High Wire Act

U.P.I. reaches for a safety net

In the summer of 1907, Edward Wyllis Scripps, the eccentric Ohio newspaper entrepreneur, strung together a ragtag assortment of reporters, telegraph operators and rewrite men to form the United Press. Though the fledgling wire service had just $500 in working capital, Scripps gave it a difficult mission: take on the mighty Associated Press, a cooperative owned by its client newspapers and established more than half a century earlier. By late summer U P. had miraculously captured 369 U.S. papers as clients, and it looked as if Scripps' folly might soon overtake A.P. as the nation's premier wire service.

That day never came. Though United Press--which merged with the Hearst chain's International News Service in 1958 to form United Press International--has gained ground on Associated Press over the years, it has always been No. 2. Even worse, U.P.I. has lost $17 million in the past 18 years, including $2.5 million last year. (A.P. is a nonprofit cooperative and usually comes close to breaking even.) For years, U.P.I.'s possible demise was a popular taproom topic among journalists.

Last week U.P.I. President Roderick Beaton announced a plan to put his wire service back in the black by ripping a page from A.P.'s ticker: turning U.P.I. into a cooperative of sorts. U.P.I. has invited more than 100 of its largest newspaper and broadcasting clients to become limited partners in the wire service. Under the scheme, Scripps and Hearst would retain 10% of the new company and stay on as managing partners. The remaining 90% would be sold in 45 shares, and no single client could own more than 10% of the firm. If successful, the restructuring would provide U.P.I. with as much as $4.5 million in new working capital. "The company must be divided," says Beaton. "We need a stronger base of ownership and a lot of capital. To broaden the base will guarantee the future."

The present seems dismal enough. Though U.P.I.'s 850 reporters clack out almost 8 million words and figures a day, they are unable to match the sheer ubiquity of A.P., with 1,401 journalists. As a result, when editors are forced to cut back on their wire budgets, many drop U.P.I. in favor of the more comprehensive coverage provided by A.P. Some 1,365 U.S. newspapers belong to A.P., while 1,115 subscribe to U.P.I.

Many editors feel that whatever U.P.I. lacks in size it makes up for in hustle. "U.P.I. has a well-developed No. 2 feeling, and they often try harder," says Mort Rosenblum, editor of the Paris-based International Herald Tribune and a former A.P. correspondent. U.P.I. reporters have grown accustomed to being slightly overworked and less well paid than their counterparts at A.P. Remembers Dave Oestreicher, 49, national editor of the New York Daily News and a 15-year U.P.I. veteran: "The company ran a tightwad operation and was proud of it." For example, in the 1950s at least one U.P.I. bureau supplied its reporters with three-minute egg timers for longdistance calls. By the time the sand in the tiny hourglass ran out, says Oestreicher, "if you hadn't got the story, you'd hang up."

Despite its smaller size and financial troubles, U.P.I. has been faster to embrace advanced technology and new lines of business than its larger rival. U.P.I. has invested more than $21 million over the past decade to automate its news-gathering operations and has opened a $10 million computer center in Dallas (corporate headquarters will remain in New York City, a few blocks from A.P.'s). U.P.I. began audio reporting for radio in 1957, and now supplies news reports to roughly 1,000 stations, 300 more than A.P. In early 1977, the company established a commodity wire report with Knight-Ridder, and also transmits news and regional reports, sports, even physics lessons to home-computer owners.

Though quasi-journalistic sidelines account for 15% of U.P.I. revenues, most of the proceeds from the sale of stock will go toward improving news coverage, and competition with A.P. should heighten. "We feel strongly that the country needs two vital news services," says Beaton. Alas, U.P.I. last week was unable to upstage its rival on one major story, though it definitely had the edge on inside information. Because of a Securities and Exchange Commission rule that prohibits a company from advertising a stock offering, U.P.I. could not report news of its forthcoming partnership sale.

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