Controlled by a privately held trust that expires in 2020, Guy Gannett executives warily eye the future from an unforgiving dollars-and-cents standpoint. While discussing the company's long-term health in 1996, execs compared current returns on assets to those from, say, mutual funds.

The difference? You guessed it--family members would have made about $50 million more on mutual funds. Execs started with that anecdotal yet daunting figure and "backed up to some estimated guesses" about market opportunities and existing operations, Shaffer says. Assuming a value of 10 times cash flow, they identified cost-savings, marketing synergy and new-business opportunities that could yield $5 million by 2004.

"It looks achievable," Shaffer insists.

Cutting costs at existing operations remains the smallest portion of the plan and would be achieved largely by merging administrative functions, according to Shaffer. To prime the pump for collaboration between traditionally competitive newspaper and broadcast properties, last April execs forged a new Maine Media division encompassing its newspapers, Portland television station, new-media group and direct-marketing firm. Doing so brought managers of the disparate operations under a single executive, an unusual arrangement among media groups of any size.

That executive, Maine Media President Bruce J. Gensmer, whose management career has been entirely with newspapers, acknowledges his role requires "reconceiving what you are doing far more broadly." But his rŽsumŽ underscores the importance of doing so--he previously worked at the Star-Tribune in Minneapolis, whose parent Cowles Media Co. was just sold by family members who suspected the market for media companies had crested.

A 1,619-foot broadcast tower built in 1959, once the world's tallest man-made structure, ranks among Guy Gannett's firsts. Today, execs focus on knocking historically independent television and newspaper staffers off their once-lofty perches.

On the news side, print and broadcast staffers sit in on each other's editorial meetings and collaborate on some projects. Both properties aggressively cross-promote; WGME broadcasters preview the stories in the next day's paper on an 11 p.m. newscast. Doing so "better serves readers and viewers journalistically," Gensmer says. Then, he surmises, "the hearts and minds of advertisers won't be far behind."

Those advertising hearts and minds have never lacked for attention from Guy Gannett's advertising reps. Only half-joking, Gensmer sums up a once-typical week: "Monday, it's the newspaper person, Tuesday, a TV person, Wednesday, the direct-marketing company, Thursday a new-media person...."

While appealing to Guy Gannett execs, initial attempts at ad-sales integration met internal resistance. "We could not just rely on their good nature and good intentions," Shaffer explains. "Only reorganizing the company broke loose collaborative sales."

Having started integrated marketing in earnest last August, staffers have developed plans for about 15 clients, typically larger advertisers such as auto dealers, financial institutions and utilities. In the longer run, lower-cost online and audiotex advertising will provide multiple-media opportunities for smaller advertisers, too.

Several advertisers have shifted share to Guy Gannett because of the changes, while others express gratitude for the reduction in sales calls. "Advertisers pull me aside at cocktail parties and say, 'Boy, it took you so long to do this,' " Shaffer says.

One key: The 1995 purchase of Portland direct-marketing firm Letterworks International allows sales reps to supplement print and broadcast buys with targeted mail. Gensmer plans to "make [direct marketing] a stronger component of our portfolio." The addition of direct marketing also brings new business to established media and new media, says J. Willard Colston, vice president of new media.

Letterworks also offers data-warehousing skills--skills "critical to both maintaining the viability of existing products and developing new ones," Shaffer says. Accordingly, Guy Gannett recently hired its first chief technology officer, among whose initial tasks was visiting a role model, Gazette Co. in Cedar Rapids, Iowa (see p. 44).

Like clustering regional newspapers, integrating marketing seems an obvious approach for a multiple-media company. "The trick," Gensmer cautions, "is the execution."

Guy Gannett execs make no apologies for aggressively spending--and yes, losing--money on new media.

"If anyone is going to take advantage of the obsolescence of ink-on-paper, we want it to be us," Shaffer says. Execs budgeted $1.6 million on its 22-person New Media Development Group for 1997, figures close to those at larger companies.

In less than two years, the NMDG built online versions of Guy Gannett properties; a World Wide Web-only business magazine; tourism services promoting the area's largest industry; a Yellow Pages-like directory service; mnetwork, a catch-all Maine resource; and hundreds of commercial sites for area businesses. Monthly billing rose from $4,000 in early 1996 to more than $70,000 one year later, with site development and hosting the surprising cash cow, initially accounting for nearly 70 percent of revenue.

At the same time, however, new media bled more red ink than expected last year, and staffers will "spend less in 1998 while doing more," Colston says. Still, he expects to break even in three years and turn a profit in the fourth.

With national companies such as AT&T and IBM now going after many of its large site-building clients, NMDG's immediate challenge becomes shifting its business model away from site development and "looking to closer integration with our traditional media," Colston says. At the same time, site-building will continue "in situations where it ties into our core strategies," specifically, small-business sites that link to Guy Gannett's online directories.

Along with aggressively promoting online banner advertising, execs ponder strategies for integrating print and online classifieds with an eye on protecting the franchise. Print classifieds presently go online without surcharges, a model that may change.

As part of overall sales, new-media buys such as banner advertising represent the smallest portion of revenue from the integrated-marketing teams. Yet the novelty often helps a team member get a foot in the door.

Guy Gannett execs express neither surprise nor discouragement from their share of red ink and short-term setbacks. They expect them.

"Our approach is to start a bunch of things and keep what works and acknowledge what doesn't," Shaffer explains.

That approach allows Guy Gannett to move at a clip unusual for a newspaper company. "What surprises me is not how fast things are changing, but how fast we've been able to change ourselves--at times," Colston says.

It seems only appropriate that such undogmatic thinking comes from a media company with roots in patent medicine . "We expect to fail a lot," Shaffer says. "For franchise operators, it's tough to have a tolerance for risk and failure. Lacking the commitment to experiment, fail and learn, we don't think we'll be able to adapt as fast as we need to."