1987 Washington Post Piece on UPI

Here's an Aug. 31, 1987 story from The Washington Post on UPI's struggle to survive:


Only days after becoming managing editor of United Press International, Barry Sussman stormed out of his office, marched up to a group of startled UPI editors, and ordered them to kill a story moving on the wire.

The story claimed that the teacher Christa McAuliffe, who was killed a year earlier when the space shuttle Challenger exploded, had been warned by Reagan administration officials not to say so many nice things about John F. Kennedy at press conferences. But the reporter had made no attempt to talk to the officials named in the story.

Sussman said he was "furious" but not completely surprised. He said that before joining UPI in January, he "had the impression that the (UPI) copy was going to be hyped, inaccurate and sloppy beyond what was acceptable . . . When I came, it didn't take me long, being in that mindset and looking for these things, to find hype, inaccuracies and sloppiness."

Sussman, formerly an editor at The Washington Post, insists that the quality of UPI stories has vastly improved in recent months. His task now is to persuade editors that real improvements have been made, and to try to reverse the floor of subscribers that have left UPI in recent years.

UPI officials acknowledge that they still are on the ground floor of a Herculean rebuilding job started last summer by Mario Vazquez Rana.

The Mexican billionaire and his 10 percent partner, Houston developer Joe Russo, startled many American publishers and editors by plopping down $41 million to rescue UPI from bankruptcy. UPI, with its headquarters at 14th and K streets downtown, has about 300 employees in the Washington area and 1,750 throughout the world, according to UPI spokesman Chris Smith.

Vazque Rana, a newspaper tycoon and president of the Pan American Sports Organization, appears to have brought a measure of stability to UPI. Paychecks do not bounce. Empty reporting positions are being filled, and 65 new reporting slots have been added. Four new bureaus have been opened.

Antiquated equipment is being replaced. Vazquez Rana ha ordered a new $4.7 million computer system, new computer terminals and printers for all the bureaus, and a new photo transmission system.

Several expansion plans are under consideration: an aggressive sales push to get nonmedia clients; the revamping of its U.S. Spanish-language radio news network, Radio Noticias, so it can be sold overseas as well as to Hispanic stations here; and the syndication of sports columns and comics.

But despite the significant rebuilding effort, skepticism still abounds about the fate of UPI, which has not seen a profit since the early 1960s. Company officials say the wire service is losing about $1 million a month. They decline to release revenue figures.

Robert Page, president of The Chicago Sun-Times and a former vice president and general manager of UPI, said that in the late 1970s the wire service's revenues were close to $100 million a year. Since then hundreds of clients have left, and some rates were cut as an inducement for others to stay. Thus, annual revenues are thought to be substantially below $100 million.

UPI's efforts to get on track since emerging from bankruptcy have been hindered by problems.

The company has been embroiled in Wire Service Guild negotiations for more than five months, and the sparring has cuased frustrations. Guild members said they remain particularly jittery over Vazquez Rana's plans for the company and their job security.

"we have never gotten a clear sense of where he wants to go," said Sean McCormally, chairman of the negotiating committee and an editor on the Washington desk. "It makes us very leery."

UPI is still plagued with high turnover. Editor in chief Ben Cason said he hopes to raise the salaries of the best reporters, who are frequently offered better-paying jobs at newspapers.

Meanwhile, Vazquez Rana continues to be dogged by questions about his leadership of UPI. This summer Regardie's, a Washington business magazine, ran a story accusing Vazquez Rana of interfering with UPI coverage in Mexico. Sussman and Cason said that Vazquez Rana has never interfered with the news operation since their arrival in January.

Probably most troubling for the future of UPI, however, is the apparent view by many publishers and editors that it is a white elephant, an anachoronism from years when UPI and The Associated Press dominated the news service game.

Those were the days when UPI and AP teletypes were mainstays of most newsrooms, and the wire services' thousands of reporters served as the eyes and ears in far off places for newspapers across the country.

But in recent years the scene has been crowded by a host of supplemental wires, such as The New York Times, Knight-Ridder and Los Angeles Times-Washington Post news services. Although supplemental wires do not offer the wide range of stories and photos available from AP and UPI, they are much cheaper. Papers can often get these supplemental wires for 25 percent or less -- sometimes much less -- of the cost of UPI.

