November 22, 2014

Newspapers

Paper Profits

An old-school newspaper family and its corporate partner have widely divergent views of the Daytona Beach News-Journal's value — and its role in the community.

Cynthia Barnett | 2/1/2006

CENTER SUPPORTERS: Publisher Georgia Kaney and CEO Tippen Davidson in the News-Journal Center. The newspaper paid $13 million for naming rights to the center.
In the mid-1960s, an International Wire Service reporter covering spring break in Daytona Beach declared the place a haven for "sex, sand and suds." The moniker appeared in newspapers and magazines around the world, and it stuck.

Along with other city leaders, Tippen Davidson, then general manager of the Daytona Beach News-Journal, which his father and grandfather had purchased in 1928, was desperate for his community to be known for something more. Passionate about the arts, he brainstormed a campaign to write 100 letters to the top cultural institutions in the world, inviting them to Daytona.

Receiving only one encouraging response, he used the newspaper to bankroll an unlikely visit: To the racy town where cars zoomed on the hard-sand beaches as well as the Daytona International Speedway, Davidson brought the London Symphony Orchestra in 1966. And to this day, every two years, the symphony pays a two-week visit to Daytona in a clash of cultures that has violinists visiting biker bars and bikers taking in Brahms.

To Davidson, now CEO, president and co-editor of the News-Journal, that's the proper role for a newspaper. The News-Journal, he says, "has worked long and hard to counter the downscale image that is projected by the rowdier aspects of special-event tourism in our community," such as Bike Week, Spring Break and the Daytona 500.

Such paternalistic gestures were typical for newspapers when they tended to be family owned. But a wave of consolidation that began around the turn of the 20th century has seen ownership shift into the hands of chains. By 2002, 69% of daily newspaper circulation was owned by the 22 largest newspaper groups.

The ninth-largest daily newspaper in Florida, the News-Journal likes to brag that it is the only large family-owned daily in the state, but that is not entirely true. The Davidsons bought majority ownership in 1928, but a little less than half of the shares remained with a partner who sold out to a competitor. He eventually sold to Perry Publications, owners of the Palm Beach Post. In 1969, Cox Newspapers bought the Post, and with it 47.5% of shares in the News-Journal.

The paper "has worked long and hard to counter the downscale image that is projected by the rowdier aspects of special events in our community," Tippen Davidson says.Executives at Cox, a 42-newspaper conglomerate with $12 billion in revenue, were never thrilled with the Davidsons' management of the News-Journal and over the years tried to buy out the family. The Davidsons always refused.

Until 2004, Cox decided it could live with the dividends the Davidsons generated -- about $25 million since 1969. But then, in a journalism trade publication, Cox executives read a short article critical of Tippen Davidson. The article charged he had unethically squeezed members of the Volusia County Council to cough up more money for a new performing arts center. The article mentioned that the News-Journal was paying some $13 million in exchange for naming rights, nearly half the cost of the $29-million center.

For Cox executives, it was the final indignity in a partnership in which they say they were routinely ignored. They say the Davidsons never told them about the $13-million expenditure, that it was way out of line with the paper's overall balance sheet and an illogical use of marketing money. In May 2004, Cox sued the News-Journal and its directors, alleging they had slighted Cox's financial interest. Tippen Davidson, the lawsuit says, "has operated the News-Journal Corporation as a virtual personal fiefdom."

The News-Journal failed to get the suit dismissed. It then exercised an option to buy out Cox, setting up a fight over the "fair value" of Cox's shares.

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