Financial offers give UPI new lease on life after near bankruptcy
Things are looking up at debt-plagued UPI. Five months after filing in bankruptcy court for protection from creditors seeking $27 million for unpaid bills, United Press International appears to be on the rebound.
The single most important piece of good news at the nation's second major news wire service is that 25 would-be buyers have informally indicated interest in helping bail out and reorganize UPI.
UPI executives are expected to narrow the offers down this Friday to a handful of acceptable candidates for a financial marriage aimed at infusing new capital into the wire service.
``This is an amazing difference from where we were a year ago, or six months ago,'' says UPI spokesman Bill Adler.
``I am more optimistic than at any time in the past 24 months,'' says Dan Carmichael, secretary-treasurer of the Wire Service Guild.
UPI was forced to file under Chapter 11 of the bankruptcy code last spring after initial signs of a financial recovery by the company triggered an avalanche of demands for payment on overdue bills. In a cost-cutting move, salaries were trimmed and 300 to 400 workers were laid off.
In early 1984, the $100 million company was losing approximately $1 million a month. Since that time, UPI has sustained 10 consecutive months of profitable operations, according to Mr. Adler, including an austere $140,000 in profits for August.
Wage cuts have been restored and staff morale is on the rise. UPI is again getting more job applicants than it can hire, officials say.
One sign of the turnaround at UPI came at 2:58 p.m. Sept. 19 when a UPI reporter got the first American news account of the recent earthquake out of Mexico.
``Mexico shows that we are back,'' says Adler. ``We are feisty and competitive again.''
But beyond the immediate drama of bankruptcy hearings and layoffs loom questions about whether a market exists to support a second major news wire service in the United States. The Associated Press (AP) is the country's largest wire service with some 1,300 of the nation's 1,700 daily newspapers listed as subscribers. Approximately 800 newspapers subscribe to UPI.
``I think it is significant that you do not see any major media companies or communications companies that are sophisticated about the newspaper business [submitting bids to purchase UPI],'' says John Morton, a newspaper analyst with Lynch, Jones & Ryan in Washington, D.C.
``AP has the market,'' Mr. Morton says, adding, ``No profit-seeking wire service in my opinion will be able to survive in the long-run against AP.''
UPI officials are hoping Morton's assessment is wrong. They are planning to eventually diversify into international data-base and other communications ventures as a means of helping support UPI's core news operations.
``We feel that the base business must be preserved but that rapid and intelligent diversification is imperative,'' says Mr. Carmichael.
UPI officials cite the British news wire, Reuters, as an example of how a financially troubled news agency can develop a business-data and information market and turn the entire agency into a profitable operation.
On a broader scale, many journalists and industry observers are concerned that UPI's demise would mark the end of an era of fierce competition between wire-service reporters.
They worry that the quality of national and international news coverage might suffer in the same way that news coverage has suffered in some cities when one of two competing daily newspapers goes out of business.