying the city at large or buying the daily market.

Editorially our long suit is pictorial. Emphasis is also placed on human interest material largely overlooked by the dailies.

Editorially we've caused the P Street papers to abandon hard-to-read fine type in their radio-television guide. They substantially enlarged the type and greatly expanded the space allocation. Ditto for obituaries. For years the dailies

published a Parade of Homes on metro size pages. We introduced tabloid sections. They followed.

We've caused the dailies to expand their coverage and pay closer attention to people and organizations in many other ways.

People tell us we carry more local news than either of the P Street papers. It's untrue but we don't argue with customers.

An untrained housewife five years ago became a columnist for us. It was frightened with personal opinion. Our readers loved her. Two years ago her column was adjudged the best woman's column in the nation by the National Editorial Assn. One month ago she was hired away from us by one of the P Street papers where she is a reporter, not a columnist.

Our staff, numbering fifty persons, averages 31-year-old. We offer part-time employment to many university and college students (Lincoln is a college town of 153,000 people and seat of state government). We have trained many employees for others including (you guessed it) the P Street papers, Omaha World-Herald, electronics media, and others. The World-Herald is owned by a big government contractor. A sign over one of our doors reads: Petter Kiewit's Field Club.

Professional baseball and other industries enjoy certain relief from anti-trust provisions, but certainly no entrenched newspaper monopoly 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. The press lords should conduct their business activities within the framework of our anti-trust laws, they should improve their service and product, not petition Congress for relief.

The Seacrest Family, long dominant in the newspaper field in Lincoln, owns control of Radio Station KFAB, 50,000-W, Nebraska's most powerful. KFAB, based in nearby Omaha, controls Musak (background music in both cities). Musak subscribers in Lincoln pick up the P Street papers occasionally to find a handsome display advertisement extolling the virtues of the subscribing firms as well as Musak's. We shrug and say: "They've got the town wired up."

Speaking of electronic communication: Since we've been in the market, all Lincoln radio stations (four AM, two FM), have increased their power and the city's only commercial television station has increased its power, heightened its tower and added satellites.

Point is Lincoln is a vibrant and expanding market. There should be room for all of us in pursuit of the advertising dollar.

It seems to me Congress might give serious consideration to undoing some of the marriages of convenience that have virtually foreclosed on such brash undertakings as ours. Freedom of the press works both ways. Vast segments of our population are being served by the suburban press USA-the fastestgrowing and, in my view, the most wholesome segment of the communications spectrum.

The prospect of relief from anti-trust provisions for Lincoln's press giants is incomprehensible in the light of seven years of "inordinate effort" and heavy risk.

We could-and probably will do a book on our experiences. For all intents and purposes we've gone through two sets of partners (it wasn't planned that way), and the death rattle has plagued us. Nonetheless our seventh year revenue indicate a 29 percent increase over the sixth year and consistent use of space by a growing and satisfied account list indicates we were and are on the right track provided Congress doesn't provide special dispensation.

If this so called Newspaper Preservation Act were to become law the consequences would be dire for us and for our community. To sanctify practices hitherto illegal would be devastating, and, we believe, very unpopular in Lincoln as in other cities similarly situated or about to be similarly situated.

No malice is intended. P Street people in Lincoln are fine people. Loosed from existing anti-trust provisions the community would pay disproportiontely 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 print shop but more likely would vanish.

Mr. DONOHUE. Thank you very much. We will now hear from the National Newspaper Association, represented by J. M. Cornwell of the Murray, Utah, Eagle; Henry Hogan, Birmingham, Michigan Eccentric; and Paul Conrad, the counsel, from Washington, D.C.

20-914-68- -23

STIMONY OF J. M. CORNWELL, PUBLISHER, MURRAY EAGLE, MURRAY, UTAH; ACCOMPANIED BY HENRY HOGAN, PUBLISHER, BIRMINGHAM ECCENTRIC, BIRMINGHAM, MICH., AND DIRECTOR, NATIONAL NEWSPAPER ASSOCIATION SUBURBAN NEWSPAPER SECTION; AND PAUL CONRAD, WASHINGTON, D.C., GENERAL COUNSEL, NATIONAL NEWSPAPER ASSOCIATION

Mr. CORNWELL. Mr. Chairman, I am J. M. Cornwell, publisher of the Murray Eagle, Murray, Utah. I am treasurer of the National Newspaper Association and appear in behalf of this organization of 6,800 weekly and daily newspapers. The National Newspaper Association, known for its first 80 years as the National Editorial Association, is affiliated with 47 State newspaper associations and has members in all 50 States. While they are, for the most part, the Nation's community newspapers, they include some of the largest metropolitan dailies.

With me are Mr. Henry Hogan, publisher of the Birmingham Eccentric, Birmingham, Mich., and Mr. Paul Conrad of Washington, D.C. Mr. Hogan is a director of the National Newspaper Association Suburban Newspaper Section. Mr. Conrad is the association's general

counsel.

