This is an interview by Dick Harnett, retired UPI San Francisco bureau manager, with Wayne Sargent, former vice president and sales manager for UPI and later a newspaper publisher. It was taped at Carmel, Calif., on Nov. 6, 1995, and corrected by Sargent on Feb. 17, 1996 by Sargent)
Sargent: I'm glad you're doing it because I don't think Steve (H.L Stevenson) would ever have finished this.
Harnett: Do you have something on paper that I could look at?
Sargent: Not really. I have some notes. I have some things on paper but not here.
Harnett: You've never considered, or have you considered, writing a book about your experiences?
Sargent: I thought of a project with H. Allen Smith. Remember H. Allen Smith? He worked for but hated UP. He worked for UP in New York then the old Scripps-Howard paper in New York, and he wrote a book called "To Hell in a Handbasket," which was really a lot about UP. He gave it to UP to review. We never reviewed it. He was really pissed at that, really mad at everybody in UP. I started talking to him. I am quoted in several of his books. I was sales manager, vice president. I was going to ask all the regional executives to give me all the funny things they ever heard of. I'd have asked them to shower down so to speak, and Smith was going to do the writing after he had gotten the raw material together. It would have been a funny book, but it never got done. He hated people in general. He said his humor came from his distaste for human beings. He finally went to live in Alpine, Texas, a small town, because he wanted to get away from human beings. He died on a visit to San Francisco.
Harnett: From my local library I have just read a couple of his books and biographical things about him. Did you work with him?
Sargent: No. I knew him after he had left UP and become an author, had written a lot of books by the time I caught up with him.
Harnett: Where did you come from?
Sargent: I was born in Brooklyn, raised in California, went to Stanford, worked in San Francisco, Fresno, Los Angeles, Atlanta, New York, Sacramento seven years. That's where I went first out of SX. I was sent there and really liked it and then Dick Litfin, who was the division manager, was impressed by the fact that I sold a couple of contracts even when I was a news guy, and so Fred Green of San Francisco asked me to become a regional executive and I said, "No." There was a job in Seattle. "No. I never would want that." Finally, on his third offer, he came around and said, "Bartholomew says you can have Oregon, you can have Idaho, or you can have Los Angeles. This is the third and final offer. You are either with us or against us. Do what you're told to do." So I went down to Los Angeles. I succeeded Beaton there and I succeeded Beaton again in Atlanta and succeeded Beaton essentially in New York. I followed him all around the country, always one step behind him, one step lower in grade. He was a very good business man, but like Richard Nixon, he had an innate ability to have people not like him. I'm told he lives up there and nobody from UPI can interest him much. They don't like him too much.
Harnett: When I first went up there I heard that, and it was true. I asked him why he didn't go to these affairs. He said he went to one in New York or someplace and someone came up and told him, "You're the asshole that fired me." He said, "I don't need that anymore." He was at the reunion this September and I overheard him greeting someone. The person said, "Yes. I know you. You're the guy that fired me." I thought, "We won't see him again." He's got a nice life. He talked to me for a couple hours. You said You essentially succeeded him in New York, but it was Keller.
Sargent: Yes, Lee Keller was the immediate possessor of the job that I held. When I went to Los Angeles, you probably know or remember Bob Bennyhoff, he teamed up with me there. There had been Beaton and Ron Funk, from the Funk family in Santa Monica. I went down there presumably to replace Funk, work with Beaton. In a few days Beaton was yanked and taken to Atlanta and I was left by myself, not knowing what the hell to do. I had never done that kind of work before. After a while they sent Bennyhoff in and I recognized a very strong willed person in Bennyhoff, a very flamboyant guy, and reasoned that what Beaton and Funk had done—Beaton had taken all the "A" clients and given Funk all the "B" clients -- and I said that isn't going to work with Bennyhoff. So I made a deal with him. We'd split our commissions, whatever we got. He said, "That's a good deal." And so we became known as "Sarhoff." It was Sargent and Bennyhoff. We always submitted our contracts "Sarhoff." That's the way they knew us in New York. Working on what had been pioneered by Baillie, Bartholomew, Joe Quinn and then Beaton, things were rolling pretty good. The year 1955 there was big growth in Southern California. Bennyhoff and I went through that area like shit through a tin sieve. When we left he left first, was given division managership in Dallas. The old rule in UPI was, whenever a guy is making too much money give him a new, bigger job and take away his money. Our commissions were higher than our salaries. We were doing very well, and when I left there were 57 daily newspapers in Southern California and we served 56 of the 57. The only one we didn't have was the Antelope Valley Ledger-Gazette, run by a guy named John Valentine who liked the AP structure. There's never been a sales territory that was as successful as that one. And we were aggressive sellers. We figured out how to track new radio stations. We got 95 percent of them, new ones coming on the air, and there were a lot of them. So we were really doing very well at that point. Bennyhoff went off to Dallas where he managed to get into trouble and they exiled him to Australia where he got into more trouble and they finally recalled him from Australia and he came back on a boat, did his expenses accounts all the way home, turned in the expense account for a three-year period, running thousands of dollars, but all documented pretty well. Thomason wasn't going to pay him. He called me in and said, "You worked with this guy, what do you think?" I said, "You only have two choices -- you pay him or you fire him. If you don't think they're legit, then you've got to fire him." He said, "I'll never sign them. You take them over. You're vice president, you can sign some things." I made some long distance calls to Australia and found items that were exactly legitimate. For example, every Tuesday he bought lunch for the same guy. I said, "Ah hah! This is a lie." I called the guy and he said, "That's what we did. He took me to lunch every Tuesday. I took him to lunch every Friday." I checked through the Fridays, no expense accounts. So it seemed legitimate, so I signed them and maybe saved his job for him. Shortly thereafter he said, "To hell with this stuff" and he quit.
Harnett: He's down in Oceanside or somewhere. I found his address and tried call him once or twice.
Sargent: When he dropped out he dropped out big. He was a great lover, you know, as many of the old UPI guys were. I could name them by the dozens. None were as good as Bennyhoff. After his daughter grew up, his wife, Mike, divorced him, and Bennyhoff really turned his avocation into a vocation. He married some wealthy women. The last one I understand had orange groves and that sort of thing.
