Devil or angel, Maxwell at least represents a fresh start for a newspaper crippled by one of the meanest labor disputes of the decade. Since January, 1990 its owner, the Tribune Co., a Chicago-based media conglomerate, had vowed to break the power of the Daily News’s unions. Claiming that the paper had lost $115 million since 1980, management insisted on wage and manpower cuts that would have slashed operating costs from 50 to 25 percent of revenues. The unions adamantly refused to surrender concessions won during the boom years. The Tribune Co. spent a reported $20 million preparing for a walkout; as the strike progressed, it mobilized some 800 replacement workers, including reporters.
The Tribune’s plan was torpedoed by the breakdown of its newspaper distribution system in New York. The powerful Newspaper and Mail Deliverers Union walked off the job, a critical blow for a paper that depends on newsstand sales for 80 percent of its circulation. Daily News publisher James Hoge charged that threats and violence by the deliverers’ union made many of the city’s 12,000 newsdealers unwilling to carry the paper. Management resorted to desperation tactics - including recruiting homeless men to sell the paper in the city’s subways - but circulation plummeted by close to 50 percent, to about 600,000. Advertisers defected to the News’s two tabloid rivals, the New York Post and Newsday. On Jan. 16, with operating losses running at $700,000 a day, Hoge announced that he would close the paper in 60 days if a buyer couldn’t be found.
Then Maxwell stepped in. Born Ludvik Hoch to an impoverished laborer in eastern Czechoslovakia, the entrepreneur has struggled to escape his lowly roots. He emigrated to Britain in 1940 and changed his name to Ivan du Maurier, after his favorite French cigarette. He won a Military Cross for bravery in World War II, adopted the name Maxwell in 1945 and later founded Pergamon Press, a publishing venture. In the 1960s, he was elected a member of Parliament from the Labor Party, but his political and business careers derailed after Board of Trade inspectors uncovered financial irregularities and declared him “unfit” to run a public company. Maxwell relaunched Pergamon as a private firm, then built a publishing empire, including New York-based Macmillan Publishing and The European, a Continental newspaper. His estimated fortune: $2 billion.
In Britain, Maxwell has earned a reputation as a fierce negotiator - and a meddler. In 1980 he bought the British Printing Corporation and cut 7,000 of its 13,000 workers. In 1984 he purchased the Daily Mirror, now the flagship of his Mirror Group Newspapers, and sacked 2,000 employees. “He is the most ruthless socialist newspaper publisher in the world,” says Tom Bower, who wrote an unauthorized biography, “Maxwell the Outsider.” Maxwell’s influence rarely ends with labor reshufflings. He fiddles with layouts, editorials and news content, frequently printing stories about himself. “He has no sense of his own limitations,” says Hugh Stephenson, journalism professor at London’s City University.
Maxwell also is said to view himself as a rival of Rupert Murdoch, former owner of the New York Post; many suggest the competition was his principal motivation in bidding for the Daily News. He stepped into the fray on March 5, agreeing to purchase the News - and assume up to $125 million in pensions and severance pay - contingent on a payment of $60 million from the Tribune Co. and an acceptable deal with the unions. Initially, Maxwell was conciliatory: he sat for face-to-face talks with union leaders, unlike Tribune Co. president Charles Brumback, who sent in a confrontational Nashville attorney as his surrogate. He backed away from the Tribune Co.’s insistence on a “management rights” clause, but won tough concessions on jobs. About 800 of the unions’ 2,600 positions will be lost. “The unions knew they had no choice,” says John Reidy, a media analyst with Smith Barney. “It was bargain with Maxwell or face a shutdown.”
Rebuilding the Daily News won’t be easy. Analysts say Maxwell will have to invest $50 million to recapture lost circulation. Ad revenues had plummeted to less than 25 percent of prestrike levels. Analyst John Morton of the brokerage firm Lynch, Jones & Ryan rates the News’s chances for recovery “50-50.” As Maxwell showed with his London Daily News, a start-up he closed after five months in 1987, he is not likely to allow sentimentality to dictate his financial future. If he can’t restore the paper to health in a few months, the Daily News’s savior may yet turn into an angel of death.
