A Newspaper Story – Part II – The Insufferable Bureaucrat vs. The Denver Newspaper Agency

Following-up on the ramble of Part I of this newspaper saga, let’s do this one is third person, shall we.

Caution: Very long, esoteric post.

The Insufferable Bureaucrat (hereafter referred to as “IB”), followed with interest the May 12, 2000, initial application/filing to form a Joint Operating Agreement (JOA) between the E.W. Scripps Company (the Rocky Mountain News), and the MediaNews Group Inc., (the Denver Post). Under Federal law, such a filing is required by the Newspaper Preservation Act that essentially allows the Attorney General of the United States to find that a limited antitrust exemption may be made if it is determined that one newspaper involved in the requested JOA is a “failing newspaper,” and that the JOA, if approved by the Attorney General, will preserve the editorially and reportorially independent competitiveness of both newspapers. The “failing newspaper,” in this case was identified as the Rocky Mountain News.

As an aside, a thorough explication of the JOA process, specific to Denver, is provided here.

The IB, at the time (May, 2000), was an mayoral appointee reporting directly to the Manager of General Services, the Charter agency responsible for providing for and administering the city’s advertising needs.

It was not lost on the IB, at the time, that the spectre of a JOA between Denver’s two daily newspapers–which, for decades had engaged in a ferocious competition for readership as well as advertising dollars–would, in spite of the requisites of the Newspaper Preservation Act, inevitably result in a monopolistic cabal whereby costs for subscribers and advertisers alike would rise exponentially. It was also not lost on the IB, that–churning at the back of his brain–newspapers were becoming somewhat irrelevant in an age when increasing numbers of the newspapers’ readership were turning to the Internet to satiate their daily appetite for news. Advertisers, too, had long-before grasped the essential worth of the Internet to expose their products and services to the market.

That churning at the back of the IB’s brain led to the inevitable conclusion: Who needs newspapers, anyway? The city’s Internet presence had, by 2000, become significant.

So, on January 5, 2001, when Janet Reno, Attorney General of the United States, approved the JOA between the Post and the News, the IB’s back-of-the-brain meanderings with regard to the city’s need to advertise everything from bid notices for animal food for zoo animals to classified ads for personnel needs, slip-slid into his higher brain and thus began the formulation of the process to unshackle the city’s reliance on newspapers for its advertising needs and step into a new dimension of opportunity that would, ultimately, serve the best interests of the City and County of Denver.

By March 10, 2001, the IB communicated his frustration with the counsel of City Attorney personnel that a “…wait and see…” attitude with regard to how the JOA would play-out was a prudent course to take regardless of the fact the JOA had advised that it would commence operations on April 2, 2001; that all prior contractual obligations for advertising would, on that date, cease.

Therefore, on March 10, 2001, the following advisement was issued by the IB:

Advertising Issue
3/10/01

1) Charter currently provides that:

A12.3-7 Official advertising. Exclusive management and control of the letting of a contract or contracts for the publication of the official advertising of the city and county and for all departments, agencies, boards, commissions and authorities thereof. A contract or contracts for the publication of the official advertising shall be let annually by the department consistent with the conditions and terms provided by ordinance.

DRMC 20-70 is the ordinance which provides for publication of “official advertising” as well as non-official classified and retail advertising. The Rocky Mountain News is the “Official” newspaper of the City and County of Denver for the publication of construction-related and non-construction related “official” notices pursuant to the “contract or contracts” provisions of CHARTER/DRMC.

2) On April 2nd the Denver Newspaper Agency will commence its operation and will PUBLISH classified and retail advertising for both the Rocky Mountain News and the Denver Post. THERE WILL NO LONGER BE CLASSIFIED/RETAIL ENTITIES AT THE DENVER POST AND THE ROCKY MOUNTAIN NEWS.

3) The Denver Newspaper Agency has provided us with “non-negotiable” pricing for classified and retail advertising. The pricing offered ranges from roughly 100 to over 300% more than our current contract pricing.

4) We have, of course, already been notified of both the Rocky’s and the Post’s intent to cease their obligations under our contract on April 2nd. In fact, the Rocky included with their bid for this year’s pricing the caveat that their pricing would be good only until the commencement of operations of the JOA entity, which we now know as the Denver Newspaper Agency.

5) On April 2nd, the entity which has been identified as the City’s “Official” newspaper for both construction-related and non-construction related “official” notices WILL NO LONGER PUBLISH OFFICIAL NOTICES. THE ISSUE, THEN, BECOMES THE CITY’S RESPONSIBILITY TO IDENTIFY AN “OFFICIAL” NEWSPAPER PER CHARTER AND CODE REQUIREMENTS PRIOR TO THE APRIL 2ND DATE. Further, IT BECOMES THE CITY’S RESPONSIBILITY TO NOTIFY ITS DEPARTMENTS AND AGENCIES OF THE CHANGE WELL IN ADVANCE OF THE APRIL 2ND DATE.