Harnett: They weren't clients' wives?
Sargent: He had his contacts with client wives and daughters along the way. That's how he always got into trouble. Down in Dallas, I am told, Beaton and Keller came in to see him and he broke a luncheon appointment with them because he was off with a girl. That made them a little bit mad. That's when they sent him to Australia. I said sending a guy like Bennyhoff to Australia was like turning the fox loose in the hen house. It's a wonderful place down there. He found it wonderful.There are a couple things I wrote down I thought might have been missed by some others. They certainly have a place in the history. One is some of the reasons for its start and for its initial success. I don't know whether anybody's addressed that. AP, when it was founded, did certain things that were eventually reversed by law and they also encouraged the rise of UP. One of the things was that they only sold one franchise to a city, exclusive. That didn't go well with the Scrippses and Howards because in many of the places there was already an AP client and they couldn't buy. So that encouraged them to get into a larger news service than their individual papers represented. They did so through Scripps-McRae Service, which was the forerunner of UP. Secondly, AP was founded as a non-profit corporation under the fish and game laws of New York state. Three hundred Eastern newspapers bought a $1,000 non-interest bearing bond. That $300,000 is what really formed the AP. For every $1,000 bond they held they were given 40 additional votes. You got one vote for being a member, a client, and got 40 votes for being a bond holder. The power of AP then and now resided in those 300 newspapers or their successors in consolidations because they held 1,200 votes among them. There were only 1,756 newspapers in the country. There are still bond holding newspapers. They get 41 votes for their bond. In some cases they get twice the votes for their bond because of consolidation, so they have 82 votes. Most of those newspapers were large Eastern Seaboard morning newspapers. The Scrippses and the Howards had almost all afternoon newspapers and smaller. So that was the second incentive, because the AP service did indeed tend to be a morning service. As we know, most stories break on morning time and in the eastern time zone. So UP developed a very strong overnight across the country, which was "second day" leads if you want to put it that way. Tatarian once showed me what he called the perfect second day lead. It was an air crash story. It was datelined and said: "Dead. That's what 165 people were today as a result of the air crash last night blah blah blah!" He said, "How can you beat that lead? It's short, it tells everything," and he said, "It's the traditional way we handle disasters. We state what happened and then what it is today." So we became very creative on the overnight everywhere. That in turn led to another myth. That myth was that AP got the story first but UP wrote better. There were some wonderful writers in AP, but it is true that UPI people tried hard to increase their writing skills because of the need to produce an afternoon service or one that was more oriented towards afternoon papers. We had, at our peak, more afternoon papers than morning papers, and they tended to be smaller and there were a lot more them in the country. Since the Scrippses and Howards were largely afternoon papers, and since the AP was largely morning oriented, that was another incentive for UP to come into existence. The third thing that happened was World War I. AP had developed what amounted to an international cartel. They traded national news reports with the national agencies of other countries, Germany, France, like we still do with communist China, traded a full and complete border-to-border report at Hong Kong or wherever. That worked for AP pretty good until World War I came and the reports that were coming out of Germany were government controlled and quite often inaccurate and quite often propaganda and quite often cover-up. So the Scrippses sent their own people to Germany to report. Some of those dispatches came back and were peddled from door to door by Scripps-McRae service. Literally go in and say, "Here's an exclusive report from our guy in Germany. Do you like it? If you do, $25, whatever." They sold dispatches individually. I suppose you could go back to the Greeks and Romans and say there were foreign correspondents, but the first true foreign correspondents were people that made the nucleus of UP. AP had nobody overseas. They were trading national reports with other agencies.
Harnett: Did you buy those writers? Were they staffers?
Sargent: At that point they belonged to the Scripps-McRae service and they were not in UP, which had its origins in 1907. Between 1907 and 1912 there was kind of a mixture, and these guys were not really in UP, but their dispatches were being sold individually, and very successfully. So there was more impulse in World War I. The cartel arrangement by AP gave a real leg-up to starting UP as a regular wire service. That was probably its most successful growth period from virtually nothing to something. And of course Roy Howard was running it. It had a gross of $17 million on which he made a couple million dollars. Clear into the '60s he was always saying, "Why can't you do like we were doing? Why can't you make a profit with this because we did?" Those were the things that contributed to the origins and growth of UP. Another thing was that as late as 1938 -- and Dick Fales up in Friday Harbor has a copy of it and I think he may have given it to you at one time -- he had a copy of the double-truck ad that AP ran in Editor and Publisher. When I was sales manager I put it in the hands of every salesman. What it says is, "We are newspaper owned, and we are a newspaper service, and we will never, ever serve radio." Radio could not buy the AP service clear into the late '30s, and stations were popping up like crazy. They couldn't buy AP but they sure did buy UP. And UP sold some of those stations at very good prices because they had no place else to go. Among them incidentally was something called the "Tobacco Network," which was owned and run buy a guy named Jesse Helms. We served all of Jesse’s stations.
Harnett: Was that tobacco industry owned?
Sargent: No, it was called the Tobacco Network because it was headquartered in North Carolina.
Harnett: There was one called Arco, Arco oil, the Richfield Reporter.
