A Deal Done In

When Oilman John Mecom bought the Houston Chronicle six months ago in a package deal that included other, more valuable properties, his friends revived the old joke that his wife had simply asked him to pick up a paper on the way home. Mecom has that kind of reputation. Right up with H. L. Hunt and J. Paul Getty among Texas' biggest independent oil producers, Mecom has added to his rich oil empire by picking up fish-meal plants, a drugstore, ranches, and other assorted enterprises from here and there. He had never tried a paper before, and last week it turned out that Mecom had apparently never really bought the paper at all.

First indication was the abrupt disappearance of his name from the Chronicle masthead, where he has been listed as president and publisher since January. Though all the principals involved immediately issued a torrent of stony silence--neither the Chronicle nor even the rival Post covered the story--the facts behind Mecom's canceled purchase murkily began to emerge.

Supposed Properties. Houston Endowment Inc. is a $400 million nonprofit foundation set up by the late Jesse Jones, onetime U.S. Commerce Secretary and owner of the Chronicle. Recently, the trustees of the foundation, notably President J. Howard Creekmore, became anxious to convert the paper and other Endowment holdings into cash; last December they happily accepted an offer of $85 million from Mecom. In return, Mecom was to get the Chronicle, the well-located Chronicle Building and Rice Hotel, and a 30% controlling interest in the Texas National Bank of Commerce, second largest in town. Mecom put up $1,000,000 in cash and shook hands on the deal--which is the way he usually seals a bargain.

Mecom then moved to take over what he supposed were his new properties. At the Chronicle, he had an office carpeted for himself in "Mecom blue," his favorite color. He was also elected chairman and chief executive officer at the bank and had a Mecom-blue rug put down in the lobby. He seemed ready to get into the newspaper business in a big way, threw a huge party for the entire staff at his home. Used to the penuriousrress of the Endowment, Chroniclers came away awed by visions of the future. But Mecom, who boasts some $500 million in assets, still needed to raise the rest of the cash to complete the deal. Before he could, something happened.

According to one version, he apparently miscalculated the current tightness of money and was turned down by at least one bank on his loan application. In an effort to raise funds for the big deal, he started looking for a buyer for the Chronicle. With a signed contract to sell the paper, so the story went, he could easily borrow the cash he needed to pay off the Endowment.

That Was That. Ever-acquisitive Publisher Sam Newhouse made an offer. Word got out that the Los Angeles Times's Otis Chandler also tried to get in on the deal. There was even talk that the Hearst chain and Scripps-Howard were interested. All this got back to Creekmore, a cantankerous and single-minded individual who is known to feel that the Chronicle should remain a locally owned enterprise. If Houstonite Mecom was going to sell it, then Creekmore did not want to sell it to Mecom.

The handshake quickly separated into fists of contention. Friends of Mecom say he had understood that six months from the date of the original deal--which was last week--he was to be ready with another payment of $14 million. Creekmore associates say the Endowment always made it clear that it wanted no part of long-term financing. Whatever the agreement had actually been, the Endowment and Creekmore gave Mecom its interpretation when he arrived with his cashier's check for $14 million. He offered to double the amount. They said that he could have 48 hours to raise the entire remaining $84 million or he could keep his money. Mecom hit the ceiling and walked out. The entire deal was off. "If they stabbed Big John in the back," said a Mecom man, "they'll be sorry." Said an Endowment spokesman: "You can say the Endowment has always owned the Chronicle--and still does."

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