Gentlemen, I am aware this hearing is running short on time, and in the interests of permitting you to hear as much testimony as possible, I would like to submit my statement and then briefly point out to you some of the points which I feel are particularly worthy of your consideration.

Mr. DONOHUE, Without objection, your complete statement will be incorporated in the record.

(The statement referred to follows:)

STATEMENT OF THE NATIONAL NEWSPAPER ASSOCIATION

Mr. Chairman, I am J. M. Cornwell, publisher of the Murray Eagle, Murray, Utah. I am treasurer of the National Newspaper Association and appear in behalf of this organization of 6800 weekly and daily newspapers. The National Newspaper Association, known for its first 80 years as the National Editorial Association, is affiliated with 47 state newspaper associations and has members in all 50 states. While they are, for the most part, the nation's community newspapers, they include some of the largest metropolitan dailies.

With me are Mr. Henry Hogan, publisher of the Birmingham Eccentric, Birmingham, Michigan, and Mr. Paul Conrad of Washington, D.C. Mr. Hogan is a director of the National Newspaper Association Suburban Newspaper Section. Mr. Conrad is the Association's general counsel.

I am sure you will realize, Mr. Chairman, that in this membership of independent publishers there is a wide spectrum of opinion on any issue. This is true of proposed antitrust legislation relating to newspapers. I would be remiss in my responsibility if I failed to make clear to the subcommittee that within our association there are members who support H.R. 19123 or some type of legislation intended to lift the cloud from joint newspaper operations.

However, three times during the past two years at our national conventions, our members and board of directors have considered this legislation. At its Fall Meeting in Milwaukee a year ago the Board adopted the following resolution: "That the National Newspaper Association opposes any statutory exemption from the operation and effect of the antitrust laws of the United States for newspapers or their publishers. The National Newspaper Association recognizes the need for and approves the use of joint printing and production facilities by newspaper publishers in order to preserve independent, competing editorial voices in the United States.

At its annual convention in Los Angeles this May, the Board heard representatives of the Tucson and Salt Lake City dailies explain proposed new bill lan

guage which is now embodied in H.R. 19123 and S. 1312. After careful consideration of these amendments, the Board once again reaffirmed its opposition to any antitrust exemption for newspapers.

Our testimony today will explain, in nine points, why the nation's community newspapers take this position. My own testimony will embody four of these points.

1. The newspapers of the nation are, on the whole, very healthy and in no need of special antitrust legislation.

By any measurement, the nation's newspapers are growing. Statistics compiled by the American Newspaper Publishers Association and related at that organization's annual convention in April of 1967 show:

Daily newspaper circulation up 2 percent over the previous year to 61,397,000. Newspaper advertising up 9 percent for the year, to $4.9 billion.

The average size of newspaper editions up 6 percent.

Daily newspaper employment up 2 percent to 353,800; up 42 percent since 1947.
The number of daily newspapers up a net of three for the year.

Newsprint consumption up 7 percent to more than 9 million tons.
Capital expenditures by newspapers up 6 percent to $140,938,000.

Seventy newspapers installing new presses with 30 of them converting to offset printing.

Seventy-one new computers installed by newspapers for typesetting.

Newspaper advertising revenue, the association reported, has quadrupled since World War II, increasing during 20 years by more than the entire current volume of television. At a recent meeting of the Bureau of Advertising, its head, Charles T. Lipscomb, predicted newspaper advertising revenues for 1968 would approach $5.5 billion, amounting to a 10 percent increase over 1967.

Newspaper circulation has continued to keep pace with the growth of the U.S. population in the 21 to 64 age bracket.

The Audit Bureau of Circulation, recognized authority in newspaper circulation statistics, reported in January that total daily newspaper circulation in the U.S. and Canada had increased by more than 400,000 in 1967 despite the loss of more than 500,000 in the closing of the World Journal Tribune.

And this growth is more than outstripped by the nation's weekly press. Total weekly circulation grew from 18,529,000 in 1956 to 26,876,000 in 1967, a gain of 45 percent. This compares with an increase of 12 percent in the nation's adult population and 19 percent in the number of households.

Editor & Publisher magazine in April published results of its annual study of medium-sized U.S. dailies. Using averages from actual newspapers, the study showed an increased net profit of 4 percent for 1967 over 1966.

All of these statistics are supported by the Department of Commerce annual survey of manufacturers, which shows a healthy upward trend in newspaper "value of shipments." In 1964 this total was $4.6 billion; in 1965 $4.9 billion; and in 1966 $5.2 billion.

The Business and Defense Services Administration of the Department of Commerce reports a consistent increase in U.S. newsprint use. Estimated total demand for 1968 is 9,700,000 tons. Actual usage in 1966, the Department estimated in its "World Newsprint Supply Outlook," was 9,123,000. The increase tells its own story.