Sargent: Well, that's right, and that was a bit of a con game, and I used to service that account. Richfield had an advertising agency in Los Angeles. That agency thought it would be smart to market Richfield (later Arco) by doing a 10 o'clock news and making it a nationwide well- known newscast. They did, and that ad agency hired UP to help write it. So UP did write that 10 o'clock news, as we wrote for a number of radio network shows. I think I mentioned one of them, Merriman Smith was assigned at one time and did some work on the Kate Smith show. It had nothing to do with news, but we did some writing for it. We supplied all of news for the Richfield Reporter 10 o'clock news. I remember it as a kid. They had this beautiful fanfare to launch the show. It was as well known as anything across the country. The con was that the ad agency skimmed our fee, took some of it for themselves. We needed them because they placed the show. They gave us the revenue so we allowed them to do that without ever telling Richfield. Richfield paid through the nose for that show. How much they knew, and how much the agency was doing, I don't know. But that was still a very viable account in 1955. I remember calling on the agency. Then the whole idea of a network news show pre- empting all others was fading because stations were learning to do their own and sell it and keep their own revenue. But we did indeed do the Richfield Reporter. As I say, we sold to broadcast stations when AP would not, and that gave us a lot of clients numerically, which was good and gave us revenue. I remember when I got to Los Angeles as a business rep I was amazed to find that a radio station over in Phoenix named KOY was paying us $500, $600 a week for the news service. That was a lot more than some newspapers were paying. It came out of the old days when that's all they could get and they were grateful we'd help them. We grew with them and the rate went up by assessments and by whatever until it became very large. KFI was very large. The three networks also paid a whopping amount. They were handled as a separate account, what they called then Special Services, which was C. Edmunds Allen. Ed Allen in New York was the salesman who handled all the networks.
Harnett: Special Service sold the networks?
Sargent: They were his clients. When I became general sales manager I never touched networks. They were his contracts. I didn't even have copies of them, but they were paying thousands per week. NBC, CBS were paying as much and more than our largest newspaper client, which was the New York Daily News. There was a quid pro quo there. We were housed in the New York Daily News building, so we were tenants of the Daily News and we paid them a large amount of money for the space and they paid us a large amount of money for our service. The New York Times was the eminent paper, but the Daily News was the largest, well over two million circulation. They did very well and they did it mostly with UPI.
Harnett: They weren't Scripps-Howard? Scripps-Howard was the World Telegram, wasn't it?
Sargent: Right. There were 11 newspapers in New York at one time, and they went down to three. What The New York Times did to New York was similar to what AP did to us. The New York Times allowed featherbedding, they gave big increases to union members. Whatever contract was reached by the publishers’ association in New York held The New York Times profit low. Around 5, 6, 7 percent was all they ever made. But every buck that was spent by The Times hurt their competitors in a much larger way, much larger way. It came to the point they couldn't exist and a lot of them went out of business. Of course the unions were blamed, the Big Six typographers and others. Those 11 papers went down to three because they couldn't afford to keep up with what The Times was paying, yet they all had to pay the same because they were in the same publishers' association. I say the AP did that to us. Whatever the AP had to pay out in expenses we pretty much had to pay also. We lagged a little behind in salaries, but in terms of equipment and operating procedures we pretty much had to stay with them. AP could handle that. They had capital reserves. They had members, a board of directors who would OK any such expenses. UP did not have the ability to raise that kind of money. That brings me around really to something else I think needs to be said about the death of UP. I'm going to tell you one story that's never been told, never been told -- very, very interesting. It came close to working in some respects, and I did it all by myself for better or for worse.One thing that UP always did from the start that AP didn't was sell. We took young guys who could tie their tie right and make a reasonably good appearance and we yanked them off news side and we put them over on the business side and called them business reps, later regional executives and so forth. These were very interesting people who were aggressive, literally went out and sought new business, campaigned for it, did sales campaigns, and a lot of times won. The AP had no sales reps. The chief of bureau was in charge of membership. Later they had what was called a membership associate who was assigned to doing something in radio. But before they did that there was no organized sales. The bureau chief was an order taker and would arrange things, but there was nobody out selling. That's a reason why Bennyhoff and I and our predecessors could do so well in Southern California, because AP wasn't really trying very hard, didn't assign anybody to do it. Then the phone company engaged over the years in something known as bundling and unbundling. They would put services together and sell the packet. Then they would break them apart and sell them as individual pieces. It wasn't really so much the change in technology, it was the pricing. As they did that they could go up in price. The cost of communication facilities got higher and higher and higher until of course satellites came along. Then both services were in a position to abandon all their land lines, thousands and thousands of miles of leased line from the phone company. Originally, you recall, it was what we called grade E telegraph service. That was the lowest grade that the phone company provided. It was a wire, twisted pairs, that literally had a signal or no signal, signal or no signal, mark, space, mark, space, the same as Morse Code. As you know, our five level paper tape was exactly like Morse Code. The letters that we used most often were the simplest combination, "e" a hole at the top. It was all based on the telegraph grade, which was literally a wire laying over fences. Sometimes you never knew what kind of grade you were going to get. Farmers were always plowing up a cable somewhere in Kansas, interrupting all service nationwide. When the phone company decided they would phase out grade E and upgrade things, they did so first with what they called "Telpack" rates. You had to buy a bundle of 12 wires. Then after that they required you to buy at least Grade C, which was a voice grade circuit which could be multiplexed. Both services had to go into rather substantial expenditures. First it was the multiplexers, then it led of course to computers. That in turn led to cathode ray tubes. This technology change that was coming in the late '60s was costing UPI an arm and a middle leg. AP could weather that much better than we could. I had been drafted out of Atlanta by Mims Thomason to become sales manager. When he first called me I told him, "No." He asked me a second time. I said, "You said I could stay in Atlanta. That's why you sent me here." I was starting to make some good money on my division manager's proposition. You got an override on everything over a base line. That base line was arbitrary. They took the highest of what your predecessor had and that became the new floor. You had to keep getting bigger and bigger or you couldn't make any money. After four years I was able do that and I didn't want to leave Atlanta because I was getting some money back in again. I told Thomason, "You said I could stay in Atlanta." Mims said, "Did I tell you that?" I said, "Yes, you did." He said, "Well, you know you can stay in Atlanta and rot." He hung up the phone, slammed it in my face. I thought, "Jeez, I've really blown it." About a half hour later, he called up and apologized. He said, "I'm sorry. I shouldn't have said that. You're a good man. I want you come up to New York. Let's talk." So I did go up there. He showed me a corner office. It had two windows. You know, that was important in New York. If you had two windows you had the best office on that particular floor, the 11th floor. I said I wasn't really so much interested in that, but I was interested in something else. I was interested in a budget and money which would provide for the training and support of our regional executives. I said, "This is a horrible business we are in. It's terrible. We need to professionalize these guys you call regional executives. We need to give them support, training, advertising and so forth." He looked at some of my figures. I had gone to the American Management Association school training for managers. It was there I found out that almost every business has a formula by which they put a certain percentage of their gross back into the sales effort. The more competitive the business the more money goes into the sales and promotion. It's true today. You can see it with soaps or Coca Cola, Pepsi, hamburgers, Wendy's, McDonalds and so on. They're major advertisers and they put more money into merchandising their products because it is competitive. I convinced Mims that we needed to do that too. I said, "The one thing for sure we do better than AP, whether our news report is better or not, one thing for sure we do better is we sell better. We have got to maximize that capability." He agreed, and he launched me on that. I went from division to division, put on a sales training program for regional executives. We started a regular and consistent advertising program. All of which is to say that when the '60s came along and the money was needed for technology, Jimmy Darr, then our communications chief, needed to buy multiplexers and things that would simply keep us in business as a wire service. There wasn't any choice. That money, as it always does with any organization, came out of the promotion and sales effort. They took away my advertising budget, reduced my regional executives, gutted the training program, and when I left UPI in '72, perhaps the straw that broke this camel's back was they took my secretary and said, "You have to share that secretary with three other guys." I said, "Here I am, vice president of UP, doing $60 million a year gross business domestically and I can't even afford a $125, $150 a week secretary to help me organize my work." It was then that I really thought about leaving UP. Al Neuharth and Gannett had made me a number of offers a number of times, and I interviewed for a number of different positions. One was public relations for General Electric. I found out later I was nominated for that job by the AP, by Wes Gallagher. I found it out inadvertently. The fact of the matter was you could take a guy whose running point for the opposition, and if you can get him off that point and get him another job someplace, that's fine. That's what Gallagher did for me.
