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The War and Far More: Hussman in His Own WordsLock Icon

40 min read
Editor’s Note: This is a lightly edited transcript of an 80-minute interview with Walter Hussman Jr. conducted in the Wehco Media Inc.’s boardroom in Little Rock on Oct. 27. The week before, Hussman had announced his retirement as the Arkansas Democrat-Gazette’s publisher by the end of the year. He has been in that post since he and his father bought the newspaper in 1974, when Hussman was 27.

Walter Hussman: In giving the talk at the Arkansas Press Association I looked back to some of the more memorable moments, ones that I remember, some of the things that shaped my career.

I guess really the first thing had to do with motivation. I may have mentioned this, but I had this experience when I was in college and was the returning social chairman, and having a great time. I was thinking about this because I’m giving a talk tonight on Edward Durrell Stone, the famous Arkansas architect. He was from Fayetteville. His parents lived there. His grandparents lived there, he went to the University of Arkansas, and his mother taught at the University of Arkansas. He was there two years, then he dropped out of college, never did get an undergraduate degree. One of the best architects of the 20th century. But he was having a great time partying and having fun, and that’s what I was doing in college too [at the University of North Carolina, where the journalism department now bears the Hussman name].

Anyway, this journalism professor, Walter Spearman, called me down to his office and he said, “You’re not really applying yourself very much; you’re not getting really great grades. And it seems like your focus is probably elsewhere. Maybe it’s fraternity life or whatever,” he said, “but you’re not really working that hard here. But you shouldn’t worry. You can probably graduate and go back to Camden and work at your dad’s newspaper, play golf every day and hang out at the 19th hole. You’ll be set, and you won’t have to worry about it.”

So I walked out of his office and I thought, wow, that’s a real wake-up call. That’s not what I want to do with my life.

Kyle Massey: Was that reverse psychology?

WH: Oh, absolutely. Yeah, really successful. As I say, he planted a real burr under my saddle. That was sort of a turning point, and I had another turning point in high school. I went away from home for three years going away to boarding school in New Jersey.

KM: That’s a beautiful campus up there at the Lawrenceville School.

WH: Yes, that campus was designed by Frederick Law Olmsted, the famous landscape architect. I kind of got involved with the wrong crowd there and started doing some really stupid things. I almost got kicked out of school. But I had a teacher there, a guy named Walker Blanton from North Carolina. He’d been Phi Beta Kappa and had gone to Columbia and gotten his master’s in history, and his first job was in Lawrenceville. As a teacher, he was unbelievably popular. The year I graduated was the first year more Lawrenceville graduates went to North Carolina than to Princeton, the school that’s just five miles away. It started kind of as a Princeton prep school, but the year I graduated 11 kids went to North Carolina and 10 went to Princeton, so I think that had a lot to do with Walker Blanton. But he really kind of sat me down and straightened me out. It’s really wonderful and I still stay in touch with him. And he teaches down at a university in Florida. That was another pivotal moment. Then I went into business school, and I was kind of shocked that I even got into Columbia Business School. I may not have gotten in except for the Vietnam War; there were fewer kids applying than normal. But that was a really great experience, because I learned a whole lot. And, it’s interesting, they were really liberal about allowing you to take courses outside the business school in getting your MBA. I took maybe three different courses in law school, including one on contracts, which was really great.

KM: I’m sure that served you well later.

WH: It sure did, and people would often say, I can’t believe you read these things. People just have their attorneys read the stuff. When we had the agreement to buy the Gazette’s assets, you can imagine how many pages that was. I read every page. And then I sat down with our attorney. So yes, that was important. I took a couple of courses at Columbia’s journalism school, so that was a really formative experience, too. And then I was going to try and figure out where to get a job. It was a time of these unbelievable opportunities. I interviewed at Time Life for a job running their television stations in South America. That sounded pretty exotic. Then I went and interviewed at Businessweek, Fortune and Forbes.

KM: You took the job at Forbes, as I recall.

WH: Yes, it was fascinating how different they were, because Businessweek had about 400 people on their staff, you know, with three people covering the automotive industry, two people covering the steel industry and so on. The staff was really siloed into one kind of thing. Then I interviewed at Fortune, where they did these long, ponderous, deep pieces. They had about 100 people on their staff, and as I said Businessweek had about 400. Then I went to Forbes and they had 25 people in their whole editorial staff. I thought, I’ll probably learn a lot more on a smaller staff like this than I would with 400 or even 100. Forbes focused on shorter pieces, and that was a great experience. Every two weeks, because the magazine came out every two weeks, right after it came out the next day we’d have a meeting of all 25 of us, and you had to have two story ideas. If you didn’t have two story ideas, you were in hot water. So you always had to prepare for these meetings. And so I remember I had had two story ideas that actually became cover stories. I wasn’t the lead writer, but I helped out. One was on what was going to happen to the tobacco industry with a new ban on television advertising taking effect. That was a cover story. And then the other one was about the change in fashion, about the midi dress, and how that was changing the fashion industry. I don’t know why I came up with those ideas, but it was a fascinating experience. Malcolm Forbes was still alive, and he was a very colorful guy. And he had a townhouse that backed up immediately to the building there on Fifth Avenue where Forbes magazine was. You could literally walk directly from the office building into his townhouse.

