YEAR IN REVIEW 2000: MEDIA-AND-PUBLISHING

Book Publishing In July 1999 the outgoing European Commission failed by a slight margin to muster the majority needed to proceed with measures that would outlaw the 110-year-old price-fixing agreement that controlled the book trade in Germany, Austria, and other Germanic countries. Incoming competition commissioner Mario Monti stated, however, that he regarded the agreement as a cartel, and he vowed to continue his predecessor's efforts to have it struck down. The heavy price discounting on best-sellers sold over the Internet spread from the U.S. to the U.K. In June 1999 the Internet division of WH Smith, the U.K.'s largest conventional bookseller, announced that it would discount by 50% the 20 best-selling books in hardback. Amazon.com promptly responded by offering the same discount on the top 40 best-sellers in any format available on its U.K. Web site, and Bertelsmann AG followed suit with the top 10 titles on its European Internet bookselling operation, BOL.com. Although on-line book sales had yet to take off in the U.K., these discounts were expected to lift sales but were unlikely to improve profitability. Some publishers continued to seek salvation in the realm of electronic publishing, but many large publishers failed to meet the challenge. Reed Elsevier, one of the world's leading publishers, was forced in June 1999 to issue its third warning in six months about sagging profits; the company attributed the decline largely to competition from Internet publishers. With the 1998 acquisition of Random House as well as the 1999 acquisition of Springer Verlag, Germany's leading scientific and medical publisher, for about $600 million, Bertelsmann AGa German conglomerate that already owned the American publishers Bantam Doubleday Dellbecame the largest publisher not only in the U.S. but also in the world. In September Bertelsmann released its sales figurestotal U.S. revenues reached $5 billion, 35% of the conglomerate's revenue. Rumours that Bertelsmann was also interested in acquiring Simon & Schuster were quickly scotched; the company would risk running afoul of antitrust violations if it carved out more market share in the U.S. Under the new management, Random House was reorganized into four new publishing groups, effective July 1. The former Bantam Doubleday Dell publishing groups were split up into the Doubleday Broadway Publishing Group and the Bantam Dell Publishing Group. Anchor Books was merged with Vintage to form a new trade paperback division in the Knopf Publishing Group. In addition, the religious imprint WaterBrook was pulled into a newly formed Doubleday Religious Publishing group. In another major acquisition, Rupert Murdoch's News Corp. purchased for an estimated $180 million the Hearst Book Group, which included William Morrow and Avon Books, from the Hearst Corp. The group was folded into News Corp.'s HarperCollins subsidiary and thereby became the second-largest trade publisher in the U.S. In the process 74 jobs and 17 imprints were eliminated. The acquisition of Hodder Headline by WH Smith was poorly received in the financial markets. It was argued that the heavy premium paid as part of the $296 million takeover bid could be justified only if Hodder proved capable of providing the bookseller with a high proportion of exclusive content, which would thus restrict sales to other retailers. In May 1999 U.K. media group Pearson announced several sales: Appleton & Lange to McGraw-Hill for $46 million, Jossey-Bass to John Wiley & Sons for $82 million, and Bureau of Business Practice to Wolters Kluwer for $16 million. In June Pearson sold Macmillan Library Reference to Thomson for $86 million and Macmillan General Reference to IDG Books for $83 million. Pearson divested itself of these holdings so that the U.S. Justice Department would support Pearson's acquisition of Simon & Schuster. Harry Potter, a young British wizard in training, was the book character that captured much of the reading public's interest and the attention of publishers. The first book in the series, Harry Potter and the Sorcerer's Stone, by J.K. Rowling (see Biographies), was released in the U.S. in September 1998, after having made its 1997 debut in Great Britain as Harry Potter and the Philosopher's Stone, and immediately climbed best-seller lists, amazing industry pundits who disbelieved that there was a market in children's hardcover fiction. Impatient for the next installment, American readers began ordering Harry Potter and the Chamber of Secrets in its British version from on-line publishers well in advance of its scheduled U.S. release date. American publisher Scholastic moved up the release date for the second book from September to June. A similar happy fate met the third book, Harry Potter and the Prisoner of Azkaban. The series captured the top three spots on the hardcover best-seller list of the New York Times at the same time that the paperback edition of the first book held the top spot on the fiction paperback list. Scholastic reported in November that there were 8.9 million copies in print of the three hardcovers and one paperback. The fourth book in