Block Communications, Inc. - Company Profile, Information, Business Description, History, Background Information on Block Communications, Inc.

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Company Perspectives

Block Communications, Inc. (BCI) is a 105-year-old privately held diversified media holding company headquartered in Toledo, Ohio.

History of Block Communications, Inc.

Block Communications, Inc. is a regional media conglomerate. Its principal properties include two venerable newspapers, the Toledo Blade and the Pittsburgh Post-Gazette. It also owns several broadcast television stations: WLIO, in Lima, Ohio; WDRB, in Louisville, Kentucky; WFTE, also in Louisville; KTRV, covering the Boise, Idaho area; and WAND, in Decatur, Illinois. Block also operates a phone, internet, and cable television company, Buckeye Cable Systems, and a business telephone services company, Buckeye Telesystems. In addition, Block Communications runs a home security service company and a construction company, Metro Fiber & Cable Construction. The company was founded by one of the 20th century's great newspapermen, Paul Block. Block Communications continues in the hands of Block family members.

Paul Block's Early Years

Paul Block was born in 1875 in the city of Koenigsburg, a north German city then the capital of the Duchy of Prussia. His Jewish family had fled poverty and persecution in Russia a few years before Paul was born, and in 1885 the family moved again, seeking better circumstances in the United States. The Blocks settled in Elmira, New York, an upstate town with a large Jewish community and thriving local businesses and cultural institutions. Block's father had been a salesman or peddler in the Old Country, and arriving in Elmira, he began work in the only trade he could manage without any capital: ragpicker or junkman. Paul Block, fourth of five surviving children, went to work at the age of ten. His first job was with the Elmira Sunday Telegram, beginning an involvement with newspapers that lasted the rest of his life.

The Elmira Sunday Telegram was at that time one of the leading East Coast newspapers, with a circulation only rivaled by the New York City papers. It was sold all over the Northeast, and was even exported to London. Its founder and editor, Harry S. Brooks, was responsible for the quality of the Sunday Telegram, which considered itself a highly ethical family newspaper, dedicated to local reporting. Paul Block began work at the Sunday Telegram as a messenger boy. Very early on he distinguished himself from the crowd of young boys working for the paper. He was known as fast on his bike, and he also had an unusually good memory as well as a charming manner. Block was given the job of escorting the paper's mascot, a St. Bernard dog called Colonel. The paper used photographs of the diminutive Paul Block and the gigantic dog as a promotion. Block not only fed and cared for Colonel, but he exhibited him throughout Elmira and in other towns such as Corning and Syracuse. Young Block even took Colonel to New York City, where he and the dog were put up in the Waldorf Hotel and took questions from the press in the glittering lobby.

Block continued to attend school while working for the paper. He learned every aspect of putting the Elmira Sunday Telegram together, setting type, writing stories, and then at the age of 16 becoming an advertising solicitor. Advertising became Block's real forte. He was a natural salesman, with considerable people skills as well as memory and mathematical acumen, so he easily convinced Elmira businesses to place their advertisements with the Sunday Telegram. As with practically every newspaper that he was associated with ever after, the Sunday Telegram's advertising volume increased dramatically once Block was on the scene.

By the time Block was 20 and had graduated from high school, he realized that he could make a good living as an advertising solicitor, but only if he relocated to a larger market. In 1895 he moved to New York City and began working as a so-called publisher's special representative for The Richardson Company. The Richardson Company functioned as an advertising broker for newspapers trying to attract national advertising accounts. Newspapers in Ohio or Colorado, for example, needed to carry advertisements for such nationally distributed brands as Quaker Oats or Wrigley's Gum, in addition to advertisements from local businesses. If they used a special representative in New York, where all the major advertising agencies were clustered, it was much easier than approaching each national brand separately. Block's job was to negotiate between newspapers and advertisers. He became such an expert at marketing that his newspaper customers deferred to him on matters including the timing of ad campaigns and what exactly they should advertise. Though it was not exactly in his job description, Block sometimes even wrote ad copy himself.