The second week I was there, he said, well, you’re going to come to the townhouse lunch. What’s a townhouse lunch? Well, you’re going to go in there and be with maybe two or three people, and you’re going to be told in advance who’s coming. It might be the head of U.S. Steel, or it might be David Rockefeller; it might be some other big name. So anyway, you need to really get prepared to ask some intelligent questions. So we go and sit down in the living room, a beautiful living room with beautiful art and everything. Everybody’s having a bloody Mary, or maybe a screwdriver. I’d never drunk at lunch in my life, and here I am in my first job out of school. The first course was vichyssoise, and I didn’t even know what it was. And we’re having wine, and I guess that Malcolm felt that if these guests drank a bit, maybe they’d loosen up and talk. After lunch, we headed back to the living room to have some port. When I got back to my desk, I couldn’t even work because I’d had too much to drink. It was crazy, but it was fascinating just listening to some of these guys. 

I also remember I had a tape recorder, which was like this big back in 1970 [Hussman’s gesture suggests a foot-wide rectangle]. It had a microphone sticking out of it, so it wasn’t like bringing a little device out of your pocket. And I went to interview the guy who was the head of Westinghouse. And this 23-year-old reporter comes in asking to record with this thing. I’m sure it scared the heck out of him.

But, you know, I have a sister who is 12 years older and a sister who is eight years older. And really, I was just a war baby. I mean, my parents thought they were finished having their family, happy with having two daughters. Then I came along. So anyway, they both married. One married an attorney. [Former 8th Circuit of Appeals Judge] Richard Arnold married my older sister, and my younger sister married an architect. They weren’t really interested in the family business.

My dad was 40 when I was born, so by the time I was working in New York he was 63. And he was really thinking about retirement because he loved to travel and my mother loved to travel.

So he was kind of encouraging me to think about coming back.

KM: As I recall, you resisted that.

WH: Yes. Gosh, I was single in New York, 23 years old, and just having a ball. Camden wasn’t that appealing.

But my dad said if you want to stay up here and work at a magazine, or be a writer, whatever you want to do, I want you to do what you want to do because it’s your life. You need to decide that, he said, but I’m getting towards retirement age, and we don’t really have anybody in the family to take over the business. So if you decide you want to stay in New York, we’ll probably sell the business. But you might want to consider an alternative. That’s just coming back to Arkansas for a while and trying it. If you don’t like running the business, you can always go back to New York and get another job. But if you don’t try it, you may have lost this opportunity forever. That option might be completely gone. So I came back.

KM: I think you once told me that there were a lot of business aspects that you found a lot more interesting than you expected.

WH: I was working just as my dad’s assistant, just trying to absorb as much as I could and learn as much as I could from him. A situation came up with the man who had run the Camden News for many years. He’d used company funds to build a swimming pool in the backyard of his house. The accounting people figured out what he had done, and my dad said we’re going to have to fire him. That was a pretty tough day. My dad said, well somebody’s going to have to run the Camden News. Maybe you just need to run it. You can be the acting manager, until we find somebody permanent for the job. And he put me in charge of finding a new manager, giving me an incentive to get busy.

So I was running the Camden News, but I didn’t  know anything about selling advertising or printing or anything, really. So I got Paul Smith, who was selling ads down in El Dorado, to come up to Camden to help me, which was the best move I could have possibly made. [Smith worked with Hussman for more than 40 years, retiring in 2013 as president of Wehco Newspapers Inc. He died last year.] And so Paul and I started working together. And then we had an advertiser boycott at the Camden News. At that time, we bought a King Air company plane because operations were getting spread out and we had these cable franchises in places like Vicksburg, Mississippi, and Longview, Texas. It was more efficient to get to these places on an airplane. But advertisers protested that we were charging too much for advertising, so we had to deal with an advertising boycott.

The press we had in the Camden News would literally shake the building when we printed the papers. It was a flatbed press, moving back and forth, and you got all this momentum, then it stopped to go the other way. At the same time we had a really good printing press, the largest offset lithography press installed in Arkansas at the time, at El Dorado, installed in 1964.

So it was only six years old, a pretty good press, so we decided to print the Camden paper in El Dorado. That’s when I started to realize that as a businessman, you have all these kinds of decisions to make in a limited amount of time and a limited amount of talent and a limited amount of resources. You had to be pretty resourceful and creative and thoughtful about how you did that. So there was actually a lot of creativity involved. And I had previously thought that all the creativity was going to be on the journalistic side. I had expected to be involved pretty much in the news and editorial side, but I really got surprised at how interesting and challenging and creative the business side could be. That was a big surprise to me.

I remember in business school, the most interesting things you’d have were case studies on companies, particularly when a company that had not done well and was struggling, and somebody would come in to turn it around. That was fascinating. So when the Arkansas Democrat came up for sale, if there had ever been a turnaround candidate, the Democrat was it. I thought this would be a really interesting challenge to get involved with.

KM: Was that purchase something you and your dad thought through together?

WH: Well, I was much more enthusiastic about it. He was pretty reluctant. Think about it; he was 68 years old in 1974. When you’re 68 years old, you may not be looking for some real long-shot challenges. That’s definitely what this one was. But he said, OK, I think we can do it, but we’ve got to be real disciplined about it. Otherwise, if we get in there and it doesn’t work, we’ll just be throwing good money after bad. We’ll give it three years, he said, and see if we can get it in the black. If not, we’re going to have to figure out some way to get out. That’s what we did. So yes, I was really excited.

