Desolation Sound doesn't seem like the ideal place to begin rescuing a
newspaper. It is a popular cruising spot off the wild western coast of
British Columbia that attracts the hardy sailors. Like David Black, a
wealthy Canadian newspaper entrepreneur who last year bought the
Honolulu Star-Bulletin, an ailing afternoon daily whose assets consisted
of little more than a nameplate and an editorial staff. In just over
three months, he built a brand-new newspaper.
How he pulled it off against steady predictions that it could not be
done--and for a few dark nights it looked like it could not-- is a tale of
newspaper derring-do. For those who lived it, the startup was a grand
adventure, maybe even a miracle.
But survival was never assured, and still is not certain.
The story begins in July 2000 as Black sailed his 77-foot ketch, the
Esperanza, through Desolation Sound. His cell phone rang. It was Phil
Murray, a Santa Fe newspaper broker.
Murray had not been able to find a major American publisher who was
interested in buying the 60,000-circulation Star-Bulletin. It would mean
getting into a newspaper war against the morning paper owned by Gannett,
the largest owner of U.S. newspapers, with a reputation for putting its
competitors out of business. Murray figured that Canadians were more
used to operating in competitive markets and might not be scared off by
the prospect of duking it out with Gannett.
Black immediately asked: "Is there a commercial printing press on the
"Is it for sale?" was his second question.
No, it was not.
"But the catchword was Hawaii," recalls Black, whose tall, thin,
professorial appearance seems at odds with his vintage Jaguar and
3.5-acre oceanfront estate called Riffington in Victoria, British
Columbia. There was the attraction of a challenge, one with big-time
risk: a duel with powerhouse Gannett while trying to rescue a paper that
no one else could. It would mean dissolving a 39-year-old joint
operating agreement between the Star-Bulletin and Gannett's Honolulu
Advertiser that had allowed both papers to share printing and business
operations. And history provided little encouragement--there have been
fewer than a handful of papers that have broken out of JOAs and
On November 30, 2000, Black had a deal to buy the Star-Bulletin from
Liberty Newspapers LP, which had planned to shut it down. The next day
Black announced he had persuaded RFD Publications to sell him MidWeek
Publications, the largest commercial printing plant in Hawaii.
After lengthy negotiations, Gannett and Black Press Ltd. settled on
March 15, 2001, as the day the JOA would dissolve and the sale would
become effective. Industry experts warned it would take at least a year
to launch a new daily newspaper.
Black had 105 days.
After publishing for nine months, the scrappy, reconstituted
Star-Bulletin is now sailing into troubled waters, facing layoffs,
less-than-brilliant ad and circulation figures, and a depressed Hawaii
economy. Black had steered headfirst into an old-fashioned,
take-no-prisoners newspaper war. Whether he and his staff can elbow
their way into the tough Hawaii market remains a question.
By anyone's estimate, the match shaped up as uneven from the start. In
one corner was the established Honolulu Advertiser with its 100,000-plus
daily circulation, fat Sunday edition, 920 employees and the backing of
Gannett, owner of 97 dailies and other media properties.
In the other corner was challenger Black, a self-made press baron and
owner of 80 community weeklies, shoppers and one small-city daily. He
had never published a large daily, never operated in Hawaii. And under
the terms of the JOA, the Advertiser owned virtually all the physical
assets of the two papers.
Black had a press, but no advertising department, no circulation
department or news carriers, no offices for reporters, no computers,
telephones or furniture. He inherited the Star-Bulletin's 80 editorial
staffers and MidWeek's 140 employees, and he would hire 260 more, for a
total of 480-- slightly more than half the competition's manpower. His
pockets, while deep, were tiny by comparison: Black Press earns $180
million in annual revenues compared with Gannett's $6.2 billion. Black
purchased the Star-Bulletin for a mere $10,000, but pledged to sink $25
million into it.
The battle had mismatch written all over it.
SEPTEMBER 2000: The Canadians land on the island of Oahu on a scouting
mission. Black and a dozen of his top executives meet with the largest
Honolulu advertisers to assess the market. "We told advertisers we
didn't need the same rate, but we needed the same linage, as the
thickness of a paper is seen as a barometer of whether it would
succeed," says Black. "They said, 'Sure, that makes sense. It's in the
interest of society and our own interest to have competition.' "
Hawaii is a popular vacation destination for cold-weather Canadians, and
many of the Black team were eager to relocate. But they were also
charmed by the passion they found in the community for keeping the
Star-Bulletin alive. Citizens had organized in protest when
Star-Bulletin owner Rupert Phillips first announced in September 1999
that he would close the paper (see "The Pulse of Paradise,"
January/February 2001). When it was learned that Phillips would pocket
$26 million from Gannett in the deal, Hawaii's Governor Benjamin
Cayetano directed the state attorney general to investigate possible
antitrust violations. Two lawsuits, brought by a citizens group and the
state attorney general, led to a court order to keep the Star-Bulletin
alive during a search for a buyer.