Launching Paul Block, Inc. in 1900

In 1900, Block decided to go into business for himself. He opened the offices of Paul Block, Inc. on the Upper West Side of Manhattan and carried on as a special representative. Many of his clients from Richardson moved their accounts to the new company out of loyalty to Block. He continued to perform magnificently as a salesman, and in 1903, publishing trade journal Editor & Publisher did a feature on him, referring to him as one of the nation's premier newspapermen. Block was still in his 20s, financially successful but not yet really wealthy, and his association with newspapers was still completely tied to advertising sales. In 1906 he became director of advertising for the Illustrated Sunday Magazine and a year later took the same title at the Pictorial Review. Under Block's guidance, these became two of the leading magazines of the day.

Block married Dina Wallach in 1907, and from this date through the end of the 1920s, his career was so hectic and varied that it is difficult to put in order. Paul Block, Inc. continued to do well in the advertising soliciting business, and Block had several trusted associates who worked diligently for the company for many years. While this business thrived and expanded, Block built up the two magazines he served as director of advertising for. The Illustrated Sunday Magazine was something like today's Parade magazine, a Sunday supplement that was inserted in newspapers all across the country. There had been a few forerunners to this style of publication, but the Illustrated Sunday Magazine was the first with an entirely independent editorial staff, so that it was not the local product of any particular paper. It is not known who started the magazine before Block took over, but already by 1907, when it was about a year old, it had a circulation of nearly two million customers. Advertising revenue was thought to be more than $500,000 annually, and it was taken up by most of the leading papers in the nation, including the Boston Herald, the Washington Post, the Detroit Free Press, the Minneapolis Tribune, and the Memphis Commercial Appeal as well as scores of smaller and lesser-known newspapers of the day. The Illustrated Sunday Magazine was known for high-quality fiction by Jack London and mystery writer Mary Roberts Rinehart, travel tales, celebrity features, and glossy four-color illustrations by the country's most prominent artists.

At the same time that Block was bringing in loads of national advertising to the Illustrated Sunday Magazine, he also built up Pictorial Review, a women's magazine founded in 1899. Pictorial Review was owned and published by an Elmira businessman, William Ahnelt, who started the publication as an offshoot of his dress pattern business. It lagged behind seven other fashion and pattern-magazines when Block came on board, but it gradually increased its circulation to become the number one women's magazine, as well as one of the most profitable magazines of any sort in the United States. Block's role at Pictorial Review was complex. The magazine's founder had left editorial decisions to others, and Block's job was ostensibly only with the advertising end. Block did things such as entice Samuel Goldwyn, the Hollywood movie producer, to write a column for the magazine, and Block authorized huge payments to secure the serialization of the novel The Age of Innocence, by Edith Wharton. Block endeavored to keep the magazine up-to-date, unique, and attractive, and his reach extended far beyond what might be assumed as an advertising director's role.

Starting to Publish Newspapers in 1916

Any one of Paul Block's three jobs might have been enough to keep a person busy, but Block found more to do. He began buying newspapers and installing himself as publisher, where he had control of the editorial content as well as the business end. He bought the Newark Star-Eagle in 1916. In 1917 he bought the Detroit Journal, which he sold in 1922. In 1921 he acquired a controlling interest in the Memphis News-Scimitar. He sold the Memphis paper in 1926. In 1921 Block acquired the Duluth Herald, of Duluth, Minnesota. Later he bought a second Duluth paper, the Duluth News-Tribune. In 1926 he acquired the Toledo Blade, and the next year he bought the Pittsburgh Post-Gazette. Amazingly, Paul Block worked hands-on with all these newspapers, even ones he did not hang onto for very long. Unlike the modus operandi at other chain newspapers, he did not attempt to make the papers he owned similar to each other, for example using the same type style. Each one was a separate entity, and Block brought his expertise to bear in unique ways. He traveled between his newspapers frequently, eventually in his own private luxury railway car.

