I think he hits on what's really the issue, but then gets distracted. The college wanted a PR publication, not a truly independent newspaper.
Given that they paid the printing costs (I'm not sure if this was always the case, but it was at the start of the venture), I guess it's up to them if they want to control it like that.
What doesn't seem right is them telling him that his later independant paper can't 'compete' with their PR mag. So long as they're not funding it, it's not their concern.