the series was scheduled to appear in the U.S. in 2000simultaneously with the British edition. The Potter phenomenon, which in general prompted a new interest in children's hardcover fiction, helped increase sales and critical attention for the entire genre. Noted author Edmund Morris, who wrote a Pulitzer Prize-winning biography of Theodore Roosevelt, astounded the literary community with the publication of the controversial Dutch: A Memoir of Ronald Reagan. He had signed (1985) a $3 million advance with Random House to write the biography of Reagan, the first ever authorized by a sitting president. Expectations for a scholarly work were high, owing to Morris's intensive research and unprecedented access to Reagan. Morris, however, found himself stymied by Reagan's elusive personality. In order to bring him to life, Morris inserted fictionalized characters, including a fictionalized version of himself, and presented them as real. The resulting controversy pitted those who disapproved of the outrageous liberties taken by Morris against those who felt that his presentation was a brilliant way to capture the essence of such an unknowable figure. Adding to the controversy was the fact that Random House had sent out early manuscripts only to publications that agreed to sign a confidentiality agreement not to review the book until its official September 30 publication date. A New York Times writer secured a copy, however, and broke the story on the front page of the paper on September 18. The 1999 Pulitzer Prize for Fiction was awarded to Michael Cunningham for The Hours, and the prize for nonfiction went to John McPhee for Annals of the Former World. The National Book Award for Fiction was won by Ha Jin for Waiting, and the nonfiction award went to John W. Dower for Embracing Defeat: Japan in the Wake of World War II. The top fiction best-sellers for 1998, reported by Publishers Weekly, were The Street Lawyer by John Grisham, with 2,550,000 copies sold, Rainbow Six by Tom Clancy, 2,000,000, and Bag of Bones by Stephen King, 1,496,520. Nonfiction best-sellers were The 9 Steps to Financial Freedom by Suze Orman (see Biographies), 1,470,865, The Greatest Generation by Tom Brokaw, 1,423,863, and Sugar Busters! by H. Leighton Steward, 1,201,000. According to the Association of American Publishers, book sales in the U.S. increased 6.4% in 1998 to $23,030,000,000. Peter J. Curwen; Beth Levine Magazines In 1999 publishers won a major victory when the European Parliament initialed an amendment to the Copyright Directive that would outlaw random, illegal copying of material on the Internet. The move came after the Telecom companies proposed to weaken the entire copyright regime for content providers. A trade war between Canada and the United States was averted in June when the two nations signed an agreement that ended a long-running dispute involving magazine advertising. The centre of the controversy was the proposed Canadian Bill C-55, which was passed by the House of Commons in March and banned all split-run editions (a Canadian edition of a foreign magazine that varied little in editorial content and that could run Canadian ads at bargain rates); some 80% of magazines sold from Canadian newsstands were foreign, most of them from the U.S. The compromise allowed a three-year phase-in period, in which advertising in split-run magazines would be capped at 12% the first year, 15% the second year, and 18% the third year. The bill faced a major revision before heading to the Senate. Industry observers in Canada feared that Canadian magazinescompeting with U.S. split-run editions that filled 18% of their ad space with low-rate Canadian adswould lose their entire ad base. In 1998 The Netherlands maintained the highest magazine readership level of European countries; magazines reached 97% of the adult population in 1998. France was a close second with a 95% level. Overall, magazine readership declined in Europe; Spain's level dropped to 52%, Italy's fell to 66%, and Portugal's slipped below 50%. Readership in the United Kingdom and the U.S. hovered around 80%. The magazine industry experienced moderate growth in 1999. Circulation rose an average of 4.3% for the top 200 consumer magazines during the first six months of 1999, and total advertising revenue was up 11.7% through the first nine months of 1999 compared with the same period in 1998. In the past three years, business-to-business magazines had become the fifth largest medium, following network television, spot television, newspapers, and consumer magazines. During 1998 it was reported that 18,606 magazines were published, an increase of 32% since 1990, and that 1,067 new magazines appeared, up from 852 in 1997. Worldwide spending in 1998 for magazine advertising was up 5% to $38.2 billion. China, which experienced a 45% increase in its advertising market, surpassed South Korea as the largest market in the Asia-Pacific region outside Japan. Rolling Stone magazine launched a new monthly edition of its magazine for the Czech Republic and Slovakia and in October issued another in Spain, bringing the number of international editions to five. The Czech version, which