Thus, cost-conscious publishers -- particularly those with both AP and UPI -- are wincing at the price of the full UPI service. Like AP, UPI supplies a wide range of services, including regional, national and international news, sports, photos and features.

UPI charges, although smaller than AP's, change range from tens of thousands of dollars a year for small dailies to hundreds of thousands of dollars for metropolitan papers. A major paper's charges can run as high as $700,000 a year.

In addition, many papers have expanded the amount of national and international coverage handled by their own reporters, making them less dependent on news wires and more inclined to use the extra funds on their own staffs.

For many newspapers, it has all added up to a decision to carry only one general wire. The wire most frequently dropped has been UPI, long considered the less dependable -- though at times scrappier -- underdog.

In 1986, AP had 990 newspaper members that depended solely on AP as their general news service -- more, sources say, than the total number of U.S. newspapers that UPI services. UPI will not divulge the number of newspaper clients it has, and few dailies depend solely on it.

AP added 35 daily papers in 1986, bringing its total of newspaper members to 1,365. That represented 82 percent of the nation's daily newspapers, and accounted for about 95 percent of the nation's total daily circulation.

AP had 3,954 radio and television stations in 1986, but broadcast rates are generally much lower than newspaper rates. UPI has about 1,700 broadcast clients. Broadcast sales make up less than half of UPI's revenue, but company officials see it as a potential bright spot, because revenue from radio sales has increased recently and because there are 10,000 radio stations in the nation.

UPI officials acknowledge that the company has been losing large numbers of clients in recent years. Industry estimates are that it has one-third less the number of newspapers that AP has.

"We lost a lot of clients in 1986," during the time of the bankruptcy and uncertainty over the new owner, said Cason, who also left The Washington Post in January to join UPI. Particularly damaging was the loss of contracts with chains, according to Cason.

"In some states where UPI had 40 papers, how it's got 20 papers. Similarly, in some states where it had a good number of reporters, it has fewer reporters," said Sussman.

In addition, of the clients retained, some are paying lower rates than they used to. During those "panic years, (UPI) would sell just aobut anything to anybody at any price," said Charles Hollingsworth, UPI's vice president for marketing and sales. But he added that is no longer the case. Hollingsworth is another former Post employee who joined UPI in January.

The loss of clients and revenue has led many in the newspaper community to question whether UPI can ever catch up with AP, and whether it even makes sense to try.

Milton Benjamin, who was UPI's president and chief executive officer last fall and winter, is one who thinks UPI cannot compete with AP as a full service wire. He believes UPI should pare back and become a "premium" news service that would concentrate on enterprise, investigative and analysis articles, leaving routine spot news to AP.

However, after five months Benjamin left UPI because of disagreement with Vazquez Rana over the future of UPI. Colleagues of Vazquez Rana say the Mexican publisher has made it clear that he did not buy UPI simply to be the owner of a supplemental wire, but rather to head a major worldwide news organization.

"Mario has decided he wants it to be a full service wire," said Cason.

UPI officials acknowledged that rebuilding will take time, and Vaquez Rana has said repeatedly during the past year that he is in it for the long haul.

Said Sussman, "We are not going to reverse this kind of thing in just a matter of months. I think it's going to take us years.

But many newspapers seem unwilling to wait for any potential turnaround.

The New York Daily News canceled UPI in June, citing economic reasons. In dropping UPI, the Daily News joined its competitors, The New York Times and the New York Post, which had previously canceled. The Newark Star Ledger dropped UPI in October, after deciding that two general wire services were unnecessary.

The St. Louis Post Dispatch, which had a month-to-month contract, dropped UPI June 15 in order to free up money to hire six new reporters and another copy editor. Harrisburg Patriot-News Editor Ronald Minard said the paper is terminating its service with UPI at the end of the year and is planning to pick up some supplemental wires instead.

