Let us protect the two voices in their few remaining cities. DEAR CONGRESSMAN: The members of Printing Specialties & Paper Products Union No. 415, affiliated with the International Printing Pressmen and Assistants' Union of North America seek your consideration as a member of the House Judiciary Subcommittee on antitrust matters on the Companion Bills now before you on the so-called "Failing Newspaper Act", $1312. If this proposed legislation is passed, we believe it will pose a serious threat to the free press envisioned in our nation's Constitution, encourage monopoly and stifle competition so necessary for the public to reach decisions based on diverse viewpoints. Encouragement of mergers has an adverse effect on the printing trades and allied workers. Mergers can cause an adverse economic effect on the advertiser and the consumer. Sincerely, WM. R. KENNY, PRINTING SPECIALTIES AND PAPER Hon. EMANUEL CELLER, Washington, D.C. DEAR CONGRESSMAN: This letter is being sent on behalf of our members urging you to vote against the passage of the Failing Newspaper Act S. 1312 and the Companion Bills now before your committee. The members of Printing Specialties and Paper Products Union No. 447, which encompasses both the New York and New Jersey areas are seriously concerned with the threat to the Free Press, one of our most cherished rights guaranteed under the Constitution. To encourage continual mergers, can only result, eventually in one viewpoint being made available to the public. Again, we urge you to vote against these matters now before your committee and thus guarantee the continuance of diversified opinions being made to the public. Sincerely, Hon. EMANUEL CELLER, Chairman, House Committee on the Judiciary, Washington, D.C. J. H. MITCHELL, President. JOHN B. JARBOE, ATTORNEY AT LAW, Tulsa, Okla., October 4, 1968. DEAR MR. CELLER: I am writing in regard to H.R. 19123, the "Newspaper Preservation Act," now being considered by the Committee on the Judiciary. Although not a member of Congress, I am the Democratic nominee in the 1st Congressional District of Oklahoma, and as an attorney with some background in the workings of the Anti-Trust Laws, I urge prompt and favorable action on this Bill by your Committee so that passage may be possible during the current session. At the Committee hearings which I attended on September 23rd, 1968, I was particularly interested to note the opposition to the Bill by the Department of Justice on the grounds that it would be preferable to allow a weak, unpopular paper to go under and open the field for a strong new entry. While this position may have some validity as a theory, I believe the Department has overlooked several practical problems in its opposition. As newer and more expensive equipment is required, and as wages and production costs increase, it seems unlikely that many investors would take the risk involved in becoming the "strong new entry" in the very market in which another publication was experiencing financial difficulty. Few businesses in any field start out as strong new entries. When a publication fails, the cause is far more likely to be the inability to meet publication costs than the bankruptcy of editorial opinion or subject matter. It would appear that under the present law, the only alternatives open to a failing publication are complete merger with another publication under a single editorial policy, syndication as the acquisition of a chain operation, or failure. In either case there is a substantial lessening of competitive reporting and editorial opinion in the area served by the publication. Thus, although this Bill provides an exemption to the Anti-Trust laws, it is one which fosters the spirit and purpose of those laws by providing an atmosphere for greater competition in a given market. I urge that all expedient attention be given to the passage of this Bill during the current session of Congress. Very truly yours, Representative EMANUEL CELLER, JOHN B. JARBOE. ASBURY PARK PRESS, Asbury Park, N.J., October 3, 1968. DEAR REPRESENTATIVE CELLER: The hearings now being held by your committee on H.R. 19123 (Newspaper Preservation Act) have raised the issue of unfair pricing practices for newsprint as in the testimony of Mr. R. M. Hederman, president of the Southern Newspaper Publishers Association. Your committee would perform a useful public service if it examined the price increase of $5 per ton scheduled by most producers for next January 1st. There is a widespread belief that newsprint prices are subject to influences contrary to the antitrust laws. This arises from the fact that prices rise (or fall) in unison even though costs vary from producer to producer. Publishers recognize that higher production costs require price changes. What nags, however, is the fact that most American and Canadian newsprint producers act concurrently and maintain the same price in what appears to be a controlled market. Publishers never know when the lightning will strike. You will recall that when your committee looked into the matter some years ago, Canadian producers transferred their records from the United States. When the Justice department expressed interest in a uniform $10 rise in 1966, this was rolled back promptly. At that time the State department reported that significant ownership of Canadian production had been acquired by interests in the United States, including some large newspaper publishing interests. Newsprint pricing policies are germane to your present study of the economics of the American Newspapers. Now is the time to determine whether uniform and concurrent price changes for newsprint reflect a free and competitive market, or a market that is artificially controlled at the expense of millions of newspaper readers. Sincerely yours, THOMAS B. TIGHE, HOFHEIMER, GARTLIR, HOFHEIMER, GOTTLIEB & GROSS. EMANUEL CELLER, Chairman, Committee on the Judiciary, House of Representatives, Washington, D.C. DEAR MR. CELLER: Thank you for your letter of October 7. This letter, together with the enclosure, will constitute the statement of the National Council of Newspaper Carriers and of the Metropolitan Routedealers Association in regard to H.R. 19123. I am sorry that I have not sent this until now, but I have spent the last two days in Albany waiting to argue, and arguing, an election case appeal. The National Council of Newspaper Carriers is a voluntary association