The closure on Thursday of Houston Daily News, an online news site created to compete head-on with the Houston Chronicle, sheds light on how the battle for daily news delivery is taking shape in the one-paper town, where people know how to ride boom times, and Internet access is plentiful.
After a week of missed payrolls, the nascent news company last week physically ousted its president, Paul Allen, renamed itself Houston Today, and started down the tortuous path of dealing with a past that employees claim was built on tall tales and unpaid bills. Allen, meanwhile, is busy pulling together another site, and nursing his feelings of betrayal after two years of building a news organization from scratch.
In 1995 Houston became the largest US city with only one daily paper, when the Hearst-owned Chronicle bought the Houston Post and quickly shut it down. What happened next is shrouded in mystery. Allen helped a group of investors, 13 unidentified attorneys, look into starting a new paper two years ago. The investors were turned off by a projection of 10 years to profitability. Part of the study, however, determined that there was enough editorial talent, local Internet connectivity, and potential advertising revenue to make a Web-based competitor to the Chronicle profitable. Allen set up Houston Daily News and set about recruiting talent from the defunct Post, working off of funding by the mysterious group of attorneys. The site went online 15 January this year. But Dick Marrifield, a former employee of Allen's who is engineering the buyout, says Allen never paid employees or Neosoft, the ISP. An employee of Neosoft confirmed to Wired News that the Houston Daily News site was pulled Thursday because the account was unpaid. Marrifield and other employees are scrambling for financial backing, and Marrifield claims that another unidentified group of investors, "from Delaware," are said to be about to fund the battered site, which is slated to launch sometime next week. (For now, the site is minimalist.)
"This wasn't a hostile takeover. It was a way of dealing with bad management," Marrifield says. He points out that Allen is a convicted felon, indicted for bank fraud when he was president of a financial organization.
Allen accuses the new group of just trying to get rich quick, setting the company up to go public. "They're all tripping over each other trying to get to the pot of gold. Two years ago, when I was sitting here in a T-shirt sweatin', nobody was fighting over a damn thing." He also says his criminal past is so well publicized that it's a nonissue: "If you put out a quality product, people are very forgiving."
Martha Liebrum, who was managing editor of the Houston Post and Houston Daily News, has agreed to be managing editor for the new Houston Today site. Part of the reason she's staying, she says, is the staff, and she credits the strength of the staff to Allen. "Paul said all the right things to appeal to people with journalistic backgrounds - he strongly supported a separation of content and advertising."
Allen started talks Wednesday with another group of investors to start a new site, named tentatively Houston Journal. The most frustrating thing about the Houston Daily News, he says, is that "we were almost there."
The upshot of Houston Daily News' demise is that Houston, a one-paper town, will probably be the first city to have two Net-only daily news sites.