NOVEMBER 9: An agreement in principle is reached for Black to purchase
In Canada, Black's strategy was to run his presses around the clock,
churning out commercial jobs when he wasn't publishing his weeklies.
Black intends to replicate this plan in Hawaii and secretly negotiates
to purchase MidWeek to provide the core of a printing operation. In
order to add enough pages and color to reconstitute the Star-Bulletin
and continue to run other printing jobs, he must expand rapidly.
Black calls 10 press brokers, trying to find Goss Urbanite offset press
units compatible with MidWeek's. They have to be used, because new
presses would take too long to build, and they have to be
idle--disconnecting them would also be too time-consuming.
NOVEMBER 28: Black learns Randy Coakley of All Press Parts and Equipment
in Oshkosh, Wisconsin, has, providentially, already purchased a press
with eight printing units discarded by a daily in Melbourne, Australia.
Black buys them over the phone, sight unseen, for $615,000.
NOVEMBER 30: The deal closes. Black vows to immediately begin a morning
edition in addition to the afternoon paper and plans a new Sunday paper.
Gannett plans to start an afternoon edition. The stage is set: The two
papers will both become all-day publications in a head-to-head contest.
DECEMBER: If Gannett's Advertiser wants to continue to dominate the
Hawaii market, it's clear it will have to fight to do so. And Gannett is
prepared to meet the challenge. It is building an $81 million production
press facility, to open in May 2004, to replace the Advertiser's more
than 30-year-old letterset press that produces blurry, muddy colors.
The Advertiser decides to retain all of the former JOA employees as well
as increase its advertising, circulation and editorial staff. It makes
most of the hires in news, where 31 people fill new positions or
long-empty vacancies, bringing the editorial staff to 145. It adds
sections for food and personal technology, as well as a stand-alone
After Advertiser Editor Jim Gatti retires, Gannett brings in Saundra
Keyes, a Knight Ridder veteran, most recently managing editor of
California's Contra Costa Times and before that managing editor of the
Miami Herald. Soon after her arrival, even Star-Bulletin executives
admit that the Advertiser's news coverage is growing deeper and more
Keyes' counterpart at the Star-Bulletin is John Flanagan, editor and
publisher since 1993. Flanagan had almost lost hope that the
Star-Bulletin would find a buyer, so he had enrolled in a University of
Hawaii executive MBA program. He dropped out when Black asked him to run
the new Star-Bulletin. For much of fall 2000, he spent days at the
Star-Bulletin in the Advertiser building on Kapiolani Street, then
after-hours in a small rented office with the Canadians.
Flanagan takes December as vacation to work full time planning the new
newspaper as Black's sole editorial employee. A serious, gray-haired
manager, he's excited when he talks about those early weeks. "Trying to
explain how we got the Star-Bulletin started is like trying to explain
how bumblebees fly," he says. Previously he had been managing editor of
Wilmington, Delaware's News Journal and editor of California's Marin
Independent Journal, where he worked with a detailed game plan. For the
Star-Bulletin launch, flying by the seat-of-the-pants and making up
rules along the way were the orders of the day. "If we had stopped to
produce a 2-inch-thick plan book, we wouldn't have had time to read it,"
he says. "We just sort of got all the arrows pointed in the same
direction and pushed as hard as we could."
The Star-Bulletin's executive sales team's early efforts to secure
commitments from the top 100 advertisers pay off. "Almost all of the
advertisers followed through and gave us half their linage," says Black.
But the Advertiser's ad salespeople are also out in force, offering
discounts for exclusive, yearlong contracts to a second tier of 300
next-largest advertisers. "That occurred when we had no sales reps on
the street, so it was impossible for us to counter," says Black.
EARLY JANUARY 2001: The Australian press misses the boat out of
Melbourne by two days.
On January 15, Flanagan resigns from the old Star-Bulletin and moves to
the new Star-Bulletin offices in 7 Waterfront Plaza, a modern complex of
office buildings, eateries and shops called Restaurant Row. Hiring is
his top priority, and he plans to recruit his former staff, almost
intact. In addition, he wants to hire 25 others, bringing the total
editorial staff to 105.
