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From graduate to group owner

Donrey Media Group

The Donrey Media Group eventually included some 100 enterprises. It began with two purchases in 1940.

Fired from first jobs

Reynolds was offered a job on the Kansas City Journal Post to start immediately after graduation in June, 1927, for $25 a week. Walter Dickey, of the Dickey Clay Pipe fame, was operating the paper in one of many futile steps to overcome the No. 1 position held for years by the Kansas City Star. Five journalism graduates were employed on the Journal Post that summer, all to be rotated between the editorial and advertising departments. Two months later, all five were laid off when the newspaper underwent another economy move. During the next month Reynolds worked in the advertising department of H. K. Poindexter, a Kansas City wholesale dry goods company.

Meanwhile, he continued to search for another newspaper job to fit his training. The Scripps-Howard owned Indianapolis Times contacted the School of Journalism for some help in its advertising department. On the same afternoon that Charles Lindbergh arrived in Kansas City to be greeted in a massive downtown welcome parade, Reynolds left Missouri for Indiana. After six weeks on the Indianapolis Times, Reynolds and two other recent arrivals were fired for not producing sufficient advertising to justify their $35 weekly salaries. These first jobs occupied such a brief time that they provided little practical training to supplement the knowledge Reynolds had acquired at Missouri.

About this time Reynolds contacted Prof. Frank Martin at the School of Journalism concerning the possibility of working on the Japan Advertiser in Tokyo after hearing that this famous newspaper was seeking a man qualified for work in advertising and editorial work. The Missouri School of Journalism had developed close contacts with publishers in Japan.

While in Indianapolis, Reynolds shared an apartment with another Missouri graduate, Howard A. Froman, who had completed his degree two years earlier. When the firing time arrived in Indianapolis, Froman, who had formerly worked in Austin, Texas, suggested that Reynolds write the Austin American-Statesmen where Froman once worked.

In September, 1927, Reynolds drove his Model T Ford from Indianapolis to Austin, making the trip in three days. When he opened the car as fast as it could run, Reynolds would travel 45 miles per hour. While driving night and day, he determined that in the future he would never again be fired from a job; the long, difficult drive over the dirt roads provided him with ample opportunity to reflect on his future. His move to Austin gave him his first hope of someday owning a paper.

Charles Edward Marsh connection

The Austin job offered Reynolds an opportunity to stay in advertising on a daytime position with an additional chance to earn extra money on the editorial staff during the evenings. His continuous presence around the American-Statesman offices brought Reynolds to the attention of Charles Edward Marsh, co-publisher and editor-in-chief of this paper as well as others in Waco and Port Arthur. Marsh played an important role in Reynolds’ early journalism career, cooperating with him in numerous enterprises.

Marsh, twenty years older than Reynolds, was a graduate of the University of Oklahoma. Prior to moving to Texas in 1916, he had been the city editor of the Cleveland Press in 1910–11; editor of the Akron Press in 1912–13; and managing editor of the Cincinnati Post in 1913–14. He became part of the Marsh and Fentress Group. Lyndon Johnson once remarked that “Marsh elected me President.” Reynolds later described Marsh as a man who “made a lot, spent a lot, owed a lot.”

The Fentress Group operated newspapers in Austin, Waco, Port Arthur and Lufkin, Texas, until late 1975 when they were sold to the Cox Enterprise, Inc. of Atlanta.

Becomes owner at 21

Marsh acquired a photo-engraving plant in Austin and offered Reynolds, “that guy who was there all the time,” a chance to become a partner and manager if he could raise $1,000. With four employees in the plant, Reynolds, then 21 years old, became the manager for $45 a week. Having practiced the policy of saving money since he was 12, he had accumulated $400. To raise the remaining $600 for the partnership, he borrowed on his second-hand Ford. Accustomed to saving $10 a week, he was prepared to repay the bank $20 a week on this loan, which provided him with one-fifth interest in the plant. While working on the University of Missouri yearbook, Reynolds had learned much about the photo-engraving processes. For the three years he was associated with the Savitar, Reynolds worked closely with the Kansas City engraving firm that prepared the plates for the University yearbook.

