1984 USA Today Story on UPI's 'Comeback'



Here's a Feb. 21, 1984, cover story from USA Today, headlined: "UPI's Big Story: It's Comeback? Loss-Plagued Wire Service Gains Hope Under New Ownership'

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When two downtown buildings collapsed in Medford, Ore., last July, United Press International reporter Robb Fulcher reached the scene five minutes after receiving a phone tip. Soon, machines at UPI's TV, radio and newspaper clients around the country were spitting out the details.

It was a story the USA's No. 2 news-gathering service might not have covered on the scene a year earlier -- before it opened 30 news bureaus in small and midsize towns like Medford; Harlingen, Texas; and Kingsport, Tenn.

Pushing to get more regional news faster is one way UPI has changed in the 20 months since two barely known businessmen took over. As they prepare to inaugurate UPI's new world headquarters in Washington, D.C., next week, owners Douglas F. Ruhe, 39, and William Geissler, 37, predict the 77-year-old news service will turn a profit in 1984 -- for the first time in two decades -- thanks to high-tech cost-cutting measures, rejuvenated marketing and a better product.

"We all think we're on a good roll," says UPI's veteran White House correspondent Helen Thomas, 63, perhaps the agency's most widely known employee. "We feel we're going to survive and thrive."

Still, tough questions loom concerning the long-term prospects of UPI, which seems stuck in eternal second-fiddleness -- dominated by The Associated Press, which is 59 years old, bigger and substantially wealthier.

Not everyone is optimistic.

"If they make money this year, they would be perhaps unexpected and certainly a remarkable performance," cautions John Morton, newspaper industry analyst at Lynch, Jones & Ryan.

Ruhe and Geissler's mission seems daunting: How can two former publicists for the Baha' faith, with socialist backgrounds and almost no news experience, turn around a company that lost as much as $12 million a year under big names in journalism like former owners E.W. Scripps Co. and Hearst Corp?

The industry hardly cheered when Scripps and Hearsts sold UPI to the two entrepreneurs in June 1982. Ruhe had been arrested twice during the 1960s civil rights protests; Geissler spent 10 months in prison for refusing Vietnam combat duty. They had published a weekly newspaper and owned two TV stations but were strangers to big-time news circles.

Geissler maintains that "not having had background in this business was certain advantage."

He and his partner found, he says, "a very conservative operation, with very little change, bound by tradition and habits and perceptions."

No one denies that UPI is re-energized. Among achievements claimed so far:

** Progress in cutting costs. UPI has turned aggressively to technology. Transmitting stories and photographs by satellite instead of long-distance telephone lines is saving $450,000 per month in phone charges, for example.

** Improvements in services. UPI has reinforced state and regional news bureaus. Fifty staffers have been hired. New computerized coding services direct editors and broadcasters to stories on selected topics without their having to monitor all 13 million words (17 times the length of the Bible) that UPI moves daily.

** Revved-up marketing. After years of steadily losing clients, UPI signed 56 new newspaper clients in 1983, though it lost a like number. This year, says Senior Vice President John E. Mantle, the goal is 100 new papers and a net gain of 65. One recent coup: the signing of a long-term contract with the seven papers of Times-Mirror Co. And sales to broadcast clients brought in $17.8 million innew contracts in 1983.

** New ventures: UPI is offering a small-newspaper computer system for under $50,000, marketing the data base (through Comtex Scientific Corp.) and selling a news service for cable television subscribers. For a fee, UPI's Datapolitix will provide political information ranging from phone numbers of precinct chairpeople to candidates' schedules.

UPI also benefits from good will in a news business that appreciates its hot competition with AP.

Camille M. Smith, in charge of wire news for the Baton Rouge (La.) State-Times, credits UPI with snappier writing and often superior reporting from the Mideast and Central America. But if she had to choose, "I'd have to go with AP in order to feel I was getting the scope of coverage."

