In the latest American Prospect, Harold Meyerson tells a good morality tale about how certain types of businesses can succeed only if managed as public trusts, if only in spirit. He documents the ignominious decline of the Los Angeles Times and the Los Angeles Dodgers after each was taken over by men "so venal, cynical, incompetent, and egomaniacal that they gutted them in just a couple of years.” Both Sam Zell (who acquired the Times after buying the Tribune Company) and Frank McCourt (a Boston parking lot mogul) treated the revered corporate institutions that they bought as personal piggybanks. The public was a mere afterthought -- helpless dependents on seemingly impregnable monopolies.
While the idea of running one’s business as a public trust has historically gotten a lot of lip service, at least in the newspaper business, today the barbarians who pass as CEOs and investors virtually go out of their way to flaunt their coarse, selfish personalities. The schadenfreude at the fall of Zell and McCourt is therefore deeply satisfying. Writes Meyerson:
Zell installed talk-radio executives who knew nothing about newspapers. He derided the editorial staff at the Timesand the Tribfor not producing the kind of copy that would turn the industry's fortunes around, and made clear that editors and reporters concerned with editorial autonomy and quality journalism were elitists who were no longer to be indulged. He instituted layoff after layoff, so that the Times, which had had an editorial staff of 1,200 in 2000, saw its ranks reduced to roughly 500 today. A little more than a year after his purchase, with the recession clobbering revenues and Zell's executives still clueless about how to run a newspaper, Tribune entered bankruptcy proceedings, where it remains mired to this day.
As for McCourt:
Last week, Bud Selig, the commissioner of Major League Baseball, took over control of the Dodgers to keep its owner, Frank McCourt, from using team revenues to pay off his wife, the team's co-owner, in a divorce settlement. Selig's action came as Frank was about to sign a 20-year, $2.5 billion contract with Fox Sports to televise the team's games. The divorce also brought to light that the McCourts…had been using team revenues to subsidize their multi-mansioned lifestyle and that Frank McCourt had had to take out a loan to make payroll earlier this month.
Meyerson contrasts the antics of these two vulgarians with Walter O’Malley, who owned the Dodgers for decades, and Otis Chandler, who built the Los Angeles Times into a great newspaper. Both men were class acts.
So what next? Here’s a great idea: turn both into legally structured public trusts. Taking a cue from the Green Bay Packers, whose fans own (non-paying) shares in the franchise, L.A. City Council Member Janice Hahn has proposed that Major League Baseball allow the Dodgers to offer shares in the team to city residents. It's a fantastic idea that would likely boost attendance and revenues and buoy the spirits of the city.
Given the corporate worldview of professional sports commissioners like Bud Selig, however, the idea is not likely to get very far. The Dodgers as a "socialist" showcase? Selig would splutter. He knows it would set a "bad example" for the rest of the league and piss off the other team owners.
But that’s the template that we ought to be exploring more aggressively: converting vital private businesses into public trusts that legally and financially belong to the public. Just look at how the St. Petersburg Times has prospered under just such an arrangement. Upon his death in 1978, the paper's owner, Nelson Poynter, established a trust as the majority shareholder so that the paper could continue to be independent and enterprising. As the paper recounted:
Although he left a widow and two daughters, Poynter stipulated in his will that most of his stock in the paper would go to a nonprofit educational institution that he established to help train working and student journalists. The institution would own majority interest in the Timesand its stock would be voted by an executive whom Poynter designated as his successor. That ensured that his beloved newspaper would not have to be sold to pay estate taxes. It also would be safe from chain ownership.
Today the St. Petersburg Times remains a locally controlled, locally responsive newspaper that generates high-quality journalism – while the rest of the industry reels from leveraged debt and clueless absentee owners. Profit-hungry Wall Street investors keep clamoring that journalism compete with all other investments -- which virtually ensures that serious journalism will be watered down into tabloid crap. Which is one reason why readers are fleeing and the bottom line is plummeting. A different revenue model could produce perfectly great journalism. A model that must pay competitive returns on investment to global capital cannot.
Rather than waiting for enlightened business families or individual moguls to step up and save us, it’s time for us to save ourselves. Commoners should propose and agitate for their own deals to take control of newspapers, sports teams, utilities and other services that are central to their communities. Why let investors whose only priority is personal profit loot vital local businesses and drive them into the ground?
As I was writing this, I just learned about Bob McChesney and Victor Pickard’s new anthology of essays, Will the Last Reporter Please Turn off the Lights? The Collapse of Journalism and What Can Be Done to Fix It. Given McChesney’s probing, public-spirited mind, the book promises to be a timely, illuminating read.
Update: Dave Zirin of The Nation just published an excellent piece supporting public ownership of the Dodgers.