Soon Marsh and Reynolds had other photo-engraving plants, making plates for other publications as well as for the Marsh-Fentress papers. During the 1931–32 depression years, the plants were consolidated. Meanwhile, Reynolds was involved in other operations. In 1931 he had a third interest in the Southwestern Engraving Co. in Oklahoma City. While operating this firm, Reynolds had his secretary call all possible accounts daily, saying, “This is Southwestern Engraving. May we pick up your copy?” This technique, combined with personal calls from Reynolds, produced more business, some perhaps to avoid the nuisance of the daily calls. When this firm was established there were two engraving plants there, operated by personnel more elderly and complacent and thus “sitting ducks” for Reynolds’ aggressive methods and hard sell.

Reynolds sold his interest in the engraving company and returned to newspaper management at a newspaper in Mobile, Alabama, owned by Marsh.

While many Americans were experiencing real financial difficulty during the Depression of the early Thirties, Reynolds was able to move from a debt situation to profit-status within a brief period. He had been successful in various projects and within four years of his graduation from the University of Missouri he had accumulated $10,000. Two years after he bought into the Oklahoma City operations, he sold his interest and his contract for managing the firm, making a profit of approximately $10,000.

Reynolds attributed much of his success then as well as later in his career to being at the right place at the right time. He did not believe in the “luck” element that many credit with success. “Luck comes only to those persons who work at it long and hard enough to achieve success,” he said. One needs to be motivated in the direction of success, Reynolds felt. And he practiced this philosophy, having developed such views during his earlier school days.

Reynolds, publisher

In the fall of 1933, Reynolds wrote Professor Frank Martin at the University of Missouri inquiring about the possibility of purchasing a small paper, preferably a daily, or a tri-weekly ready for conversion. He wanted “something doing between fifty and seventy-five thousand dollars gross a year. Perhaps someone wishing to take in a junior partner with plans for an eventual sale would be my best bet.” Reynolds wrote Martin about the $10,000 he had saved and indicated he possibly could raise another $5000 for a downpayment. “All of my capital has been made in newspaper and allied operations by myself since 1928,” he wrote Martin. Before he could act on any leads from Martin, Reynolds spent a year in Europe as a stringer for United Press.

Within a few months of returning from Europe, he became owner of his first newspaper. Marsh arranged for him to serve as business manager of the Quincy, Mass. Evening News. Marsh had acquired this paper from Perly Barbour,who was in the shoe business but more interested in running for mayor of Quincy. Barbour couldn’t make the newspaper pay. It had been established in 1928 and always trailed its competitor in circulation. Meanwhile, Marsh owed Reynolds some money as the result of their complicated transactions and so let him have the News to settle accounts.

At age 28, Reynolds acquired a half-interest in this publication. His partner, Robert Evans, was a Harvard man who eventually sold to Reynolds. Although this was his first fully owned newspaper, Reynolds owed $60,000 on it. Greatly in need of operating capital, Reynolds sold theater ads in advance, offering the concerns sizable discounts.

The Evening News soon, worried the competition, the established Patriot-Ledger, which observed its 100th anniversary in 1937. At that time the company’s lawyer contacted Reynolds to meet him in Boston. Reynolds, not accustomed to the New England surroundings, was anxious to return to his familiar Southwest. He admitted that he would have been willing to settle for the assumption of the $60,000 debt payment. However, before he could propose such an offer the Patriot-Ledger lawyer offered him $100,000 and the debt assumption. Reynolds, surprised yet outwardly calm, asked for $110,000. They settled for $108,000. Bonds were issued at the bank for this amount.

Reynolds could then borrow against these bonds; the interest of more than $500 monthly was more than he had been making. Quincy apparently could not support two daily newspapers then and thus both parties were satisfied with this transaction.

Other Marsh/Reynolds ventures

Before Reynolds could return to Texas he was transferred by Marsh whom he often served as a trouble-shooter, to the Orange, New Jersey, Daily Courier. Marsh had purchased this newspaper with a small down payment and had personally endorsed bonds for the remainder. The publication was unable to meet these bond payments and the former owners, who held the bonds, threatened to foreclose on Marsh’s personal guarantee. Reynolds’ job was to work Marsh out of his personal liability, which he was ultimately successful in doing. Reynolds was in Quincy at the time and briefly work with both of the dailies.