Harnett: He did it to get you out of your position?
Sargent: He did it to get me out of my position in UP.
Harnett: There was politics, internal company politics. You came from Atlanta. There was scuttlebutt that Atlanta was moving in on the running of UPI. When you left, did some other people leave? Was there anything to that?
Sargent: The thing that sticks most in my mind about Atlanta -- two things. One, I succeeded Rhea Eskew and then Rhea Eskew succeeded me back in the same job. He didn't like New York and wanted to go back South. So he was both my predecessor and successor as division manager. I came out of Los Angeles with this tremendously successful sales record and everybody said, "This division will become nothing but sales and business now. No money will flow to the news report. It's all going to go to the business effort." What I did more than anything else in Atlanta in my incumbency was I built a good news team, a really solid news team, which is not what anybody anticipated from me, and I did so with a lot of help from New York. One of the reasons that it paid off is that in one of the years, 1963 I guess, it was, you know, one of those editors’ polls that are taken at the end of every year, name the most important breaking story, the most important stories on this and that. In one year the Atlanta bureau was in charge of the three top stories in the country. First was the racial unrest in the South, 44 different cities and towns; the second was the space race, which had just started at Cape Canaveral. I opened the bureau and negotiated the lease for the first civilian property outside of the base. Initially we were not allowed on the base, we had to sit five or six miles away. Al Webb was the guy I put down there. And I opened the FM bureau named for Fran McCarthy, and negotiated with the Miami Herald to put a listening post on the top of their building. UPI hired Cubans to monitor Cuban radio day and night so that we had some report coming out of Cuba. Those were the three top stories of that year, and the southern bureau, Atlanta, was in charge of all three of them. I did a couple of smart things. There was a bright young guy in UPI who was from Bay Point, Mississippi and I took him down to Atlanta and I said, "We are going to create a new title. You are going to be managing editor of this bureau. We haven't got any managing editors anywhere else, but that's what you are because I am not going to mistreat Chiles Coleman who has been here for years as the division news manager. He's going to be the division news manager, but he is going to work for me on everything I can think of to put him on, but you are in charge of the news." That was H.L. Stevenson.
Harnett: I was going to ask you if H.L. Stevenson was the guy.
Sargent: And there was a bright guy in the photo bureau. I made that guy the head of pictures for the division, and that was Bill Lyon. Steve became head of UPI news and Bill Lyon became head of UPI pictures.
Harnett: Lyon was from Atlanta too?
Sargent: Yeah, my two guys became head of the news and head of pictures.
Harnett: You didn't bring them to New York though?
Sargent: No, somebody else did.
Harnett: They got there on their own?
Sargent: Yes. Also, Dick Fales was my assistant in Atlanta. I sent him to New York before I went. But Steve and Lyon didn't come until a little later. But we had created a top-notch news organization.
Harnett: This program of education, was it something you created yourself?
Sargent: That's something I started in New York.
Harnett: In the long run it might have been successful if you hadn't been cut off?
Sargent: It might have been successful.
Harnett: You trained sales reps?
Sargent: I created what the regional executives called "Sargent's Black Bible." It was a big black book, loose-leaf, and in it I led them step through step, how to write contracts. I got lawyers from Scripps-Howard in from Cincinnati. We tore up all the old UP contracts and we wrote new ones. The original UP contracts had been written back in 1915 and were loaded with all this lawyer's boilerplate. Do you know what a "legal consideration" is? A legal consideration is money has to change hands, otherwise there's nothing between you and me. So all of our contracts in those days used to start out with these words: "Comes now Dick Harnett and Wayne Sargent representing UPI, each to the other a dollar in hand." Literally I was supposed to give you a dollar, you to give me a dollar, and that was a "legal consideration" which made a contract binding. I said, "Why have we got that in there?" The lawyers said, "Oh, it doesn't mean anything, it fulfills some legal stuff." I said, "Have we ever used it?, declared a contract illegal because he didn't give me a dollar and I didn't give him one?" I said, "Let's get it out of there." We spent five days, and we got all of this legalese boilerplate and junk out of the contracts, simplified them down and put big headlines on the paragraphs, like assessment clauses, which were the toughest things to deal with. We put in big letters, "Assessment Clause" so there would be no doubt what the guy was signing. In this manual I showed them how to sell. I used stuff like Fales’ ad from AP saying they’d would never sell to radio. A lot of radio guys didn't know that. You show 'em the ad, "You are thinking of buying AP? This is the group that as late as 1938 would spit on you." I said, "They are not your service. We created radio writing for the ear not for the eye. We pioneered that. We are pioneering new things today, audio service for example. AP hasn't got any." In those days they didn't. Wes Gallagher, when he retired -- they always interviewed the outgoing general manager -- he said the biggest mistake he made was not recognizing the potential of audio services for radio and television. And of course now they have a complete radio network service.