I was 27, and I’d been in Hot Springs for a year with the Sentinel Record and had hired Mike Masterson to be the editor. I had seen the paper get so much better with him as editor, and that was exciting.

That probably gave me some false encouragement for the Little Rock paper’s future. See how much better a paper can get quickly with a good editor. I wanted to hire one at the Democrat.

KM: Who was the Democrat’s editor when you bought the paper?

WH: Let’s see, I think Jerry McConnell was the managing editor. I can’t remember if Bob McCord was the editor. Actually, Jerry was the top editor. And I remember when I moved here, there was a union organizing attempt in the newsroom, here and at the Gazette. The first challenge was that we had to win a union election, or we’d have started out even further behind [in competing with the Arkansas Gazette, long Little Rock’s dominant newspaper]. And I still remember it went 34 to 15 to decertify. At the Gazette, the vote was 50-50, and management wins in the event of a tie. Which was fortunate. But you can tell by the numbers 34 to 15 versus 50 to 50 that we had a far smaller staff. The Gazette had 100 people voting, right, because they had a lot more revenue. We had 49.

But we were encouraged to compete because a lot of people in the communities felt the Gazette was kind of arrogant, and some people didn’t like the fact that it was so liberal when we were more conservative. I thought, at least people are going to be more business-oriented, more business-friendly. And people like Billy Rector [the late Little Rock insurance industry leader and founder of Rector-Phillips-Morse Inc., now RPM Group] were very enthusiastic.

All of a sudden, we started getting tons of advertising, more than the Democrat had gotten before. But the interesting thing was that the more advertising we got, the more money we lost. What is going on here? This is crazy. That’s not the way it’s supposed to work. I found out our variable costs were so high, because we had a number of unions, that the more business we took, the more we weren’t covering our variable costs.

After the first year, we’d gained circulation because people thought, gosh, it’s under new ownership, we’ll give it a try. But we had to solve our economic situation, and we turned inward.

We saw a danger of never making a profit. So from 1975 to ’77, we had every one of the unions here have an [National Labor Relations Board] election, and every one of them decertified. So we ended up with no unions.

When we bought the paper, we took all the labor costs for the composing room, the plate making, the press room, everything, and we divided it by the number of pages. Our labor cost per page was over $100 a page. With no unions, that went down to $20 a page. Wow. So we made a dramatic change in the cost structure of producing the newspaper. And so at that point, in 1977, our three years were up. We were actually reducing the losses each year, but we still weren’t profitable. That’s when my dad and I sat down and he said, hey, valiant effort, good try. Now he’s 71 years old. That’s when we tried to do the [joint operating agreement] with the Pattersons. [Little Rock’s Heiskell-Patterson family owned the morning Gazette, which was led by Publisher Hugh B. Patterson at the time.]

KM: Much has been made about the missed opportunity that they had there because you basically offered something like a 90-10 split, right?

WH: First we tried to talk to [Patterson] about it. We said look, you all run the whole operation, and we’ll keep a newsroom and an editorial page. So then I thought we should do something to get these people interested. I asked a Washington attorney to give me details on every newspaper JOA in the country, something like 26 of them, and I read them all. I was determined to offer the Gazette the most profitable JOA in the country for the bigger newspaper. So I said, here’s how much money you made last year, whatever that is, and we didn’t know what it was, but up to that number, you get 100% of the proceeds. After that, we want $300,000 a year, because we had a $300,000 note payment, a 20-year note to the previous Democrat owners, and our interest and principal payments were $300,000 a year at 7% interest. I said once that $300,000 was covered, the Gazette would get 90% and we’d get 10% of the profits. So the offer was they’d get 100% up to their previous profit, then we’d get the next $300,000, and then accept a 90-10 split. There was no JOA in the country that was so lucrative for one of the partners. And they turned it down.

KM: Do you think they even considered it seriously, really?

WH: I do, but I think they made a gamble, and that a lot of people might have come to the same decision they did. They thought the Democrat was going to go out of business, so we really don’t need to do this. Why bring these people along and incur the cost of having two newspapers when we could have just the one? We don’t want to fool with this. And they were just about right, because when they said no, we went to our attorneys in Washington to start asking how do you shut down a newspaper? I mean, what are the legal steps you have to go through? What are the costs in severance and liability and everything? And we really looked at closing down. At that point, my wife, Ben, and I decided to take a five-week sabbatical. And so in August 1977 we traveled down to South America and over to Africa, then back through Europe. And it was really amazing to just get away from the office. You start to think, and this was beneficial. In fact, I came back and decided that was so beneficial we put in a five-week sabbatical for all of our newspapers. So after 10 years, you had to take a five-week sabbatical, to get away from the newspaper and recharge your batteries thinking about your job, your future and your family.

KM: And when you came back, did you have something in mind?

