The Best Newspaper Owner

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:

Paging Larry Brilliant!

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