hit newsstands in April, was published through a licensing agreement with Stratosfera. The Spanish Rolling Stone was published by Progresa, the magazine-publishing division of Grupo Prisa, a Spanish newspaper publisher. In addition, Rolling Stone planned to expand its Argentine edition, which was launched in 1998 and had a circulation of 70,000. Beginning in April 2000, the title would be distributed to nine additional South American countries. Among the most notable new magazines launched in 1999 was Tina Brown's Talk. The first issue, which guaranteed advertisers a circulation of 500,000, came out in August and was aimed at the same literary set that read Vanity Fair and The New Yorker, the two titles that Brown had edited and revived while at Cond Nast Publications. The magazine was a joint venture of Hearst and the Disney Co. Hearst also announced that in the spring of 2000 it would launch Oprah: The Magazine, aimed at women 2554 and patterned after Oprah Winfrey's television program. Vanity Fair took the top award for General Excellence for magazines with over one million in circulation in the National Magazine Awards announced in May. Other winners included Cond Nast Traveler, Fast Company, and I.D. Magazine, in smaller circulation categories. Publishers Clearing House was sued in separate actions by Florida and Arizona, alleging that the sweepstakes giant used deceptive tactics to lure consumers into purchasing magazine subscriptions. Several other states filed similar suits. In responding to the complaints, Magazine Publishers of America adopted guidelines in February that called for easy-to-find no-purchase-necessary statements and clear disclosure of all sweepstakes terms and conditions. In May more than 700 top international magazine publishers attended the 32nd World Magazine Congress in Hamburg, Ger. The event was sponsored by the International Federation of the Periodical Press (FIPP). Thomaz Souto Corra, vice chairman and editorial director of the Abril Group, Brazil, was elected the new FIPP chairman. Nina B. Link, former president of publishing and interactive software for the Children's Television Workshop, became president of the Magazine Publishers of America in November, succeeding Donald D. Kummerfeld, who retired after having held the position since 1987. David E. Sumner Newspapers In 1999 consolidation ruled in Great Britain, where one of the country's biggest newspaper groups was formed when Trinity PLC purchased the Mirror Group PLC for 1,240,000,000 (nearly $2,000,000,000). The newly named company, Trinity Mirror PLC, would publish city newspapers, such as the Liverpool Echo, along with the nation's third largest newspaper, the Mirror. Analysts predicted that the takeover would lead to lower costs and a stronger advertising base. In recent years regional newspaper groups such as Trinity had increased profits, whereas competition between national newspapers had led to price slashing. The tabloid Mirror, which led the nation with a circulation of 5 million in the 1960s, sold 2.3 million copies and trailed the Sun (3.6 million) and the Daily Mail (nearly 2.4 million). Other newspaper buyers included Britain's fifth largest regional newspaper group, Johnston Press, which spent more than $400 million to control the remaining 83% of Portsmouth & Sunderland Newspapers. Gannett Co., the publisher of USA Today and owner of 74 newspapers, planned to purchase Newsquest PLC, the third largest regional newspaper company in Great Britain, for about $1.5 billion. With more than two-thirds of U.S. newspapers owned by chains, other U.S. companies looked abroad for financial opportunities. The publishers of The Wall Street Journal became partners in creating Vedomosti, a Russian-language newspaper that aimed to be an independent voice in a country of partisan newspapers; the partnership included Dow Jones & Co., Financial Times owner Pearson PLC, and Independent Media, the Dutch-owned publisher of the Moscow Times, Russia's leading English-language newspaper. Partners in Russia were also rivals in the competitive market for business news in Europe. Dow Jones found a German ally to battle Pearson's Financial Times for the English-language business news in Europe by trading shares with Germany's biggest daily business newspaper, Handelsblatt. The German paper, which had 100 editorial employees, received a financial interest in The Wall Street Journal Europe. The two newspapers would share the news from each paper as well as report, translate, and publish each other's work on the same day. Meanwhile, the Financial Times teamed up with the German magazine publisher Gruner + Jahr to begin a German-language version of its newspaper. The Wall Street Journal Europe reported that its circulation was about 70,000, with about 57,000 of that number outside Britain. The Financial Times disclosed a circulation of about 367,000, with 113,000 outside Britain. Much of the world remained a dangerous place for reporters and a free press; the international authors group PEN reported that during the first six months of the year, 34 writers and journalists were murdered, 22 disappeared, 5 were kidnapped, 