Cleveland Press: Death By Greed

“We dispose of history the way we dispose of everyday household garbage.” – John MacArthur, publisher of Harper’s

It was more a newspaper of the people. It was more a working class medium. It did not have the pretensions of its competitor. It’s reporters were more of the city. It deserved to continue. It certainly did not deserve to be scuttled in a greed-ridden deal.

That, however, is what happened.

We are coming up in June on the 25th anniversary of the death of the Cleveland Press.

Yet, even eight years before the death struggle had begun, I wrote in Point of View newsletter, under the headline “Newhouse Makes Monopoly Move in Cleveland,” the following:

“Nothing less than the death of the Cleveland Press or its complete subordination to the Newhouse chain, owners of the Cleveland Plain Dealer, will be the result of the conspired, forced strike at the PD and the lockout of Press employees.” The Newhouse family owned many newspapers under Advance Publications and many magazines, including the New Yorker, under Conde Nast.

At the time, I was confident that Scripps-Howard, owner of the Press and the Newhouse family, owner of the Plain Dealer, would work out an agreement to publish jointly. It would have killed competition, journalistically and financially in Cleveland.

In 1980, Press editor Herb Kamm told reporters that Scripps-Howard had sought a joint operating deal but Newhouse rejected the offer. It was too late.

Time, however, would prove a joint operation unnecessary.

It should have been clear by then that the Newhouses wanted total control of a shrinking market.

Businessman Joe Cole, once linked to mob figure Moe Dalitz, was in the wings. Talk was that he could take over the Press for a mere upfront investment of $1 to $2-million and assume a newspaper with $20 million in debt. However, payment of the $20-million debt was predicated on profits, which no one really expected.

Scripps-Howard must have known it would never collect but it wanted out of Cleveland. The deal with Cole saved the chain from killing its own child - its one-time flagship newspaper. The chain also owned Channel 5.

The sordid tale that would unfold would sicken most. The catalog of shabby acts is long and disgusting.

The greed and intrigues in the drive for a monopoly makes for a ghastly story. Now, expansion of all kinds of new media has diluted that monopoly status of the PD to some extent. It makes the history of this period no less troublesome.

Cole didn’t announce the paper’s death. Indeed, he had run from the Press building the night before as employees began to learn of the sale of the newspaper. From TV reports! I wrote at the time: “Cole ‘sneaked’ down stairs, says an eye witness. Cole’s bodyguard said, ‘We don’t know anything,’ with staffers and others pursuing them.” Even at a press conference the next day, Cole refused to answer questions. However, on the final day, the Press, started as the Penny Press in 1878, was “graced” with a portrait photograph of Joe Cole.

Here are some of the disgusting elements of the dirty deal:

- The PD paid some $25 million to Joe Cole ostensibly for the Press mailing list, rights to a useless free mailer and other incidentals, as revealed by Akron Beacon Journal reporters Peter Phipps, formerly of the Press, and Dan Cook. The duo’s investigation forced the Justice Dept. to have to look at the situation. What the PD really bought was a MONOPOLY. In a short time, the Pee Dee’s circulation swelled by 50,000 customers.

- Joe Cole and S. I. Newhouse, Jr., head of the family which owned the PD, faced a federal grand jury into the deal made that killed the Press. However, just as we wouldn’t expect today’s Justice Dept. to come down on Halliburton, the Reagan Justice Dept. pulled back from anti-trust criminal action. It could have sent the two business leaders to jail for three years with fines up to $100,000 each and $1-million in corporate fines.

- U. S. Federal Judge Ann Aldrich had to turn down a suit by Press printers charging anti-trust violations against Cole & Newhouse. However, her 52-page ruling added heat on the U. S. Justice Dept. “The record,” she wrote, “is replete with facts from which a jury could conclude that the Plain Dealer, Press Publishing and Cole conspired together in restraint of trade for the purpose and with the intent of creating a monopoly in the product market of daily and Sunday newspapers for the greater Cleveland area…”

- Two Justice Department lawyers, hard on the case of this rotten deal, were stopped, one transferred, the other essentially dumped for being too aggressive. The reason for the investigation is suggested in this Justice Dept. memo: “The unusual circumstances surrounding the closing of the Cleveland Press (it closed very abruptly and just before the opening of labor negotiations with the Plain Dealer) and the rumors regarding the amount ($6 million to $16 million) paid by the Plain Dealer for the Cleveland Press’s subscription list and other assets…” It looked like a dirty deal from the start.

- The head of the Cleveland office of the Justice Department, John Weedon, wrote: “… You are authorized to take no further action into the above matter.” The prosecution was essentially killed.