composed of individuals who themselves are heads of associations of independent routedealers, that is, persons who home deliver newspapers-all newspapers. The Metropolitan Routedealers Association, further described in the enclosed, is an association of such persons in the metropolitan New York area. We represent both organizations, which are unalterably opposed to the proposed legislation. We stated our views on S. 1312 (H.R. 19123 predecessor) in our testimony on the Failing Newspaper Act given on August 9, 1967, a copy of which—as published in the Senate Judiciary Committee hearings-is enclosed herewith. In view of the fact that the House Committee is unable to schedule a time at which we could testify, we ask that our testimony on the predecessor bill be made a part of the record before your Committee. We are confident that the cross-discussion will be helpful to your Committee. Our basic objections to the proposed legislations have not been removed by the sole change from the Senate legislation, that is, the addition of subsection 4(b). For one thing, it may be that practices engaged in by a single entity would not be unlawful under the anti-trust laws, though they might be unlawful if engaged in by more than one entity-and such practices would still be allowable even under the said subsection 4 (b). But the basic ground for our opposition still remains: That the practices legitimized by this Bill might make impossible the existence of an independent routedealer system of readily available distribution for all newspapers, including new newspapers. The new newspaper, in the absence of an independent routedealer system, would find it almost impossible to achieve distribution except at a completely prohibitive cost. The net result of this Bill would therefore be to dry up the channels of access of distribution, which would be violative of the First Amendment. Thank you for your cooperation with us in this matter. FAILING NEWSPAPER ACT WEDNESDAY, AUGUST 9, 1967 HERBERT MONTE LEVY. U. S. SENATE, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY The subcommittee met, pursuant to recess, at 10:25 a.m., in room 1318, New Also present: Senators Moss and Bennett. Also present: S. Jerry Cohen, staff director and chief counsel: Jack Blum, assistant counsel; Peter N. Chumbris, chief counsel for the minority; Gladys E. Montier, clerk; and Patricia Bario, editorial director. Senator KENNEDY of Massachusetts (now presiding). The subcommittee will come to order. Our first witnesses will appear in a panel and if they would be kind enough to take chairs at the table, they will be Mr. Sydney Finkel, Jules Beitler, Herbert Levy, and Theodore Markowitz. STATEMENT OF SYDNEY FINKEL, PRESIDENT OF THE METROPOLITAN ROUTE DEALERS' ASSOCIATION, NEW YORK CITY; ACCOMPANIED BY JULES BEITLER; THEODORE MARKOWITZ; AND HERBERT M. LEVY, COUNSEL Senator KENNEDY. I understand you gentlemen have prepared statements which we have. If you would be kind enough now to review them with us, we would appreciate it. Mr. Finkel, would please identify yourselves? Mr. FINKEL. I am Mr. Finkel. Mr. Beitler, Mr. Markowitz, Mr. Levy. Senator KENNEDY. Thank you very much. Mr. Finkel, I understand you are president of the Metropolitan Route Dealers' Association. If you will be kind enough to start off. Mr. FINKEL. My name is Sydney Finkel. I am representing the Metropolitan Route Dealers' Association, as its president. The MRA is an association of some 300 independent businessmen in the Greater New York metropolitan area. (There are an additional 500 route dealers not yet MRA members.) A route dealer is an independent businessman engaged in the home delivery of newspapers-all newspapers, without distinction-for a service charge to the consumer. I have been an independent route dealer since 1950. For 17 years, I was a newspaper wholesaler. Our association is opposed to S. 1312, which would virtually exempt failing newspapers from the antitrust laws. More specifically, we object to the definitions that refer specifically to the exclusive control of the newspapers over distribution, circulation promotion, and circulation rates. Our livelihoods as independent route dealers come exclusively from the newspaper industry. Thus, we want to do everything in our power, in our own selfinterest, to keep all and any newspapers in business. The New York metropolitan area has a unique history from the standpoint of distribution of newspapers. There are nearly 20 major city and suburban newspapers sold and distributed within a 50-mile radius of New York City, not to mention the special interest and foreign language publications. These newspapers are distributed to the ultimate consumer in five distinct ways: mail subscription, newsstand sales, boy carrier systems, franchise systems working exclusively in assigned territories for individual publishers, and the independent carrier or route dealer system which evolved to serve all publishers. The independent route dealer system originated nearly 50 years ago. It was not feasible to deliver a few scattered copies to area within the purview of their coverage. Ours is the only home delivery system that the publishers do not subsidize. Service charges or delivery fees above and beyond the cover price of the newspaper, which are paid for by the subscriber or customer, make this system unique and have been a part of this industry since its inception. In other cities throughout the Nation, where fewer newspapers exist or where competition is not as keen, publishers often subsidize home delivery or franchise systems by offering lower wholesale rates to their carriers, assigning them exclusive territories, promoting new circulation for them, or offering them additional incentives such as weight and mileage allowances, extra pay for inserting sections, the profit that can be made on the sale of insurance policies, and the like. In some instances, newspapers are home delivered by employees of the publisher. The cost of printing and distributing the newspaper is always in excess of its cover price. Therefore, to minimize costs and to avoid having to pay minimum wages, social security, workmen's compensation, and other employee benefits and instead of "most," please put into my testimony, "a great many" publishers throughout the country, establish franchise systems which style the franchised dealer as an independent contractor. Later on I would like to