Paul Steinle Interview - 2000

Here is an interview by Bob Lowry of Paul Steinle, who was president of UPI from February 1988 until March 1990. Steinle is now director of the Masters in Journalism Program in the School of Communications at Quinnipiac University at Hamden, Conn. The following questions were posed and answered via email.)


Lowry: How did you get involved with someone (Earl Brian) who eventually wound up in federal prison?

Steinle: Is this what they call a loaded question? When did you stop beating your wife? Earl found me through a recruiter to help run the Financial News Network in 1983. I found him to be bright, ambitious and forthcoming. He was a neurosurgeon, a Vietnam vet and he had served in the cabinet of Governor Reagan in the late 1970s. He did not hide his agendas, and despite his head-strong nature, he had great vision and confidence. He succeeded where others failed. All the press and prognosticators said FNN would fail -- until we broke even in 1985.

Lowry: Why was Brian initially interested in UPI, considering it was a proven money-loser and he had no media experience?

Steinle: I was looking around for something else to do outside of FNN in the fall of 1985, talking to a venture capital company -- I've forgotten their name -- on my own when I learned about UPI being up for sale. Ironically, Dr. Brian, learned about the same opportunity at the same time, independent of my research, and when the venture capitalists walked away from UPI, Earl asked me to help him try to buy UPI. Earl had a new vision: bundling general news with business news and selling it -- not unlike what Bloomberg has done. I don't clearly recall his specific vision statement, but it had to do with bundling general news, business news and FNN and delivering it on computers -- an idea that is contemporary in the mid-90s and visionary in the mid-80s. Also he had just overseen the development of the first independent, publicly-held cable network -- FNN -- to profitability, so he had some media experience.

Lowry: What role did Bill Geissler play in Brian's bid for UPI?

Steinle: As far as I know -- none. I never discussed Geissler with Earl and never heard his name mentioned in a meeting, except as a reference in passing to what Geissler and Ruhe had done earlier. If Earl talked to Geissler, I never knew about it then and don't now.

Lowry: Why the obsessiveness about secrecy at Infotechnology -- especially pertaining to the Cohen-Gordon book?

Steinle: You should be asking Earl these questions, but I think Earl was concerned with anything that would harm UPI's prospects for a turnaround. He was running a private business with private venture capital, so he wanted to control all the information about his big investment. And, although I suspect "Down to the Wire" was basically harmless to UPI's prospects, it certainly did nothing to promote UPI's chances for success. Of course in the context of the history of journalism in America, it's a very worthwhile book. But when you are trying to stop a company from sinking from sight, serving history is not your first priority.

Lowry: If Infotechnology/FNN had been able to acquire UPI in 1985-86 instead of 1988, would its chances of success been improved? If so, why?

Steinle: It might have. I would have jumped through hoops to keep The New York Times, for example. But, frankly, who knows. I believe the vision we had of rationalizing UPI's business activities and diversifying UPI's base by selling info via computers was a sound one. But we might have been too far ahead of the curve (pre-Internet). And since we were under-financed in 1988, I suspect we would have been just as under-financed in 1985.

Lowry: Did you or Brian have serious ideas about developing either new markets for UPI's then-current products or new products for then-emerging markets? What were they?

Steinle: The last project I worked on for UPI in June 1990 was an attempt to "bundle" together all the local news from our clients in Michigan as a starting place with all the other states to follow to integrate into one stream of news: UPI copy plus their copy. The goal was to create a richer news product for use via PC. I recall all these clients agreed. I suppose that project died after I left, but the idea -- simply stated -- was to create a kind of super Nexis-like product, married to the UPI news stream. In fact I think we called it "Super News." And then to share the revenues from this new product with our clients on a pro rata basis. I still believe that would be an appealing product, backed up with an archive, and priced less than Nexis. At the time we were conceiving of delivering the product via the Vertical Blanking Interval of FNN's signal, but the Internet would have also facilitated delivery of such a product for a fee.

Lowry: Why was UPI such a hard sell in the media by then?