Harnett: Advances in technology really damaged UP service by taking your money?
Sargent: It took money out of the thing we did best. It really gutted our marketing efforts. When I left, I remember I resigned on the same day Tatarian did. He didn't know I was going to resign and I didn't know he was going to resign. Beaton was mad as hell. "Good god! Lose two vice presidents on the same day. People will think we're falling apart. You can't resign." He rejected my resignation letter, said, "You've got to stay on for at least another year." I said, "I've already taken a job with Gannett as publisher of a newspaper. They're ready to make the announcement and release it simultaneously with UPI making it. I can't reverse it, no way." That was unfortunate but I recognized at that point I really couldn't do anything much to save UPI. I had thought I could sell them into prosperity and I couldn't. I tried everything I could to diversify UPI's base. I said, "We have to get into other ways of marketing that which we have now and get into new fields." One of them was quickie books. We did one called "Four Days" It's still in print and it's still selling.
Harnett: That helped.
Sargent: It made some money. Then we did "Gemini," we did the "Death of Churchill," we did the "Death of Truman," we did the "Sinai War." Nothing else sold. I've got them all here.
Harnett: That was a wonderful idea though.
Sargent: We got into the book business. It didn't help. Then we were going to get into the education business. I said, "This is a natural, to be used in schools. Today's current events are tomorrow's history. Students should be learning about that. We've got to help revive the teaching of current events in schools so the kids become au courant with what is going on around them, because they sure don't know what's going on now." I teamed with a professor from Stanford whose name I've forgotten. He had worked on something called "programmed instruction." You get one simple fact, then you get asked what that fact is, and you play it back. Then you get two facts and you play two back, then three, then four, five. You progress at your own speed in a classroom to help teach yourself from printed materials. To aid and abet that we made records, vinyl records or audio tapes made by our audio department. I might pause just for a moment to say that audio, when it first started, and for the first years, when AP had none, it sold like crazy. We made a lot of money on it. The first one that was ever done was done by me in 1957 although Pete Willett says he did it. It was done when I sat in for Dick Litfin. Litfin asked me to come up from Los Angeles while he took some vacation. While I was there I hired a guy from KFRC.
Sargent: I don't know what the guy's name was but he was out of a job and he had been with the KFRC news department. I set him up in a little office. With alligator clips for electronic connections and telephones and so forth he would call certain places and get news stories in audio. We guaranteed four audio cuts a day to be fed to the stations. The largest stations were to pay $35 and the smaller ones $25.
Harnett: I remember a guy who came into our bureau. He was experimenting with audio with UP, but he never made it, at least he never made it with UP, but when we started our own service it was successful. I don't know if you recall it. We told him, "If you can do it you can use our service. If you sell it, give us our share." He left after several months because he apparently wasn't making it.
Sargent: The thing I'm talking about in 1957, that was the start of it, may have been the same guy. I think maybe he tried to become an individual contractor and sell it on his own or something when Litfin got back on the job. We went up and down California and sold a number of stations. So much so that when we went out of the business with the experiment a number of stations wrote and said, "Don't quit. This is marvelous. This is exactly what we need." If there was a forest fire we would talk to the forest ranger and he would say, "We are going to have this 50 percent controlled by tonight."We would feed that ranger to the stations. We made two or three feeds a day, guaranteed only four stories a day. Sold 35 bucks to big stations, 25 to little ones. At the end of the four weeks or five weeks Litfin was away I could submit a balance sheet and did to New York and said, "You have got to go into audio. This experiment proves that it will work. The stations out here love it. You gotta go into audio." It fell on favorable ears with LeRoy Keller. He said, "That's inventive, it's marvelous. It will work." Keller originally put a guy from UPITN, the old film thing, to run it. He kind of got it started. But the guy who really made it work was Pete Willett, Peter S. Willett. It was a marvelous service. At any rate, that was one of the diversifications. We tried the education thing, and Thomason made me plug in $10 million worth of revenue the first year for that. He said, "This is a wonderful idea. There is no reason we shouldn't go big in education." I said, "Mims, you have to work for years to get on approved lists by states and counties and so forth." I said, "This educational service is not going to make a lotta money. If you get into it you have got to be in it for the long term." He faced the budget problem. Our budget was unbalanced. He made me, literally made me, he said, "If you don't do it I'll do it," add $10 million in expected revenue, largely from this education project. He was then able to take the Scrippses and Howards into port with a budget which was not losing money. In those days, domestically we regularly lost about $10 million a year. I tried to get Mims to go to the board and tell the owners, "It is worth $10 million a year for you to retain the ownership and have control over UPI. It's a wonderful thing. This is the only country in the world that now has two wire services. All the rest have become lethargic, monopolies, or government controlled news agencies. You don't want that, philosophically, and even though you lose $10 million a year you aren't going to live any worse. You aren't going to have any fewer chauffeurs. You aren't going to have any smaller houses. It's just something that the Scrippses and Howards ought to bite the bullet and assume they've got this loss for a long period of time, because we ain't ever going to overcome it." Mims wouldn't do that. Mims was a wonderful guy and at that time had problems with the bottle and he was forever trying to present the best face to his own employees, "This is going to be a good year." And the best face to the owners, "This year we are going to break even." Neither was ever going to be true. There was no room in this country for the two services as we subsequently found out. It might have been all right had a Jack Howard, a Ted Scripps or somebody else stayed in charge. But the Scrippses and Howards were falling under the running of other people that were not in the family, didn't have any historic sense of UP's beginnings or its impact on history. As we know, they finally let it go to the worst people they could. I can't tell you why, but they got these two guys from the Ba'hai faith in Nashville, didn't even sell it for a dollar. They gave it to them and refunded the pension fund to bring it up to normal, gave them two or three million dollars cash to start operating, and just dumped it.