WH: I thought maybe instead of closing the paper, we ought to go around the country and see if anybody’s ever been in this predicament that we’re in and see if they’ve ever gotten out of it. So that’s what we started doing. I went to Chattanooga, the one place I could find where there was No. 2 newspaper that had become the No. 1 paper, one of the most fascinating business stories I ever encountered. The guy who owned the No. 2 newspaper, Roy McDowell, had started out in the corner grocery store business and ended up with 77 corner groceries in Chattanooga. And he would print 1,000 flyers for each store and distribute them in the neighborhoods. Pretty soon he said, I’m printing 77,000 of these things, I might as well turn it into a shopper. He started taking advertising from other people and started making pretty good money with the shopper. So he bought one of the multiple newspapers at the time in Chattanooga, and eventually passed the Chattanooga Times, the old Sulzberger family paper [owners of The New York Times]. In the JOA, he was the controlling partner. Anyway, I went to see him, and then went down to Dallas, where the Dallas Times Herald had gone to a morning edition throughout the state except in Dallas. That made it much more competitive trying to get news out in the state. Then I went to Winnipeg, Canada, where they had free want ads and had been very successful with them. It’s generating more revenue, more circulation, etc. So we started accumulating all these ideas. Then I went to my dad and I said, “Look, our family has built a really successful media business since 1909, but this is a spectacular failure we have here in Little Rock. But I think we ought to give it one last try and just try everything that we’ve seen that other people do and be successful. If it doesn’t work after 90 days or so, then we can throw in the towel. But we could say at least we tried everything.” We really had tried to be a more cleverly edited alternative to the Gazette, not really a substitute. But we had to make people make a choice. We had to have as much in our paper as they had, as much news as they have, as many ads. We’ve got to cover as many meetings as they cover. 

KM: That led to the Democrat going head to head with the Gazette with a morning edition after having been an afternoon paper.

WH: Yeah, we needed something to promote. So we had to have more pages, we had more news. That’s what we did on that. 

KM: How did Bob Starr [newspaper wartime editor John Robert Starr, who died in 1990] fit into the revitalization plan?

WH: First I went to McCord, and I think Bob was maybe working on the editorial pages, and I told him I’d gone to Chattanooga or something, but Bob was still with us. And Bob went over to Chattanooga and thought maybe we need a second opinion. I had a lot of respect for Bob’s thinking. Anyway, I said we’re gonna have to hire a whole lot more people in our newsroom; we’re gonna have to challenge the Gazette.

He said, well, I don’t know. That’s a huge undertaking, and I’m not the guy to do it, basically.

So I thought, well, we have to find somebody to do it. He disputed this later, but McCord actually suggested Bob [Starr] as an alternative. Bob had been head of the Associated Press here, so I went to see Bob, who was then getting his Ph.D. over in Knoxville. Bob had a lot of things that recommended him. No. 1, he’s a brilliant guy. People don’t realize the intelligence he had, but he went to two colleges simultaneously, Southwestern and Memphis State or whatever it was called. His brother was in the CIA in India, and actually we met on a trip and I asked how they both got to be so smart. It turns out they just read voraciously as children. Rudyard Kipling and things when they were kids. Anyway, Bob knew Arkansas thoroughly from being with the AP here, and he had gotten crossways with the Gazette somehow. I may have that somewhere in my files, but I’ve forgotten what it was. Anyway, he didn’t have real good feelings towards the Gazette. And Bob was extremely competitive. I thought we really needed a competitor, somebody that gets up in the morning wanting to beat the competition. And if they get up in the morning, and they look at our paper, and they look at their paper, if the Gazette beat us on a story, it makes them furious. And he’s gonna get to the office and he’s gonna kick some tail because we got beat.

So that was one change, getting a new editor, and we started printing in color, using our press in Hot Springs to print color in different sections. At first we couldn’t print color on the front page.

KM: But you did have the first color front page in Arkansas.

WH: Yeah, that’s right. That’s because we got new presses when we moved over to the Terminal Building [at 500 President Clinton Ave., where the Democrat was printed from 1985 until it acquired the Gazette’s relatively new press building just south of the Clinton School of Public Service in the newspaper war victory of 1991]. 

KM: Was there a time when you saw a glimmer of possibility for profit at the paper?

WH: What happened is the free want ads just started working fantastically. We had under $800,000 in classified revenues in 1978. And we introduced free want ads in December 1978, the anniversary of the day Pearl Harbor was bombed. We didn’t want to hire an expensive ad agency, so we used Dick Langford, who was probably the most creative advertising person in Little Rock. He was kind of a one-man show, and we got Willie Allen as a photographer, and we took Dick up to Winnipeg, Canada, to look at a free want-ad situation. After we started the free classifieds, revenue kept going up and up and up. Then we went to morning [challenging the morning Gazette head to head], and our circulation started going up. It was really encouraging, but we’d hired all those new people in the newsroom, and we were printing all of these additional pages, and our losses went way up. The following year, losses went down and they went down and they went down. Finally, in April of 1984, we made our first profit. After everything, depreciation and interest on that 20-year note, I think we made $42,000. Maybe more than that, but far less than $100,000.

But here we were, the No. 2 newspaper, and yet we were making money. So the whole argument that you can’t have two newspapers in a community because they can’t survive had to be re-evaluated. We had proved, frankly, because our cost structure was nonunion, was a lot less. The Gazette still had several unions. But that didn’t mean it was impossible for them to change their cost structure. But we had rebutted the idea that the town couldn’t support two papers. So that was encouraging, too. And then of course, that was when we were sued.

The Gazette sued us for unfair business practices, claiming that we were engaging in predatory pricing.

KM: Yes, you guys won that case. It was a big deal at the time.

