No Longer All in the Family

By Ellie McGrath

For nearly three decades, Detroit has been the scene of one of the costliest and hardest-fought newspaper rivalries in the U.S. In a battle for dominance of the sixth largest market in the nation, the powerful Knight-Ridder Newspapers Inc. has spent an estimated $23 million since 1979 to cover losses at the morning Detroit Free Press (circ. 646,476). The smaller, family-run Evening News Association, which owns the all-day Detroit News (circ. 666,949), has paid even more. It allegedly used revenues from five television and two radio stations to offset an estimated $41.5 million in losses at the paper from 1981 to 1984. ENA Chairman Peter B. Clark has defended the News like a crusader in a holy war; the paper was founded by his great-grandfather James E. Scripps in 1873. Last week, however, Clark's efforts to uphold family tradition gave way when his nine-member board, including six relatives, voted to put the ENA on the block.

The board's hand was forced by a hostile takeover bid by two producers: Norman Lear, creator of the TV series All in the Family, and A. Jerrold Perenchio, promoter of the 1971 Ali-Frazier fight. As principals in cash-rich L.P. Media, Lear and Perenchio had offered $1,000 a share for ENA stock last month. That offer alone was enough to roil the Scripps family: ENA stock had been selling sporadically at only $150 a share two years ago. Late last year, in an attempt to placate family members disgruntled over the stock's performance, Clark bought back 31,500 of ENA's total 453,000 shares at $250 a ! share. When Lear and Perenchio upped their offer last week to $1,250 a share, the scene was set for a bidding war. Says New York Media Analyst Bruce Thorp: "If a few family members jumped at the $250-a-share offer, they'll probably all leap on an offer for more than $1,250."

Since the ENA board's decision to sell, potential buyers have been lining up like antique dealers at an estate sale. Although Clark considers the News the crown jewel of the company, bidders seem more enticed by ENA's highly profitable television stations in Washington, Tucson, Oklahoma City, Austin and Mobile. (ENA also owns nine newspapers in California and New Jersey, and radio stations in Detroit.) Rumored potential suitors include CBS, Hearst, Washington Redskins Owner Jack Kent Cooke, the Tribune Co. and Wesray Corp. (headed by former Treasury Secretary William Simon). Another major contender is considered to be the Gannett Co., the country's largest newspaper group, which reportedly bought a block of 20,000 shares last week at $1,300. The ENA board has announced that it will not sell stock to L.P. Media, but Lear and Perenchio have taken the company to court to press their right to a hostile bid. Only one thing is clear: the price will continue to go up. Some Wall Street analysts believe that ENA stock could hit $2,000 a share.

Observers speculate that a new owner might split ENA into two companies, one consisting of broadcast properties and one of newspapers. As the News's losses mount, a new owner could petition the U.S. Justice Department to allow a joint operating agreement with the Free Press, in which the editorial staffs would remain separate, but the advertising, printing and circulation operations would be shared.

The ENA board will meet this week to consider offers. The probable sale has not cooled the battle between the News and Free Press for the hearts and dimes of Detroiters. Says News Editor Lionel Linder: "I suspect we will continue to lob grenades at the Free Press. We've done it so long we can't turn off the competitive juices."

With reporting by Paul A. Witteman/Detroit, with other bureaus