Gannett may have several million reasons to sell the Virgin Islands Daily News to Jeffrey L. Prosser, but do they add up? Prosser, a forty-one-year-old financier, has cut a wide and controversial swath through the islands, becoming in the process one of the principal targets of the Daily News, a small but stellar daily. The big chain is handing the leash of a fine watchdog over to a man at whom the dog was barking.

The Daily News is the dominant voice in the U.S. Virgin Islands, and even its critics there -- like Tito Morales, president of the territory's Central Labor Council -- consider it an irreplaceable source of essential news. "There's a lot of things they do that aren't positive for the community," Morales says, but "there's things they say that need to be said." Professional colleagues tend to agree with the latter. The St. Thomas-based paper has been honored with a startling list of prizes, including a public service Pulitzer (in 1995), a Selden Ring, several Investigative Reporters & Editors and Sigma Delta Chi Awards -- and thirteen "Best of Gannett" awards just since 1991.

Along the way, in a territory with a total population of about 109,000, the News's circulation has risen from 6,000 in 1979 -- when Gannett bought it for $3.5 million -- to about 16,000 today. Hurricane Marilyn in 1995 wreaked havoc with the local economy, but Ron Dillman, the paper's c.e.o., says things are looking up. "You ever see a Gannett paper that wasn't profitable?" he says. "We were -- and are -- profitable." Dillman says he first heard that his paper had been sold to Prosser on the radio.

And how does Prosser make his money? Among other things, if Gannett's executives read the SEC filings of Prosser's company, Atlantic Tele Network (ANK), they would know that a declining but major source of ANK's revenue consists of about 8 million minutes per month of "audiotext" traffic, through its Guyanan subsidiary, GT&T. This is 900-number telephone traffic, on which callers pay for entertainment or information. While Prosser's spokesman, Ed Crouch, says the traffic includes services about such subjects as "psychics and sports cars," he concedes that "a substantial percentage" of it comes from sex calls.

Prosser is expected to shed that part of the business when a complicated split with his partner, Cornelius B. Prior, is completed. But nonetheless: apple-cheeked Gannett is selling its prize-winning newspaper to a world-class phone-sex operator.

 Prosser's relationship with local government is part of the controversy. He has also been a prominent supporter -- and beneficiary -- of Roy L. Schneider, the embattled governor of the U.S. Virgin Islands, who faces growing criticism in the territory for what some perceive as fiscal mismanagement, who despite his problems is expected to run for reelection this year, and who has had a long-running feud with the Daily News. The Schneider/Prosser relationship is out front: "The governor has said he was a friend of Jeffrey Prosser's before the sale [of the Daily News], during the sale, and he will be a friend after the sale," says Schneider's spokesman, Hal Hatfield.

 Before he was elected in 1995, Schneider, a 58-year-old oncologist, served on the board of another ANK subsidiary, Vitelco, the Virgin Islands telephone company. And last May Schneider played a crucial role in obtaining five years of income, excise, property, and customs tax abatements -- worth an estimated $23 to $35 million -- for Vitelco. The huge abatements were controversial, mainly because they were granted at a moment when the territorial government owed some $140 million to its employees (and still does, concedes Hatfield). The abatements also raised questions because they were explicitly designed to protect Vitelco from competition.

The Daily News amply covered the uproar about the abatements. But tension between the governor and the newspaper goes further back. According to c.e.o. Dillman, before Schneider was elected "one of the governor's henchmen came to me in my office and said they wanted to 'nationalize' the newspaper" if it didn't tone down its aggressive campaign coverage. "We didn't lay off," Dillman adds. According to Hatfield, Schneider never made such a threat. In 1996 Schneider canceled all the government's legal notices in and subscriptions to the Daily News, a $60,000 annual hit according to Dillman.

 Gannett would not comment on the sale, which was to have been completed before the end of 1997. Neither would Prosser. So whether the paper had been for sale before Prosser made his offer is unclear. The price is said to be $17 million, but that too could not be confirmed.