Marsh and Reynolds were involved in other projects in Texas in a loose association. In some transactions, Reynolds operated alone, such as his acquisition of a finance company which Reynolds made money by building up the firm's reserves. On another occasion, Reynolds and Marsh held notes on a brewery that was about to go broke. Although Reynolds had no background in the brewery business, he believed the extreme low price for the notes would make the operation profitable in later years. Part of Reynolds’ activities with this brewery involved a trip to Munich, Germany, to negotiate for yeast and other needed supplies. This trip occurred just before war started.

Reynolds arranged the sale of the brewery to Andre Soriano who owned breweries in Kansas City and St. Joseph, Missouri, and in Omaha, Nebraska as well as in Manila where he once lived. Soriano earlier visited San Antonio, liked the golf courses there, and acquired the brewery for $100,000. However, this venture was one of the few in which Reynolds lost some money.

Marsh and Reynolds were involved in an attempt to acquire a newspaper in Johnson City, Tennessee. Reynolds recalled that the Chronicle floated a bond issue for a new building and equipment in 1929 to a Richmond, Virginia, bond house. The underwriting bond house went bankrupt during the depression, as did the Johnson City newspaper. Most of the bonds were of small denomination and had been placed through a number of then defunct banks in the Virginia-Tennessee area.

Reynolds had the responsibility to assemble the bonds at the lowest possible price. Ultimately, the Johnson City newspaper would come out of the receivership and it was the hope of Reynolds and Marsh to buy the newspaper with these first mortgage bonds. Unfortunately, the bonds were held to be in violation of Virginia usury laws because of a sinking fund requirement. The Johnson City newspaper was put on the block, but the receiver refused to take the bonds as payment, so the newspaper was sold for cash to the Memphis Commercial Appeal, and later to the Carl Jones family.

After considerable litigation the bonds were held to be legal obligations and Reynolds was able to make approximately $15,000 on their redemption. This was part of the money used for his share of his next newspaper.

Reynolds briefly was involved in a prospective newspaper deal in Macon, Georgia. However, when he discussed his plans with some other individuals, they beat him on the transaction. From this project, Reynolds learned never to let others know about his plans until they were officially completed.

Donrey Media launch

Acquisition of the first unit of what eventually became the Donrey Media Group came about accidentally. While visiting his parents in 1939 in Oklahoma City, Reynolds learned that the Okmulgee newspaper was for sale.

He found out that John Cook, one time president of one of the Okmulgee banks, owned 60 per cent of the paper. Cook, hurt by the depression as were many bankers in the thirties, had moved away. Harry Horton, the manager, owned 30 per cent. The first asking price Reynolds had heard for the paper was $250,000, but he ultimately paid approximately $110,000 for all shares in the Daily Times in January, 1940.

That same year Reynolds acquired one of his major holdings, the Fort Smith, Arkansas, Southwest American and Times Record. On March 21 Reynolds purchased these papers from John Parks and his partner, George Carney.

These two prominent businessmen also owned a furniture factory, a drug distributing house, a canning company and a glass plant. Parks at the time also was serving as the receiver for the Fort Smith and Western Railroad which operated out of Fort Smith. Reynolds was only 32 when he heard about the possibility of the Fort Smith sale.

Recalling this major acquisition, Reynolds said Parks and Carney wanted $490,000 for their papers. Reynolds went to a local bank and a rather short worded official informed him that $500 would be required to open an account. Then, when Reynolds deposited $200,000 in New York Exchange certified checks, the banker asked, “What's the hell's going on?”

Reynolds recalled that he had stopped in Fort Smith for the night, enroute from the east to Oklahoma. At the hotel, he remembered a girl he had known at the School of Journalism who was then working in the city.

Inviting her to join him at dinner, he discussed his interest in buying a newspaper. “Why don't you buy the one here?” “How do you know it is for sale?” “I am a friend of the publisher’s secretary and I think it is.”

The next day Reynolds learned that the papers were for sale with the publishers demanding $200,000 as down payment. The sale was concluded for the gross income the papers reported for the previous year.

Reynolds named the first airplane owned by the Donrey Media Group 3–40 , signifying the March, 1940, transaction which made Reynolds a “group owner” with two dailies in separate locales. Reynolds moved to Fort Smith, commuting to Okmulgee when necessary to supervise his other property.