Harnett: And all the operating funds for a year or so. Was it that Scripps-Howard dumped UP or were we really failing?
Sargent: We were losing money, and we were going to continue to lose money.
Harnett: Is it because our rates were too low, or we couldn't compete, or there doesn't need to be two services?
Sargent: Basically it was very hard to beat the non-taxpaying cooperative structure that was owned and run by the same people who bought the service, that is a board of newspaper people, the participation by newspapers in the management, even though by rubber stamp on what their permanent managers told them to do, including giving service, allowing service to throwaway newspapers, which they did with the Dean Lesher case. When I went to some of the AP directors and said, "Why did you do this?" They said, "Well, AP management thought it was the right thing to do."
Harnett: That was down in Tulare where Lesher was?
Sargent: No, in the East Bay.
Harnett: Throwaway newspapers?
Sargent: They were throwaway newspapers which they called controlled circulation. The one you're thinking about was called the Greensheet, using some green newsprint, down in the San Fernando Valley. They tried for years to buy UP service and we said no. They were a big newspaper. They were the second largest consumer of newsprint in California. They were big, and they were successful, and they couldn't buy a wire service because we stayed by the Post Office standards. If you didn't have paid circulation you couldn't get a second class mailing permit. If you couldn't get a second class mailing permit you couldn't buy UP service.
Harnett: I thought it was some Lesher operation.
Sargent: No, it was the Markham brothers and a guy named Ferd Mendenhall, who was addicted to very wide-shouldered coats and boots. He was a very good operator. He invited me to come and speak to their controlled circulation group one time. I said, "No way! I'm not getting into that, Ferd." I said, "I understand what you are doing. I'd like to sell you the service, but I can't and I won't." But Lesher, who was an attorney in Walnut Creek, talked the AP into allowing him one year as an associate member of the AP. Associate members are radio and television stations. They have no vote. He said, "Let me come in as an associate member, let me have this wire service. I need it for my newspapers," always maintaining that some of the circulation was paid. He was the guy that was allowed in by AP. When I quizzed each and every one of the AP directors at that time, they said, "We didn't know what we did." I asked Otis Chandler, I said, "You were on the board. You want me to serve Mendenhall out here in Van Nuys, the valley which is growing so fast? You guys haven't even had the guts to go out there and get some of that circulation. You want me go out there and sell him?" He said, "Oh no, if you sell him out there we'll drop you at the L.A. Times." I said, "I can't afford that. Why do you allow AP to do what you threaten me with death if I do it?" It all worked well for AP. The Lesher papers also succeeded and were sold big.
Harnett: You were a publisher too. In my own mind I kind of blame the publishers for the death of UP, in the sense that they felt, "Why should I pay for two agencies when I get enough from one to fill the paper," failing to realize that the competitive thing was worth money.
Sargent: It was, but there weren't a lot of publishers who could see that with a broad enough vision. A few of them were hard as rocks and would never have left UP simply for that philosophical reason. One was the Hoiles papers headquartered in Santa Ana. They were against co-ops, they were against government in all forms, they were for free enterprise. They loved UP because we were free enterprise and we operated the same way they did. But there weren't a lot of publishers who felt that was very important. I could go through a list of papers and tell you the ones that would stick with UPI to the end simply for the reason you mention. When I was out of the wire service business, down in San Bernardino, Tim Hayes called me from Riverside. He said, "It seems to me UPI is going down the tubes. Service is lousy." I said, "Yes, it not very good." He said, "Should I continue to buy them?" I said, "Every support that you can give UPI will be of long range benefit to you. You, of all people, understand that. Stick with them as long as they're producing a word of copy." He did.
Harnett: Beaton tried to get all the big publishers to throw in money. You remember that. He wanted to sell them partnerships. Some of the big ones wouldn't go for it. Have you heard anything about the consequences of that? At some point they are going to regret it. They are not getting things from AP they used to get.
Sargent: There were many ways a restructuring of UPI could have taken place, or that UPI could have been sold to a willing and legitimate operator, chief among them being Reuters. As far as I know that was never explored. This was cooked up for economic reasons I know not. Beaton will have to talk to that. But it was sold out from under him for nothing. They had reached a point where they said, "We're not going to continue to cover the UPI losses, and we're going to dump it." Dump it they did. They really dumped it.
Harnett: Was AP out to kill UPI?
Sargent: Oh sure. Oh sure. I'm going to tell you in a minute a couple things I did or that we did. I was always trying to convince Thomason we have to do more of what AP is doing successfully. We have to look more like them not less like them. One of the successful things that came out was carried out by a guy named Norm Cafarell, who had been division manager in the east, was to start an association of UPI editors. Once a year we had what we called Edicon, editors conference. It was well-supported. The main purpose of it was to get editors and publishers to participate in the affairs of UPI.
Harnett: They paid their own way, didn't they?
Sargent: They paid, you bet. When we took the conference down to Mexico City, Thomason told me, "You'll never get a bunch of guys to go 3,000 miles to Mexico City." I said, "They'll go anywhere."
Harnett: Especially Hawaii or Mexico City.
Sargent: Especially Hawaii or Mexico City. We used both, and we had nearly 500 people down in Mexico City. That was a long trip to take. It was expensive, but it was all business expense with writeoffs in those days. That was one attempt to be more like AP. As a result of that we formed a UPI advisory board made up of publishers and editors. They were supposed to advise UPI as to the operations, both content and particularly in business. The problem with that was that the Scrippses and Howards had never given them any real authority. They were an advisory board and that was the most that they could be. The Scrippses and Howards owned UPI and they were not going to let this advisory board vote as to whether there ought to be a price increase or no increase or what ought to be done. So that came a cropper.
Harnett: Beaton told me that Bartholomew had a problem getting that across because Roy Howard said, "All you are doing is giving them a forum to stand up and bitch about the service."
Harnett: Apparently it didn't pan out that way.