2. Joint newspaper operations combine all of the efficiencies of unified sales and production with the advantages of dual ownership, constituting the most formidable barrier against entry of new newspapers into a market.

A joint newspaper operation-as for example the Salt Lake TribuneDeseret News in my home territory-enjoys these economic advantages:

a. Joint operation brings together the resources of two publishing entities. b. Joint printing and distribution result in maximum utilization of physical plant.

c. A joint operation pre-empts the morning, evening and Sunday fields in a market.

d. Advertising rate fixing and joint ad sales facilities balancing the advertising lineage between the morning paper and its companion aftrenoon publication, so that the owners can maintain both in spite of any preference the community's merchants and readers might have for one over the other.

e. Circulation rate fixing and distribution policies make possible manipulation of this distribution, again to guarantee the success of both editions.

f. The presence of two ownerships and, where offered, divergent editorial viewpoints, serve to satisfy the community's desire for editorial variety, while the newspapers' buisness activities remain under unified control.

g. Joint sales at combination rates draw maximum advertising dollars to the joint operation.

All of these factors work to the detriment of competitors. Joint ad sales, in particular, raise barriers against lessor competitors. An advertiser knows he must be in the dominant newspaper. He is persuaded by the favorable combination rates to spend the remainder of his ad budget in the second newspaper of the joint operation, rather than pay the higher rates of competing publications.

The proposed antitrust exemption goes to this particular point-the legalizing of price fixing and joint sales. Hence adoption has a direct bearing on the "ease of entry" into a newspaper market area. While preserving the weak sister of the joint operation, this legislation closes the gate and pulls up the drawbridge on anyone else who would like to enter the market.

I am not attempting to color this testimony with personal experience but am obviously most familiar with what I have personally encountered. I ask your indulgence while relating what took place in our market area in August, 1964: At that time, as I testified last year in the Senate hearings, the Salt Lake Tribune and Deseret News began what they called "Metro South". It was a weekly newspaper within a daily one, delivered as a part of their regular editions at no additional cost to the subscriber.

The section appearing in the Tribune was identical in every respect, except masthead, to the one disseminated in the News. In other words, one staff did all the selling of advertising and preparation of news and photo content, after which it was produced on one press by one group of mechanical workers.

It had a circulation of 43,000 with a most conducive advertising rate structure. It offered, as its publishers proclaimed, to the "neighborhood store, the suburban branch store, the beauty salon, the local gasoline station, the area shopping center a brand new selling force working for them at most attractive rates.” It was called, "big paper advertising prestige at modest prices."

These businesses are obviously the lifeblood advertisers of the community weekly newspaper and this was obviously a competitive media to ours, sold and produced by already-successful daily newspapers bent on acquiring the market on which we existed.

I will not belabor this since the entire testimony is on record in the Senate subcommittee hearings, but had it continued for a year at the pace it had reached by only its fourth edition, it would have cost me advertising valued at more than $17,000.00 My neighboring publisher to the south, J. Parr Godfrey of the Midvale Sentinel, would have lost over $7,000.00.

These financial figures, gentlemen, are impressive ones to a small newspaper operation and in a year would have meant the difference between profit and loss. I submit that this zoned edition, stopped after only six issues, is evidence of the manner in which joint-operation dailies could eliminate competition if they were given the right to operate in the same way as one-owner newspapers. Their strength with such zoned papers would be far greater than that of a single ownership because their circulation in comparison with the total populace is higher than single ownerships are able to attain.

A similar section being produced by the Denver Post is hurting suburban newspapers there substantially and yet it reaches a much smaller percentage of homes than did the one in the Tribune and News. In addition, the Denver Post has daily competition in the Rocky Mountain News. Which incidentally, gentlemen, is certainly evidence that competing daily papers can and do operate completely independent of one another, the joint ownership argument notwithstanding.

3. An antitrust exemption for newspapers-even limited to joint operationswould inhibit enforcement of antitrust laws in the newspaper field at a time when such enforcement is vital to police vigorous competition in metropolitan areas. For instance, former Assistant Attorney General Donald Turner noted in testifying on S. 1312 before the Senate Antitrust and Monopoly Subcommittee in March that adoption of a newspaper exemption would frustrate one Justice Department goal.

Turner said that he would like to see the Times-Picayune decision overturned. In that case the U.S. Supreme Court ruled that "forced combination" ad sales by newspapers do not violate the antitrust laws. "Forced combination" rates are those, alluded to above, in which advertisers either must use the second paper in order to buy space in thhe dominant one, or the rate for using the second paper is so low as to practically "force" purchase of both.

Turner said he thinks the Times-Picayune case was wrongly decided, and that the same issue raised again would be decided the other way now. "S. 1312 would