Washington Journalism Review Piece on Ruhe/Geissler



Here's a 1983 piece from the Washington Journalism Review on UPI owners Douglas Ruhe and William Geissler. It was written by Nashville, Tenn., writer Laura Hill.


THE MYSTERY MAVERICKS OF TROUBLED UPI

Given that they have been variously portrayed as flaming radicals, shady entrepreneurs, high-tech visionaries and religious mystics, Douglas Ruhe and William Geissler look surprisingly like any guys you might meet on the racquetball court after a day in the corporate boardroom.

In their 30s, they are both tall and trimly mustachioed, articulate and quick to smile. They favor neat, conventional clothing on the casual side and their offices in a Nashville bank building reflect the same relaxed style: cool shades of gray and maroon; spare, contemporary furniture; a noticeable lack of formal seating and big desks.

The scarcely come across as the major figures in one of the most intriguing media stories of the decade, but as the principal owners of United Press International that is what they became a little more than a year ago, when their acquisition of America's ailing number-two wire service hit the press like a bomb.

For more than two years, the 76-year-old agency had been on the block, after its owner, the E.W. Scripps Co. Of Cincinnati, had failed to enlist its clients in a cooperative-ownership venture. For years, UPI had been losing large amounts of money -- as much as $33 million in the previous decade. At fault, some said, was the company's policy of unrealistically discounting its rates to compete with The Associated Press. Others felt the wire service was just generally mismanaged.

Still, interest in UPI was widespread. The company claimed a net worth of $25 million and annual sales of $100 million or more, despite annual losses that reached a high of $12 million in 1980. Thought not as large as AP, the agency still boasted 223 bureaus worldwide, 2,000 full- time employees, 5,000 stringers and 7,500 newspaper, radio, television and cable TV customers in 100 countries. Over the years, UPI reporters have included such luminaries as Harrison Salisbury, Walter Cronkite, Howard K. Smith, Eric Severeid, David Brinkley and Helen Thomas.

Reuters had been mentioned as a possible buyer and had come close enough to begin inventorying local bureaus before the deal fell through. Scripps had also considered giving the wire service to National Public Radio.

but, on June 2, 1982, Scripps President Ed Estlow announced that a deal had been struck with Media News Corp., a new company whose fur principals were anything but major names in the news business. The sketchy biographies told little of the men. Len R. (Rob) Small, vice president of his family's Small Newspaper Group and editor and publisher of the Moline, Illinois, Daily Dispatch, seemed a more or less logical partner in the deal. After all, his late father had been well-respected in newspaper circles and had once tried to put together a group to buy UPI. Small himself had once worked as a UPI reporter. A second partner, who like Small owned 15 percent of UPI, was Cordell Overgaard, a director of Small Newspapers, partner in a Chicago law firm and president of Community Cablevision, a cable TV company in Wisconsin and Illinois. Totally unknown, however, were Geissler and Rhue, the owners of Focus Communications, a Nashville-based firm with holdings in cable television. Between them they owned 60 percent of the wire service: another 10 percent was owned by two employees of Focus.

No details of the financial deal with Scripps were disclosed. Questions concerning them were repeatedly dismissed. The press was in high dudgeon over the "veil of secrecy," as Gannett News Service described it, that hung around the transaction. In papers all over the country, Geissler and Ruhe became known as UPI's "mystery men."

All hell broke loose when it was discovered that Geissler had served time in prison for refusing induction into the Army during the Vietnam war, that he and Ruhe had both been civil rights activists in the '60s and that Ruhe had twice been arrested for those activities. Equally upsetting for many newspeople, in light of the Unification Church's recent launch of the Washington Times, was the disclosure that both Geissler and Ruhe were members of the Baha'i religion, which claims three million members worldwide, but very few in American newsrooms.

Editors and publishers demanded that Scripps disclosed the financial details of the sale, seeking assurance that no "funny money" was involved. But Scripps remained silent and the new owners said that, regrettably, they were bound by the terms of their agreement with Scripps to do likewise. And so the speculation and the controversy went on -- as it still does.

"I guess I was naive to expect otherwise, but frankly, I was surprised at the ferocity of the reaction," Geissler says now, musing on his and Ruhe's rocky beginnings with UPI. His partner, however, says he "expected approximately what we got.

"People were alarmed at the prospect of major media being taken over by religious nuts and weirdos and fanatics," says Ruhe. "I can hardly blame people for having that fear. They didn't know what the Baha'i faith was about. Part of it, too, was that we were younger, than we were of the wrong generation in the view of a lot of the press. As someone put it, we butted in line. And we were businessmen, not journalists."

Within a few weeks of the announcement, much of the secrecy in regard to the background of the new owners had been lifted. Geissler, Ruhe, Small and Overgaard spoke freely with the press. But the details of the actual sale of UPI remain official undisclosed, and the current owners remain true to their word to Scripps.