WH: There were a few moments in that trial that were really fascinating. One was, Roy McDonald came over from Chattanooga to testify.

He was being cross-examined by Steve Susman, who was a high-powered attorney out of Houston. Texas Monthly had interviewed him and asked, “Steve, you’re representing the Hunt family and charging them $600 an hour.” This was not our case. “You’re charging $600 an hour when the top attorneys in Texas get $200. Now, how do you justify three times as much as the top attorneys in Houston and Dallas?” He said, “I’m just three times as good as they are.”

He had won a big antitrust case [Corrugated Container Antitrust Litigation Anchor Hocking Corp., et al. v. St. Joe Container Co., et al., Edwin A. McCain, et al]. So he made a lot of money and he had acquired a reputation as an antitrust attorney. Anyway, he’s cross-examining Roy McDonald, or somebody on his team was, and they kept saying, “Now, Mr. McDonald, you didn’t do free want ads in Chattanooga.” He answered, “I wish I thought of that.” They said, “You didn’t try to run more pages than the other paper did?” He said, “Well, not every day, but I wish I’d thought of that.” They said, “We understand that the Democrat said that if Dillard’s spent $500,000 a year with them, they could run all the advertising they wanted, an all-you-can-eat program. You didn’t do anything like that?” And he said he wished he had thought of that. I recall it was the woman attorney who then asked, “But Mr. McDonald, that’s not on your rate card [a document provided by a newspaper detailing its rates for advertising].” He said, “Honey, I want to tell you something. You can’t meet a payroll with a rate card.” The whole courtroom erupted [with laughter], including the jury.

Steve Susman was cross-examining me. And he said, “Now you told me in your deposition, didn’t you Mr. Hussman, that the Chattanooga paper published more pages than the Chattanooga Times?” I said yes. So he handed me a document, and said these are notes that were given to you by Bob McCord, who went over to Chattanooga, and then wrote these notes. He said, “You just tell me where in all these notes where it says anything about publishing more pages. Just tell me. You tell me!” getting very dramatic.

And I said, “Yeah, it’s right here.” It got real silent. “The notes said 375 FP vs. 290 T, or whatever it was. That meant 375 pages a week for the Free Press vs. 290 for the Times.” Like Phil Anderson [the Little Rock attorney representing the Democrat] says, “Never ask a question of a witness unless you know the answer.”

And the second thing is always know your documents. If it says something on there and you don’t know what it means, find out exactly. I mean, that was kind of a turning point in the trial. It was like the air just kind of went out of the room.” Anyway, it was an interesting experience and we won.”

KM: Did that set the Gazette on its path to sell to Gannett? [The Gannett Co., the nation’s largest newspaper chain, bought the Gazette from the Patterson family months later, paying $51 million and assuming $9 million in debt.]

WH: Yes, yes. My theory, which may be wrong, was that the Gazette, being the dominant paper, had continued to lose market share. So they were losing in the marketplace. And they thought, well, we can try to regain in the courtroom what we’ve lost in the marketplace. And when that didn’t happen, I guess it made them decide to sell.

KM: Well, Gannett’s ownership of the Gazette presented a new set of challenges for the Democrat, right?

WH: Yes. That was, that was tough. [Gannett CEO] Allen Neuharth came to town, remember, and stayed at the Capital Hotel, and took a limousine three blocks to the Gazette Building [laughter]. I still remember seeing him and may have a recording of that from the news. He said they were here to use their considerable financial resources to prevail in this market. I thought, “Oh, boy.”

We had been having advertising competition between the two papers, competing as hard as we could to get advertising, and working on trying to build circulation. We said, let’s kind of completely change now. There’s not gonna be advertising competition. This can be a circulation competition. So we’re getting ready to go into a circulation war, kind of like they had in San Francisco. They had a real circulation war out there.

A Harvard Business school adviser, Steve Star, said you need to get as many subscribers as you can, and they’re going to try to do the same thing. He said if you go to some home and they don’t have enough money for a subscription tell them you’ll take a can of tomato soup. Anything for a subscription. We had never been in a circulation war. That is the most unprofitable thing you can do because the pricing on advertising is set so there will be a considerable profit margin on advertising. But circulation pricing is set to cover the newsprint and the ink, and maybe some or all of the carrier costs. So you cut the price, and all of a sudden, you’re losing money on every subscriber. So, holy cow.

And so Steve said there’s no free movement over contested terrain, which is actually a military term. And it means you can’t let the Gazette do anything that you aren’t going to be bold enough to match. So you know, like these crazy radio giveaways, they’d give away a Thunderbird so we’d give away a Porsche. With these crazy contests, which we’d never done, losses just skyrocketed. And that was their plan, and I think they thought, hey, this guy’s finally gotten the paper to where it’s profitable. During the Gazette trial, all the financials got traded. Gannett thought this guy has been at this thing for 12 years and he’s finally got a profit. We can push him into deep losses again and he’ll get so discouraged he’ll throw in the towel. Right? 

KM: But you were getting close to them in circulation by then, right?

WH: Almost. We almost caught the Gazette in Sunday circulation before Gannett bought it. It was like 157,000 for the Gazette to 155,000 for us. We’d gotten within about 2,000, when we had been 40,000 or 50,000 behind when we first bought the paper. But what the Gazette did, which was really smart, before they sold to Gannett, they started aggressively discounting their circulation, that six months prior to the sale, so they could show Gannett, OK, our circulation is way up. And we had stopped discounting because we thought, man, we’re going to be profitable. We made a big mistake.

