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Newhouse's papers pay because his attention is riveted on the business side of newspapering. Alert for the smallest money-saving maneuver, quick to invest in new machinery when it promises to cut costs, he manages to make even sick papers pay—occasionally with a helping hand from luck. Shortly after selling the St. Louis Globe-Democrat to Newhouse in 1955, Publisher E. Lansing Ray died, leaving the paper—and the surprised Newhouse—$1,000,000 in life insurance.
In 1939, when he bought Syracuse's two evening papers, the Herald and the Journal, both were losing money—$450,000 the year before. Overnight, Newhouse changed the loss to profit. To get full city coverage, Syracuse advertisers had been compelled to buy space in both evening papers, at a retail rate of 10^ a line in each. Newhouse merged the two papers, retaining their best individual features. Then he raised the Her aid-Journal's retail ad rate to 13¢ a line. Merchants responded to the bargain, and retail ad sales rose nearly $1,000,000 the first year.
Still Dropping. But merging papers is only one of collectivization's many forms. Among small dailies, the tendency today is to form into an "intercity" paper—a single daily replacing two or more in neighboring towns. Today there are more than 70 such papers, some of them with sizable circulations: the Herald-News, serving Passaic and Clifton, N.J. (circ. 74,227); the San Gabriel Valley (Calif.) Tribune in West Covina spreads its 52,152 circulation over seven neighboring towns.
In larger cities, editorially competitive morning and evening papers sometimes cut costs by sharing the same mechanical plant, the same advertising, circulation and distribution departments. Frequently, the stronger of two papers in a big city buys the weaker one out—a device that Newhouse has used many times. William Randolph Hearst Jr., editor in chief of the Hearst papers, has estimated that if a competitive morning and evening paper each clears $100,000 in annual profit, under the same management they net not $200,000 a year but $500,000. Hearst is presently testing this formula in San Francisco, where his morning paper, the Examiner, last June bought out Scripps-Howard's interest in the city's only evening paper, the News-Call Bulletin.
As the economics of existence continues to clamp down on U.S. newspapers, combining into chains seems the surest chance for survival. Fifty years ago, the eight U.S. newspaper groups then in existence controlled 10% of total daily circulation. Today there are 118 chains, with a combined circulation of 27.4 million—almost half the total daily circulation in the U.S. (59,200,000). Since chains not only stifle competition but kill newspapers (generally by merger), their effect has been dramatic. From a high-water mark of 2,461 daily papers in 1916, the number has steadily fallen, to 1,760 today. It is still dropping. Daily