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Cowles have iron grip

October 25, 1980

By Steve Forrester
For The Bulletin

WASHINGTON – For media watchers, the Cowles family of Spokane is one of the Northwest’s most fascinating puzzles – the largest privately held cross ownership of television and newspapers in the region. The Cowles empire is the focus of a long-awaited ruling by the Federal Communications Commission, expected to be delivered at one of its November meetings. The FCC will rule on whether to renew the broadcast license for the Cowles’ station, KHQ-TV in Spokane.

In a 272-page complaint before the FCC, hitherto unknown details of the Cowles family’s vast holdings in media, real estate, timber and insurance are laid bare for public consumption. The product of over 200 interviews, the petition for denial of broadcast license renewal was originally a Harvard University thesis completed by a former Spokane resident, Terrence Fancher, in 1977.

Media is but one part of the Cowles empire. Not only does the family own the city’s morning and afternoon newspapers and one of its television and radio stations, it holds considerable prime downtown real estate, the area’s only paper and newsprint manufacturing company, about 50,000 acres of timber land surrounding Spokane and throughout the Northwest and California, 4,000 acres of riverbank lands on both sides of the Spokane River, five agricultural magazines which circulate in the Northwest, Utah and Montana, the Northwest Farm Insurance Company and 9 percent of the Tribune Company, a multi-hundred million dollar media conglomerate based in Chicago. The Cowles hold the second largest block of stock in the Tribune Company.

The petition for denial of license renewal describes business practices which have led to the Cowles’ alleged domination of Spokane media and business. It quotes a Justice Department report done in the early 1970s which estimated that Cowles media firms controlled 79.7 percent of the total dollars spent on daily advertising dissemination in Spokane. In addition to the Cowles’ NBC-affiliate station, there are two other network affiliates in Spokane and 16 radio stations besides the one which the Cowles own.

In his complaint, Fancher points out that the Cowles founded none of their Spokane businesses, but took them over. His description of the network of trusts which will keep the Cowles empire intact for decades to come is reminiscent of the great wealthy families of fiction – Booth Tarkington’s “Magnificent Ambersons” or Edna Ferber’s Benedicts of “Giant.”

But the irony of the Cowles empire – and this is the undertone of Fancher’s complaint – is that for all of their financial resources, the journalistic product they turn out is quite unremarkable. Among newspaper people of the Northwest, the Chronicle and the Spokesman-Review are not highly regarded newspapers. Ralph Nader, in Spokane earlier this year, called the Spokesman-Review “the worst newspaper in America.”

Since 1974, the license for the Cowles’ KHQ-TV has been in deferred status because of a challenge based on anti-trust statuses, lodged by the Justice Department. The FCC was prepared to dismiss the Justice Department petition in 1977 when Fancher filed his petition.

One of Fancher’s most fruitful sources was the transcript from a case in U.S. Tax Court here in 1968 over a disputed $7 million in inheritance taxes. From that transcript, Fancher learned that none of the Cowles companies nor their affiliates had ever borrowed funds for any purpose during the past 50 years.

One of the most interesting findings which Fancher reports is results of a study completed by the Harvard Business School in 1969 for the National Association of Broadcasters. While the report was designed to be a defense of cross ownership of print and broadcast media, its results were not flattering or favorable to the Cowles’ ownerships in Spokane. In its petition for denial of license renewal filed three years ago, the Justice Department cited the NAB study and said that the Spokane interviewees said:

“a. The broadcast stations and the newspapers do not compete for news. KHQ-TV uses the newspapers’ stories practically verbatim.

“b. The cross-owned media promote each other very heavily and the newspapers scarcely report the programming and activity of the competitors of the KHQ stations.

“c. The cross-owned media parallel each other in emphasizing reportage that enhances the holdings of their common owners.”

Officials at non-Cowles broadcast stations in Spokane told Fancher that by exercising price leadership in keeping its advertising rates low, KHQ-TV had effectively starved the local television market of revenue and thereby made quality local programming very difficult.

While the senior Cowles family member is publisher of the newspapers, Fancher found evidence that he occasionally reaches into the television station. Fancher reports one instance of the KHQ-TV news director unknowingly broadcasting a news story directly involving the Cowles family and subsequently being summoned to the editorial offices of the Spokesman-Review to explain himself to William H. Cowles, Jr. The offending news story was eliminated from the station’s late night news show.

Through interviews with Spokane city officials and residents, Fancher demonstrates how the Cowles influence the city’s politics not so much through their newspapers and television as through their extensive ownership of downtown real estate and buildings.

One of Fancher’s subjects, identified as “an appointed city official or former city official,” said, “As far as I have seen, all the Cowles media represent essentially the same opinion; there is simply no competition among them in terms of the viewpoint that they represent. I have never seen any reporting contrary to their own economic interest. This sets especially bad, I think, when you consider all the downtown property the Cowles own. They have pretty well controlled the development of downtown. If the Cowles’ newspapers and broadcast stations were owned by someone absolutely free of downtown property, we would have a better city.”

A Washington lawyer handling the KHQ-TV license renewal for the Cowles says, “We don’t think he (Fancher) has raised anything that is anything. It goes into a lot of ancient history, and he has no support for anything whatsoever. They are allegations not supported with documentation. These allegations were investigated by the Justice Department before they withdrew their complaint, and we got a clean bill of health.”

Whether the FCC will ever listen to Spokane residents’ opinions on the ownership of KHQ is doubtful, in part because Fancher’s complaints are three years old and may be considered no longer germane. An FCC field hearing into a license renewal is a serious matter and not frequently called for. The more likely action by the FCC would be for it to renew KHQ-TV’s license, with a wrist-slapping at worst.

Saturday, October 25, 1980

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