By the 1920s the son of a ragpicker had become a spectacularly wealthy man, and Block was friends with many of the top names in New York society, including New York's mayor "Gentleman Jimmy" Walker, Florenz Ziegfeld of the Ziegfeld Follies, and the financier Bernard Baruch. Block was close to President Coolidge and to Herbert Hoover. His later relationship with President Roosevelt was also close, but not necessarily characterized as friendship, as they were at odds politically. Block was also a close friend, perhaps the only friend, of newspaperman William Randolph Hearst. Block was named executor of Hearst's will, and the two had complicated and often secret business dealings. Hearst's takeover of a newspaper was often met with dismay, as his papers were known for "yellow" journalism, including exaggeration and fabrication. In several instances, Block seemed to have bought a paper with Hearst's money and run it as a Block paper. While Block had ostensibly owned the Pittsburgh Post-Gazette since 1927, ten years later he bought it from Hearst for approximately $2.5 million, meaning he bought out his silent partner.

Struggling in the Depression

Block's businesses did well under his stewardship, providing him with enough wealth to outfit a gigantic country estate in Connecticut, where he moved in 1929. The stock market crash of October 1929 and the ensuing Great Depression brought great difficulty to Block's empire. Block continued to believe the Depression would be short-lived. He was a staunch supporter of Herbert Hoover and vehemently against Roosevelt's New Deal. In 1932 his newspaper the Brooklyn Standard, which he had bought in 1928, was near bankruptcy, and he sold it. Advertising revenue at all his papers fell as industries cut back on spending and unemployment rose. Block could do nothing but shed the unprofitable papers. By the middle of the Depression, in 1936, Block owned only the Toledo Blade, the Pittsburgh Post-Gazette, the Newark Star-Eagle, and two Milwaukee papers which again were presumably really Hearst's properties. In 1939 Block regretfully sold the Newark Star-Eagle.

Though Block was ill and probably depressed with worry over his financial difficulties, he traveled to Europe in the 1930s and met with world leaders, including Italy's Benito Mussolini. Block continued to invest in the Pittsburgh Post-Gazette, spending $1.5 million on new facilities in 1937. Though the business could ill afford it, Block thought he had to keep the paper up-to-date or fall prey to competitors. The Post-Gazette won journalism's highest award, the Pulitzer Prize, in 1937 for a story Block had set his reporters on, exposing Supreme Court Justice Hugo Black as a member of the Ku Klux Klan. Block died in 1941.

Changes After World War II

When Block died, his newspaper empire was split between his two sons. The elder son, Paul, Jr., was involved in war work through World War II, while William served in Asia until 1946. After the war, Paul took over the Toledo Blade while William went to Pittsburgh and ran the Post-Gazette. The advertising company, Paul Block and Associates, was sold to its employees in 1946. The remaining media properties were combined in a holding company called Paul Block, Inc. The Block brothers had evidently learned much from their father, and they were each quite dedicated to their cities and papers. Both made changes to ensure their papers were more politically neutral than they had been in their father's day. Both the Pittsburgh and Toledo markets were quite competitive. The Post-Gazette bought a rival paper, the formerly Hearst-owned Sun-Telegraph, in 1960. This still left a formidable competitor, the Pittsburgh Press. The Post-Gazette signed a joint operating agreement with the Pittsburgh Press in 1962, which combined the two paper's business ends but maintained separate reporters and editors. This agreement lasted 30 years.

Paul Block, Inc. expanded its media holdings in the 1960s and 1970s. It bought several small newspapers, the Register, of Red Bank, New Jersey, in 1965 and the Daily News of Port Clinton, Ohio, the next year. In 1967 it acquired the Peninsula Herald, of Monterey, California. These smaller papers were sold off by the mid-1980s, except for the Peninsula Herald. The company began investing in television in the 1960s as well, and these holdings lasted longer. In Toledo, the company went in with a local cable company to form a new entity, Buckeye Cablevision, in 1965, at the dawn of the cable television era. By the mid-1970s, Block had acquired all the stock in Buckeye and was sole owner. Buckeye was one of the top 20 cable television systems in the United States by the mid-1980s. In 1972, Block acquired its first network television station, WLIO-TV in Lima, Ohio. The company bought another television station, WDRB, in Louisville, Kentucky, in 1984, and the next year bought a Boise, Idaho station, KTRV.