He is immersed in so many details that he springs awake at 4 a.m. some
mornings, mind racing. Even a new typeface is needed, as the old
Star-Bulletin had used a mishmash of fonts, some of which had been
licensed to the previous owner. Executives settle on a family of
Cheltenham typefaces for a unified design.
Space is so cramped that the new managers use outside courtyard tables
under umbrellas as temporary offices. President Don Kendall has a stock
answer when friends ask him how he likes living in Hawaii: "I've heard
they have a beach."
Meanwhile, on the northeast side of Oahu at MidWeek's Kaneohe plant,
Production Manager Russel Retynski panics when he learns that he will be
overseeing the production of a daily newspaper on top of the free,
268,000-circulation MidWeek, four military newspapers, several weeklies,
grocery ads and even some inserts for the Honolulu Advertiser. "We were
already a 24/7 business," he says. He goes into overdrive.
Star-Bulletin employees say the word on the street is that there's no
way their newspaper will debut on schedule.
MID-FEBRUARY: While the Star-Bulletin possesses few physical assets, it
does boast a home-delivery subscriber list of almost 50,000 devoted
readers. But Black's team is not allowed access to Star-Bulletin
subscriber or newspaper carrier lists for the important central Honolulu
area until February 22. Still, the Canadians had assumed they could
easily hire the old JOA Star-Bulletin carriers to deliver the paper.
By the time they get the lists, the Advertiser has signed up most of the
old Star-Bulletin carriers to deliver the new Advertiser afternoon
edition. Star-Bulletin circulation managers are so desperate for
carriers that they drive up and down streets asking kids if they are
interested in paper routes.
As if that weren't bad enough, for years each of the two newspapers had
a set of front door keys to 700 high-rise condo and apartment buildings
so that carriers could get into the buildings and deliver papers to
tenants' doors. "We assumed that they would hand over the
Star-Bulletin's set of keys," says Kendall.
The Advertiser isn't going to make anything easy. The Advertiser's
publisher, Michael Fisch, acknowledges: "We did not provide keys to
multiple-family buildings. It was never negotiated by Mr. Black. It was
not part of the sales agreement."
Incensed, the Canadians go to court to argue unfair business practices.
They don't prevail, so two circulation employees work full time for a
month, meeting with each building manager, paying new security deposits
and obtaining keys. "We didn't see that one coming," admits Kendall.
"Depending on what side of the fence you're on, it was either great
strategy or dirty tricks."
FEBRUARY 22: Eighty Star-Bulletin editorial employees open letters with
job offers at the new paper; an unlucky five are told, "Your services
will not be required by the Honolulu Star-Bulletin." Some of the
Star-Bulletin's best-known journalists are out of jobs.
Not hired is Ian Lind, whose dishy online diary during the Star-Bulletin
survival saga had turned into the must-read media site of Hawaii. "There
were some hard feelings about his Web site," admits Black. "He wanted to
put all the news on it, whether or not it was hurting us competitively.
We were entering a different world and had to keep our competitive
secrets. He wouldn't cease and desist."
Two top editors would also be missing from the new Star-Bulletin.
Editorial Page Editor Diane Chang and Managing Editor David Shapiro had
earned acclaim in 1997 for running an op-ed essay headlined "Broken
Trust" exposing corruption at the $10 billion Bishop Estate. It's a
story often cited by community leaders as an argument for why Honolulu
needs two independent newspapers.
In 1997 and 2000, Chang was named best columnist in the state by the
Society of Professional Journalists. But Black says he had heard
negative comments about her column, which he describes as
single-mindedly focusing on women's issues. One of her severest critics
was Gov. Cayetano. The fact that Black had apparently listened to the
powerbrokers troubled some Star-Bulletin journalists. "If the governor
and other movers and shakers complain about an editor, does that mean
you fire her?" asks one.
Black also opts not to pick up medical insurance and other disability
benefits for Shapiro, who is in a wheelchair due to multiple sclerosis.
Shapiro, a key figure in keeping the Star-Bulletin alive, had gone on
disability status before Black's takeover. Gannett steps forward to
assume Shapiro's benefits. His weekly column, "Volcanic Ash," shifts to
For some, Black's hero's halo is tarnished. For instance, Richard Port,
spokesperson of the citizens organization Save Our Star-Bulletin (SOS),
describes Black's failure to hire Lind as "a mistake." But for Port and
others, the important prize was maintaining Honolulu's two-paper-town
status. "We never considered either of the papers to be really great
newspapers," says Port. "But we wanted two independent editorial voices
Most journalists are just glad to have jobs. One reporter comments, as
noted in one of Lind's reports: "If they said we have to all come to
work in clown suits, I'd be asking, 'Where's my suit?' "
FEBRUARY 24: The press units arrive in Honolulu harbor, only to sit in
customs for five days. It seems a fatal blow. Kendall and others worry
that they will never be able to install presses in 13 days – an operation
that usually takes several months.
