From the Boneyard to No. 1

By Ezra Bowen.

Seven years ago, the Anchorage Daily News had surely endured its quota of lean seasons. Founded on a meager stake in 1946, the feisty, liberal-leaning paper had lagged far behind Anchorage's conservative afternoon Times, described on its masthead as "Alaska's Largest Newspaper." After being taken over in 1967 by former Chicago Daily News Editor Larry Fanning and his wife Kay, the Anchorage News turned out some spirited journalism but continued to decline. "In 1976," recalls Kay Fanning, "we won a Pulitzer Prize and went publicly broke."

Two years earlier the News had entered into a joint operating agreement with the Times, under which it used the larger paper's business and production services while retaining its own editorial staff. In 1977 it decided to back out of the pact and had to seek donations to keep going. By 1979 the newsroom staff numbered eleven people, the daily edition had withered to 16 pages, and circulation was 11,000, in contrast to 46,000 for the Times.

The end, right? Wrong. Just the darkness before the dawn of an astonishing new day.

A robust News published weekday editions averaging 102 pages last week. Meanwhile 400 news and business staffers hoisted glasses of Chardonnay earlier this month to toast the opening of a new $28 million headquarters. The News's circulation now stands at 53,000, making it the state's largest paper. The Times, forced to remove its masthead boast eight months ago, has slipped to 40,000 and has hired its seventh managing editor in seven years. Observes Frank McCulloch, managing editor of the San Francisco Examiner: "If you had asked newspaper analysts seven years ago if it could be done, they all would have said, 'Impossible!' "

The impossible got under way in late 1978 with a desperation move by Kay Fanning, who had become editor and publisher of the News after her husband's death in 1971. Fanning journeyed to Sacramento to ask C.K. McClatchy, whose chain of newspapers now numbers a dozen, for a tide-over investment. Instead, McClatchy bought the News by assuming its debts, while letting Fanning retain a 20% interest. Then McClatchy dispatched a 21-member team of business and editorial pros from his Modesto Bee to spend four months trying to pump life into his new purchase.

A key strategy was to stick with morning publication rather than go head to head in the afternoon with the Times. Then the News immediately expanded to 48 pages. "We decided we had to match the news hole of the Times," says McClatchy, 59. As publisher, McClatchy plucked brash Jerry Grilly from Florida, where he was running a chain of weeklies. "It was like someone offered me a job on the moon," recalls Grilly, now 39. The moon might have been cozier. When Grilly arrived in Anchorage, the Times controlled 85% of the advertising dollars. "It was tough getting people to return my calls, much less buy," he says. But Grilly pelted away at prospective advertisers and built an 80-person circulation cadre that outhustled the Times, indulging in such expensive ploys as flying copies to Fairbanks, Juneau and even Adak Island, 1,200 miles west in the Bering Sea.

In a shrewd editorial stroke, McClatchy brought back Howard Weaver, now 35, a defector from the News's bad old days. Weaver, who had left to launch a "semiunderground" weekly, says McClatchy interviewed him "to find out what kind of bomb thrower I was." A mighty good one, as events proved.

When Fanning went to Boston in 1983 to become editor of the Christian Science Monitor, Weaver succeeded her at the News and began looking for people, as one deputy put it, "who write stories that are a bit of a surprise." He also stressed old-fashioned digging. Last year, after two reporters fished a stenographer's notes from a trash can outside a grand jury courtroom, the paper's revelations based on those notes nearly blew Governor William Sheffield out of office for alleged involvement in a state office- leasing scam. Readers gobbled up the Tale of the Trash Can Papers, as well as the News's coverage (including a regular column by Weaver) of a state senate impeachment investigation, which Sheffield survived by a vote of 12 to 8.

Other investigative reporters on Weaver's rebuilt editorial team have written more than 40 stories in the past two years about pollution issues surrounding the state's powerful oil industry. Meanwhile Weaver has run a poignant series on the survival struggle by the state's Eskimos and launched a folk-adventure column that recently took readers on an open-boat whale hunt. Then last week he dropped a fresh bomb with a front-page scoop about MarkAir, an Anchorage-based airline. According to the News, the U.S. State Department paid Mark-Air to fly supplies to a Nicaraguan contra base in Honduras.

This artful mix has won a steady stream of reader converts, among them Governor Sheffield, who admits he prefers the News even though "they write horrible stories about me." Advertisers too are climbing aboard, raising the News's market share to a healthy 65%. As for the once depleted and demoralized staff, it is reveling in the sleek new building, with its workout room, outdoor running track and the latest in computer technology. Marveled a visiting Fanning as she inspected the $8 million printing press: "It seems so big league."

None of these triumphs has yet produced a solid profit for the News. Despite McClatchy's first-ever monthly profit, in May, the paper will probably end the year in the red. The Times's publisher, Robert Atwood, 79, says that he is far from abandoning the war. "We're in a position to buy them out and relieve them of their losses," he says. But more quietly, Atwood offers a notion that seven short years ago would have been unthinkable: the Times might contemplate a joint operating agreement with the News. "I guess McClatchy's pockets are deeper than mine," he concedes.

With reporting by Paul A. Witteman/Anchorage