In Pittsburgh, the Post-Gazette and William Block were influential in supporting public works in the city, such as the mass transit system, the airport, and area schools and colleges. William Block was also a patron of the arts, involved with the Pittsburgh Symphony and collecting works by local artists. Likewise, the Blade was a big backer of the Toledo Industrial Development Council, which helped revitalize Toledo's port, among other projects. The Blade was a strong proponent of downtown development, though civic policy often went the other way. Paul Block, Jr., died in 1987, and his two sons, John and Allan Block, carried on. The other members of the holding company, then called Blade Communications, were their uncle, William Block, and his son, William Block, Jr.

Post-Gazette Purchase of Press in 1992

A significant change came to the Post-Gazette in 1992, when it and the Pittsburgh Press suffered a crippling strike. Under the joint operating agreement the two papers had entered in 1962, they used the same presses and the same distribution system. The papers were delivered by drivers represented by the powerful Teamsters union, and the union struck to protest a plan that would have reduced some 200 distribution jobs. The strike dragged on for eight months, until finally the Press decided it could not win, and it offered itself up for sale. Post-Gazette parent company Blade Communications opted to buy the Press in a deal worth $100 million in cash and stock. In addition, Blade traded the Press's owner, newspaper chain E.W. Scripps, its Monterey, California, paper, the Peninsula Herald. The new owner then ceased publication of the Pittsburgh Press, folding it into the Post-Gazette. The paper went back on sale in January 1993, now the reigning paper in the Pittsburgh market. In a highly competitive market, the Post-Gazette had finally ended up as the last one standing.

Family Business Becoming More Businesslike

William Block, Sr., was chairman of his family's media holding company until 2001, when he stepped down at the age of 86. That year, his son William Block, Jr., became chairman of what was then called Block Communications, Inc. Paul, Jr.'s son John R. Block became vice-chairman, and his twin brother Allan Block ran the company's television divisions and was managing director of the parent company. William Block, Sr., died in 2005. Allan Block became chairman of Block Communications when William Block, Jr., retired.

As a private company, Block Communications was never required to make its financial records public, but in the early 2000s, news of financial worries at the company began to leak out. The company had invested heavily in facilities, including upgrading its television properties to digital format, and the newspapers had long been known for the generosity of their compensation to their employees. By 2002, Block Communications carried heavy debt, both from its investments in its plants and its obligations to retired employees. Though portions of the company, particularly the telecommunications divisions, had steeply climbing revenue in the early 2000s, the newspapers were less profitable, described by Allan Block in an interview with the Toledo Business Journal (December 1, 2002) as performing "substantially below industry standards." Block continued to explain that the poor performance of the newspapers was "something we must address if we are to continue in the newspaper business."

Allan Block made it known that the newspapers needed to be run as businesses, that is, they had to make money. The company let go some non-union personnel, including in 2006 a cartoonist who had been with the Post-Gazette for 30 years. The Blade had made a splash in 2004, winning a Pulitzer Prize for a series of stories about a Special Forces unit that had committed atrocities during the Vietnam War and gone unreproved for nearly 30 years. The paper was clearly committed to top-drawer journalism. Yet in 2006, Block Communications closed the Washington bureau that had served both the Blade and the Post-Gazette. Contracts with the ten unions that served the Blade and the Post-Gazette were scheduled to expire in 2006. The parent company emphasized that it needed to cut costs, particularly labor costs. Block Communications announced that it would consider selling the newspapers if it was unable to bring costs down. This seemed a clear indication that big changes were coming for Block Communications as the third and fourth generations of the Block family took control.

Principal Subsidiaries

Toledo Blade Co.; Pittsburgh Post-Gazette; Buckeye Telesystem Inc.; Metro Fiber & Cable Construction; CPS; WLIO-TV; WDRB-TV; KTRV-TV; WFTE-TV; WAND-TV (66%).

Principal Competitors

Advance Publications, Inc.; Gannett Co., Inc.; Knight-Ridder, Inc.


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