MARCH 1: At last, the new presses are trucked over the steep Pali
mountains to MidWeek, where the existing 10 press units have been pushed
to one side of the plant and stacked to the ceiling. MidWeek's pressmen
begin working harder. They'll go for two months straight, without a day
Ten new editorial department employees report to work and begin putting
together prototypes. Black is allowed to post sign-up sheets in the old
Star-Bulletin's newsroom for training on his new computer system, but
the instruction has to be done on journalists' own time. Nary a chair or
computer can be moved until March 15, when Black assumes command.
Security guards keep watch at the old newsroom's entrances.
Black's classified sales department expands from two sales reps to 16 in
a week. Most of the new workers are inexperienced and must be trained.
MARCH 12: The Advertiser sends letters to Star-Bulletin subscribers
announcing that for the next 24 weeks they will receive free afternoon
delivery of the new Honolulu Advertiser p.m. edition. "It meant that
Star-Bulletin subscribers would receive a bill for us at the same time
they received the Advertiser for free," says President Kendall. "I've
never heard of any such promotion that gives away 40,000 papers for 24
weeks," he fumes.
Black makes speeches in Honolulu complaining about Gannett's "predatory
pricing"--a charge rejected by Advertiser executives. "I'm getting the
Bulletin at home for free right now," says
Advertiser Editor Keyes. "I assume that at some point I'll get a call
trying to sell me a subscription. Sampling is a long-standing technique
for increasing competition. It's going on all over the country."
MARCH 14: Extra security guards appear in the newsroom as the staff
prepares the final Star-Bulletin to be published by the JOA Honolulu
Newspaper Agency. Advertiser employees from other parts of the building
begin to flood the Star-Bulletin newsroom, carrying flowered leis to
bestow on departing colleagues.
At noon, the newsroom staff walks through the lobby, surrounded by
applauding and cheering Advertiser staff, and out the door. Led by a
bagpiper they walk four blocks to their new Waterfront Plaza offices.
A kahuna presides over a traditional blessing of the premises. The
journalists gulp quick refreshments, then bang out stories for the next
day's first-ever morning Star-Bulletin. Reporters sit at folding tables
or on the floor with their laptops or in front of Macs on cardboard
As the 10:30 p.m. deadline approaches, editors pore over page one.
Splashed across it are large color photographs of the triumphant march
of the editorial staff to their new offices.
Yet, out at the Kanoehe plant, it's chaos. Wires lie all over the floor
in makeshift electrical connections. Catwalks have been thrown up to
reach the high presses, but there hasn't been time to install safety
railings. The presses have been turned on to make sure they work, but
there hasn't been time for a test run with paper. Not enough press parts
could be located and purchased to allow for four sections, so the new
Star-Bulletin will debut with only two.
Late in the evening, many of the advertising staff, television crews
from Honolulu stations, and David Black and his wife and parents gather
to watch in the pressroom.
MARCH 15: At 12:35 a.m. Retynski presses the button to start the
presses. The crowd applauds as the presses begin to churn and gather
speed up to 50,000 copies per hour. But then the machines go down, first
for an hour, then for another two hours. After huddling, Black and
Kendall decide to drop color on several pages. Because of the delays,
they cut the number of papers printed to 40,000 from a planned run of
What should have been a two-hour run has turned into a nearly eight-hour
Kendall's 19-year-old son helps deliver the paper. Other family members
and friends work until 10 p.m. distributing copies. Even so, the
newspaper is down 350 carrier routes out of a total of 1,200.
More than 30,000 home-delivery customers phone in, complaining they
received no paper. Phone lines are so clogged that they shut down. The
newsroom operates on cell phones, for days. "Every newspaper in North
America has two separate switchboards to prevent this problem, one for
circulation, one for everything else," says Black. "We had only one."
Soon after the launch, the staff begins to gear up for its new Sunday
paper, promised to debut April 1.
APRIL 1: Many of the Canadian executives trek to the Kaneohe printing
plant for the historic run of the first Sunday paper. Kendall and Don
Moores, vice president of marketing and advertising, work until 5 a.m.
loading trucks, but the launch is a success.
