Who would have guessed that localism might return to the newspaper business because the big media chains no longer find local monopolies lucrative enough? In search of ever-higher profit margins, the Knight Ridder chain recently divested itself of dozens of newspapers because — tsk, tsk — they were earning only 15 to 20% returns on investment. With similar disappointment about earnings, Wall Street is apparently eager to see the Tribune Co. sell off its newspaper holdings, including The Los Angeles Times and The Baltimore Sun. (See recent stories by Laura M. Holson of The New York Times, July 2, and Frank Ahrens of The Washington Post, June 17.)
What’s really interesting about this growing trend is the opening it is creating for locally minded business moguls who aspire to become a new breed of city patrons. When the Philadelphia Inquirer and Daily News were put on the auction block, a group of local businesspeople bought the paper. In Los Angeles, a number of business titans — Eli Broad, Peter Ueberroth, David Geffen, Don Burkle — are reportedly exploring the possibility of buying the L.A. Times from the Tribune Co. And in Baltimore, the Abell Foundation, which once owned the Baltimore Sun and sold it in 1986 to the Tribune Co., has been trying for years to re-acquire the newspaper in order to bring back a measure of local control. (See my earlier post about the St. Petersburg Times trust model of newspaper ownership.)
There’s a lot of obfuscation and spin that surrounds these bids for local control. The newspaper chains like to say that their local papers already have plenty of autonomy in how they are managed, so why should anyone be concerned about chain ownership? The local investors, for their part, insist that they will manage the paper like any other investment, and that they are not simply do-gooders.
Yet it is clear that community interests are being pummeled by absentee newspaper investors, and that the local investors clamoring to buy have more on their minds than profits alone. Ask any industry insider and they will point to Wall Street’s extreme pressures on newspaper publishers to cut staff and other costs. This is a primary reason journalism has suffered so much in recent years (along with newspapers being judged by the same financial performance standards as entertainment properties).
To the extent that a daily newspaper is a unique community resource, its ownership by an absentee corporate overlord usually means that the quality of local journalism depends upon the whims of distant executives and global capital markets. As newspaper analyst John Morton put it, “The fact is, Wall Street is so short-nosed and is so dedicated to maximizing return on investment to the exclusion of almost everything else, you’re going to have situations where, basically, you have a lot of public shareholders who have interests that are inimical to good journalism.”
There’s a reason why family-owned newspapers have historically produced better journalism. Their names are associated with the journalism, and their local reputations make them more responsive to community sentiment. Family-owned papers have historically been more willing to show real leadership. It is no accident that The Washington Post, owned by the Graham family, had the courage to take extraordinary risks in ferreting out the Watergate scandal, and that The New York Times, owned by the Sulzbergers, was willing to publish the Pentagon Papers and go to the Supreme Court in defense of their decision.
Let’s not be deluded into thinking that the new businessmen/patrons of daily newspaper journalism are high-minded, public-spirited paragons. Many surely regard the city newspapers as an unparalleled power base for themselves and their businesses. It is a force for spurring economic development (which may benefit them) and burnishing their community prestige (which, not so incidentally, was a motivation for the family owners of newspapers).
Yet it is also true that local business leaders live in the same community as the rest of us. We know their names (can you name the executive of the Tribune Co. or Knight Ridder?), and they can be held more accountable for their stewardship of the newspaper, and lauded for exemplary action. It’s also true that local owners are more likely to strike a more enlightened balance between their interests as investors and the needs of the community. Indeed, in Philadelphia, the band of investors that bought the Inquirer and Daily News signed a pledge not to interfere with the journalism produced by the papers. They realize that, in the newspaper business, credibility is a business asset that should not be treated lightly.
Come to think of it, that may be one reason that the absentee investors in the newspaper business might be bailing out. As the locus of trust and authority moves away from centralized media to more local sources (and to sources with greater social and personal credibility, like blogs), the mass-media model has its distinct limitations as an investment. You may be able to manufacture and sell widgets as a mass commodity, but journalism that is local, personally relevant and trustworthy is another matter. Its success depends upon community trust and support, and absentee investors just may not have the stomach for this sort of committed, long-term relationship.
Could it be that the business model for quality journalism pioneered by the great newspaper families of yore — the Binghams, Grahams, Sulzbergers, Poynters — is finding a modern-day successor? Here’s hoping.