- Cole “acquired” the land upon which the Press stood and placed it in his personal real estate portfolio. This revealed Cole’s real interest in the newspaper. (See the first posting in January in CoolCleveland’s RoldoLINK or Lakewood Buzz’s http://readroldo.com for more. Also, for full treatment of much in this piece, check a library for Point of View newsletters, Vol. 16 #9, #10; Vol. 17 #6, #15, #16, #17, #22; Vol. 18 #5, Vol. 19 #5, #10, #13, #16, #18, #21 and to Cleveland Magazine, March, 1985 for an exhaustive piece on this issue by Peter Phipps.)

- It was revealed in 1985 that reputed New York Mafia figure Anthony (Fat Tony) Salerno arranged a front-page retraction from the PD on its 1982 story reporting startling information that Teamster boss Bill Presser was an FBI informant. The Teamsters played a role, many believe, in the demise of the Press. There was hope that the Teamsters would strike the PD with the Press continuing to publish alone and thus gain profitability. The Teamsters didn’t strike, however.

- The interconnections of vile characters – Teamsters, big and smaller law firms, newspaper bosses – revealed how distasteful our elite leaders can be as the Press land continued to give profits to some. Dick Pogue representing the town’s elite law firm and Mike Climaco representing the city’s most politically connected law firm, both enjoyed benefits.

- Jones Day represented Cole and ended up with a 25 percent interest in the North Point Building - the site of the Press. Thereafter Jones Day occupied the building built upon the Press’s foundation. However, not before a legal battle between Jones Day and the Climaco firm, which also claimed a right to the same tenancy as Jones Day. Climaco represented the Teamsters nationally; Dick Pogue of Jones Day represented Cole. What a crew of scoundrels.

- This lawsuit had a clear odor of conflict of interest. It also revealed a circuitous route for the exchange of swag that hides transactions among these moneygrubbers. To settle the lawsuit, Cole gave the Climaco firm, lawyers for Presser and the Teamsters, a 12 per cent interest in North Point. A short time later, Cole bought back the 12 percent, presumably giving Teamsters’ lawyers a neat unearned profit. One hand washing the other did not relieve the deal of a certain stink.

- Although the PD gained some 50,000 circulation quickly after the Press went under, the paper decided it would not hire – as similarly done in other cities in those circumstances – any Press reporters. Some thought the PD failed to hire Press people to avoid an anti-trust taint. It must have rued that decision since it would not hire Peter Phipps who then did the major investigation of the rotten deal of the Press buyout.

- Joe Cole and his “secretary” picked up thousands of dollars worth of appliances in exchange for ad space at a time the Press was in dire need of cash. I wrote at the time, “You get the picture of greasy hands, quickly shoveling food into a fat, piggish mouth. Oily dribbling down the chin.” With the Press slowly losing economic ground, Cole was giving advertising in exchange for new TV sets, video movie cassettes and other appliances for personal use. Indeed, the day the Press died, according to an appliance dealer, Cole was asking for $45,000 in appliances. The secretary didn’t have trouble finding a new job. She went on the County payroll of Commissioner Ed Feighan and then his successor Tim Hagan. Hands still washing hands.

I wrote at the time: “In a city of incestuous relationships you really have to wonder how big the bed gets for these people to share a cozy nest, to say nothing of other monetary enjoyments.”

When there is a carcass to feed on, the greedy bunch that runs things all want in on the feast. The following reveals how it sometimes works. Even years later.

In a newsletter piece written in June 1987, five years after the death of the Press, I started thusly:

“The short, stern man walked up to the counter and spoke to no one in particular.

“‘Where’s George Forbes’ office?’ he asked, more like a demand than a question.

“‘Sir, you’ll have to see his secretary,’ said Councilwoman Fannie Lewis respectfully.”

To make a long story shorter, the impatient man was Joe Cole. It should have been, as I wrote, a happy day for him. The U. S. Justice Department that very day ruled not to indict him.

However, Cole had other business at City Hall. He was concerned about a piece of legislation before Council that afternoon.

Forbes – chairing the Council Finance Committee in the next room - was “punching holes legislation that would allow Cole and his partners to build a 1,000 slot parking facility on city land behind the old Press building.” It would provide parking for Cole’s new North Point Building and Jones Day, as it does today.

Forbes was giving Cole and co-developer John Ferchill a tough time. He had a message delivered to Cole cooling his heels in the Council offices: Don’t bother me, I’m busy. Cole unhappily walked out.