APRIL 12: Only 125 of the 1,200 carrier delivery routes remain
unstaffed, a level Star-Bulletin executives deem acceptable.
Russ Retynski, 48, the usually gruff production manager, calls a meeting
with press crews to thank them for working seven days a week. He tells
them: "If the Star-Bulletin doesn't survive, we have nothing to hang our
heads about. We are in a newspaper war. Gannett is the biggest newspaper
company in the nation. David Black doesn't have as much money as they
do. If by chance it goes down, we can stand up and say we gave it our
Later, he wistfully recalls the old days when he could spend an
afternoon on the golf course. "This was like starting all over. We did
give it our all. But I don't want to go through another startup – I'm too
MAY 20: Black makes a brief appearance in the Star-Bulletin newsroom to
announce that his Oahu Publications – MidWeek and the Star-Bulletin
together – are making a profit after only three months.
JULY 2: New press equipment allows the Star-Bulletin to expand to four
sections. After readers and staff express unhappiness about the new
design, some of the old Star-Bulletin style is revived.
AUGUST 15: "Advertiser daily circulation up 38 percent" boasts a
headline on the paper's business front. The story cites a specially
commissioned 15-week Audit Bureau of Circulations publisher statement
for the period ending July 1, 2001. On the jump page, the story reveals
that the unprecedented circulation gain, to 151,808, was due to a
promotion that gave free weekday subscriptions to more than 30,000
The Star-Bulletin claims that its own average paid Sunday circulation
climbed to 85,072 from April to June, including 18,000 "controlled
circulation copies." The term doesn't exist, according to the Audit
Bureau of Circulations, responding to a complaint from the Advertiser.
In their previous incarnations, the feisty Star-Bulletin often bested
the stodgier Advertiser, winning more newspaper awards and producing
more enterprise stories. Now, even Star-Bulletin editors admit that the
Advertiser is putting out the weightier news report. "It ought to," says
Star-Bulletin Publisher Flanagan, noting that the Advertiser editorial
staff has increased by almost 30 percent.
The Star-Bulletin continues to show off its high-quality color printing
with huge front-page pictures often illustrating soft features. "We've
really just been concentrating on putting out the paper," says Managing
Editor Frank Bridgewater. "The one thing that has been sacrificed is
Executives at both newspapers say they are making money. Neither side
much. Black says his strategy of combining the Star-Bulletin with
MidWeek's printing operations is working. "It's not very scientific as
to exactly which product is contributing the most.... On the whole they
are making money. I'm thrilled with where the Star-Bulletin is today."
SEPTEMBER 21: Black reshuffles his management team, with Editor and
Publisher Flanagan stepping down to become a contributing editor.
Kendall becomes publisher; Bridgewater assumes control of the newsroom
and says that the paper is now able to devote more resources to
The Advertiser's parent, Gannett Pacific Corp., announces some moves of
its own--it purchases Ladd Publishing, owner of Buy & Sell, a free
classified newspaper published twice weekly and distributed statewide. A
week earlier Gannett announced it would buy PennySaver, an Oahu
classified paper. With a total gain of more than 100,000 freebie copies
a week, Gannett is fast closing the gap between it and the
Star-Bulletin's free MidWeek publication.
October 31: ABC figures show the Star-Bulletin's daily circulation has
grown nearly 5.5 percent in the previous tumultuous year, to an average
of 63,000 a day. Sunday circulation comes in at 64,344, about half of
the 130,000 projected by Black before he took over. The Advertiser's
daily circulation stands at 152,000, 38.9 percent more than last year,
but its Sunday circulation has dropped 6.3 percent to 173,000. Both
papers struggle to keep advertising, as the September 11 attacks have a
disastrous impact on the tourist-dependent Hawaii economy.
November 9: In the first visible sign of weakness in the
full-spend-ahead newspaper war, David Black blinks. Blaming the
advertising plunge, Kendall announces the Star-Bulletin will lay off
"about 20" employees, including five in the newsroom. Any staff member
earning $40,000 or more will be asked to take a pay cut of 5 to 10
percent for an unspecified length of time.
Gannett, the national chain with deeper pockets, appears to be able to
take the hit. The Advertiser says no such retrenchment measures are
From the beginning, David Black has said he doesn't want to be Hawaii's
dominant paper; he simply wants a piece of the action. "I can continue
forever if I'm making money," he says. "I don't have to make much. A
dollar would do."
Contributing writer Lucinda Fleeson first
wrote about Honolulu's newspapers in AJR's January/February 2001 issue.