Communications: Giving the Owners the Hook

In the nearly three years since Nashville Investors Douglas Ruhe and William Geissler acquired ailing United Press International from E.W. Scripps for $1, they have slashed costs, reduced staff and cut wages 25%. For a time, the medicine seemed to work. When U.P.I. announced a $1.1 million profit in the fourth quarter of 1984, its first gain in 23 years, the owners predicted profits of $6 million in 1985. That view was overly optimistic.

Last week, with payroll checks bouncing and losses again mounting, Ruhe and Geissler agreed to step aside as part of a deal to save the firm. Under the new plan, they would retain some 15% of the stock but relinquish all control of the news service. U.P.I. President Luis Nogales, who was fired by Ruhe just four days before the agreement, will return to run the company. The terms also call for U.P.I.’s trade creditors to forgive the bulk of its $23 million debt in exchange for a 30% to 40% interest in the firm; most of the remaining shares will be divided among the staff. The creditors, however, may not accept $ the deal. And even if they do, further cost-cutting moves will be needed if U.P.I. is to survive in the lengthening shadow of the Associated Press.