NEWSPAPER PRESERVATION ACT THURSDAY, OCTOBER 3, 1968 HOUSE OF REPRESENTATIVES, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2141, Rayburn House Office Building, Hon. Harold D. Donohue presiding. Present: Representatives Rodino, Donohue, Kastenmeier, McGregor, and McClory. Staff members present: Kenneth R. Harkins, chief counsel; R. Frederick Jett, counsel; and Howard W. Fogt, Jr., associate counsel. Mr. DONOHUE. This hearing is resumed for further consideration of H.R. 19123. Our first witness this morning will be John J. Pilch, president of the International Typographical Union from Colorado Springs, Colo. Mr. Pilch, you may proceed. TESTIMONY OF JOHN J. PILCH, PRESIDENT, INTERNATIONAL TYPOGRAPHICAL UNION, COLORADO SPRINGS, COLO., ACCOMPANIED BY RALPH "SCOOP" WHITE, HISTORIAN Mr. PILCH. Thank you, Mr. Chairman. Gentlemen, my name is John J. Pilch. I am president of the 116year-old International Typographical Union, which has its international headquarters, Union Printers Home, and ITU Training Center at Colorado Springs, Colo. The ITU has some 750 local unions in the United States, Canada, and Puerto Rico, and a total membership of 124,000 skilled craftsmen. This is the second time we have appeared before a congressional subcommittee to express our strong opposition to this controversial legislation, H.R. 19123. A little more than a year ago it was introduced in the Senate as S. 1312, the so-called Failing Newspaper Act, and extensive public hearings were held on it before Senator Philip Hart's Senate Subcommittee on Antitrust and Monopoly. Now the bill is before this subcommittee in amended form. It is known as H.R. 19123, and is designated as the "Newspaper Preservation Act." But despite its "new look" and new title, H.R. 19123 basically is still the same bad bill and has the same questionable objectives as the original S. 1312. It should be noted here that H.R. 19123 contains the identical test of a substitute version of the original S. 1312, which was introduced March 17, 1967. The amended version of S. 1312 was proposed on June 19, 1968, but no further public hearings were held. The preponderance of testimony at the hearings was against S. 1312. This was the reason, this witness firmly believes, that it was amended after the hearings were completed, and then introduced in the House because its proponents hope to overcome some of the antagonism against the bill developed at the Senate subcommittee hearings. In this statement we shall feel at liberty to quote from our own testimony, and testimony of others, on S. 1312, because, as we noted, H.R. 19123 and S. 1312, both the original and amended versions, are so similar in text and intent. H.R. 19123's test sets forth at the beginning that it is "A bill to exempt from the antitrust laws certain joint newspaper operating arrangements." Then its intent is further amplified by this statement: DECLARATION OF POLICY SEC. 2. In the public interest of maintaining the historic independence of the newspaper press in all parts of the United States, it is hereby declared to be the public policy of the United States to preserve the publication of newspapers in any city, community, or metropolitan area where a joint operating arrangement has been or may be entered into because of economic distress. As defined in H.R. 19123 the term "joint newspaper operating arrangement" means— any contract, agreement, joint venture (whether or not incorporated), or other arrangement entered into by two or more newspaper owners for the publications, pursuant to which joint or common production facilities are established or operated and joint or unified action is taken or agreed to be taken with respect to any one or more of the following: printing, time, method, and field of publication; allocation of production facilities; distribution; advertising solicitation; circulation solicitation; business department; establishment of advertising rates; establishment of circulation rates and revenue distribution. The original S. 1312 stipulated that it was, "A bill to exempt from the antitrust laws certain combinations and arrangements for the survival of failing newspapers." H.R. 19123 deletes the word "combinations" and adds the phrase "for the survival of failing newspapers." In the original S. 1312 the same privileges were provided for "newspaper combinations" as for newspapers working under a joint operating arrangement. The term "newspaper combination" was defined in S. 1312 as— the merger or consolidation of two or more newspaper publications or newspaper owners, or the acquisition by one newspaper owner, directly or indirectly, of one or more newspaper publications of one or more other newspaper owners through the acquisition of the whole or any part of the capital stock or assets of such other newspaper owners. The deletion of any reference in H.R. 19123 to "newspaper combinations" is a transparent attempt by proponents of the measure, as we noted before, to make the bill more palatable to its opponents. It falls far short of doing that, particularly insofar as the International Typographical Union is concerned. The term "failing newspaper," as used in H.R. 19123, means a newspaper publication which, regardless of its ownership or affiliation, appears unlikely to remain or become a financially sound publication. The specific antitrust exemption spelled out in H.R. 19123 follows: ANTITRUST EXEMPTION SEC. 4(a). It shall not be unlawful under any antitrust law for any person to propose, enter into, perform, enforce, renew or amend any joint operating arrangement if, at the time such arrangement is or was first entered into, not more than one of the newspaper publications involved in the performance of such arrangement was a publication other than a failing newspaper. JOINT OPERATING ARRANGEMENTS A joint operating arrangement commonly has two independent publishing companies establishing a jointly owned third company to handle production, distribution, advertising, and business office functions for both