October 30, 2006
The latest episode in the tale of the sagging newspaper industry introduces a new set of players who, by some accounts, bring hope of rescue from the tyranny of Wall Street.
These are the hometown rich guys. Already, one set, led by PR magnate Brian Tierney, bought Philadelphia’s Inquirer and Daily News in June when they were spun off by McClatchy Co., which acquired them after previous owner Knight-Ridder was frog-marched into liquidation by its stockholders.
Word now is that a Hollywood investor group, including DreamWorks co-founder David Geffen, has its eye on the Los Angeles Times. It too may be put on the block by owner Tribune Co., which is under pressure from its stockholders to either gin up its share price or break itself into pieces for easy sale. Other hometown rich guys are reportedly eyeing at least three more Tribune papers, the Baltimore Sun, Hartford Courant and Long Island’s Newsday.
Yet another set of local worthies, among them ex-General Electric boss Jack Welch, say they’re looking at the Boston Globe, which is in disfavor with its owner, The New York Times Co., whose stockholders are annoyed with its torpid shares.
For newsroom people, the hope is that vanity will deliver what greed could not: A stable business environment in which journalists can serve the public with high-quality work while returning a modest profit to owners.
That’s the hope. The question is why anybody should imagine that such bliss would be more achievable when news organizations are owned by hard-driving, fabulously wealthy individuals — who amassed great riches by cutting corners, cutting costs and, for all I know, cutting throats — than it is now, when the owners are anonymous pension funds and investment pools. But such are the mysteries of faith.
Already, Tierney, who took charge in Philly amid great optimism after decades of timorous, ham-handed management by Knight Ridder — a company that quailed before Wall Street’s moods — has announced that, my gosh, on closer inspection things at the Inquirer are going to have to change after all: jobs and spending will have to be cut if he’s going to hit his numbers and keep his bankers happy.
What does that mean? Did somebody show him a different set of books four months ago?
Now, anybody who spent enough time in newspapers has probably had the pleasure of working under a number of ownership regimes. I did. I worked for public shareholders, and I worked for family owners. I worked for a publicly-held company that was largely family-owned. I worked for a private investment group that was in hock to public bondholders. I worked for chains and sole proprietors, and I even worked for a partnership between a publicly-held giant and an individual entrepreneur.
I never worked for a Ponzi scheme, but with that exception I think I tasted a reasonable sampling of the corporate contrivances offered by modern capitalism. And I can say, with confidence, that I never worked for owners who didn’t care a lot about making money.
Plus, I don’t think I ever met an owner, no matter how rich, who would pony up a nickel of his own money to cover shortfalls in the operations of a company he owned unless somebody was holding a gun to his head, and even then, not before he’d had a moment to think it over.
So to me the notion that the industry’s salvation lies in buying freedom from public stockholders through the help of chivalrous saints with deep pockets is highly dubious.
True, Wall Street can be tough. Stupid too. But generally, public investors aren’t buying today’s profits, they’re buying tomorrow’s promise. That’s what the newspaper industry has so dismally failed to articulate — and that failure will be no less vexing for hometown rich guys than it has been for stock portfolio managers.
Sure, some owners are wiser, more far-sighted, have a stronger sense of public commitment than others. For a practice like journalism, which thrives where it’s valued and loved, that can matter a lot, and if a company’s share price falls when its reporters win Pulitzers — for fear the honor will spur greater newsroom spending — we have a serious disconnect.
But the problems the news business faces aren’t Wall Street’s fault. They derive from the need to reformulate a business model that will enable news organizations to sustain themselves in the Internet age so they can continue to nourish the rest of us.
Correction: Last time I misidentified the Advocate, the publication that outed former congressman Mark Foley. It’s a national magazine, not a South Florida newspaper.