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June 2001




2001 June
One Publisher's Taxing Crusade
For Seattle Times publisher Frank Blethen, repealing the federal estate tax is a personal obsession -- and in pursuing it, his employees say, he's put his newspaper's credibility at risk.

By

It's been a hell of a year in Seattle. An earthquake swayed The Space Needle, The Seattle Times struggled through a 49-day strike, and, believe it or not, the ordinarily soggy city experienced a prolonged drought. But on a late March afternoon things are looking up, at least for Seattle Times publisher Frank Blethen. Rain is pelting his office windows, returned strikers are hard at work in his newsroom, and, best of all, Blethen is on the verge of completing his personal, six-year crusade to repeal the federal estate tax.

Eliminating the 85-year-old tax on cash and assets that can be passed on to heirs has become a rallying cry for conservatives, and it is a major component of President Bush's tax plan. In early April, the House approved legislation sponsored by Republican representative Jennifer Dunn of Washington state that would do away with the estate tax; if the legislation stays on track, the tax will be dead by the Fourth of July -- and Blethen can claim a large share of the credit. "His efforts have turned the tide," says Dunn, a GOP rising star whom The Seattle Times has endorsed in each of her five congressional campaigns. Dunn even credits Blethen with coining the catchy pejorative the tax's opponents favor: "Frank was the one who actually gave us the idea of using 'death tax,'" she says.

The fiery 56-year-old publisher did more than editorialize against the estate tax in The Seattle Times. He created a series of advertisements against the levy that ran in his own paper and others across the nation; he stormed Capitol Hill to convert lawmakers to his cause; he launched an advocacy website called Deathtax.com; and he hired a staffer to lobby Congress on the issue. Almost all newspaper publishers marshal their editorial pages in support of various political initiatives, but Blethen's zeal in taking on the estate tax is seen by some as excessive and ill advised. After all, the publishers of most major dailies are discreet in their activism, lest they call into question their papers' news coverage. Even Blethen's executive editor, Michael Fancher, says his publisher's efforts to kill the estate tax have caused exasperation in the newsroom and cast doubt on the credibility of The Seattle Times.

Blethen says his crusade against the tax grew out of his devotion to independent, family-owned newspapers, which are, he says, an endangered species. In 1915, when Blethen's great-grandfather ran The Seattle Times, there were around 2,100 independent dailies in the United States. Today there are about 300 (The Seattle Times, with a circulation of 225,687, is one of the largest). The rest have either gone out of business or been gobbled up by publicly owned chains like Knight Ridder or The New York Times Company. Blethen blames that consolidation on the estate tax: Since the tax is levied on the value of assets such as printing presses, he says, heirs to family newspapers are often forced to fold a paper or sell it to a chain just to raise the cash to pay the tax on inheriting it. "My passion comes from the public-policy part of it," says Blethen.

"We need to preserve independent family businesses; we need to preserve this dying diversity of voices in the media."

The Blethen family has owned and operated The Seattle Times since 1896, and Frank Blethen is determined to keep it that way. His business card bears the slogan "Remain family-owned, private, and independent," and on his calf he sports a five-inch-long tattoo of the eagle that adorns his paper's front page. Last year Blethen turned down a $750 million buyout offer from Knight Ridder, which owns 49.5 percent of the company's voting stock.

His silver beard and benevolent blue eyes befit a family patriarch, but when Blethen began working at The Seattle Times Company, it was far from clear that he would inherit the publisher's seat.

A child of divorce, Blethen was raised in Arizona by his mother. He started working at The Seattle Times to get closer to his father, whom he describes as distant and "hard-living." Blethen is frank about his early feelings of inadequacy: "I'm an ADD [attention deficit disorder] adult. I didn't know it when I was a kid. When I was in the third grade the teacher made me sit in the dunce corner during a spelling bee."

Still, Blethen overcame doubts about his competence by turning around the ailing Walla Walla Union-Bulletin -- which his family also owns -- in the seventies, and by 1985 he was running The Seattle Times.

It wasn't long before Blethen had a chance to demonstrate his mettle to the newsroom. In 1990, the paper aggressively covered a labor dispute at the upscale retail giant Nordstrom, which is based in Seattle, and the chain responded by pulling its advertising. Despite the threat of losing more than $1 million a year in revenue, recalls executive editor Michael Fancher, "Frank didn't flinch." Blethen impressed his employees by standing behind solid reporting. "When it comes to backing reporters on controversial stories," says reporter Steve Miletich, "you couldn't ask for a better publisher." Under Blethen's watch, The Seattle Times won three Pulitzer Prizes for taking on such sacred cows as the Seattle-based Boeing Company.