As the Media Group expanded, its success was often celebrated as part of annual birthdayparties for Reynolds.

Post-war expansion

Reynolds was released from military service in early 1945. Based on his experience with YANK magazine, he briefly considered international publication of Reader’s Digest.

He had worked with the original program for Yank distribution when negatives were prepared in New York and supplemented at the fourteen places where editions of the weekly magazine were published throughout the world.

This was an operation similar to one Reader’s Digest had proposed to establish after the war ended. His colonel, Franklin S. Forsberg, had been in the periodical business before the war. The men maintained close contact and later in 1945 Reynolds made a trip to Buenos Aires, Argentina, which had remained neutral during the war. Such a country appeared to be the best spot for a possible overseas periodical in the Spanish language. Had the trip been successful Reynolds’ career would have been sidetracked from the Donrey Media Group operation to one associated with Reader’s Digest.

Reflecting on this possibility thirty years later, Reynolds said, “After what I thought was a careful analysis, I decided rather than to go into a foreign publishing venture I would attempt to increase the number of newspapers in a field in which I felt competent to operate.” After all, Reynolds had become successful in the newspaper field. His periodical experience had been confined to his work with Yank magazine, which had only token competition during the war years.

While in military service, Reynolds had paid for his Fort Smith and Okmulgee newspapers from their earnings. In addition, he had bought a half-interest in the Greenville, Mississippi, Delta Democrat from Hodding Carter, a fellow officer who was in charge of Yank magazine in Cairo, Egypt. Later, he resold his interest to Carter, who became a spokesman for the South in the post-World War II era.

Under their original arrangement, Carter and Reynolds both held 49 percent of the stock. For some reason, 2 percent was put in escrow. Under the terms of their agreement, Reynolds would provide the management. There was also a buy-or-sell agreement by which either partner could buy the other out at a figure the initiator of the sale would set. This meant the partner to whom the offer was made had the right to either sell to the initiator at that price or buy at that price within a stated length of time.

The subsequent publisher of the paper, Mrs. Betty Carter, recalled other details of the relationship:

“The Reynolds organization provided excellent business management for the property. However, my husband saw the newspaper as an important element in democracy and he was always committed to an aggressive editorial policy. When he returned to Greenville from the Army in the summer of 1945 he wanted control of the paper back. He encouraged Don to believe he was not interested in staying in Greenville, so Don would think he didn't have to make a high offer to buy him out. Don offered to buy — at a reasonable figure. So my husband had the opportunity to re-acquire the paper — and in this case all of the stock if he could raise the money by the given date.

“What Hodding did not realize was that Reynolds had purchased various new pieces of equipment for the paper and held the mortgage on them. These would come due if Hodding bought the paper. He therefore had to raise well over $100,000 to buy the stock and take over the mortgages. It was, at that time, a stupendous amount of money for a recently returned veteran to raise. He did it and to Reynolds’ amazement came to him with the full amount on the deadline day.

“Several years later he ran into Don at the Southern Newspaper Publisher's Association meeting at Hot Springs, Arkansas, and Don introduced Hodding to a friend as ‘the only man who ever played marbles with me and picked up the marbles.’”

Reynolds told his biographer that he was negotiating at the time for the Bartlesville Examiner Enterprise and needed sufficient capital for a down payment. He set the Greenville property at a figure that would enable him to meet the Welty's family's down payment demand. Thus, both Carter and Reynolds were satisfied with the transaction.

In 1946, Reynolds added radio to the Donrey Media Group’s holdings. It was the realization of an interest in the medium developed first in high school. He was granted a permit for radio station, KFSA.

In the years ahead, he would add more newspapers, radio stations, television, CATV operations several thousand billboard posters and panels to the diversified holdings of the Donrey Media Group.

Donrey Media Group

Welcome to the Donrey Media Group 1963 Executive MeetingThe Donrey media management team assembled at least annually for training and policy and process discussions. Meetings usually held at one of the group’s training centers at Lake Tahoe [NV] or Okmuglee [OK]. Occasionally the group met in Hawaii.

