Staking a Fortune on "Gypsies"

By WILLIAM A. HENRY III

Despite the odds, Gannett starts USA Today, a national daily

Frequent travelers often find themselves facing an information gap. Though some savor getting to know a new area through its local newspapers, others dislike the parochialism of too many home-town stories. The nationally distributed alternatives, the Wall Street Journal and the less universally available New York Times, are not exactly the lightest of reads. Starting this week in Washington, D.C., however, and perhaps eventually throughout America, there will be another choice: USA Today, a streamlined, eye-catching and affordable (25-c-) Monday-to-Friday daily paper from the nation's biggest newspaper chain, the Gannett Co. USA Today's launch will cost $20 million to $25 million, industry analysts say, and the paper will require at least as much next year. Contends Gannett Chief Executive Allen Neuharth, 58: "A large segment of the public has a voracious appetite for information that is not being satisfied."

USA Today will expand successively into Atlanta, Minneapolis-St. Paul and Pittsburgh by early October; next year it is scheduled to enter ten more cities, including New York, Chicago and Los Angeles. The target audience is not city residents. Instead, USA Today is aimed at: visitors, especially businessmen; people who have moved into a new region yet remain interested in news and sports from their former homes; and suburbanites whose local dailies are just too local. Gannett seeks only a small fraction of current newspaper readers, but hopes to amass enough such "tack-on buys" to reach a circulation by 1987 of 2.35 million, vs. the Wall Street Journal's current 2 million.

Readers who buy this week's Washington-area press run of 200,000 copies a day will get a 40-page package including national and foreign news, a business section more consumer-oriented than the Journal's, extensive coverage of television, briefer reports on the arts, law, religion, science and other "soft news," plus lots of sports. Gannett promises to provide a play-by-play of each run scored in every major league baseball game. To keep sojourners abreast of events back home, the paper has a two-page spread of news items from each of the 50 states, and a similar state-by-state summary of college, school and amateur sports. The clean makeup features sharply reproduced color photos, charts and a vivid, detailed national weather map.

The idea for USA Today, which now occupies 160,000 sq. ft. of a Rosslyn, Va., office tower overlooking the capital's monuments, was nurtured about three years ago in a bungalow mere blocks away from Neuharth's home in Cocoa Beach, Fla.; the Gannett team worked behind windows coated with reflective paper to discourage the curious. By April 1981 the plan had progressed to prototype issues, which were mailed to public figures, journalists and financial analysts for comment. Some of the reaction was pungent. Publisher Joe Murray of the Pulitzer-prizewinning Lufkin, Texas, News returned his dummy issue after scrawling across the top, "Forget the whole thing."

The idea seemed especially daring for Gannett: The country's sixth largest media company (reported 1981 sales: $1.4 billion), it specializes in small, mostly monopoly markets. Of its 88 dailies, only three, including morning-evening combinations, have weekday circulations above 150,000. Some critics contend that the new paper is a personal bid for recognition by the driven maverick Neuharth; they find evidence even in the office suites of USA Today, which are decorated in black, white and gray, the only colors Neuharth wears in public. Says one Gannett insider: "It's Al's ego trip." Responds Neuharth: "The decision was not glandular, it was aided by research. And we will keep going only as long as we think we have a chance to succeed."

Part of the reason Gannett proceeded was that technology made it relatively cheap. By transmitting page proofs via satellite to pressrooms borrowed primarily from its own regional newspapers, USA Today has installed a production system for about $500,000 per printing center, vs. millions of dollars if it had built new factories. Papers will be sold primarily through newsstands and vending boxes rather than costly, complex home delivery. Most of the staff, and virtually all the executives, came from other Gannett papers and were guaranteed that their old jobs would be held open at least through December.

At a tune when big-city newspapers across the country are in trouble (latest fatality: the Cowles-owned Buffalo Courier-Express, which last week was announced as scheduled to close Sept. 19), newspaper executives are inclined to applaud any new venture in the industry. But as Los Angeles Times Publisher Tom Johnson points out, "USA Today's success will be determined by a very tough public and by advertisers looking for the best possible increase in sales." Business Analyst R. Joseph Fuchs of Kidder, Peabody and Co. Inc. rates USA Today's chances as "better than even." John Morton of Lynch, Jones and Ryan notes that Gannett is at worst taking a gamble in which potential rewards greatly exceed risks: "This is not an enormous investment, it is like buying a moderate-size newspaper, and it promises an enormous return."

One big problem, says John Reidy of Drexel Burnham Lambert Inc., is "picturing the typical reader of USA Today. I'm not sure how clearly I see this ephemeral reader." Neuharth counters that "there are millions of gypsies in this country, and if they are normal, they have retained an interest in the locations where they have lived or worked."

But Neuharth knows as well as anyone the odds on his gamble. No large, general-interest daily has been launched successfully in this country since Long Island's Newsday, which debuted back in 1940.

-- By William A. Henry III .

Reported by Anne Constable/Washington and Maureen Dowd/New York

With reporting by Anne Constable, Maureen Dowd

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