19 received death threats, and 164 were jailed. In East Timor, for example, Dutch journalist Sander Thoenes, who was working for The Christian Science Monitor and the Financial Times, was killed by armed men who pursued his motorbike. In Zimbabwe Pres. Robert Mugabe attacked the independent press when an editor and a reporter of the Standard, a weekly newspaper, were beaten, tortured, and nearly drowned after being arrested by the military. They had reported a plot to overthrow the Mugabe government but refused to divulge their sources for the story. The editors and reporters of Neshat, a reformist Iranian newspaper that had been forced to close, published a new daily, Asr-e Azadegan. Similar to Neshat, the paper was the fourth that the reformist group had published since 1997. Salam, another pro-reform paper, was shuttered in July for five years, and its publisher was found guilty of defamation, publishing insulting language, and lying to the public; he was suspended from journalism for three years. The closure sparked the worst student protests since those that erupted during the 1979 Islamic revolution. On a positive note, Faraj Sarkuhi, an exiled Iranian editor and writer living in Germany, won the 1999 Golden Pen of Freedom award given by the World Association of Newspapers. In Hong Kong the editor of the South China Morning Post, the city's leading English-language newspaper, was fired after the newspaper continued to criticize the Chinese government, which had assumed control over Hong Kong in 1997. British editor Jonathan Fenby maintained that he was not told why he was fired after more than four years at the helm. The offices of The Apple Daily, a Hong Kong tabloid, were raided by the government on November 29. Newspaper advertising of tobacco products was another hot topic; a ban in Great Britain was delayed by a high court injunction granted to tobacco firms. In the United States the New York Times snuffed out tobacco advertising, citing the harmful effects associated with smoking; only about a dozen U.S. newspapers banned such advertising. Most American publishers argued that a free press was obliged to print advertising of legal products. The issue of newspaper credibility was a major concern in newsrooms after the 1998 release of a $1 million study conducted by the American Society of Newspaper Editors (ASNE). Following the findingsthat newspapers were suffering from a credibility gap because they made too many spelling and grammatical errors, sensationalized the news, slanted the news, did not demonstrate respect for readers and communities, and had values that conflicted with readers' valueseight papers, in cooperation with ASNE, began testing strategies and innovations for addressing the problems. In addition, the Pew Research Center surveyed 552 journalists and news media executives and found that 55% of journalists working for local media thought that factual errors and sloppy reporting had increased; in 1995 40% of journalists had thought so. Various incidents surrounding the integrity of reporting highlighted the credibility quotient. The Indianapolis Star suspended one of its television columnists for having plagiarized a story written by a writer at another newspaper; the editor of the piece recognized the story before it was published. A columnist for the Arizona Republic was fired after editors said they were unable to locate some of the people whom she had quoted; she denied charges that she had fabricated the stories. A San Jose (Calif.) Mercury News columnist who wrote about Silicon Valley technology was suspended indefinitely after she made a profit of $9,000 on a stock deal not available to the general public. A Kentucky reporter was fired after revealing that she had lied in her newspaper columns about having cancer and AIDS. Mike Barnicle, who was forced to resign in 1998 from the Boston Globe after charges were made that he misused the work of other writers, was hired by the New York Daily News to write a weekly column. The Los Angeles Times printed a front-page apology after management failed to tell its staff and readers that the newspaper shared advertising revenues from a special section about the Staples Center with the owners of the new sports arena. The Times followed with a major investigation by media reporter David Shaw who wrote, But many in the Times newsroom see the Staples affair as the very visible and ugly tip of an ethical iceberg or ominous proportionsa boost in the profits, drive-the-stock-price imperative that threatens to undermine the paper's journalistic quality, integrity, and reputation. The Newspaper Preservation Act of 1970, a U.S. law designed to preserve competition in two-newspaper towns, failed to save papers in three cities. Analysts noted that changing readership habits combined with higher production costs and increased competition for advertising revenue led to the failures. The San Francisco Chronicle, owned by the same family for 134 years, was sold for an estimated $660 million to the Hearst Corp., publisher of the rival San Francisco Examiner. The Chronicle, a morning paper with a circulation of 482,000, was the nation's 12th