say a few more words about this. The franchise system has not been practical in the New York metropolitan area simply because it was uneconomical for only one paper to be delivered by one carrier across a vast area. The independent route dealers, by home delivering all papers, became an economically feasible system for all publishers. But, because one independent route dealer would invade the territory of another, with the not infrequent result that both went out of business and large territories were left unserviced, the newspaper publishers set up what was popularly known as the "Mansfield office." And this goes back almost 50 years, too. John C. Mansfield was the circulation representative of the Herald Tribune, JournalAmerican, Mirror, News, and Times. Shortly after the death of Mr. Mansfield, the Danby office was set up, known technically as "the New York Metropolitan Newspaper Circulation Association." Its board of directors was made up of representatives of the New York World-Telegram and Sun, Times, Post, Mirror, Journal-American, News, and Herald-Tribune, plus others in the metropolitan area. The offices dealt exclusively with independent route dealers. They regulated the sale of routes. They listed the geographical boundaries of the routes. They purported to give the dealer an exclusive franchised territory. They attempted to eliminate competition between route dealers. They fixed cash deposits required of route dealers. They approved or denied the sale or establishment of a route, dependent upon the approval of all publishers. Shortly after the death of Mr. Danby, the office was closed; probably this was because of feared difficulties under antitrust law. From such formal control, the independent route dealer business has since become a jungle of entanglements. The control has taken the form of the use of the bludgeoning and overpowering economic power of each publisher, wielded against small independent businessmen. The consequence has been that many route dealers act not in accordance with their own business interests, but out of fear of reprisals and to the dictates of the publisher. Since S. 1312 would permit even greater control by publishers acting jointly, without any limitations whatsoever, we are unalterably opposed to it. We are fearful that the proposed bill's implication of joint distribution of papers by more than one publisher will put the small independent carrier out of business. Gentlemen, our livelihoods depend on the success of the newspapers we deliver. The greater increases in circulation they can achieve, the greater will be the number of papers home delivered. We want them to succeed, but if the exemptions in S. 1312 be granted, these giant publishers, who already have too much power over the small independent businessman, will then have such complete and uncontrolled power that the existence of these thousands of small businessmen throughout the country will completely cease. There are two thoughts I would like to suggest. What happens to freedom of the press when a single dominant news source is the only major source of information in the area? Publishers who control the news outlets, and the news sources, will also be able to shape the thinking of the market area they control. Is this beneficial? But, let us carry it one step further. Assume two newspapers jointly control the distribution, circulation, and the major news sources of a market area. What happens to the advertiser? Does he not become a pawn of the medium that disseminates his advertisements? If this advertiser cannot effectively convey his message to his prospective customers without the services of this now powerful and exclusive outlet to the market, is the advertiser not completely controlled by the publisher? This is not what we think of when we talk about the free enterprise system, the right to compete, and the right to select. At this time, I would like to add what I suggested earlier, a little about the franchise system and boy carriers as operated by the publishers. Frankly, it is my opinion, and I have been in this business a great, great many years, that the little merchant plan and the franchise system is used by publishers as a subterfuge, complete subterfuge, a way of getting around the Wage and Hour Acts and the Child Labor Acts, all the obligations that ordinary businessmen and ordinary corporations owe to employees, and a way of controlling the price and trying to keep it down and having other people bearing the brunt of it. The ordinary franchise dealer, and we can substantiate this, puts anywhere from 70 to a 100 hours a week in. Yet, he is called an independent man and if he takes home anywhere from $70 to $150 a week, depending on the territory he has, he is doing very well. In the case of the boys, they call them little merchants, and again this little merchant has to get up at weird hours, many of them are up before the hours that are usually allotted under child labor acts. They have to do all the collection and all the recordkeeping, and so put in many, many more hours than ordinarily people are led to believe that newspaper carrier boys do. Many of the independent dealers, such as myself, employ some boys. Most of us operate with men. But when we do have to employ boys, we have to make sure that we pay them under the minimum wage law. We pay them. They earn as much or more for delivering 30 to 40 papers a week as another boy does who is operating supposedly under this farcial setup that they call an independent merchant who has to, as I said, keep the records, go out and collect at night, after hours, after the hours that boys are supposed to work because this is the only time they can find many of their customers in. It is as I said before, just a subterfuge to allow a publisher to enhance his own financial position, nothing else, nothing less. I want to thank you for your indulgence. Three of my other colleagues are about to present testimony dealing with more specific aspects of the situation. We will, as a group, be happy to answer any of your questions individually or as a group and to the best of our ability. Thank you. Senator KENNEDY. Thank you very much. Mr. Beitler? Mr. BEITLER. My name is Jules Beitler and I am the executive director of the Metropolitan Route Dealers' Association. Among MRA's major objectives are the establishment of communications among route dealers and the investiga |