Toll Road firm alarms Texans with purchases

Macquarie to buy newspaper chain; critics fear it's to silence Trans-Texas Corridor opponents.

January 31. 2007

JEFF PARROTT, Tribune Staff Writer

One of the foreign firms leasing the Indiana Toll Road is drawing suspicion from some Texans after announcing plans to acquire a chain of small newspapers there.

Australia-based Macquarie Media Group last week said it will pay $80 million for American Consolidated Media, which publishes 40 community newspapers and shopping publications serving nine communities in Texas and Oklahoma.

Macquarie's sister company, Macquarie Infrastructure Group, last year joined with the Spanish conglomerate Cintra to lease the Indiana Toll Road for the next 75 years. Republican Gov. Mitch Daniels championed the deal, heralding the $3.8 billion in instant revenue it brought the state, although 60 percent of Hoosiers opposed it, according to opinion polls.

Likewise, several grass-roots groups in Texas are battling that state's Republican governor, Rick Perry, and his plan to convert existing freeways to toll roads and build a new toll road, the Trans-Texas Corridor, that would stretch from the Mexican border to Oklahoma.

Cintra and Macquarie Infrastructure Group, which also jointly operate a toll road in Toronto, are expected to be among many groups bidding on about $250 billion in Texas road work and toll road administration over the next decade.

Through eminent domain, the Trans-Texas Corridor, largely paralleling the existing Interstate 35, would force people to sell off their land for the project. Small papers in rural communities along the route have aggressively reported on opposition to that plan, said Sal Costello, founder of the nonprofit political action committee, Texas Toll Party.

"It sure would make it a lot easier for their business if they weren't being torn up in the newspapers every week," Costello said of Macquarie.

The newspaper chain includes five dailies, 19 weeklies and 16 "shoppers," which are comprised entirely of ads.

"The big (Texas) newspapers have written about (public opposition to the Trans-Texas Corridor), but the smaller newspapers have really dug into it," Costello said. "By them buying these papers in one fell swoop ... they'll be able to suggest to writers that they not dig into it. It's editorial independence we're talking about here."

Costello has filed a complaint with the Federal Trade Commission, which still must approve the deal.

Costello said he recognizes how small the ACM newspapers are. The largest has a circulation of just 7,000. But that does not mean they have no influence, he said. Texas state legislators listen to their rural constituents, and the small papers often break stories that grab their larger counterparts' attention, Costello said.

But Costello's fears are so misplaced that they barely merit a response, said Jeremy Halbreich, ACM's founder, president and chief executive officer.

Macquarie Media Group owns television and radio stations in Australia, and a cable company in Taiwan. This would be its first foray into print journalism.

Still, Halbreich said Macquarie has enough media sense to appreciate the value of credibility. They know that if current ACM readers and advertisers think the papers have lost their objectivity, the product quickly will lose its value for shareholders, he said.

"We cover both sides of the issue and that's not going to change," said Halbreich, former president and general manager of the Dallas Morning News. "For these people to suggest that it's going to happen tells me how naive they are about the newspaper business and how it works."

Rusty Todd, a journalism professor at the University of Texas at Austin, agreed.

"That's a stretch," said Todd, who worked for the Wall Street Journal and the Dow Jones News wires before entering academia. "They're buying these newspapers because they'll make money with them. Weeklies and small dailies still have got steady circulation, and although they are small, they still have good profit margins.

"There are other ways to build public opinion that are much cheaper," Todd said. "They could just buy ads, hire lobbyists and establish front groups that appear to be public interest groups. That way you build public opinion and can then walk away from it, and you're not stuck with a big investment."

Macquarie officials could not be reached for comment. But in a news release, the company said it was attracted to the ACM papers, and community newspapers in general, partly because they lack competitors.

That rationale should be a red flag for Hoosiers, said Steve Bonney, a West Lafayette sustainable farming advocate who was the lead plaintiff in a lawsuit that unsuccessfully tried to stop the Indiana Toll Road lease.

Macquarie and Cintra required "no-compete" language in the lease, prohibiting the state from building new roads near the Indiana Toll Road.

Bonney said the ACM deal is just more evidence that Macquarie is pursuing investments with the highest-possible returns for investors. That the Indiana Toll Road fit into that corporate mission cannot be in the public's interest, he said.

Staff writer Jeff Parrott:
jparrott@sbtinfo.com
(574) 235-6320