6) IF THE CITY HAS NOT IDENTIFIED AN “OFFICIAL” NEWSPAPER BY APRIL 2ND WHAT BECOMES OUR LIABILITY WHEN “OFFICIAL” NOTICES ARE NOT PUBLISHED IN THE “OFFICIAL” NEWSPAPER ?

7) The due diligence the Purchasing Division focused on this issue included the completion (in December, 2000) of an amendment to DRMC 20-70, which was designed to address this specific issue. Indeed, we were prepared and even scheduled to present the amendment to Council. However, after City Attorney review – including a meeting with City Attorney personnel – the advised course of action was to “wait and see” what happens with the JOA. We have “waited” and we have “seen” and now we must provide Departments and Agencies of the City with definitive direction in the area of both official and non-official advertising.

FINALLY, it is absolutely imperative that Departments and agencies of the City be given direction with regard to this issue immediately.

A band-aid solution was arrived at:

CITY AND COUNTY OF DENVER – IMPORTANT NOTICE

Due to the commencement of the Joint Operating Agreement (JOA) between the Denver Post and the Rocky Mountain News and the subsequent creation of the Denver Newspaper Agency, newspaper advertising costs for the City and County of Denver have more than doubled. The commencement of operations by the Denver Newspaper Agency represents an extraordinary, once-in-a-lifetime event, which eliminated the City’s contractual relationship for advertising with the Rocky Mountain News and the Denver Post. As a consequence of that event and in consideration of budgetary limitations, the City has taken several “emergency” steps with regard to advertising, and specifically with regard to advertising that is required to be published in a “newspaper.” Managers of City departments and agencies have been authorized to place “official” notices for not-construction related matters with either the Daily Journal, or the Denver Newspaper Agency. Construction-related “official” notices will be placed with the Daily Journal, who was the second low bidder for this type of advertising. Job announcements, and classified and retail advertising items that were formerly placed with the News or the Post for publication may now be placed with the Denver Newspaper Agency, depending upon the Managers’ determination that the expenditure is justified. It is anticipated that these “emergency” steps will be temporary only, as the City endeavors to identify more appropriate, global, modern and certainly cheaper methods of advertising for the future. Please be advised that the City’s Internet site http://www.denvergov.org contains an enormous amount of information about the City’s activities, including job offerings, bid notifications, activities at City venues and other information that may be helpful or informative to you.

Let us now back-up a bit.

The IB’s interaction in mid-March, 2001, (probably, even earlier than that), with the folks over at the Denver Newspaper Agency (that, once again, would officially begin operations on April 2, 2001), included efforts to negotiate down the initial rates for advertising they had proposed; rates that would supersede what had been offered by a competitive bid process in December, 2000.

Additionally, the IB’s cogitation with regard to moving the city’s advertising requirements away from exclusive dependence on newspapers and into the realm of 21st century technology–a technology that clearly had surpassed the rapidly declining significance of print media–had, prior to March of 2001, moved to written articulation in the form of a Charter amendment with accompanying Revised Municipal Code (RMC) modifications. The Charter amendment and RMC modifications would provide the city with the flexibility to utilize modern electronic technology as a primary advertising tool, while relegating newspapers to a tangential resource to be utilized only when the same would be in the best interests of the city. The content of the proposed Charter amendment was known by the DNA.

Let’s take a look at the DNA’s original proposed pricing as opposed to what had been offered pursuant to the competitive bid process the prior December. The DNA offered this pricing prior to the effective date of their operation, April 2, 2001.

Official Notices for Construction-Related Advertising
RMN Bid Price offered in December, 2000: (Mon-Sun): $0.80 Net Unit Cost Per Line Published Per Insertion
DNA Proposed Pricing: (Mon-Thu) $3.52, increase of 340% over bid price
DNA Proposed Pricing: (Fri) $3.87, increase of 384%
DNA Proposed Pricing: (Sat) $4.05, increase of 406%
DNA Proposed Pricing: (Sun) $4.26, increase of 433%

The IB, incensed with the outrageous increases offered, communicated to the DNA that the same were absolutely unacceptable and that revised new rates must be forthcoming. The DNA responded withe the following offer:

Official Notices for Construction-Related Advertising
RMN Bid Price offered in December, 2000: (Mon-Sun): $0.80 Net Unit Cost Per Line Published Per Insertion
DNA Proposed Pricing: (Mon-Thu) $2.25, increase of 181% over bid price
DNA Proposed Pricing: (Fri) $2.25, increase of 181%
DNA Proposed Pricing: (Sat) $2.25, increase of 181%
DNA Proposed Pricing: (Sun) $2.25, increase of 181%

NOTE: DNA pricing offered for other categories of advertising (e.g. Not Construction related notices) increased from 120% to 166% over the December bid pricing.