 Prosser's rise as a media magnate does not stop with the Daily News. Through a new corporate entity, Emerging Communications, he has bought one of the two major cable TV stations in the territory, on St. Croix, and the Daily News reports he is trying to buy the other. Prosser's spokesman says his boss is "looking at other" media acquisitions.

Prosser has promised that he will respect the independence of the Daily News, and that no one on its staff will be fired. But some people in the newsroom are dubious, and some, too, are appalled that Gannett would sell the paper to someone with reasons to defang it. "That's what shocked people," says reporter Melvin Claxton of the Chicago Tribune, who previously helped the Daily News earn its Pulitzer. "We became a target for a buyout because we did what we were supposed to do."

Letter to the editor

UNFAIR ARTICLES

I began my career as a broadcast journalist with the BBC and worked as a broadcaster in several countries of the Caribbean before becoming a diplomat and then a business executive. I was president of the Caribbean Broadcasting Union and served on the first board of directors of the Caribbean News Agency, which is widely regarded as an independent and objective news organization. I have served on the executive board of UNESCO and held senior ambassadorial appointments in London and with the World Trade Organization. I am a member of the board of directors of Innovative Communication Corporation (ICC), which is owned by Jeffrey J. Prosser, a man I have known for over fifteen years.

I am surprised that, twice in six months, the Columbia Journalism Review published extremely damaging, incorrect, defamatory articles about Mr. Prosser and ICC. The two articles are in the January/February and May/June 1998 issues.

To label Mr. Prosser a "world class phone-sex operator" in the first article was entirely wrong. Neither Mr. Prosser nor ICC has ever operated phone-sex companies. The description, "phone sex operator," if it has any communicative value, is appropriate only to describe the adult content provider and not the carriers who transmit the content from point to point. No telephone company — not even ones that have very deep pockets and operate internationally — can dictate the content of messages sent over its system. The Guyana Telephone & Telegraph Company, of which Mr. Prosser was a shareholder and chairman, operated no differently than any other telephone company when "phone sex" material was carried over its system. AT&T, Bell South, Verizon, Sprint, Cingular — all carry telephone messages by voice and data that originate with subscribers, some of whose business is "phone sex," and just as these telephone companies and their shareholders are not phone sex operators, neither was Mr. Prosser.

When the defamatory articles were published in 1998, the Internet was in its infancy. No one had any idea that business competitors could use this medium indefinitely against Mr. Prosser and ICC. Adversaries have hired firms to repeatedly access the CJR articles so whenever anyone searches for information about Mr. Prosser and his company, the "phone sex" reference is always at or near the top of the list.

These articles completely overshadow the positive and constructive contribution that Mr. Prosser and ICC have made to economic and social development in several countries through the operations of state-of-the-art telecommunications services.

The articles also lead readers to believe that Mr. Prosser bought the Virgin Islands Daily News from Gannett to silence his critics and suggested he would ruin the newspaper. In fact, under his ownership, this newspaper has won the prestigious Silver Gavel from the American Bar Association and numerous awards and honors from organizations including the Associated Press Managing Editors, American Society of Newspaper Editors, and the Society of Professional Journalists. Mr. Prosser is scrupulous in his non-interference in the paper’s editorial policy and operations.

I write a weekly commentary that is syndicated on Internet news Web sites and in newspapers across the Caribbean, including The Daily News. Neither Mr. Prosser nor the editor of The Daily News has ever attempted to direct or restrict my writings. The Prosser-owned Daily News keeps the people of the Virgin Islands fully informed about events in their territory, the U.S. mainland, neighboring countries, and the wider world. In doing so, very high journalistic standards of accuracy and objectivity are applied.

It is well known that Mr. Prosser and his wife are actively involved in their local communities, are generous benefactors, and created the Prosser-ICC Foundation, which gives more than $1 million a year to local organizations in the Virgin Islands. These are facts that are easily established and that CJR, in the interest of its own reputation, should disclose to its readers who, at any time, can read the existing articles on its Web site that damage Mr. Prosser.

Sir Ronald Michael Sanders, KCMG

London

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