CORRECTED: Democrat-Gazette, Stephens Media Employees Face Uncertain Future

by Rob Keys  on Friday, Sep. 4, 2009 11:46 am  

Warren Stephens, co-owner of Stephens Media, and Walter Hussman, owner of Wehco Media, may combine forces and seek an end to the newspaper war in northwest Arkansas.

Thursday's surprise announcement of a proposed merger between the Arkansas Democrat-Gazette Inc. and Stephens Media LLC in northwest Arkansas sent shock waves throughout the state.

Perhaps nowhere, though, were the reactions stronger than in the newsrooms of the affected publications.

"There's just a lot of uncertainty," a Stephens employee said. "You can put things together in your head, but you don't really know anything at this point."

Said an employee of the Democrat-Gazette: "There's a bunch of nervous people, a lot of uncertainty, and we supposedly won the thing."

That "thing" was the newspaper war that took place in northwest Arkansas over the last decade. It effectively ended with Thursday's announced merger, which must be approved by the Department of Justice.

Under the proposal, Stephens will attempt to sell The Morning News, its flagship publication in the area. If no buyer materializes, as is predicted,  Stephens Media and the Democrat-Gazette will contribute their northwest Arkansas assets to a new limited liability company. Both companies will have a 50 percent financial interest in the new company, to be called NorthwestArkansas Newspapers LLC. (An earlier version of this story incorrectly reported that Stephens would sell The Moning News to the Democrat-Gazette, and that a jointly owned company would then be formed.)

Under that scenario, Stephens would be responsible for editorial control of the local newspapers in northwest Arkansas, while the Democrat-Gazette will control advertising, business, production and circulation. The Democrat-Gazette also would control the editorial functions of its northwest Arkansas edition.

Mark Fitzgerald, editor-at-large at trade journal Editor & Publisher, said the Justice Department is likely to approve the proposal.

"The Justice Department knows newspapers are hurting, and these sorts of innovative ways to keep them alive are typically looked on favorably," he said.

Fitzgerald also said it's reasonable to believe the merger will be approved "by October or November," and that it can succeed, especially given the track record of Walter Hussman, the owner and chief executive of Wehco Media Inc., which owns the Democrat-Gazette.

"The one thing you have to say about Walter Hussman is that he's a very disciplined guy, and if that's his plan, he's going to stick to it," Fitzgerald said. "And I would say the same thing about Stephens Media, too."

Exactly what would happen after the approval in terms of personnel is still sketchy. The Morning News would be circulated in Springdale and Rogers, wrapped around the Democrat-Gazette similar to the way the Northwest Arkansas Times and Benton County Daily Record currently are circulated in Fayetteville and Bentonville. But employment numbers and responsibilities appear more complicated.

A report posted on, a Fort Smith Web-only publication, cited an unnamed source predicting "radical downsizing" beginning in January 2010. Those types of fears were common among members of both organizations.

"If we won, don't we get first priority?" a Democrat-Gazette employee said. "I don't know right now, so I am concerned. It only makes sense somebody's got to go."

"I tried to wrap my head around it [Thursday], and I basically decided, ‘What can you do, but go back to work?'" a Stephens employee said. "I guess it's good they're at least trying this new business model."

The same employee indicated Morning News employees likely will be forced to re-apply for jobs if the merger is approved. In an interview with KUAR-FM reporter Kelly MacNeill, Hussman said the Democrat-Gazette would have primary responsibility for covering University of Arkansas athletics.

In a joint statement, however, Stephens Media and the Democrat-Gazette said, "All comments regarding production and distribution of the newspapers are premature," and "The Morning News and the Arkansas Democrat-Gazette will both provide coverage of Razorback sports."

The proposed merger comes after both companies suffered significant financial losses during the recession. Both also laid off workers and instituted furloughs in an effort to control costs within the last year, and the Democrat-Gazette debuted a smaller-sized format this week.

In addition to The Morning News, Stephens owns several weekly publications in Benton and Washington counties and in Missouri. The Democrat-Gazette owns the Daily Record, the Times and other weeklies in the area.

The Arkansas Democrat-Gazette's northwest edition had an average daily paid circulation of 37,052 and a Sunday circulation of 44,200 for the 12 months ended March 31. The Morning News had an average daily paid circulation of 31,479 for the same period for its five-county designated market area, and a Sunday circulation of 38,947. Both are down from previous years.



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