The picture that emerges is that, faced with the possibility that heirs to the Scripps family trust might take legal action -- either forcing the shutdown or sale of UPI or suing the management for UPI's continuing drain of millions of dollars -- Scripps turned the wire service over to Geissler and Ruhe virtually as a gift, reportedly sweetening the pot with $9 million to ease pension-fund and other liabilities and another $10 million to help the new owners effect a turnaround. Scripps was rid of a money-losing headache and received a nice tax break in the deal.

But why give the company to two unknowns? Sources say it was a matter of both "chemistry" and real conviction on the part of Scripps Co. That Ruhe and Geissler, the architects of the deal, had the technical and business know-how to turn UPI around as well as a deep commitment to make the troubled company go.

Geissler describes the takeover as "the opportunity of a lifetime." Ruhe says he and his partner wanted to buy UPI "the minute we found out in the press that it was available. It's a wonderful company, a great company with a great tradition and a great history. We thought it might have a future, too." They also saw in UPI a sound business opportunity. As partners in Focus Communications, Ruhe and Geissler operated Channel 66 in Joliet, Illinois, a pay TV station and the first of 100 such operations they planned in the United States. Focus, in fact, planned a number of ambitious projects in low-power TV, direct satellite broadcasting, cable television and programming. In UPI there existed similar possibilities and a business compatible with the one they already owned.

"If you have no money and you start a business from scratch, it is a struggle every step of the way," says Ruhe. "To be able to buy an organization and solve its financial problems means that you have a gigantic apparatus that is in place already and you are in effect leapfrogging, moving ahead."

Ruhe, who is managing director of UPI, is an intense, energetic man, given to good-natured kidding on occasion but possessed of what seems to be a deeply serious commitment to his work. Geissler, UPI senior vice president for planning, seems to hum along in a lower gear, and is possessed of an easy, dry wit. He is serious, as committed as his partner to UPI, but perhaps less formal. Both are married. Ruhe has three young children.

If they are far less exotic than they seemed to some people a year ago, their backgrounds are still not the stuff of which most conventional businessmen are made. They are mavericks who have made their way, successfully so far, on a combination of instinct, creativity, intelligence and sheer guts, their admirers say.

Ruhe, 38, was raised in Kansas City, Missouri, where his father was a doctor. Both his parents were followers of the Baha'i faith, which was founded in 19th-century Iran and rests on the belief that all mankind is unified under one god -- not a particularly subversive sentiment. Ruhe's father is now one of the nine members of the religion's governing board if Haifa, world Baha'i headquarters. Racial discrimination is specifically forbidden by the Baha'i faith and Ruhe early on became involved in the civil rights movement. He was arrested in demonstrations in Kansas City, Missouri, in 1963 and Lawrence, Kansas, in 1965. In the first case he was fined $25, though the conviction was reversed on appeal; charges were dropped in the second.

Ruhe attended Earlham College and the University of Kansas before joining VISTA and moving to Laredo, Texas, where he, Geissler and Geissler's brother, Richard, a fellow VISTA worker, led a 1967 campaign to organize Mexican-American restaurant workers. Its success led to the passage two years later of the state's first minimum-wage law and also led to Ruhe's expulsion from VISTA. He next worked briefly as a reporter for the Allentown, Pennsylvania, Morning Call and then served as a medic in the Army in Vietnam for a year. Back in the U.S. In 1969, he co-founded an experimental school for inner-city youth in Springfield, Massachusetts, at which Geissler became a teacher.

Geissler, 36, was born in Caracas, Venezuela, where, his parents divorced, he and a brother were raised by their father and a Venezuelan family. He returned to the U.S. When he was 13, attended military school in Virginia and Syracuse University. Geissler studied at the University of Mexico after his involvement in the Laredo restaurant-worker campaign, filed stories for the Kansas City Star from Mexico and Venezuela, and worked for a year or so as a reporter for the English-language daily in Caracas. In 1968 he returned to the U.S. And offered to serve in a noncombatant capacity but was turned down by his draft board and instead served a sentence for draft refusal in the Danbury, Connecticut, federal prison from August 1969 to June 1970. It was while he was waiting to enter prison that Geissler began to study seriously the Baha'i religion.

Reunited after Vietnam and prison, Ruhe and Geissler collaborated on a book that was never published, a chronicle of the war from the viewpoints of both Vietnamese citizens and returning American veterans. Geissler worked as a reporter in Springfield, taught at Ruhe's school, co-founded a paper for the school with Ruhe and, like Ruhe, earned an M.A. in education from the University of Massachusetts.

