Gilbert Cranberg: The Widgetization of the American Newspaper Industry
Posted at 7:37 pm, October 8th, 2006
Tribune Company CEO Dennis FitzSimons announced recently that a deal had been struck with Chandler family interests that frees the company to pursue alternatives “to further enhance shareholder value.” Additionally, FitzSimons said an independent committee had been created to oversee other steps, perhaps sale of papers and/or TV stations, or taking the company private, to create “additional value for shareholders.” Spoken like a true widget company executive.
In other words, it is investors uber alles. The readers and viewers and communities where Tribune properties operate will just have to take a back seat to the interests of shareholders. Just the way all other businesses operate.
Journalists are fond of saying that, while newspapers are a business, they are unlike other businesses that must turn a profit because they are a public service or public trust with a constitutionally-protected mission to inform the public. If that sounds quaint, it’s because newspaper corporations by and large turned their backs on the concept when, beginning in 1963, they went public. That fateful decision meant that newspaper company executives had to play by the same Wall Street rules as everybody else. Which also meant, among other things, stock options, fat salaries and bonuses for executives tied, as a rule, not to improved circulation and journalism but to meeting financial targets.
Newspaper companies then became indistinguishable from the widget makers, looking and acting the same as any other money-driven corporation. Read the proxy statement of a media company nowadays and you have a hard time realizing that the business being described is engaged in journalism.
A few years ago a couple of University of Iowa colleagues, Randall Bezanson and John Soloski, and I collaborated on a book about this development, “Taking Stock; Journalism and the Publicly Traded Newspaper Company.” One of my assignments for the book was to Interview most of the leading stock analysts who follow newspaper companies. For these analysts, the decision to go public has been highly lucrative personally. But when I asked if they thought the decision has been good or bad for journalism, they were nearly unanimous that it was harmful. The reason? It compels the companies to do all the things to cut costs that hurt quality.
The talk in the air nowadays is about undoing the mistake of having gone public by taking the companies private. In the book, we declined to recommend unscrambling the egg because, we said, private owners can be as greedy as public investors. We noted there were plenty of things publicly traded newspaper companies can do to improve both quality and the bottom line. Mainly, we said, they should look and behave like companies with a public-service mission instead of trying to imitate the widget makers.
That is exactly what the publisher and the editor of the Los Angeles Times attempted to do recently when they mutinied against corporate demands to dance to Wall Street’s tune. But they need help. Among the things that would help stiffen the spines of newspaper corporate directors would be legislation some states have that authorizes directors to do more than just parrot “shareholder value.” Or as we recommended:
“Legal changes should be effected to assure that directors of the companies are authorized to consider the journalistic quality of the newspapers and the needs of the communities served by them in making business decisions, including decisions about acquisition and sale of the company and any of its newspapers.”
We need more “other constituency” statutes — that is laws to protect directors from lawsuits if they take the same principled stand as Jeffrey Johnson, the L.A. Times publisher, and Dean Baquet, its editor, in behalf of readers, communities and employees. Let’s now call them Johnson-Baquet laws in honor of the guys who put their jobs at risk in the service of their constituents. Indeed, Johnson was canned last week when Tribune editors lowered the boom.
October 11th, 2006 at 9:01 pm |
At one point the New York Times didn’t appear believe that one of their reporters, Linda Greenhouse, who reported on the Supreme Court, should talk about her private opinions openly. I wrote the editors:
“Dear Sirs:
I disagree heartily that Times reporters should have no public opinions. Okrent is right that they risk hiding them, and pretending they don’t exist. A person can have an opinion and still write a story that is objective. Otherwise you pretend the reporter are eunuchs, spineless, uninformed lumps of nothing. So long as the story is objective and, more important, up front, that’s what’s important. Arrogance is what I get from Keller, who has no reason to act that way after the contretemps with Judith Miller, because you guys don’t pay your reporters enough to ask them to keep their opinions to themselves. This last statement is exactly what all the high-faluting language amounts to. Just expect good reporting, and pay for it. As long as it’s all above board, it’s OK. The rest belongs to the life of the reporter.
P.S. I hate to say it, but you sound like some candy-assed moralist instead of a robust, unafraid person.”
I added:
“By the way, Helen Thomas is a good example of someone who speaks her mind openly yet is a great reporter. She gets to the truth. You might try her image as a “model” for your own reporters.”
I also wrote the Los Angeles Times, and they published this letter:
“Dear Sirs:
In this day and age, any business that earns 20% or more annually is considered a prize. The fact that the Chicago Tribune may earn more and that therefore justifies tinkering with the L.A. Times mystifies me because Chicago is a different city, a different paper, with different demographics. The rule is generally, If it aint broke, don’t fix it. I search in vain to understand how sensible businessmen want to cut back a profitable publication. Their arrogance, or stupidity, boggles the mind. Let them go after the parts of the Tribune empire that don’t work. Oh, well, the best quote I’ve heard about this is the only thing that gives you an inkling of infinity is the extent of human stupidity.”
October 12th, 2006 at 1:37 am |
“Which also meant, among other things, stock options, fat salaries and bonuses for executives tied, as a rule, not to improved circulation and journalism but to meeting financial targets.”
Wouldn’t it be interesting to run a newspaper with perqs tied to circulation, quality of journalism and a “community quotient” measuring positive impact in the general community? Might bring the fun back to newspaper work.
October 12th, 2006 at 6:56 pm |
I began reading the L.A. Times when I was twelve years old, much to the horror of my parents who took the Santa Ana Register. However, they paid for my subscription and opened discussions comparing articles and viewpoints in both. Unusual dynamics fifty years ago for sure. To this day my mother takes the Register, and when we visit my husband and I pick up the L.A.Times. There is a difference in the…ooh, I don’t like the tone of this word but I hope to be understood…slant of these two definitely opposing newspapers.
If we can tell the difference, and my mother can tell the difference, after fifty years of having both available, can I assume that some viewpoints are permitted in both papers?
Or is it that I’m being very naive and that both papers hire only reporters that already have the “correct” viewpoints or agree to report from that correct viewpoint? I’d sure hate to find that’s the truth after all my years of believing the alternative. I know that the opinions sections carry varying political points. But those are very often nationally syndicated columnists.
Oh dear! I think I just talked myself into the truth. These two papers of my experience in large market areas either hire to suit their beliefs or insist that their hirees submit only that paper’s beliefs for print. Darn it!
I don’t mind the waking up part of today. I do mind that I’ve been this non-alert to the truth for this many years. Thanks for the opportunity to learn.
January 7th, 2009 at 10:24 pm |
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