largest newspaper, whereas the Examiner, an afternoon paper, had a circulation of only about 114,000; though the latter was for sale, observers doubted that anyone would buy it. The newspapers had been run under a joint operating agreement since 1965, but pressure from the Hearst Corp., one of the richest media groups, led to the sale. A decision to close the Honolulu Star-Bulletin because of declining circulation and lower revenues was blocked by a federal judge in response to antitrust suits filed by Hawaii's attorney general and angry readers. The paper was expected to remain open until at least September 2000. Management for the afternoon paper had decided to terminate the joint operating agreement with the Honolulu Advertiser, a Gannett Co. morning paper, in exchange for a reported $26.5 million payment. The papers shared some business and production departments, but reporters and editors operated separately. The last issue of the Chattanooga (Tenn.) Times was published, despite the operating agreement it had with its rival. In 1878 the nearly bankrupt newspaper had been bought by 20-year-old Adolph S. Ochs, who borrowed $250 for the purchase. Thirteen of his great-grandchildren ceded control of the paper to the Chattanooga Free Press. The 130-year-old Indianapolis (Ind.) News, an afternoon newspaper, also closed. Management cited a decline in readership to 33,175, down from 111,000 in 1989. USA Today announced plans to sell colour advertising at the bottom of its front page, a move that, it was predicted, would net more than $5 million in revenues. The paper became the largest daily newspaper (1,758,477) in the United States, exceeding the circulation of The Wall Street Journal (1,752,693). Cartoonist Charles Schulz announced on December 14 that he would stop drawing Peanuts, the comic strip he created in 1950 and which became a beloved mainstay in newspapers in 75 countries. The last original daily strip was to appear on Jan. 4, 1000. The Pulitzer Prize for public service was won by the Washington Post for a series reporting that District of Columbia officers shot and killed more people per resident than any other large city police force. The staff of the New York Times won for national reporting for its series of articles disclosing the corporate sale of American technology to China. The Miami (Fla.)Herald was honoured for the investigative work of a team of reporters who uncovered hundreds of fraudulent ballots in the 1997 mayoral race, which led a judge to nullify the election of Xavier Suarez. Glen Bleske Media and Publishing Television In recent years there had been increased competition between television and the Internet, but by 1999 TV saw the Internet as crucial to improving its own reach. In addition, on-line firms used TV advertising as a way to bring their names to consumers. Organization. In January Australian media mogul Rupert Murdoch announced that he was very, very bullish about prospects in Asia, despite the region's economic slowdown, but skeptical about the potential of the Internet. Creator of STAR TV Richard Li of Singapore disagreed, putting up Pacific Century Cyberworks to deliver superfast Internet and video services throughout Asia. Pacific's new home would be Cyberport, a Hong Kong government-approved technopark. Subscribers flocked to Taiwan's Hoshin Gigamedia Centre, which offered news, entertainment, financial information, and free shareware on home personal computers, following placement of an islandwide network involving two dozen cable TV operators. The service included CNN, MSNBC, Koo Group's Chinese Television Network, and Formosa Television. Pacific Cable & DTU Systems, Inc., offered the first direct-to-user digital satellite TV service in the Philippines, and it became the first company to be awarded a congressional franchise to operate such a service. The U.K. cable company NTL Inc. launched digital TV services, signaling the eventual creation of a telephone, TV, and Internet-access platform. NTL, formerly the third largest cable company in the country, became Britain's largest cable operator after it acquired the more than $13 billion in assets of Cable and Wireless Communications PLC. In reaction to the move, BSkyB (British Sky Broadcasting Group PLC) chief executive Tony Ball warned against creating a Frankenstein cable giant and called for a level playing field for digital TV at the International Broadcasting Congress in Amsterdam. He also asked regulators to force all broadcasters to supply culturally relevant programming to all platforms, a subtle jibe at Independent Television, which withheld Britain's highly popular Channel Three station from BSkyB's digital service. TV manufacturer Skyworth of Hong Kong played the Internet card, creating its own World Wide Web page as a way of enticing potential clients overseas and using Internet live-video conferences to discuss design aspects with importers. Customer service improved with direct e-mail service between clients and representatives. By year's end Skyworth was selling to mainland Chinese on-line, particularly set-top boxes, which turned TVs into computers by using Microsoft Corp.'s Venus