Milestone dates

Donrey Media Group milestone dates

1927 - Graduated from the University of Missouri

1935 - Bought first newspaper (Quincy [MA] Evening News)

1940 - Formed Donrey Media Group with purchase of newspapers in Okmulgee [OK] and Fort Smith [AR]

1947 - Bought first radio station, KFSA, Fort Smith

1949 - Bought Las Vegas [NV] Review-Journal

1953 - Bought first TV station, KFSA-TV, Fort Smith

1963 - Bought first outdoor advertising plants, Reno and Las Vegas [NV]

1964 - Bought (Hilo) Hawaii Tribune-Herald

1969 - Acquired first property in Missouri - Moberly Monitor-Index

1967 - First entered California - Pomona Progress Bulletin and Ontario Daily Report

1968 - For the first time founded a newspaper from scratch, (Kailua-Kona) West Hawaii Today

1969 - Founded Washington [DC] News Bureau

1972 - First Donrey operating company east of Mississippi - Washington [IN] Times-Herald

1976 - Acquired first Donrey Cablevision plant, Vallejo [CA]

1976 - Bought Hunstville [MO] Times-Herald

1981 - Bought Macon [MO] Chronicle-Herald

1985 - Daily newspaper total reaches 50 with purchase of Norman [OK] Transcript

1988 - Sold last radio station

1993 - Donrey Media Group purchased by Stephens Media LLC. Proceeds from the sale transferred to the Donald W. Reynolds Foundation.

Editorial independence

In 1975, Professor Taft, Reynold's biographer, described the operation of the Donrey Media Group this way — “40 newspapers …40 communities …40 different outlooks on editorial policy — and they're all Donrey.”

In a 1975 full-page ad in Editor & Publisher, Reynolds elaborated on that description:

“Media groups often suffer from a bad reputation because some members of their audiences think news coverage is controlled by some amorphous, unidentifiable corporate committee that has several axes to grind. When I began to form the newspapers that eventually became the Donrey Media Group, I made sure this would never happen in this company.

“It was, and is, my conviction that local editors and newscasters should determine the editorial and news policy of their property. I feel the communities in which we are located can best be served by having the local staffs intimately involved in their own community. They are the ones who are in a position to identify the needs, problems and opportunities in their community, and they should make all decisions regarding their news and their editorials.”

In some communities there existed some fear when an “outsider” was to move in and take control of the newspaper or radio station. This thinking gradually disappeared across the nation since more and more groups took over publications formerly owned by families representing the second , third or fourth generations. Professor Taft noted that by the mid-1970s a majority of newspapers were under group ownership. For example, in 1973 the group purchased the Gainesville, Texas, Daily Register, a family-owned paper for 84 years. The circulation manager, Warren Flowers, was quoted as saying that he had some misgivings when he first heard that a new owner would move in and take possession.

“I had always heard people say you're just a number when one of those media groups sinks their fangs into you. ‘They'll clean house,’ people said, ‘and put all their own people in as department heads. They’ll dictate everything from editorial policy to production methods.’

“We soon learned our fears weren’t justified with Donrey. The old employees were kept in their same positions at their same salaries, all vacations were honored, and we even ended up with a better hospitalization program than we had. The only person Donrey sent in was a general manager to fill the vacancy we had. He brought new ideas with him. But he’s re- receptive to employee opinions and always makes a point to check our viewpoints before he makes some decisions. We still make most of our decisions locally, and we’re not dictated to by Donrey’s high-level management,” Flowers added.

Flowers said that the people in Gainesville became convinced that their daily newspaper was still published for their benefit and the employees have learned that their future may be greater in such a group operation than with one under the control of a single family.

In Moberly, Missouri, to cite another example, the former owners expressed some concern at the last minute before selling their Monitor-Index to Donrey.

The story is told that the lawyer representing the local owners suddenly started nitpicking at the final negotiating session and looked at the down payment check wanting to know, “How can I know that this is a good check?”

Reynolds’ lawyer said, “Well, the easiest way to find out is to telephone.” He walked over to the telephone, dialed a number, and said something like this: “Joe, this is Harry. The lawyer representing the Todds here say they want to know if this is a good check so I thought the best thing to do is just telephone you and put them on the line.”

He handed the telephone to the Moberly lawyer, who said, “I want to know if this is a good check."

Quite obviously the individual on the other end of the line reassured the lawyer and advised him that the Donrey account there would cover checks many times larger.