By the time Gannett bought it, the difference was back to 12,000 or something. Gannett thought, you know, we can build on that. Really, we went through this for about three years. And literally, the only thing that gave us enough encouragement to keep going was to say we can’t look at the bottom line; we’ve got to look at market share. And so the one market share we could measure was circulation. We didn’t know what they were charging for advertising, but we could look at the quarterly circulation figures filed with the Audit Bureau of Circulation.

So we had to gain share on them, and as long as we were doing that, and we felt we could afford the losses; we’re going to keep going.

And that’s what we did. We kept gaining and after three years, I think Gannett was so frustrated, they thought this thing was gonna be over by then. And they’re still losing, as it turns out — we didn’t know this at the time — but they were losing more money each year than they had the previous year.

They said, we’ve got to put this thing in fast-forward. So that’s when they cut their price from $1.70 a week to 85 cents a week. We calculated that was gonna cost them an extra $7 million a year in losses. And if we match them, it’s gonna cost us $5 million a year in losses. Extra losses. We couldn’t afford it. I mean, we were losing a lot of money. We couldn’t afford another $5 million a year in losses. Well, what are we gonna do?

OK, now we’re going to crisis mode. What are we going to do now? Well, we did that same thing. They had gone with free want ads by this time, too. So what to do now?

So the idea was, OK, let’s expand our hours. Let’s take free want ads on Saturday; let’s take them till 9 o’clock at night. Let’s have enough staff people on the phone. We had to have great customer service, because we can’t beat them on pricing.

We didn’t have that idea when we walked into the room for that meeting, and we still didn’t when we walked out. But we asked, how much more can we lose? Maybe a million, or $2 million max. 

KM: There’s an idea that WEHCO was able to cover some losses by squeezing the profits of your cable TV operations. Was that the case?

WH: No, we couldn’t do that, unfortunately.

We couldn’t get access to our cable TV business because of our loan agreement with the Bank of New York. We couldn’t transfer money over to the newspaper. But all the other newspapers were profitable enough to let us supply enough money to hang in there. All of our newspapers used to be pretty profitable, so we were putting all of our profits into the Democrat.

But in thinking about what to do in another meeting, we decided to put it all into sales.

We were going to get more sales with door-to-door, telephone, kiosks, all those things. And it turned out we spent another $2 million on sales, but that was much more productive than spending another five or $7 million on cutting prices. They were cutting prices, and running, you know UALR cheerleaders on the front page in Spandex, which just horrified Gazette readers. You remember that. 

And I thought oh, well, no wonder they’re charging half as much. It’s not as good a paper as it used to be. We would do focus-group research with Gazette-only subscribers, Democrat-only subscribers, those who read both, and those that subscribed to neither one. In groups of Gazette-only subscribers, we asked what would it take to get them to subscribe to both papers. We’d ask the Democrat-only subscribers, what it would take to get you to switch to the Gazette? Nothing. I’m not going to because I like the Democrat. We get the Gazette people in there. What could it take to get you to switch to the Democrat? Nothing. I love the Gazette. I’m not switching. Well, surely there’s something that can be done that gets you to switch to the Democrat? Well, if they threw the paper on my roof every day for about a month, I might consider switching. Or if they just changed the paper so completely and I didn’t recognize it anymore. Then I might consider switching to the Democrat. So you see what the Gazette did. They did something we couldn’t do. They changed in a way that gave the Gazette’s readers a reason to try us.

KM: The Democrat at that time was promoting itself as Arkansas’ newspaper. 

WH: We used to say, “Arkansas’ largest newspaper back before Gannett bought it.” But that wouldn’t work anymore because Gannett could always print more pages. So we just thought, wait, let’s drop “largest.” We were Arkansas’ newspaper, and that was comforting for us, but most research shows that people really couldn’t care less who owns a newspaper. They just want to know what’s in the news. The facts. 

KM: Well, there’s no doubt that since you won the newspaper war, newspapers have been in serious general decline. There’s been an enormous drop in newspaper readership in the internet era, and you resisted putting the Democrat-Gazette’s report onto the internet for free. And eventually you turned to technology as a new avenue for subscriptions. Giving iPads to those who subscribe to keep as long as they keep up the subscription.

WH: Well, yes, I’ll tell you what. One of the greatest aha moments I’ve had in my whole career came the day we closed the deal with Gannett.

It’s a weird deal. You’re on the telephone line the whole time until the money’s transferred and it’s confirmed that the money’s in the bank account. So we’re sitting over at [Little Rock law firm] Williams & Anderson, and it may have been the day Bill Clinton announced for president. I was sitting at the law firm and I could hear him down at the Old State House, when they say it’s closed.

I said, OK, I want to see the financial statements, because I hadn’t been able to look at them because there was a chance the Justice Department wouldn’t allow the sale if anybody else had been willing to buy the Gazette, on the idea that it wouldn’t have been fair for us to see these financials.

But now I could say bring me these records, and I looked at the balance sheet, and I looked at property, plants and equipment, before depreciation and the original cost of what all the assets and costs were. The trucks, the computers, the land, the buildings, every asset they had, was more than double what we had. And I looked over the income statement and I thought, gosh, last year they spent $10 million more than we spent. What about the previous year? They had spent $10 million more that year. And I just thought, how is this possible? How did we gain market share when they had over double the amount of assets that we had and were outspending us by $10 million a year?