From 1972 to 1977 both worked at the national Baha'i center in Wilmette, Illinois, on various media projects. In 1977 they founded Communications Design Group, a Chicago-based multi-media consulting firm whose clients included Bell & Howell. The company was renamed Focus Communications and in 1980 moved to Nashville. A subsidiary, Focus Broadcasting, operates the Joliet station and was granted permission for a low-power TV station in Murfreesboro, Tennessee, near Nashville.

both men describe themselves as capitalists and remark on how far they have traveled since the '60s, like much of their generation. They still, however, stand solidly by the choices they made then.

"The Vietnam war was a central life experience for me," Geissler says. "I did what I felt was the honorable thing do to. I did not dodge the draft. If I was called upon to serve today, I would do it."

Ruhe describes the civil rights movement as "one of the finest expressions of the democratic spirit in our time," and says, "I think it was a noble undertaking and I'm proud that I was able to be a small part of it."

Still, both say they are not involved in partisan politics, because their religion forbids it as it forbids proselytizing. Their relationship with the business of news-gathering at UPI is nil, they assure, and they make no attempt to influence or interfere with the news agenda. Still, certain personal values of their are reflected in the way they plan to run UPI, such as a "non-hierarchical" approach to management, absolute equality in hiring and promotion of different races, sexes and national backgrounds and a hope-for broadening of UPI's editorial voice to include a range of opinions and ideas not generally reflected in the media.

If their commitment to broader and less discriminatory employment practices is welcome news to many in the historically white- and male- dominated agency, Geissler and Rhue's non-hierarchical management approach is even more welcome.

"We try to involve a lot of people in the consultative process," says Ruhe. "We don't have a formula like the Japanese and we haven't arrived at a new paradigm or anything but we try to operate in a way that is consistent with our feeling that a lot of people have talent and good ideas and in organizations there is too often a tendency for structure to lock them out and frustrate them."

Don Phillips, chief of UPI's reporters at the House of Representatives, says employee morale has markedly improved since the takeover.

"We're not sharecroppers any more. We've moved into the manor house and become part of the family," the 15-year UPI veteran says. "We never saw the management under Scripps. these guys have made an effort to come in and sit down and really get to know us. That has created a lot of good will."

How well their progressive style serves them as they attempt to turn UPI around remains to be seen, but the strength of Geissler and Ruhe's determination to do so is impressive. They have commuted weekly between New York and Nashville for a year, throwing themselves into the daily business of running UPI, a task they admit has been made more difficult by their lack of experience in managing $100 million corporations.

Geissler says UPI lost money in 1982 (the speculated amount is $11 million) but the company claims that sales in the last quarter of 1982 were up 20 percent over 1981, that sales in the first quarter of this year were at a 20-year high and that for the first time in years UPI is now gaining more customers than it is losing.

"It has been slower than we expected, but then people told us that big boats turn slowly," says Ruhe, who sticks with the prediction he made at the time of the transaction that UPI will reach a break-even cash flow by late this year.

The key to their optimistic predictions is an ambitious and long- overdue overhaul of UPI's technical capabilities and generating operating efficiency, an upgrading of product and a vigorous expansion of its sales effort. First on the agenda has been the installation of 1,400 satellite dishes, which will bring UPI's total satellite installations to 2,000 and by lessening the company's dependence on leased telephone lines for its transmissions will save, Ruhe estimates, $6 million annually. The company has also instituted a new computer system for newspapers that will upgrade and broaden its service to subscribers.

Also under way has been an extensive restructuring of staff in an effort to eliminate "top-heavy management" and shift the emphasis in personnel to news people. Forty-five administrative and clerical positions were eliminated in February and 30 news and editorial employees were hired in various bureaus. Further cuts were rumored but have not materialized.

more than two dozen new photo and news bureaus have been opened since June 1982 and more are planned, particularly state and regional bureaus. William J. Small (no relation to Rob), the controversial former president of NBC News and a 17-year veteran of CBS News who was hired last fall as UPI president, has started a number of news, feature and graphic services. Others are in the works. Among them, regular reports on regional economic and financial trends jointly produced with Megatrends author John Haisbitt and economist Michael Evans.

A relocation of the company's news headquarters from New York to Washington this summer and a move to Nashville of most of its business functions will eliminate expensive "duplicative activity," says Geissler.

Despite this substantial progress in streamlining the wire service, boosting its sales and beefing up its menu of services, Geissler and Ruhe's first year at the helm of UPI has been a stormy one. There have been technical and financial setbacks, and two major changes in the ownership of the company have done little to help assuage the news industry's continuing worries about UPI's stability.

One of the major snags was a delay in the implementation of the satellite dish installation program. It is now resolved, Ruhe says, but he admits that the delay worried all of the four original principals in the takeover from Scripps and had a role in the decision last February of Rob Small and Cordell Overgaard to leave UPI.

