Jon Binder in Chicago writes with a question:
What is the best way for newspaper media companies to structure their ownership
so they can still generate sustainable profit and inform the public on issues
of importance? [public, private, ownership by charity?etc.]
This is an interesting question, with a number of moving parts embedded. For
one thing, it (sensibly enough) starts with the fact that newspapers are, presently,
owned by media companies – which means that you have to worry not only
about what the optimal ownership structure is, but also whether you can get
there from here. While it might make perfect sense for a newspaper to be owned
by a non-profit organization, for instance, if it’s presently owned by public
shareholders, there’s no reason for them to give up all of their equity for
the sake of informing the public on issues of importance.
It’s certainly true that newspapers owned by charities seem to be doing reasonably
well in that regard: the Guardian, in the UK (owned by the Scott Trust) is probably
the prime example, and in the US one can point to the St Petersburg Times. But
absent an improbable bout of public-spiritedness by institutional investors
with a fiduciary duty to their clients, this model is unlikely to become particularly
What’s more, a new non-profit organization might well lack the deep pockets
necessary to compete effectively in the news industry, especially if it came
burdened with debt incurred to acquire its newspaper property in the first place.
One thing we have learned over the past ten years or so is that the models which
worked well in the past won’t always work well in the future.
That said, there will always be advantages to finding a benign press baron
with deep pockets who respects the independence of his properties. Such a thing
probably doesn’t exist in reality, but the Sulzberger family comes reasonably
close at the New York Times: they certainly managed to vanquish the bothersome
Hassan Elmasry of Morgan Stanley Investment Management, with his annoying ideas
about unlocking shareholder value.
It’s probably just a historical artifact that the New York Times Company and
the Washington Post Company and even Dow Jones even had publicly-traded stock
in the first place; it never seemed to do them much good. News Corp is a bit
different: while it is controlled by the Murdoch family, it’s also vastly bigger
than its newspaper-industry competitors, and the family’s control isn’t completely
iron-clad. Rupert Murdoch has come close to losing control more than once as
he has sought to expand the company.
The real question is what happens in the future. Newspaper publishing doesn’t
have the glamor it had in the past, and would-be press barons like Sam Zell
and Jack Welch don’t inspire a huge amount of confidence in their willingness
to trade profits for posterity.
But public ownership, as we saw with Tribune, just doesn’t seem to work at
all: great journalism simply doesn’t lend itself to the kind of profit growth
that public shareholders demand.
Weirdly enough, state ownership, of all things, has actually proved itself
to be very good at producing great journalism, albeit mainly in the broadcast
arena: think of the BBC, or NPR, or any number of state-owned radio stations
in Germany. It’s not something I or anybody else would recommend for a newspaper,
of course, but it does show that sometimes quality journalism can emerge from
the most unexpected ownership structures.
The ideal newspaper owner, in my view, would be a fan of profits, yet not profit-oriented;
have a strong commitment to making the world a better place through the dissemination
of information; and have loads of money. Who best fits the bill? Easy: Google.org.
Paging Larry Brilliant!