I sat there and I had this kind of epiphany. The only thing it could be was the people we had at the Democrat. And what was so special about the people at the Democrat? Well, I think that what was special is that they thought if we lost, they’d lose their jobs. I think they figured they were just going to get transferred. I think that was one of the things, plus we had incredible loyalty. There’s no other way to explain it. It has to be the people, you know, working at 90% of their capacity instead of a normal 70% of capacity. It’s a huge difference. That was just my conclusion, that people are the most important assets you have. It’s not your printing press. It’s not your computer system and everything. And it also confirmed what Sam Walton had always said, you’ve got to be a lower-cost operator.

When the Gazette went out and bought a new front-end system for the whole newsroom, they spent $1.2 million. We couldn’t spend $1.2 million. So we went to the Raleigh News & Observer while they were getting a similar type of million-dollar system. So we got their old system and bought it for $50,000, right? Well, it was so much better than what we’d been using. We brought it over here. And we used it every day in the newsroom.

And we had enough computers to do the Hot Springs Sentinel Record, too.

KM: When you bought the Gazette’s assets after Gannett decided to sell, we got a new computer system very soon after that.

WH: Those were the machines they’d been using over at Third and Louisiana [the old Gazette Building]. 

KM: As to your retirement, you said that age 75 was sort of this mark for you. And, of course, Eliza [Hussman Gaines, Hussman’s daughter who is now executive editor] is in the wings here. Can I ask you directly, will she be the new publisher?

WH: We’re gonna make an announcement on that question, but at the end of the year.

KM: All right. Fair enough. What kind of job has she been doing?

WH: Well I think she’s doing an excellent job, but I’m her dad. I’m biased. But you can ask [Wehco CEO] Nat Lea or [Managing Editor] Alyson Hoge.

KM: You’re planning to stay on as Wehco chairman, but would you go over your thinking in this retirement as publisher?

WH: Well, you know, I think there are exceptions to 75. I mean, I feel like mentally I’m still pretty sharp. Physically not as good as I was five years ago, but I don’t have any major health issues, so I could be an exception. I made that comment last week and Saturday I was playing golf with Bill Dillard, and I think he’s going to be 77. So I told him he’s definitely an exception. But I don’t want to be an exception.

KM: How will you spend your days?

WH: I’ve got a lot of things that I want to do. I don’t want to go sit around, play golf all the time. We belong to a couple of golf clubs, and that’s what a lot of retired people do, they hang around and play golf. I like golf, but that’s not what I want to do mostly. I want to stay engaged doing things I feel called to do. And one of them is to try to advance this idea of more impartiality, objectivity and fairness in news reporting. I thought we’d made a pretty good start on that at North Carolina [where a $25 million pledge put the Hussman name on the University of North Carolina journalism school]. Then the controversy blew up. So it’s been like two steps forward, one step back, but now I think we’re making some pretty good progress again.

KM: Have you reflected on that controversy involving Nikole Hannah-Jones? [Hannah-Jones is Pulitzer Prize-winning reporter who wrote on racial injustice for The New York Times Magazine and created its landmark 1619 Project, detailing a history of systemic racism in U.S. history. She was hired by the UNC journalism school but questions swirled about a grant of tenure. Hussman was one benefactor who discussed her hiring with university officials, drawing controversy. She eventually took a professorship at Howard University in Washington, D.C.]

WH: Of course, I had a lot of concerns about that. And I think I expressed this in one of the emails trying to express why I was troubled by it, and I went back to Times v. Sullivan in 1964, when the Supreme Court defined actual malice. It wasn’t something in your heart or in your mind. It’s publishing something with a careless disregard for the facts, or you knew it was wrong and you published it anyway. When I read that [Northwestern University history professor] Leslie Harris had been consulted by a fact checker for The New York Times, and she told them this was wrong, it wasn’t true, they published it anyway. She [Harris] is a Black historian who has written books on slavery, and they asked her to fact-check this. Then they ignored her.

[Harris has written that she objected to a statement that preserving slavery was a central reason for the American Revolution, and that she pushed back. She said she found other parts of the series quite worthy.]

Now, you can’t libel a dead person; you can’t libel the founding fathers now, but that’s just not good journalism. That really troubled me, and in looking at the situation with Nikole Hannah-Jones, maybe she didn’t know they had gone to Leslie Harris and heard her objections. Maybe this was a decision the editors made. I don’t know, but that was really maybe the most troubling thing.

But that kind of put me to the test to see if I can really live by my principles. One is to love your adversaries, you know. And it’s a lot easier to do when you aren’t in a situation like we got into, but I felt pretty good when it was all over.

KM: That’s a respected journalism school there. Do you think the hubbub may have detracted from that? 

WH: I don’t think so. I think it’s kind of blown over now. It probably ended up better for Nikole Hannah-Jones, too. Because she’s, I think, a big advocate for reparations. And if I was a big advocate for reparations, where I should be is in Washington, D.C. That’s where the government’s headquartered and that’s where she is now. So I think it’s probably a better situation for her. And so, we [Hussman and UNC] have a good relationship. I’ve gone over there like six times, and a professor invited me to come over and teach classes. But back to your question, I really want to say it’s been a blessing having people reach out from all over the country saying, man, we really support your core values of journalism. People in business foundations have said, look, we want to support this. Tell us what we can do to help.