Sargent: It didn't pan out that way. I gotta go back. I've got so many things on my mind. I gotta go back to this technology change, where the money from the sales promotion effort went into technology. One other thing happened which was unanticipated by a lot of people, including the telephone company, and it helped kill UPI. After we got the multiplexes we now had 24 channels of telegraph grade and we didn't need that many. There was this excess capacity laying around to move thousands and thousands of words on channels that weren't being used at all. I came up with an idea. I said, "We have got to look more like AP." I said, "I have done some work on this and I think it will work." I'm now in a business meeting with Thomason. I said, "Let's put together all of the big, good, newsy newspapers of the country, and let's take all of their output just like AP gets dupes. Let's get all of their special investigative reports, all of their really good pieces, and we'll put all of them out on a wire as a supplement to UPI service. It became known as "Supersup." I don't know who named it, but everybody referred to it as "Supersup." Beaton and Thomason said, "This is a great idea." I said, "Now we have got to develop it slowly, carefully." They asked who do you think ought to be in it? I said, "I suppose we ought to take Scripps-Howard in although I really don't care." Later Scripps-Howard demanded two votes for every vote that anyone else had. They wanted control over this thing if we were going to do it. I said, "Knight-Ridder, The Wall Street Journal, St. Louis Post Dispatch. Perhaps you would rather have The New York Times but I think the logical one in New York would be the Daily News because we're so close to them, they pay us so much money, and they've got to be in it, The Christian Science Monitor, Baltimore, Boston." They said, "Wonderful, wonderful." I had clipped out pieces from all of these papers and said, "Look what we'd have had if we could have done this, an investigative report that was published in the St. Louis Post Dispatch last week. It would have been a bell ringer." They said, "Yes it would. Yes it would." I said, "We need to do some pioneering work with each one of these guys; find out their level of interest, and what they expect out of it, and what they want out of it." I already knew from some of the conversations I had. The St. Louis Post Dispatch wanted profit from it from day one. Knight-Ridder wanted in it and wanted editorial control of the wire. The New York Daily News wanted something. Each wanted something else. I said, "It is not a project to rush into. It has got to be done carefully." Beaton would have no part of that. He said, "This is the salvation for the next fiscal year. We'll be able to present more profit to the owners and stay in business." So he called two hurry-up meetings. The first was at the Chicago airport. All of these people met. It was pretty upbeat. They all thought it was a pretty good idea, although even then you could see that some of them had different things that they wanted to do with this super supplemental wire. Then he called a second meeting, maybe 90, 120 days after that, at Williamsburg, Colonial Williamsburg, Virginia. There, more of the disparities were obvious. The thing literally collapsed under its own weight. We got no agreement out of that meeting whatsoever. However, what it did, it told these individual newspapers and these individual groups that there was a capacity within our system that was available. They came right back at us, the Knight-Ridders for example, and leased from us a channel in our multiplex system and paid us money for it. The New York Times leased a channel from us. Latwap, the L.A. Times-Washington Post, leased a channel from us. So what was created was not the super supplemental wire that I hoped for, making us look more like the AP, with the real winners of the world working with us, and we were going to sell it. I said, "UPI has the sales organization in place. We will sell it. You guys with the newspapers produce it." These individual groups and newspapers came along and they started their own supplemental services. Some of them were already in existence but were being fed out at very expensive cost or being handled by mail. Now came a cheap facility. We, in fact, were brokering our communication facility to them. The telephone company never anticipated that we could or would do this. As a matter of fact they threatened to take us to court saying, "You can't resell the telephone facilities." We said we could. They backed away from it.
Harnett: Do you think it is possible the members of this group were aware, deliberately, when you had this meeting in Williamsburg, that, "Hey! We won't do it their way, we'll do it our way?"
Sargent: They became gradually more aware of it because we had not done our homework in the way that we should have to make our own project go. I blame Beaton mostly for that. He was necessarily in so much of a hurry. At any rate, as you know, these services wanted something different out of their capacity than we then recognized. They wanted national recognition for their reporters and writers, so that these people would not go over to the wire services or go over to larger newspapers all the time but would be content to stay at St. Louis or Miami or wherever they were and work for an organization that would disseminate their product nationwide. Secondly, they wanted to enhance their own corporate image and reputation. They did not want necessarily -- if they got it, fine -- but they didn't care very much about the profit involved. What they did is -- going back to the AP origins --they sold one to a city. They sold exclusivity, which is a very powerful selling tool. And, two, they sold it cheap. The L.A. Times and the New York Times were $35 a week in most cases. McClatchy started service up and down the West Coast and they sold it for $10 a week. It was a giveaway. What happened, Dick, going back to the point that you made about newspapers recognizing the value of having the competition, what they now saw was that the AP gave them everything they needed in the way of a basic service and they could use the UPI money to buy exclusivity in something as well known and as prestigious as The New York Times. These little individual supplemental services, dozens of them sprung up. They eventually got into the AP network too.
Harnett: The New York Times had a bureau in San Francisco but Wally Turner had to cover Alaska, Idaho. He had to come up to our bureau to find out what's going on. They were spending about $2 million in San Francisco. I don't know how much they spent on UPI but they said, when they dropped us, "We are going to use our own service." But there is no comprehensive service involved and I would think the publishers should have known that.
Sargent: The publishers cared less about the competitive benefits which did indeed result in duplication of product in AP and UPI. We covered the same stories. What they cared about was the one story that Wally Turner or Glad Hill would do from Mexico or Alaska that nobody else did and which took him three months to do but was a wonderful piece once he produced it. Now it would go out on The New York Times service and these clients were delighted to have it at 35 bucks a week, if they got two or three stories a week that were really good.
Harnett: Something I thought, and you as a publisher would know, was what percentage of newspaper expense is editorial, and of that what percent is wire service? They were getting the worldwide service for less than the cost of one reporter.
Sargent: At one point I figured out both of those things. The norm for newsroom expenditure was about 15 percent, of operating expense. That figure has gone down. It's not that high. It's gone down. But that was the goal, the target of most newspapers, 15 to 20 percent. During the era of computerization the whole name of the game was to get money out of production and out of the back shop and put it back in the news department. Good newspapers did that. Bad newspapers simply took the savings and increased their profit, particularly where they were publicly sold on the New York Stock Exchange or another exchange. They didn't put all that money back into it because they didn't need to. The cost of the wire service was like one-tenth of one percent of their total operating expense.