And Blethen isn't afraid to speak his mind -- when he starts talking about the evils of the estate tax, it's impossible to stop him. "Right now," he says, "the death tax drives private business out of business." Blethen says his obsession with the estate tax began 30 years ago, when he made plans to pass on his stake in The Seattle Times to his sons. In the mid-nineties, when local business owners told Blethen about the Family Business Tax Coalition, a nascent alliance forming against the tax, Blethen eagerly climbed aboard.

Because of careful estate planning, The Seattle Times is not in danger of being sold to Knight Ridder or any other chain. Nevertheless, Blethen feels it is his responsibility to speak up for the little papers that might be felled by the estate tax. "I've been in this job for 15 years," he says. "I'm one of the deans. You'll be hard-pressed to find an independent paper as large as we are. So to the degree that we can represent smaller independent newspapers with our larger voice, I will." Blethen acknowledges that his family also has a stake in repeal: His heirs would inherit about $2.5 million that would otherwise wind up in government coffers. The tax affects estates worth more than $675,000, or just two percent of all bequests each year.

Starting in 1995, Blethen worked closely with Representative Dunn to craft legislation to repeal the tax and shape a strategy that would sell it to Congress.

He made certain that his own paper frequently called for the abolition of the estate tax and has devoted eight full editorials to repeal over the past four years. In 1997, he launched an annual "Death Tax Summit" in Washington, D.C., which brings estate-tax opponents and legislators together each May for daylong strategy sessions and lobbying.

"To help the crafting and the visibility of the public-policy message," Blethen says, he created several anti-tax ads, which he ran about 20 times in his paper. The most dramatic ads feature a tombstone inscribed with three words: "The Family Business." With the help of the Newspaper Association of America, which also opposes the tax and sent the ads to its member newspapers, they appeared in more than 75 other dailies. But many publishers -- even those who supported Blethen's cause -- chose not to carry the ads. Butch Alford, editor and publisher of Idaho's Lewiston Morning Tribune, is one of them.

"I thought it would [look like] Butch Alford is using his columns to further line his pockets," he says. When Blethen runs the anti-tax ads in The Seattle Times, he uses the paper's name, stamping advocacy rhetoric -- as opposed to news reporting or editorial writing -- with the imprimatur of The Seattle Times. "I think it gives you more credibility with the audiences we're trying to reach," explains Blethen.

About three years ago, Blethen took his campaign online with Deathtax.com, a website featuring legislative updates, a biweekly newsletter, and fill-in-the-blank e-mails for visitors who want to write to their legislators. The site clearly reflects Blethen's views on the matter, sometimes at the expense of the facts. The site claims, for instance, that "independent studies reveal that [repeal] would actually help reduce deficit." Although one reputable study claims that repeal could increase net tax revenues by pumping money into the economy, most studies find that abolishing the tax would be costly. A March study by Congress's bipartisan Joint Committee on Taxation found that repeal could cost as much as $662.2 billion over ten years; according to President Bush's budget figures, it would cost $266.6 billion. The site also claims that only $650,000 of an inheritance can be exempted from taxation, while in fact the exemption for family businesses -- as opposed to inheritances of cash or property -- is $1.3 million. Blethen admits that the site does not meet the standards of objective journalism: "We don't want people to [think] we're trying to give some parameter of news objectivity to it," he says. Still, at the bottom of the Deathtax.com home page is the following: "This Web site was created and maintained by The Seattle Times."

Jill Mackie, The Seattle Times's in-house lobbyist, crafts the content for Deathtax.com. Although she lobbies on other issues that affect The Seattle Times Company, Mackie's main function is to orchestrate the estate-tax fight on Blethen's behalf. She coordinates with Representative Dunn and other lawmakers and organizes the "death tax" summits. Mackie also briefs her boss for anti-tax public appearances, including a February stint on CNN Sunday Morning and his March testimony before the House Ways and Means Committee.