Ferchill, attending the hearing, tried to interject from the audience. Forbes glared and told him sharply: “If I were you, I’d let my lawyer do the talking.” Ferchill shut up. Ironically, the lawyer, Lee Kohrman, was a personal lawyer of Forbes. Indeed, Kohrman’s firm had hired Forbes’s daughter Helen’s husband, Darrell Fields.

Forbes spent much of the hearing berating the deal on the parking lot from every direction. He had something on his mind. It was classic Forbes. The legislation would give Cole & Ferchill use of the land for 50 years at $120,000 a year.

The real reason for the holdup? Forbes wanted personally to select the firm to operate Cole’s parking facility. Exactly what the deal was between Forbes and the parking operator was unknown, but they were closely allied. Cole had to accede to Forbes since he controlled the legislation on the city land.

I wrote in 1987: “It’s the kind of public behavior that has got to stop in Cleveland but there is little reason to believe that it will.” It has not stopped, obviously.

Both Cole and Newhouse got off without any cost or conviction. However, it was extraordinary that they had to defend themselves in a courtroom. It was particularly delicious to find a billionaire like Newhouse on the griddle.

The original letter that documented the federal investigation said: “We opened the investigation because of strong suspicious that this transaction involved a Section 1 conspiracy along these lines: the parties realized an acquisition of the Press by Newhouse would have violated the anti-trust laws, and thus they devised a sham transaction under which (1) Newhouse would buy at extraordinarily inflated amounts the Press subscription list and the DelCom business (a cheap ad sheet created by Cole) and (2) there would be a side deal that operating assets of the newspaper would be disposed of in such a manner that Newhouse would not thereafter be faced with competition.” The latter referred to the sale of all the Press’s printing equipment that could be used to start another daily newspaper.

One of the Justice Dept. lawyers charged that the very people who should have been pursuing it derailed the investigation.

“… What I do know is that there has been a course of conduct in this investigation to derail it and impede it ... consistent with one direction: To minimize evidence to immunize Cole and (his partners) and to not obtain evidence that you should be obtaining,” wrote the Justice Department lawyer. He got sacked.

It was anguishing to follow the case since the Justice lawyers had to remain silent but reporters following the case knew that something was amiss.

I wrote at the time: “Whenever I would meet the two (Justice Dept. lawyers) in passing they would make a clear effort to avoid being seen talking. There was clearly fear but there were hints in their avoidances that they were under great pressure and that unusual events were taking place in the secrecy of the grand jury investigation.

“The if-only-I-could tell you facial expressions and groans foretold of the troubles now being experienced by Twist (Russell Twist) fired, not for going public with his whistle-blowing but for pursuing his complaint within the legal bureaucratic structure,” I wrote in Point of View.

Despite the fact that the fix was in, the exceedingly secretive S. I. Newhouse, Jr. had to appear before the grand jury. A minor victory in my mind. Newhouse, a billionaire times over, was on the stand for three days in all-day sessions.

The grand jury meets secretly but the old federal courthouse was a rather small place and security was lax. It was open to the public. I spotted Newhouse’s lawyer, Richard Urowsky of New York, in a room in the court building. It also revealed S. I. Newhouse’s appearance.

“The usually dour Urowsky, putting on a sarcastically confident face, passed reporters in the hallway, remarking to Newhouse as he came aside him and obviously for their (reporters) benefit, ‘Lovely day, isn’t it?’

“But,” as I wrote at the time, “the bravado doesn’t dispel the fact that Newhouse was a long time before the jury. And he didn’t look as spry at the end.”

Of course, the PD was not covering its own story and it avoided the Newhouse’s appearance.

I have to return - reminded by the book “Newhouse – All the Glitter, Power and Glory of America’s Richest Media Empire and the Secretive Man Behind It” by Thomas Maier – to something I wrote shortly after the Press demise.

“The problem of the Plain Dealer’s inadequacies has become more than a problem of a newspaper. In the past few weeks particularly, it has become a problem for the community. When the Press died in June, it left the Plain Dealer – fat and arrogant – the only kid on the block in a city with all the terminal illnesses of a big, old northern American city.”

The community problem of the Plain Dealer, 25 years later remains. Ohio - a backward state in many respects - needs the prodding that could come from a more progressive newspaper in this old, once most progressive city in America. See Lincoln Steffens.

One hopes the PD’s new editor, Susan Goldberg, takes the time to heed the warning implied in MacArthur’s quote leading into this column.

She needs to understand the culture of her newspaper as much as that of her adopted city. I hope she takes the time.

From Cool Cleveland contributor Roldo Bartimole roldo@adelphia.net
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