papers. Under another publishing arrangement one newspaper contracts with another to handle production, distribution, and advertising, or one or more such functions. Separate editorial departments are maintained. A third arrangement finds two or more companies setting up a joint operating company and publishing a consolidated paper. At this juncture I think I should stress that the International Typographical Union is not opposed to joint operating arrangements as such. It is true that some of them have cost us jobs because of the attrition that naturally accrues to operating one composing room instead of two. However, the generally prosperous condition and growth of the newspaper publishing industry has taken up the slack. At the present time there is a shortage of skilled craftsmen in our industry. It is the predatory practices and unhealthy monopolistic operations which have evolved from some of these joint operating arrangements to which the ITU is strongly opposed and about which all Americans should be gravely concerned. When newspaper publishers combine their mechanical operations under a joint operating arrangement only for the purpose of effecting mechanical economies, it is quite understandable. I do not believe an act of Congress is necessary, however, to effect such an arrangement. But when they use such an arrangement for the purpose of establishing a business operation that is undeniably predatory and viciously monopolistic they deserve no protection from the antitrust laws or any other statutes. When proponents of H.R. 19123 claim that passage of the bill is necessary "in the public interest of maintaining the historic independence of the newspaper press," and to save failing newspapers from going out of business, they are stretching the truth to the breaking point. THE TUCSON MONOPOLY CASE Let us take the case of the Arizona Daily Star and Tucson Daily Citizen as an example. It was for the benefit of the owner of these newspapers that the original S. 1312 was introduced in the Senate. The two Tucson dailies at the time of S. 1312 was proposed were under duress as the result of a suit filed by the Justice Department charging them with alleged violations of the antitrust laws. The Star-Citizen and Tucson Newspapers, Inc. (TNI), a production facility, through a continuing agreement and concert of action, were specifically charged with controlling and dominating the publication of newspapers of general circulation in Tucson; restraining and suppressing competition in the publication of daily newspapers of general circulation in Tucson; fixing, determining, and controlling the advertising and circulation rates of daily newspapers of general circulation published in Tucson; and pooling the profits resulting from the publication of daily newspapers of general circulation in Tucson. Trial was held but the decision was held in abeyance while hearings on S. 1312 were conducted by the Senate subcommittee. Several months ago a decision adverse to the publishers was handed down, and the case is now on appeal. If S. 1312 had been passed, its retroactive feature would have taken the Star-Citizen and TNI off the hook and the Government would have lost its antitrust suit. HOW TUCSON MONOPOLY FUNCTIONED For a better understanding of how the monopoly established by the Star-Citizen and TNI functioned, I would like to read some excerpts from a letter which appears in the record of the hearings on S. 1312 before the Senate subcommittee. The letter was addressed to Senator Hart and the author was William H. Williams, a representative of the International Typographical Union, who was assigned to Tucson during the long strike of longtime members of the union against unionbusting tactics of the publishers. The excerpts follow: The Arizona Daily Star and Tucson Daily Citizen are owned, controlled and operated by one man, William A. Small, Jr. These two newspapers are published in one production facility, which for some reason or another is called Tucson Newspapers, Inc., with the same Mr. Small owning a majority of this enterprise. Circulation of these newspapers is handled through one circulation department, and the subscription price of both papers is identical, as are all incentives for purchasing one or both papers. Advertising, both display and classified, are handled through one advertising department, with one department head and one sales staff. Rates for advertising are identical, and every potential advertiser is compelled to advertise in both newspapers whether he wants to or not. It is impossible to purchase advertising space in just one of the newspapers. You either buy space in both, or you buy space in neither. The editorial portion of this particular setup is where the farce really lies. Theoretically, Tucson is supposed to have two newspapers with two distinct editorial voices. Such is not the case since Mr. Small bought the Star from the Matthews interests. The editorial policy is set by one individual. It is more noticeable with regard to local news and editorial comment than it is in the case of national or international news and editorials. It is particularly more noticeable when one analyzes what is not printed because of the one-man control than what is printed. It is also interesting to watch and read how news is slanted, whenever necessary, in favor of the newspapers, or persons projects or politicians these papers favor, and again it is at the direction of one individual. There is never printed a pro or con on any subject by the Star and Citizen, and there is no evidence that the two newspapers ever took divergent positions to one another on any subjects of importance. How in truth could they? If one man owns both editorial voices, and seeks to influence his reading community to his line of thought, how, and why should he allow one paper he owns to argue with another paper he owns against his line of thought, when he has at his command the facility to blanket a community and smother his readers with his thinking? |