Can UPI make it?

"I think they can," says Kenneth L. Bagwell, executive vice president of Miami-based Storer Communications Inc. "The question is, do they have the financial staying power til they get to that point?"

In response to widespread speculation about the source of the new owners' capital, Geissler and Ruhe said no Baha' money is involved and that financing comes from reorganizing, joint ventures and borrowing (such as a $5.2 million line of credit from Los Angeles-based Foothill Capital Corp.)

Ruhe says the key is for UPI to cash in on the expanding demand for information by using its news-gathering army and modern communications system to develop information services "potentially more profitable than the wholesale news business."

UPI has come far from the days when visored rewrite men pounded out stories on rickety teletype machines. Now, news services whip stories around the world at 1,200 words a minute and photos flash from hemisphere to hemisphere in 11 minutes,thanks to cathode ray tubes and digital darkrooms. For this, clients pay from $100 to $20,000 a week.

UPI also has adopted a more team-oriented management style. Says Ruhe, "It really doesn't make sense in this era to manage people in the top-down, captain-of-the-ship hierarchial manner . . . We tend . . . to encourage people to take initiative, to see ourselves as problem-solving managers."

A year ago, UPI signed a three-year contract with the Wire Service Guild, providing $133-a-week- raises for veteran reporters and allowing an agency shop in which non-members of the union pay the equivalent of dues. In return, the company was able to "backload" the contract (concentrating the expensive benefits toward the end) and the union yielded some veto power over transfers.

Guild activist Jerry McGinn, 38, a Spokane, Wash.-based reporter with 20 years at UPI, has cautious praise. "There's a definite appearance of an effort to . . . improve the product for the client and to improve the conditions under which we work. The new ownership is communicating. Before, the only communications came at contract time, and that was, 'No'."

Explains Geissler: "In the end, we're relying on the willingness of these people to make great efforts to get news and information. If we can create a system where we have 2,000 people kicking out the jambs to bring home great stories, nobody will be able to get close to us."

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FOOTNOTE: This memo was sent by UPI public relations director Bill Adler to UPI department heads, managers and sales directors on Feb. 22, 1984, the day after the USA Today story ran:

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The enclosed copy of the Feb. 21 edition of USA TODAY includes a cover story in the Money section about UPI.

Dave Wickenden is putting together reproductions in slick form to be sent to you in numbers for distribution.

The story is interesting in that it is the first major article in a national publication that has this amount of positive thrust. It has its share of minor errors and negatives, but you can tell that the reporter did a thoughtful job and came away with a detailed look with many positive impressions.

We can look forward to more and more positive stories as time and accumulated achievements add up in UPI's favor.

You should be aware that AP's count for broadcast clients is very inflated. Our count is based on a true client count. They seem to have added up AMs and FMs separately and thrown in the kitchen sink for an obviously made up figure. Ours is client count of radio, TV, cable and UPI Radio-only. It's a solid and conservative count. (In a USA Today graphic, AP claimed 6,119 broadcast clients, while UPI claimed 3,800.)

The budget figure for UPI ($100 million) is wrong; they picked it up from clips several years old.

USA TODAY insisted that we list our bureau count the way AP does for their comparison. We prefer to say UPI has 260 news and photo bureaus worldwide. We count it as a bureau if there is a bureau manager and a separate administrative operation. AP goes by physical "offices" whether or not there is a bureau manager. Counting their way, UPI (135 in 50 states) still edges out AP (132 in 50 states) in total offices. Thanks to the expansion of the past year or so, UPI has more reach.

USA TODAY would not print out UPI's figure of 720 overseas agency and newspaper clients because AP, which has fewer international subscribers, uses an estimate that includes indirect clients served by overseas agencies that take the wire service. We estimated UPI's numbers in these terms based on reports from the different international mangers. We prefer to use the 720 count because it is "hard" rather than an estimate.

All in all, however, a positive story.

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