So the Moberly lawyer rang up, closed the deal, papers were signed; before they left the room, however, Reynolds’ aide turned to the Moberly lawyer and said, “I have a question for you.”

“What is it?” the Moberly lawyer asked.

“How do you know that was the banker you talked to?”

Profit oriented

The priority for Donrey growth was on purchase of newspapers and other media properties in small and medium size markets. As one of the group’s vice-presidents, Ross Pendergraft, told an Arkansas Gazette reporter writing about Donrey’s operations in Fort Smith, “We’ve looked at a number of large newspapers. Of course, the larger they are, the more difficult they are to purchase, because there are so many people in there scrapping for them, and too, the larger newspapers just don 't come on the market as often as the small ones do.”

Donrey Media was identified by some as being a business-orientated group, a label that was not denied. Company officials viewed the success of any operation as being dependent upon its ability to make money and thus retain its independent standing. With the profits earned from each operation, the newspaper plant could be enlarged, editorial staffers added, and the community served with a better publication. Donrey personnel considered this low profile organization more a “people-orientated company.” A booklet supplied to all new employees, listed four factors regarding success:

  1. Donrey properties are independent and autonomous services to individual communities.
  2. Donrey’s successful growth is the people in the community. Everyone in Donrey is involved in his community. They are aggressive, public­-minded people.
  3. Donrey’s policy of modernization has enabled its media outlets to serve their communities with the most up-to-date equipment available.
  4. Donrey’s highly skilled management team is available to each unit while the future of the group is limited only by the imagination of the people who are a part of it.”

During 1973, for example, Donrey Media Group acquired four dailies and two weeklies, as well as two new outdoor advertising companies. Improvements were made to 43 of the 54 Donrey properties with $3 million spent on the construction of new plants, new transmitters and microwave facilities for broadcast stations, press additions and conversions from letterpress to offset. The report to employees noted that “At Donrey, we do not believe profit is a dirty word. Profit allows us to expand our services and profit enables us to continue growing.”

How organized

Donald W. Reynolds was president of Donrey Media Group and the sole owner. As “the stockholder” he, naturally, made the major decisions. Directly under his place on the organization chart was Fred W. Smith, executive vice president, a position he took over in the fall of 1973.

Smith was typical of many Donrey officials inasmuch as he “grew up” within the organization. He had been with Donrey since he was graduated from Arkansas Polytechnic College in 1951. He began in 1952 as a classified advertising salesman for the Southwest Times Record in Fort Smith. Within three years he was the classified advertising manager, later the national advertising manager and then assistant general manager for this daily. In 1961 he became vice president and general manager of Donrey’s largest daily, the Las Vegas Review-Journal. Five years later he was advanced to become vice president of the western newspaper division, in charge of publications in Nevada, California, and Washington.

Smith described his experience with the Group and its operating principles in remarks at the 2000 posthumous induction of Reynolds into the Arkansas Business Hall of Fame.

Under Smith’s supervision were six divisional vice presidents, each directing a particular phase of the Donrey Media Group. These included three newspaper divisions, outdoor advertising and broadcast divisions and a management services division.

The Management Services Division served all Donrey operations. It performed numerous functions that were more easily and efficiently handled on a group level, thereby freeing the local general managers and other personnel of many details. It likewise provided more efficiency and more uniformity within the group. The group-level financial support made it possible for smaller operations to acquire expensive new equipment that might not otherwise have been possible under a one-family ownership. Still each operation within the group remained strictly an autonomous unit. Each unit also had the satisfaction of knowing that auxiliary help always is available, primarily from the group headquarters in Fort Smith, or from the appropriate division headquarters.

First under the supervision of Don Reynolds, Jr., this management services division included accounting, advertising and promotion, aviation, budgets and planning, construction, data processing, internal auditing, newspaper production, personnel, insurance and the systems analysis. Reynolds Jr., a graduate in journalism from the University of Oklahoma in 1955, worked within the group in several capacities until 1973, when he entered business for himself in Tulsa. Following service as a jet pilot in the Air Force, Reynolds Jr. was manager of KOKL in Okmulgee and KOLO in Reno, and for two years operated his own radio station, KPUB, in Pueblo, Colorado. Later he became the vice-president of the Donrey Broadcast Division.

Read Donald W. Reynolds part 3 here


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