Friday, September 24, 1999

Star-Bulletin closing after 117 years

Cayetano says Newspaper
Preservation Act has failed
the Star-Bulletin

By Pat Omandam


The state probably can do nothing to legally prevent the closure of the 117-year-old Honolulu Star-Bulletin, Gov. Ben Cayetano said.

Moreover, it would be difficult to find another company or organization that could shoulder the financial costs to create another afternoon newspaper here to go head-to-head with the Honolulu Advertiser, the governor said yesterday.

"If anything, if someone has a great deal of capital to invest, maybe he could invest in a morning newspaper, but that seems highly unlikely because the Advertiser has such a hold on the market now," Cayetano said.

"So I'm hopeful that out of all of this ... the Advertiser will become a better newspaper. Certainly, they should have more resources at their disposal. Perhaps they will be able to provide the kind of reporting with the kind of substance that the Los Angeles Times has."

Cayetano, who returned from a weekend mainland trip Wednesday night, spoke with reporters yesterday for the first time about the scheduled Oct. 30 closure of the Star-Bulletin.

The governor said he asked Attorney General Earl Anzai to look into the circumstances of the closure by owner Liberty Newspapers Limited Partnership because the plan allows Gannett Co., owner of The Advertiser, to buy out the competition, leaving a daily newspaper monopoly in Honolulu.

The governor said his understanding of the transaction --which he was told will be done in 10 weeks -- leads him to believe the Star-Bulletin's fate was sealed in 1993, when Gannett sold it to Liberty Newspapers and bought the Advertiser.

Both newspapers are part of a joint operating agreement that allows them to save money by combining circulation, advertising and distribution costs, which are handled through the Hawaii Newspaper Agency. The joint operating agreement is allowed under the Newspaper Preservation Act, a federal law aimed at keeping alive two separate newspaper editorial voices in a city.

Cayetano questioned whether the Star-Bulletin should have been put up for sale by Liberty General Partner Rupert Phillips before Phillips reached the agreement with Gannett to shut it down. Doing so would comply with the spirit and intent of the Newspaper Preservation Act, which in this case has failed, he said.

But from a business standpoint, Cayetano acknowledged it was an offer that Phillips could not walk away from. Union officials representing the newspapers and HNA employees told members last weekend the offer from Gannett to Liberty Newspapers to close the Star-Bulletin and dissolve the joint operating agreement is estimated at $30 million.

"I don't see how, if I was in their shoes, I would have done anything else. It's very attractive to be bought out at those kinds of prices," Cayetano said.

The unions asked the governor to intervene a few hours after Phillips on Sept. 16 told Star-Bulletin employees the paper was closing. At the time, Phillips said he didn't believe he could find a buyer for the paper.

The state attorney general's office next week is expected to complete its discussions on the newspaper's closure with the U.S. Justice Department, which approved the joint operating agreement.

Senate Minority Leader Whitney Anderson (R, Kailua) said the state should look for alternate ways to keep Honolulu from becoming a one-newspaper town.

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