A Feud in Anchorage

When a newspaper wins the top Pulitzer Prize for journalistic excellence, one might expect it to flourish like the biblical green bay tree--or at least the Washington Post after Watergate.

There are no bay trees, green or otherwise, in Alaska, however, and last spring's Pulitzer gold-medal winner for public service, Anchorage's Daily News (TIME, May 17), is having a long dark winter. To reduce expenses, the paper has had to trim its editorial staff from 21 to twelve. Two of the three reporters whose Pulitzer-winning articles revealed the stranglehold that the Teamsters have gained on Alaskan labor have left for better jobs, and the morning Daily News' circulation of 11,600 has shrunk to 7,580. But Publisher Katherine Fanning, 49, who with her husband bought the paper in 1967 after leaving her native Illinois, is fighting back. She has sued Anchorage's other newspaper, the Times, for $16.5 million because, she says, it is trying to put her out of business.

The trouble began in 1974, when the already battered Daily News merged its advertising, circulation and production departments with those of the far larger Times (circ. 45,350). Only the editorial departments remained separate: the News continued to ask awkward questions about conservation while the Times remained boosterish about the Alaska oil pipeline and any other scheme that might improve the state's economy.

The purpose of the merger, of course, was to lower operating expenses for the loss-ridden Daily News. The deal, however, had the opposite effect. In the last year before joining up with the Times, Fanning's paper lost $650,000. A year later the red ink was even redder: $750,000. Worse, according to Fanning's lawsuit, Times Publisher Robert B. Atwood and his staff have tried to kill the competition by scaring off potential Daily News advertisers and subscribers, mismanaging the paper's financial affairs and letting its distribution system go to pot Says Kay Fanning, who took over the paper on her husband's death in 1971: "Of the 22 other joint operating agreements in the U.S., to our knowledge this is the only one not working to the benefit of both newspapers."

Atwood, 69, disputes Fanning's version. Says he: "The whole thing is ridiculous. The only way that the Times could have benefited from the arrangement was for the News to be a whopping success. If they made money, then the Times would share in the profits. There is no motivation for us to want to kill it."

Atwood points out that the News got into deep trouble only when Frederick ("Ted") Field, Kay Fanning's son by her first marriage to wealthy Chicagoan Marshall Field IV, stopped subsidizing the paper last October. Fanning agrees that the loss of the $500,000 annual subvention was a jolt and that she is seeking that amount to keep the News afloat for a year. But she blames Atwood for most of her current trouble. Says she: "What it comes down to is that the Times has absolute management control with no accountability."

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