So that’s it.

I have other interests, and I still really care about things I’ve been involved in for a long time like P.A.R.K. [Positive Atmosphere Reaches Kids, an after-school and summer enrichment program for central Arkansas at-risk students from the eighth to 12th grades]. I’ve been on the board there now for over 27 years. I want to stay involved in that, and I’ve gotten involved more recently with a prison ministry down in Wrightsville. It’s so gratifying to actually go down there and talk to the men and bring speakers in to talk, and to try to find donors.

KM: Are you a churchgoer?

WH: Yes. Eliza and I both go to Trinity Episcopal. I’ve gone there since I moved to Little Rock.

But some of those guys down there [at the Wrightsville Unit of the Arkansas Department of Corrections] are in for murder, rape, just horrible violence, some of them for drugs, just everything. But you can’t get in this program unless you’re accepted, and you have to have pretty good behavior in prison. But you don’t have to be a Christian. You can be Muslim or Jewish or any other religion, or no religion at all.

But you’re going to learn something about the Ten Commandments, the Golden Rule. You’re going to learn about anger management and everything. You’ll learn moral principles and ethics. You’ll learn about anger management, spousal relationships and everything. And…

KM: I’m sorry to interrupt, but how hard is it to apply those sorts of principles in the business world today? Is there an ethical point where business and religion sort of conflict?

WH: I think that you do have a lot of decisions to make as you confront things. I remember, when I was in college, I had a real close friend and still have a close friend down in southeast Arkansas named Greg Shackelford. He was at the University of Virginia, and I was at Carolina, and we’d drive back and forth here during spring break, and sometimes I’d spend the night. I remember his grandmother down there, and she would say, someday when you get into business, you’re going to get into an ethical swamp, and you’re going to have to compromise and everything. So I listened to her. And I thought about that. I think you really have to have a real moral core of honesty, integrity, and you’ve just got to stick with it, even if it hurts or if you lose business because of it. I can remember a situation when we were competing with the Gazette, or about to buy it, and this guy showed up willing to show us their financial statements. We just told the guy to take them away. We’re not even going to look at them. I mean, we would have loved to see those financials at that point, but it wasn’t right, and you just can’t do it. It was the right thing to do.

KM: And where do you see the future heading for Eliza and the Democrat-Gazette now?

WH: Well, I’m encouraged because, you know. But it’s a far different world out there. Today, a lot of young people just don’t read newspapers. 

Northwestern’s Medill School of Journalism studied over 20 markets in the United States on digital subscriptions. They found that we have the highest retention with our iPad program of any newspaper digital subscription program in the country.

So we’re really holding on our subscribers better than anybody. Despite that, people are dying. And out in the state, you have some attrition. So we’ve got to go out and sell new subscribers.

I saw somewhere last week that only 26% of Americans have ever paid for a digital subscription. Just 26%. Now, if you poll people making over $150,000 that goes up to 49%.

But as you go down the socioeconomic scale it keeps getting smaller and smaller.

And why is that; why is the newspaper industry falling? It’s their own fault. They gave away their content. And then the newspaper industry that owns the Associated Press approved giving the AP copy and content away for free to Yahoo News, Google and others. Arthur Sulberger Jr. of The New York Times said this. He said, “I’m afraid we’re raising a whole generation of people who expect the news to be free.” And they do expect that now. 

And once you get used to something being free, why would you want to pay for something?

That makes it really difficult, you know, to get new subscribers.

KM: You famously resisted that, and you were named Editor & Publisher’s publisher of the year on the strength of that. Most of the Democrat-Gazette’s content was walled off from free clicks. And now with the iPads, you get a really useful little device that you can use to do a lot more things than just read a replica of a printed paper.

WH: Exactly. You’re getting a whole lot more value. But you know, I’ll tell you something really fascinating. A couple of months ago, I got on an airplane and there was a Miami Herald. Remember what a great newspaper the Miami Herald was years ago. This one had 20 pages. That same day, we had 42 pages. 

At the end of August, I was coming back from California and picked up the San Francisco Chronicle. It was 24 pages, not too bad, but we were at 36 pages. I thought, good grief, that’s amazing. We’re not making comparisons with Kansas City or Shreveport or Memphis, but with papers in some of the biggest markets in the country. 

At our board meeting — we’re a family company but we’ve got outside directors. And I asked them to go back and calculate this:

If we were still printing the paper seven days a week instead of one day a week, and we were paying for that newspring and ink, and distribution, how much more would we be spending than we are now?

They came back and the number was $6 million a year. I thought, where would we be able to get $6 million a year? We’re selling all the ads we can sell. We’re selling all the subscriptions we can sell. Even if we aren’t doing a very good job, and you can always sell more, but $6 million.

Then I thought, we’d have to do like the other papers have done. Oh, I get it, we’d be a 20-page paper. So that’s the idea. People ask me all the time how this thing is going with the iPads, and I say it’s really going great for the subscribers. They’re getting a newspaper like they couldn’t get anywhere else in the country, except, you know, maybe The New York Times or The Washington Post. We’ve been able to keep a well-staffed paper.

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