The Sacremento Bee canceled a few months ago and picked up Reuters, which Mort Saltzman, the executive news editor, said provided better business and foreign news for less money. The Sacremento Bee also gets AP and numerous supplemental wires, and in the past two years has expanded staff coverage of national and international events, according to Saltzman.

UPI "wasn't fulfilling any kind of need," said Saltzman. "It was just there. There was nothing we lost by dropping UPI."

San Jose Mercury News Executive Editor Robert Ingle said the paper dropped UPI at the beginning of the year after deciding the service was not worth the money. "They don't like to hear this, but they're not essential," said Ingle.

He said UPI was most valuable in sports and photos, and that he would like to resume getting UPI photos if "they would make a reasonable deal . . . but suddenly they're talking about hundreds of thousands of dollars." He added, "What they (UPI officials) want for these things is more than I think they are worth."

Ingle also said he has not seen any major improvement in quality in recent months. "I kind of judge that by what I see in the competitors who use UPI, and so far I haven't been blown away," said Ingle. "Frankly, we felt that we had supported it for many years beyond its value, because we didn't want the country's papers to be in a situation where there was only one basic wire service . . . But you can only do that for a while."

The Hartford Courant dropped the UPI news wire last fall but kept the photo wire, although it now is thinking of dropping that as well, managing editor Michael M. Jenner said. "Our sense had been that there were international photos that we might miss" without UPI, he said. "In fact, for the last year, we've been paying close attention and I don't think that we run all that many photos from UPI that we couldn't get from AP."

Even E.W. Scripps, chairman and president of Scripps League Newspapers Inc., and grandson of the founder of UPI, dropped the wire from his 24 dailies last year.

UPI officials cite some victories. The Seattle Times considered eliminating UPI for budget reasons, then after a two-week study earlier this year decided the paper would miss some critical stories. "There were a number of things UPI had that AP didn't and vice versa," said wire editor John Gomes.

The Pittsburgh Press renewed its contract, but only on a short-term basis, said editor Angus McEachran. "There's been a definite improvement in the state wire, an area that had really tumbled. We had threatened to pull the plug if the system was not replaced, and they improve it."

McEachran also singled out UPI's Central American coverage for praise. But he declined to say how long the paper would stay with UPI.

The Chicago Tribune and The Washington Post have also renewed their contracts. The Trenton Times has a long-term contract with UPI, but executive editor Linda Cunningham said that if it were up for renewal, she would continue the service. "We often joke that we'll be the last newspaper in the country left with both wire services . . . but we like the competitive edge," said Cunningham.

She said UPI stories coming out of New Jersey have improved in the past year after having deteriorated dramatically about three years ago. She complimented the wire service for hiring more and better experienced reporters in the state.

But she added that AP is still stronger, saying, "We would be very concerned if all we had was UPI."

Likewise William B. Ketter, editor of The Patriot Ledger of Quincy, Mass., and a former UPI official, said he has noticed improvements in the international report and some "flashes of brillance" in reports from Latin America and the Middle East. But he said the paper depends mainly on AP and the New York Times News Service.

"As long as we can buy UPI we will. We feel strongly that it is an important American journalistic institution," he added.

Other editors, however, seem less charitably inclined these days. Many echoed the comments of Frank Devine, executive editor of The New York Post for the past year and previously the editor of The Chicago Times: "It is a marvelous institution . . . But in the year that I've been editor here without UPI, I haven't seriously missed it, I regret to say."

Said Jenner of The Hartford Courant: "It would have been nice to keep UPI, but it was a luxury . . . I wish them the best . . . But I don't think we felt that we owed UPI a living."

UPI editors say their strategy to get these editors back is straightforward. They plan to win back newspapers by improving the quality of stories and offering stories that papers do not get from AP.

but they acknowledge that it is an uphill fight. Sussman described a recent UPI tryout at a major paper. As he tells it, the editors who were monitoring the service gave it a glowing report. Yet despite the praise, they recommended that the paper not take UPI because of the price.

"As it happened, I knew the publisher there," said Sussman. "So I called him and said : If you're not going to get it, and your guys like us so much, then who's going to get UPI?"

While Sussman thinks that story eventually may have a happy ending, he acknowleges that it is just one of the major questions facing UPI.

- 30 -