Their departure was also the result of differing expectations of what the partners' role would be in the company. "We were quite simpatico but we were so busy putting the thing together that we didn't think too much about who was going to do what," says Rob Small. The partners also differed over whether or not to manage UPI themselves or hire managers to do it for them while they held the reins from a distance. Ruhe and Geissler felt that a long-term, hands-on approach was necessary. Overgaard and Small felt that they could not give UPI that kind of time, as both of them had other businesses and Small had a young family in Illinois.

The resignation from UPI of "the legitimacy factor," as Ruhe describes his two former partners, was worrisome, but overshadowed by the simultaneous entrance of John Jay Hooker, who took over as chairman of UPI's board and acquired a 30 percent interested in the company for, he announced, $1 and other valuable considerations."

At first glance, the 52-year-old Nashville businessman, political figure and lawyer seems an odd partner for two children of the '60s. Hooker is a fixture in Tennessee politics, having run (unsuccessfully) for both the governorship and the U.S. Senate. He is a founder of Hospital Corporation of America and the parent company of the ill-fated Minnie Pearl Fried Chicken chain. He served as counsel for The Tennessean in Nashville, later helped set up the deal in which Gannett Newspapers bought that paper and sold the Nashville Banner, making Hooker part owner. Hooker later became its publisher for two years. Flamboyant, eloquent, ambitious, Hooker numbers among his friends actor Warren Beatty, the Kennedy family and Muhammad Ali.

Hooker took it upon himself to meet Geissler and Ruhe when he heard that they had been successful at landing UPI from Scripps -- something he had tried twice to do himself. He believed in Scripps' "due diligence" in selecting the two young men to run the company because, he says, "You don't sell your house in a neighborhood where you grew up and knew all your neighbors and loved them to people you think are outlaws."

His enthusiasm for the company was, if anything, even more unbridled and vocal than his partners. He envisioned a great future for UPI in the information revolution as the agency moved from handling "time- sensitive" information to general information with the help of new technologies. The three partners' differing views of when UPI would move into these areas, however, was to prove a stumbling block, as were differences on how to finance and manage the company.

In mid-April, Hooker rather suddenly returned his share of UPI to his partners, after his offer to buy the company from them for "several million dollars" was refused. The major source of disagreement, Hooker and Geissler both say, was over whether or not to bring in outside capital. Hooker felt it was important to do so to help launch new projects. Geissler and Ruhe did not wish to dilute their control over the company by bringing in outside money. The parting was with regret on all sides. Hooker describes his former partners as "highly intelligent, highly capable," and say theirs was a "point of view a reasonable man could have -- it just wasn't one I could live with." All three men say they hope to work together on other projects.

There is admittedly no dearth of investors who have shown an interest in UPI and it is nice to know they are there if needed, says Geissler. He maintains, however, that UPI has sufficient internal capital to bring about a turnaround that one source estimates could require an additional $15-20 million. Others say that some sort of outside investor is almost an inevitability if UPI is to survive.

While grappling with management changes and trying to turn UPI around during the past year, Geissler and Ruhe have also had to spend an enormous amount of time on another problem: trying to reassure the press, both as news gatherers and clients, that they are competent managers, suitable material for news executives and in possession of a company with a viable future.

They have won over their share of believers, for example the Newhouse Newspapers, which signed a $9 million contract with UPI in January. But others remain unconvinced. The Denver Post announced its intention to terminate its contract in March because, said Executive Editor Will Jarrett, UPI's new owners lack professional news background. They repeatedly came under fire at the American Newspaper Publishers Association and American Society of Newspaper Editors conventions last spring. At the latter, in failing to answer a simple question about why an editor should subscribe to UPI, Oakland Tribune Editor and Publisher Robert Maynard told The New York Times Geissler and Ruhe "shot themselves in all four feet with one bullet."

Market research, Geissler says, indicates that editors and publishers have a deep-seated desire to see UPI prosper. Rob Small believes that, "Human beings being what they are, if Associated Press is the only major wholesaler, they won't have the enterprise they should. There is also an economic concern. The economies of scale that would accrue to AP by being the only would be in a sense a windfall for the newspaper industry since AP would get all the revenue and not have much more cost. But over the long run -- maybe as early as five years -- the total cost to the industry might be even higher than having two. There would simply be incentive to be efficient."

There is also the undeniable fact that without UPI the vast majority of newspapers, magazines, radio and television stations would be left with only one major source for national and international news. There would be no checks on accuracy -- or fairness.

Some in the news business agree with the sentiments of Anniston (Alabama) Star Publisher H. Brandt Ayers, who told USA Today, "I'm not going to wring my hands if it (UPI) fades away." It is a good bet, however, that more concur with Rob Small's sentiment: "UPI is a national resource, a national treasure. Its loss would be a terrible loss."

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