Harnett: In other words, 1 percent of the news budget?
Sargent: One tenth of one percent of the total operating expense of the newspaper. You can figure it out. You can figure backwards, a newspaper is grossing $50 million a year and spending 30 you can take their wire service bill and take that as a percentage of that $30 million and it was less than one tenth of 1 percent. It was a small amount.
Harnett: What was the big deal trying to get rid of us?
Sargent: It wasn't necessary. The stuff that they got off the supplemental wires, even a few times a week, was more advantageous to them because it was not duplicated and because it was sold exclusively and nobody else would have it in their circulation area. Wire services were by their very nature 60 to 70 percent duplicative. They had to be because wherever you had a client that was all your own and didn't have any AP you were obligated to provide a full range of services. There was never any need for two stock market services. They were very expensive. They were very complicated. At one time I talked to AP people about forming a partnership in a separate corporation to do nothing other than provide the mechanics of getting the stock market.
Harnett: You talked to AP about that?
Sargent: Yeah. I'll tell you something now. I'm getting around to that point. I told you I was going to tell you something that has never been revealed before. In my pitches that I had been making to Thomason saying we have got to look more like them, not less like them, I said, "I have some contact with AP, and I want you to know I am going to talk to them because I think there are certain things that might be done, probably should be done, that would be to the long range benefit of both services." I told them what I was about to do. He (Thomason) said, "That's antitrust." He said, "The Sherman Act. It's as illegal as hell. Officially I forbid you to do it." He says, "Now if you go do it you're on your own. If you get caught with it, I don't know anything about it. This is not anything I will authorize. If you can do something, you go ahead and do it, but don't tell me about it. I don't want to know about it." I met with some AP people in New York -- at least two of them are dead but I won't mention any of their names -- I took to them a number of ideas, some of which at least were very workable. The first one was the most grandiose. I reminded them they had once said they would never sell to radio or TV. I said, "It's important, I think, that two wire services be maintained in this country. We will give you all the newspapers in the country, and you give us the radio and television stations and we will compete generically between the two major mediums, newspapers and radio-television, and we will both survive." I said, "Now don't tell me it can't be done, because there are joint operating agencies in Albuquerque, Nashville, Salt Lake City and elsewhere where there is one failing partner in the thing and they get together to combine their production, advertising and circulation but keep their editorial voices separate." I said, "Maybe this is asking you to support us indirectly, because if there is one that is failing it is us and not you, and we both know that." I said, "It will guarantee the life of two wire services in this country for generations to come, and it's a very good thing." They would have no part of it. They said nominally that it was against the law to do that. I said, "We can go to the Justice Department and tell them what we are about to do. Maybe we can convince them that this is a very sage and wise thing to do." They said, no they wouldn't be any part of that. The truth of the matter was, and this goes back to your question, did AP want to kill us? Yes. They did. They did. They always knew that whatever dollars they spent they could handle better than the dollars we spent, and that sooner or later there would be a diminution of UPI services until one of several things happened, one of which did happen, that the owners were tired of taking the losses.
Harnett: Would that cooperation have meant continuing the whole service, with bureaus all over?
Sargent: That would be in the province of each service, but probably it would mean, in the case of UPI for example, if we were doing radio and television we probably would turn the A and B trunk wires into bureau-only communications and concentrate on the radio wire and script wires for television film, or television, audio for radio, everything that we could do to make the radio and television business and cable business, stronger than it was against newspapers, and they (AP) in turn would be producing stuff for newspapers down to and including ad services on their communications facilities, which has now come to be, in fact, and that sort of thing. It was remotely possible that it could work. It could not work if AP did not want to do it, and they did not want to do it because they foresaw that in the long haul they would survive and we would not. The second idea I had was much smaller, but very workable and very practical. They wouldn't buy this either. I said, "AP, you hire a bookkeeper, a guy that has never worked for you or for us, and we will hire a guy that has never worked for AP or UPI, and we'll lease an office in downtown New York, not at 50 Rock and not at 220 East 42nd, and we'll call it the Wire Service Credit Bureau. All of the billing information and payment information goes through them. You are plagued with deadbeats and people that won't pay your bills, mostly in the radio and television end of it, and we've got the same thing, huge collectibles that we can't collect, and we are writing them off, taking 10, 20 cents on the dollar in some cases. We would agree that if you cut off a guy for non-payment we would not serve him. You would agree that if we cut off a guy for non-payment you would not serve him, and we very quickly will get all of the money that is due either of us. That is not illegal. If you run up a bill at Macy's and you don't pay it, you can't get credit at Gimbels. There are credit bureaus and credit services that work through the retail business everywhere in this country and I am proposing we do the same thing, we have a credit bureau so we know what we are doing. The way it is now we have some guy that's paying us $60 a week and he owes us $5,000 and he says he hasn't got it and we say, "You pay it or we're going to shut off your service. We shut off the service and within a week you've got them back working at $50 a week. You shut them off at 50 and we take them back at 40."
Harnett: I think that price cutting was a pretty big thing. I remember Tatatarian told me once that AP has like twice as much money from the Chronicle and they can distribute it among all the little rinky dink stations up there in the foothills. We try to sell for $50, they sell for $45 and are losing money. That was a widespread, pretty big problem wasn't it?
Sargent: It was. That's one reason that Thomason gave me the authority and why, when I went to New York, I wanted the training program for salesman to elevate their professionalism and their ability to sell, and with it I put in a minimum. We did not sell anything less than $55 a week. I said, "That is going to be the new minimum and I am not going to accept any contracts that come into New York at less than $55 a week. Once you get that in your mind, and the station says they can only pay you $40 you can now say, "I'm sorry, I can't sell it to you because $55 is the rock bottom rate. Now you will be honest. You will not be lying. I will not take any contracts in at less than $55."
MORE IN PART II