Friday, March 14, 2003

Two years after separating, the Star-Bulletin and Advertiser still battle for readers every day.

Isle newspaper war
passes 2-year mark

Honolulu remains one of
the few two-paper cities

By Rick Daysog

The rivalry between Honolulu's two daily newspapers is continuing to confound skeptics as the Honolulu Star-Bulletin and the Honolulu Advertiser enter their third year of head-to-head competition.

Tomorrow, the Star-Bulletin will celebrate the second anniversary of its first edition under Canadian publisher David Black, who saved the paper from closure and bucked a national trend toward consolidation within the media industry.

"What's happened in Honolulu is a nationwide precedent," said Stephen Barnett, a newspaper anti-trust law expert. "It's been two years and that's quite an accomplishment."

For nearly four decades, the Star-Bulletin and the larger Advertiser published under a joint operating agreement in which the two papers kept separate editorial voices but shared business, circulation and advertising functions.

But in 1999, the Advertiser's owner, Virginia-based Gannett Co., agreed to pay $26.5 million to the Star-Bulletin's former owner, Liberty Newspapers LP, to terminate the agreement and close the Star-Bulletin. That prompted a lawsuit by a local community group and the state Attorney General's Office. The suit was eventually settled by Black's court-supervised purchase of the Star-Bulletin.

Black also acquired MidWeek, a 280,000-circulation free weekly newspaper, at about the same time.

Barnett, a law professor at UC Berkeley's Boalt Hall, said newspapers like the Star-Bulletin usually fold within a year of emerging from the shelter of a joint operating agreement and competing head-on with the dominant newspaper.

Barnett contrasted Honolulu's competitive newspaper environment with that of the San Francisco Chronicle and the San Francisco Examiner.

In 1999, Hearst Corp. acquired the Chronicle and provided a $60 million subsidy to the Fang family of San Francisco to take over the Examiner.

The Examiner last month laid off nearly all of its editorial and circulation staff and began operating as a free daily newspaper.

Gerald Kato, a University of Hawaii journalism professor, said the Star-Bulletin's continued operation has beaten the prediction of skeptics, who believed the paper would fold within a year in the face of competition with the Advertiser and the weak local economic climate.

Kato, a former reporter for the Advertiser and KGMB-TV, said he believes the competitive environment has led to improvements in both newspapers' coverage of local and national issues.

It also has benefited local advertisers, who have seen both newspapers drop their ad rates in an effort to attract business, he said.

"Any kind of competition is a positive kind of thing. It forces people to really get off of their duff and try to match or better their competition," he said. "I'll give Black credit, he's been able to keep his operation open longer than anybody expected."

Black, for his part, said his investment in the Star-Bulletin is for the long haul.

He noted that since his acquisition of the Star-Bulletin, the newspaper's share of the local advertising market has grown and paid circulation has increased to 62,900 from about 58,000.

"In a challenging economic period, I am satisfied with our results," Black said. "We think the papers are better. We believe they have helped make a difference in the community by promoting a wide variety of worthy causes."

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