The revised pricing from the DNA came, incidentally, after the following email exchange between the IB and DNA management personnel:

To:______@rockymountainnews.com’

> Subject: Advertising Rates
>
> Good afternoon, _____. Any progress on reasonable rates for Denver/MAPO?
> Thanks.
>
From: _____@rockymountainnews.com

Sent: Monday, March 19, 2001 4:58 PM
To: _____@ci.denver.co.us
Subject: RE: Advertising Rates
______, our lawyer has informed us it would be useless to try to offer what you consider “more reasonable” rates because of what you told me Friday………..that the plans are to move forward on changing the charter, no matter what we offer you. What would be to our benefit to try to lower
the rates, when you aren’t planning to use newspaper in the future? Thanks,

To:______@rockymountainnews.com’
> Subject: Advertising Rates

Interesting comment. We all have advanced into the electronic age and it would be ludicrous to deny the City and County of Denver the innovative foresight to allow for flexibility in the manner in which notices are posted and disseminated. It is also interesting to me that the rates the DNA is proposing ($3.52 per line) were justified very early on as ONLY establishing parity with rates charged in like markets. The “like” markets mentioned by the DNA were Houston, Dallas, Phoenix and Kansas City. Kansas City is still, apparently, negotiating rates but, surprise, surprise, Dallas comes in at $1.98 per line for legal ads; Phoenix comes in at $1.35 per line(with a 15% discount for the 1st insertion); Houston is at $4.02 per line (a Hearst paper) and we were told that that rate was so outrageous that the City of Houston secured legal authority to place their legal publications in a newspaper similar to our Daily Journal. Additionally, I certainly did not say the City and County of Denver will not use newspapers in the future. If the best interests of the City are served by placing an ad in a newspaper then that’s what will happen. If our best interests are served by placing the add on the Internet, then that’s what will happen. If the use of both a newspaper and the Internet makes sense, then that’s what we’ll do. It is disheartening to read your comment in consideration of who, ultimately, will be paying the exorbitant advertising rates the DNA is proposing; the taxpayer ultimately picks up the tab. Please allow me to take off my city hat for a moment and speak as a native Denverite (and Denver taxpayer) who is passionate about this city and its best interests: The proposed DNA rates are outrageous and I resent their imposition simply because the DNA has a monopolistic ability to do so. So, there’s my response. I would welcome any attempt to negotiate these rates down. If the only reason the DNA has for proposing “reasonable” advertising rates to the City is to assure the City does not endeavor to responsibly participate in technological advances that will save time and the taxpayer’s dollar, then I suggest the DNA’s motivation is misguided and not terribly responsible.

Okay. Lawd this is a long one. Let me tie this up.

Suffice it to say, the DNA commenced operations on April 2, 2001. The IB–with the assistance of city attorney staff–went forward with the Charter amendment and accompanying RMC language modifications. The Charter amendment appeared on the May, 2001 ballot and passed handily. The amendment replaced each instance in the Charter where the word “newspaper” appeared, with the words “official publication.” (The changes to the RMC would accomplish the same thing, at a later date.)

The essential meat of the Charter amendment was, of course, the language that allowed for flexibility in identifying what constituted an “official publication.” As the adopted language, below, notes, newspapers were no longer the mandated method of publication for official notices.

A12.3-7 Official Publications. Exclusive management and control, by contract or otherwise, of the manner and method for designating official publications to be used for the official advertising of the city and county and for all departments, agencies, boards, commissions and authorities thereof. The manner of publication may include print, electronic, and other media as appropriate to comply with applicable law and meet the various publication needs of the city, and shall be made annually unless the Manager determines that an annual designation has become impracticable.

So, obviously, the term, “digging one’s own grave,” surely comes to mind here. Not only for Denver’s dailies, but for the JOA that enabled the creation of the Denver Newspaper Agency. The Denver Business Journal has consistently reported on the decline of Denver’s dailies since the advent of the DNA.

So ends this newspaper saga. (Thank GAWD!)

And, if you’ve read this far, George wonders if you’ve actually got a life worth living. Who on earth would want to trudge through this mush! Who on earth could stay awake long enough to get this far! And, what nutcase would actually write it!

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2 Responses to A Newspaper Story – Part II – The Insufferable Bureaucrat vs. The Denver Newspaper Agency

  1. doog says:

    George, as a friend of mine is fond of saying ‘The battles were so vicious because the stakes were so SMALL’ – as for the Denver newspapers shooting themselves in the foot, what can you expect of people who still think they can control the Internet? It’s one thing to grow OLD – that’s unavoidable. It’s completely another to grow UP – something most of Colorado’s ‘conservative’ (what an amusing word to apply to stoneheaded dinosaurs) businessmen absolutely refuse to do; even if it means the demise of their businesses.

    Like watching someone load a gun, take off their shoes, sit down, take careful aim and systematically blow their toes off one after another – then whine that they need four more bullets to finish the job.

    Yes, long post. No, not mush. Life? Who needs one of those!!??

    😀

  2. georgeindenver says:

    Well said, Doog. Thanks.

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