project technology. Singapore's Advent Television Ltd. developed Aviation, Internet-based technology enabling people to buy and place their own TV ads. Aviation would create the ads by means of digital image-processing tools, place them according to the advertiser's own schedule, and automatically collect revenues for the TV station. Competitive Media Reporting, an advertising monitoring service, noted that Internet companies were flooding TV outlets and other forms of old media (newspapers, magazines, and radio stations) with more than $1 billion worth of advertising. E-retailers, who spent $323 million in 1998 on TV advertising, placed about $400 million worth of TV ads in the first half of 1999 alone. In the U.S., television continued its drive toward consolidation and conglomeration, a result of the deregulatory climate created by the U.S. Congress and the Federal Communications Commission three years earlier. Leading the way was CBS, a network that at the start of the year was considered too dependent on its core business. First, the onetime Tiffany Network announced in April that it would buy television's most successful syndicator, King World Productions, Inc.; the $2.5 billion deal announced was approved by King World shareholders in November. In the biggest media merger to date, cable and entertainment giant Viacom, Inc., announced in September that it would buy CBS Corp. for $36 billion in stock. Viacom's holdings included the Paramount Pictures movie studio and such established cable channels as Nickelodeon, MTV, and VH1. Although Viacom purchased CBS, and the new company would retain the Viacom name, the new management structure suggested more of a merger. The move gave CBS a major content-producing partner with which to attempt to create corporate synergies. CBS was the last of the Big Four networksABC, CBS, NBC, and Foxto acquire a major cable channel. The merger was not expected to take effect until late 2000, pending federal rulings on such issues as Viacom's 50% stake in the sixth-place broadcast network, UPN, and the new entity's ownership of television stations reaching 41% of the population. Government rules prevented one company from owning two networks or television stations that reached more than 35% of the American people. Nine days after the CBS-Viacom announcement, NBC said that it was buying a major interest in Paxson Communications, the corporate parent of the newest English-language television network, seventh-ranked Pax TV. NBC's 32% stake in Pax TV, which had been trying to build an audience with family-friendly programming, was the precursor to a plan to take operational control of Pax TV in 2002, pending federal approval. NBC coveted Paxson's 72 stations as a second outlet for its programming and a second chance at generating advertising revenues from that programming. The major competitor to a network, beyond other networks, remained cable television. Although cable's viewership had again increased, its rate of penetration into American homes was slowing. By the end of August, 68% of households with TV sets viewed cable, up from 66% 10 months earlier. Some analysts contended that cable had come close to reaching its saturation point; those who wanted cable had cable. Others wondered if the uncertainty of the television market, with high-definition TV (HDTV) and Internet-based telecasting on the horizon, meant that potential new customers were adopting a wait-and-see attitude. For continued growth major cable companies were counting instead on adding nontelevision businesses, specifically Internet access and telephone services, to their menus of offerings. To that end telecommunications giant AT&T in March completed its reported $55 billion acquisition of cable giant Tele-Communications, Inc., and became the nation's second largest cable provider. In April it moved to become the largest, announcing a planned $58 billion purchase of MediaOne Group, the number four player. That sale was awaiting regulatory approval at year's end. In November the chief rival to cable for delivery of signals into American homes got a major boost. New federal legislation allowed direct satellite broadcasting services to include local network affiliates' signals in their packages, something they had previously been precluded from doing except in special circumstances. This change removed the major programming advantage cable television had over the satellite companies. Led by DirecTV, with 7.8 million subscribers as of late November, and EchoStar, with 3 million subscribers, the satellite-based providers immediately moved to make local stations available in major cities for additional charges of $5$6 per month. Digital and digital-ready television sets began appearing in American consumer-goods stores, but at prices reaching into five digits. In addition, the availability of costly sets did little to clear public confusion over the beginnings of digital broadcasting. That consideration did not stop NBC from broadcasting its popular The Tonight Show in the new wide-screen and more photographically detailed HDTV format, which was designed to take advantage of digital TV's richer data stream.