Steinle: UPI was buffeted by a series of structural changes in the industry. First, the arrival of TV news in the 50s and the demise of the afternoon newspaper. Second, the realization that newspaper were no longer competing on the basis of breaking news because of TV. Finally, I believe UPI was fatally undercut by the supplemental news services. They cost a tenth of what UPI was charging since they had very little overhead. Newspapers with very little head-to-head competition were out of the breaking news business, so most of them believed they didn't need two breaking news services (AP and UPI). So, it made sense for them, economically, to trade UPI for a supplemental at a tenth of the cost. And they choose to drop UPI because AP was a cooperative and did a better job, through APME, of bonding with their clients. Fortunately, the smart editors realized that their AP service would decline if UPI disappeared and without UPI they would have no way to verify stories, so the smart ones, who could afford UPI, kept UPI. About 400-plus newspaper clients remained when I left out of about 1,500 total dailies in the United States. Meantime broadcasters -- who were still involved in breaking news competition -- were still supporting UPI. There were still about 2,000 broadcast clients when I left.

Lowry: Since you instituted cost accounting what products cost the most to produce and which made money, if any did?

Steinle: I remember that news photos were the most expensive and lost the most money. About the rest, I no longer recall.

Lowry: Would you comment on UPI's history of selling off assets (United Features, foreign photos, even broadcast) and leaving the money loser -- news? UPI seemed to do the opposite of downsizing -- selling off the products that actually made money or lost the least -- this appears irrational.

Steinle: Given UPI's confused accounting records, I'm not sure anybody really knew what line of business was making money and what wasn't when they sold them. But, strategically this appears to have been an ill-conceived practice. The company needed greater access to funding sources, and from the moment Rhue and Geissler took over, nobody had the access to capital needed to fund a turnaround -- if indeed one was possible -- so they started this cannibalizing to fund UPI operations. I suppose it was harmful, but it did help keep UPI afloat for a decade.

Lowry: There was always the view that after Scripps-Howard, the successive owners had fatal flaws. Rhue-Geissler had no money and sold off some of UPI's most valuable assets to keep it afloat for two years; Vazquez-Rana had plenty of money, but no vision for the company and didn't trust Americans; Infotechnology had a plan, but ultimately ran out of time and money, plus there was the element of fraud and corruption. How could things have been different? Or was UPI simply doomed after Scripps gave it away?

Steinle: I have a friend who keeps telling me -- since 1991 -- that Apple computers are about to collapse. Given intelligent management, good record-keeping, rational operations, a pragmatic vision of the future, a knowledge and respect for the structure of the news business and sufficient funds -- $50-100 million dollars -- I believe UPI could still be serving the news industry. Is this wishful thinking? Perhaps, but nobody brought all of these elements to the leadership of UPI.

Lowry: In your view, why did Vazquez-Rana fail, considering his resources?

Steinle: I'm only guessing, but I suspect that Vazquez-Rana was not likely to succeed in our news values system. I suspect the methods of doing business and reporting the news in Mexico are quite different than they are here. And I suspect UPI clients knew that.

Lowry: How did Van Bennekom shift so easily from Vazquez-Rana confidante to the Brian camp?

Steinle: You should ask him. I think his number one goal was saving UPI, and I suspect he thought Earl Brian was more likely to complete the task than Vazquez-Rana was.

Lowry: Were you aware UPI revenues were being siphoned off to Brian's other holdings while UPI was sinking financially?

Steinle: I know of no such siphoning.I would very surprised if that analysis were true. I would suspect, if anything, the opposite is true: UPI was probably siphoning off dollars from other Brian enterprises. But this is pure speculation. As far as I know, no dollars were taken away from UPI for any other enterprise. When I left, UPI was still losing about $5 to $6 million a year from its own operations -- down from about $12 million annually -- I think -- when I started. When you are losing money it's hard to siphon off funds. Earl Brian very much, I believe, wanted UPI to succeed.

Lowry: At what point in your tenure with UPI did you realize that it was doomed to fail as a full-service competitor to AP?

Steinle: I never thought it was "doomed" to fail. I thought it was under-financed. UPI needed time -- and therefore the dollars -- to manage a turnaround, which I reckoned to be at least five years. By the way, the "full-service" issue is a red herring. What does that mean? If UPI could have broken-even by dropping photos, for instance, why not drop them? Would that somehow devalue every other newsgathering effort? I can't understand that concept. It sounds like AP spin to try to devalue UPI.

