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Newspapers on the edge

12:19 AM EDT on Thursday, July 26, 2007

By Benjamin N. Gedan

Journal Staff Writer

Communications mogul Rupert Murdoch’s attempt to capture The Wall Street Journal has provoked widespread apprehension about the future of one of the country’s most important newspapers.

In New England, the proposed acquisition is sowing even greater anxiety.

The Wall Street Journal’s corporate parent, Dow Jones & Co., also owns Ottaway Newspapers Inc., a nationwide chain of local papers that includes the Cape Cod Times and The Standard-Times in New Bedford.

While Murdoch has trumpeted plans to leverage The Wall Street Journal to support a Fox television business channel and other media, he has been silent about the company’s other newspapers.

That has left local reporters and editors uncertain about the impact of a potential sale, fearing the heavy hand of Murdoch pushing a political agenda and the type of photographs of scantily attired women that regularly appear in his British tabloid The Sun.

At the same time, Ottaway employees are haunted by the opposite scenario, the rapid resale of the local media group.

“I think they’re nervous about what’s going to happen,” James H. Ottaway Jr., a former board member at Dow Jones, said in an interview. “I would hate to see him or his people in the future reduce the unique editorial quality and public service practices.”

Ottaway’s father, James H. Ottaway, started the newspaper chain in 1936. His son served as publisher of The Standard-Times, which Ottaway acquired in 1966 along with the Cape Cod Times. He has also served on the boards of Ottaway and Dow Jones, and remains a significant Dow Jones stockholder.

In all, the Ottaway group, acquired by Dow Jones in 1970, owns at least 12 publications in Massachusetts, including The Inquirer and Mirror, in Nantucket, and The Barnstable Patriot. It also owns newspapers in Maine and New Hampshire.

Media analysts and some Dow Jones shareholders have warned that Murdoch’s News Corp. would use The Wall Street Journal to promote a right-wing political agenda and its own global business interests. Reporting on corporate wrongdoing and coverage of human-rights abuses in China might diminish, they have warned.

But that type of impact, analysts say, would not likely be felt at the Ottaway newspapers, where the headlines have profound local impact but do not move world markets.

“His editorial practices are not ours, and he’s quite willing to use his media power to advance his business interests and his political interests,” said Ottaway, 69. “But I don’t think he’d spend a lot of time worrying about the editorial policy of the New Bedford Standard-Times.”

Andrew Tomolonis, the city editor at The Standard-Times, was a deputy managing editor at the Boston Herald when it was owned by Murdoch. (Murdoch sold it in 1994 when he bought Fox affiliate WFXT, to comply with a federal law prohibiting the ownership of TV stations and newspapers in the same market.) Tomolonis said Murdoch never intervened in editorial decisions.

“He wasn’t a big presence,” Tomolonis said. “We just pursued the news. There was never an influence to cover a story a certain way.”

For most Ottaway journalists in New England, the bigger fear is the sale of the newspapers by News Corp. to an owner who would cut staff and resources, as is happening at newspapers across the country in response to lower advertising sales and circulation.

“No one is smiling and saying Rupert Murdoch is a great guy who does great things for news reporting,” said a reporter at an Ottaway newspaper who requested anonymity, citing instructions from her editors. “But the biggest fear for us would be what’s going to happen with our chain, if there is going to be a sale and if that would lead to cuts.”

In its global empire, News Corp. has focused on large metropolitan newspapers, including the New York Post and similar publications in the United Kingdom and Australia.

The Ottaway newspapers would be an unusual addition, said Edward Atorino, a media analyst at The Benchmark Co., a financial broker in New York.“They don’t really fit into News Corp.’s long-term strategy,” he said. “They are not major dailies, and they are not financial newspapers.”

Last December, Dow Jones sold six of the Ottaway newspapers to Community Newspaper Holdings Inc., of Birmingham, Ala., for $282 million. The newspapers — including the News-Times in Danbury, Conn. — accounted for nearly one-third of Ottaway’s revenue.

Fred Bayles, a journalism professor at Boston University, said Murdoch would probably continue that process.

“I’m not sure whether or not Murdoch or his minions would be interested in maintaining those papers,” Bayles said. “There’s a lot of movement toward smaller chains buying those up.”

Two years ago, Community Newspaper Holdings bought The Eagle Tribune, in Lawrence, Mass., along with six other Massachusetts publications.

In January, R.I.S.N. Operations Inc. bought nine Rhode Island newspapers, including the Kent County Daily Times and The Times, of Pawtucket, from the Journal Register Co.

The next month, the Journal Register sold seven newspapers in Massachusetts — including The Herald News, in Fall River — to GateHouse Media Inc., based in Fairport, N.Y.

Andrew Butcher, a News Corp. spokesman, said it would be “premature” to discuss the potential sale of the Ottaway newspapers if the Bancroft family that controls Dow Jones approves Murdoch’s bid. (The Dow Jones board voted last week in favor of the sale; on Monday, Bancroft family members, who own a majority of the controlling stock, met in Boston to discuss the takeover, but came to no conclusion.)

GateHouse declined to comment on any interest in the Ottaway newspapers.

Carey Hendrickson, a spokesman for the Belo Corp., owner of The Providence Journal, said the company is more focused on acquiring TV stations than additional newspapers. He declined to comment specifically on the Ottaway properties.

Although The Wall Street Journal is Murdoch’s target, New York-based News Corp., which generates $28 billion in annual revenue, would be under little pressure to jettison other Dow Jones properties after an acquisition, analysts said.

Murdoch has built an extremely successful company, despite rapid changes in the mainstream media, particularly in the newspaper sector. He could pay the $60-per-share sales price for Dow Jones without taking on significant debt, if any at all.

The newspapers are not in markets in which Murdoch also owns TV stations, according to David C. Joyce, a media analyst for Miller Tabak + Co. “It looked like there was no overlap,” he said. “I don’t think there’s a need for anything to happen immediately.”

Despite declining ad sales, moreover, the Ottaway newspapers have been solid revenue producers for Dow Jones, responsible for 15 percent of company sales over the past three years, according to federal filings.

The local daily newspapers had an average circulation of 282,000 last year. Including the non-daily publications, the Ottaway newspapers generated $252 million in sales in 2006, up $2.3 million, or nearly 1 percent, over the previous year. Net income for Dow Jones’s local newspapers was $48.2 million.

(Revenue from the local media group was down 6.2 percent in the second quarter of this year, according to a recent filing with the U.S. Securities and Exchange Commission.)

Ken Hall, an Ottaway spokesman, referred all questions to Dow Jones. A Dow Jones spokeswoman, Linda Dunbar, declined to comment on the impact a potential News Corp. takeover would have on the Ottaway newspapers.

“There’s nothing to be said about that topic,” she said.

Ottaway, who strongly opposes the sale of the company, said he does not see News Corp. rushing to spin off the community newspapers.

“Just on economic grounds, I would think that Murdoch would keep them,” Ottaway said. At this point, he added, the best his newspapers could hope for is “benign neglect.”

bgedan@projo.com

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