Though her title is "director of external affairs," some of Mackie's efforts are directed inside the building. "Sometimes [Mackie] will send me background information," says editorial-page editor James Vesely. Indeed, several Seattle Times editorials contain the same inaccurate statistics cited by Deathtax.com. For instance, an editorial last May asserted that "the IRS spends 65 cents for every dollar it collects from the tax." This is false. In the 1999 fiscal year, the IRS collected $28 billion in estate taxes; the entire IRS budget that year was only $8 billion. ("I'm not an expert on this," says Blethen when told of the actual figures. "My understanding is this has to do with the complexity of these laws and the overall administration of it. The money the IRS spends in terms of pursuing the estate tax is pretty significant.")

All of this advocacy unsettles Blethen's staff. "Ideally, I think it would've been better off if Frank hadn't done it," says Seattle Times executive editor Michael Fancher of his boss's campaign. "The potential threat to the perceived integrity of the newspaper is too great." When reporters worry that their stories will be perceived as influenced by a publisher's politics, says Fancher -- even if there is no direct influence -- then you've "corrupted the independence of your journalistic thought process."

"It makes it very difficult for reporters," says Pulitzer Prize-winning reporter Eric Nalder, who left The Seattle Times after this year's nearly crippling strike, "when a publisher mixes the name of the news product with an effort to sell an idea."

Even editorial-page writers, who support or oppose political causes for a living, raise concerns about Blethen's activism. "It's his paper," says Casey Corr, who worked on the page and left after the strike, "but when the publisher becomes so directly involved in the news and he becomes such a public figure, it affects the clout of the editorial page." For instance, when the page endorsed George W. Bush for president, several readers wrote angry letters accusing the paper of basing its endorsement solely on Bush's pledge to repeal the estate tax. Editorial-page editor James Vesely says reader response caused him to worry "whether...the corporate interests were clouding the editorial voice."

It's not the first time Blethen's passions have alarmed the newsroom. In 1998, opponents of affirmative action in Washington state placed a proposition on the ballot to outlaw racial preferences. Blethen vigorously opposed the proposition. In addition to mobilizing his editorial page against it, he ran a series of full-page ads in his paper. (Though Blethen's anti-tax tirades fit the stereotype of a conservative, he also happens to be passionately committed to diversity: At The Seattle Times, he has created journalism internships for students of color, and the paper boasts a 21-percent minority newsroom, which is well above the national average.) Proponents of the initiative seized on Blethen's activism to question The Seattle Times's credibility in reporting on the issue. The newsroom conscientiously chronicled Blethen's involvement and the objections to his activism. Fancher, then and now the paper's editor, tried to get his publisher to back off, going so far as to question the propriety of the ads in a column he pens in the paper and offering on-the-record criticism of his boss to his own reporters, who were covering Blethen's exploits on the issue. "[Critics] were very aggressive about challenging the fairness of our reporting based on Frank's participation," says Fancher. Even Blethen's son Ryan Blethen, who was then an editorial assistant at The Seattle Times, told his father he had gone too far. "[Ryan's] concern," says the elder Blethen, "was that this puts the newsroom in a really compromising position if the publisher is out there on something that is a ballot initiative." (Ultimately, the proposition passed despite Blethen's efforts.)

Blethen's commitment to diversity has also shaped his tax crusade. Back in the mid-nineties, when he began mobilizing against the estate tax, his allies didn't exactly look like America. "The message was being delivered by middle-aged white guys perceived as privileged," he says. "That wasn't going to cut any ice -- and it sure wasn't going to cut any ice with Democrats." To convert more people to his cause, Blethen recruited minority newspaper publishers such as M. Alexis Scott, the publisher of the African-American Atlanta Daily World. "He told me he needed my help," says Scott, "and he wanted a team that would show the diversity of business owners concerned about the tax." Scott joined with Blethen and Alejandro Aguirre, of the Miami-based Spanish-language newspaper Diario Las Americas, to tag-team Congress.

Blethen says he understands that his estate-tax crusade may handicap his paper. "Every time you do something like this you're spending credibility," he says. "It's like a withdrawal from your credibility bank. If you do it all the time, you're not going to have much credibility left." But he still relishes using his power. When asked if his public crusades against the estate tax and for affirmative action ever stirred any desires to seek public office, he says, "For the last 15 years, I've been publisher, and I've been able to be involved in public policy. Why would I give up such a fun and influential job for one which has less influence and is less fun?"



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