Lowry: When did you realize that it was doomed under Brian's tenure?

Steinle: I addressed this in my speech at the University of Miami. I never believed it was doomed. The intellectual decision point I reached -- in July 1989 -- was a) we needed enough financing to survive long enough to rationalize the business and launch our new enterprises; it would take about $50 million to do that (five years-plus); c.) Earl Brian was not interested in trying to raise that much more money (or maybe he thought we couldn't); and d.) I couldn't conceive of how we could survive without this funding. I told Earl Brian this in July 1989 and he appointed someone else CEO over me.

Lowry: Is that what prompted your departure?

Steinle: Actually I stayed around another 11 months (after July 1989) as president so as not to stir up the waters further with another "turnover at UPI." A decision, which in retrospect, seems rather naive and certainly overvalues my role in the 90-year plus history of UPI.

Lowry: If the Internet explosion had come along, in say 1988, would that have saved UPI as a full-service wire? If so, how and why?

Steinle: I think I have already stated the reasons above. But, we would have needed more capital to survive, no matter what. Of course a natural partner would have been Microsoft. The Internet would have facilitated certain aspects of our goals, but we still needed to develop a great product (like Super News) and we had to see if there was really a market for it. We thought there was one, but it's obvious that making money on the Internet has been problematic for information companies. I believe you have to charge for the information and only The Wall Street Journal has had any success doing that.

Lowry: If you could do anything differently doing your time with UPI, what would it be?

Steinle: Figure out a way to raise more money (capital), hopefully from some news media partners, and then convince Earl Brian to follow that initiative. Turning a company the size of UPI around takes time, and we didn't have enough.

Lowry: A somewhat related question: How could an operation such as UPI was (satellite photos, archived, historical film, a complete Intranet, a paper business, a "network") manage to go broke in the midst of the information explosion and revolution? How could the ownership fail to see the future, given its resources, and not lead UPI into what is now the Internet explosion of the next millenium, given that its people were leading this charge in so many areas at one time?

Steinle: I suspect that most people in our industry had "written off" UPI mentally. I remember a conversation with Donald Graham at some point (in 1989?) when he said as much to us. When there are so many stories about a company's distress, a consensus of failure forms and people lose interest after a while. And The Washington Post was even a client at the time, albeit a client paying discounted rates. If a visionary person, with deep pockets like Bloomberg, and the respect of the news industry, and the savvy to run a business efficiently had taken over UPI, they might have "saved" the company. But as I said, I don't think any of the owners had all those characteristics at once.

Lowry: This may be a biased view, of course, but I often hear Unipressers complain of the soft coverage of AP these days, especially at the state/regional level where they have virtually no competition. The view is that they don't have to run to the phone as quickly and they can simply let some stories slide and pick them up the next day from member papers. As a former journalist and journalism professor, do you see that happening?

Steinle: Absolutely. In Miami a few years ago I learned that the state AP bureau there didn't even bother to look through the electronic carbons from all its clients (which the bureau receives by midnight or so) until the next morning. So much for staying on top of the news.

Lowry: Have you stayed in touch with Brian? If so, how has he taken the events of the last few years?

Steinle: He is very disappointed about the demise of UPI and he believes he was treated unfairly by the courts.

Lowry: Brian had a reputation among Unipressers as a bully who cared nothing about them or the company. How would you characterize him and his view of UPI?

Steinle: Of course, I don't think he was a bully. Quite the contrary, he is a bright, determined, ambitious, hard-charging guy. I believe he did care about the people at UPI in the same way that Jack Welch cares about the people at GE and Lou Bocardi cares about the people at the AP. I think they both believe that if the organization succeeds, the people will be taken care of. I think Earl Brain is exactly the kind of person you would want in a foxhole with you if you were fighting a war. He would be loyal and he would be worried about anybody who might be harmful to you. He respected UPI's role in the news industry and that he wanted to protect it. He liked challenges and UPI was a big one. I'm certain he is saddened by UPI's demise.


(Steinle note: Having answered these questions, I once again would like to tip my hat to all the people who worked for UPI. I never worked with a more highly motivated group of people in the news business. I'm only sorry I didn't have all the skills needed to assemble the resources needed to guide UPI into the 21st century. Cheers, Paul Steinle.)