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The Honolulu Advertiser
Posted on: Friday, February 26, 2010

Businesses worry ad rates could rise

 •  Bulletin owner buys Advertiser

By Andrew Gomes
Advertiser Staff Writer

The possibility that one of Hawai'i's two main daily newspapers may disappear is raising concerns from companies that advertise in the publications.

The fear that advertising rates will rise if competition between the newspapers is eliminated has begun to make the rounds of the local advertising community much like it did about a decade ago when the shutdown of the Honolulu Star-Bulletin was threatened by its previous owner.

Yesterday's announcement that the owner of the Star-Bulletin has contracted to buy its larger rival, The Honolulu Advertiser, from Gannett Co. raises the possibility that the Star-Bulletin will cease publication and have its operations consolidated to continue publishing the Advertiser if no buyer emerges for the smaller paper.

The Star-Bulletin has lost money for the nine years since Canadian publisher Black Press Ltd. bought the paper, the owner said in a news release.

It's possible, though analysts consider it highly unlikely, that someone will buy the Star-Bulletin from Black Press and maintain operations at or near its present competitive level.

This belief has raised fears among advertisers that their business will be negatively impacted.

"With the two papers there is a competitive rivalry that made it more advantageous for my clients," said Doug Harris, CEO of local advertising firm Harris Agency. "We were getting better deals, quite frankly."

Harris said big uncertainties exist, such as how one or both papers might change in terms of content and readership under the deal.

The concern about fewer advertising options and higher rates was raised in 1999 after Rupert Phillips of Florida-based Liberty Newspapers LP announced that he planned to close the Star-Bulletin.

As part of that deal, Gannett agreed to pay Phillips $26.5 million to end the joint-operating agreement under which the two newspapers had long shared advertising functions.

After community and regulatory challenges that led to a forced offering to sell the Star-Bulletin, David Black of Black Press emerged as a bidder. His purchase resulted in two statewide daily newspapers competing for advertising for the first time in almost 40 years.

Black at the time said most businesspeople he contacted wanted the Star-Bulletin to survive and offer competition for advertising as well as news.