A HARD LOOK AT PUBLIC OWNERSHIP AND IDEAS FOR CONTROL

BY GENEVA OVERHOLSER

 

There has been much unhappiness and little clarity in the newspaper world lately. Now comes a book that could help. Three professors, working at the University of Iowa, have done an exhaustive study of the leading publicly owned newspaper companies. Taking Stock: Journalism and the Publicly Traded Newspaper Company is a thoroughly reported, fact-rich look at exactly what has taken place to turn the news business away from news to business. Happily, it also offers some compelling thoughts about how we might return journalism to a position of strength.

Gilbert Cranberg (for whom I once worked at The Des Moines Register) joined law professor Randall Bezanson and John Soloski, then director of Iowa's school of journalism, to bring together an unprecedented trove of information about the seventeen major publicly held newspaper companies. In presenting their work, the authors push our understanding well past the familiar cardboard villain -- the greedy c.e.o. who might save us all if only he were nobler -- into an exploration of the economic and technological changes that have placed newspapers in an entirely different world than they were in when public ownership began forty years ago.

"News has become secondary, even incidental, to markets and revenues and margins and advertisers and consumer preferences," say the authors. "At its worst, the publicly traded newspaper company, its energy entirely drawn to the financial market's unrealistic and greedy expectations, can become indifferent to news and, thus, ultimately to the fundamental purposes served by news and the press."

The authors cite numerous consequences, from reduced emphasis on accuracy to lessened editorial independence, from a change in the definition of market to a resultant change in news judgment. Taking pagination as an illustration, the authors look at what has happened as composing-room tasks moved into the newsroom and labor savings dropped to the bottom line. A University of Oregon study determined that at a medium-size paper paginating fifty pages a day, the extra work equaled more than a shift a day. Yet copy editors, already writing all display type and reading copy for clarity and for error, were widely asked to absorb this work unaided. The authors of Taking Stock, interviewing copy editors at papers of varying sizes, found that only eleven of forty-six papers had increased staff to handle the extra work.

Taking Stock presents an invaluable array of facts on everything from the composition of boards (only seventeen of the 131 outside directors on these seventeen corporate boards have any journalism experience) to lists of the ten largest institutional investors for each company. (What opportunities might lie in the fact that the University of California is Gannett's largest institutional investor; surely universities care -- or can be made to care -- about journalism quality?)

Years into the era of recurring cutbacks in newsroom resources, we are accustomed to finding explanations. One is that all the change is simply responsive to the market. But what market? As Taking Stock makes clear, it's not the mechanisms of the local marketplace at work on newspapers. "The market to which the newspapers are responding, from top to bottom of the organizations, from business to news departments, is the stock market and the market demands of the passive investors who own the publicly traded stock in the companies." From this follows so much -- including the emptiness of talk about local autonomy. "Tight budget, margin and profit controls imposed on the operating company by the parent leave the operating company much apparent, or formal, autonomy but little capacity to exercise it."

Good newspapers in America have always worried about being good businesses. But when we spoke of delivering eyeballs to advertisers, the content that drew those eyeballs counted -- and so did the number of eyeballs. Now, we seek to deliver specific audiences desirable to advertisers in order to create today's real product: return on the stockholder's investment. In interviews with more than 100 people, from editors to c.e.o.s to stock analysts, the authors found an interesting thing. Most executives, even many editors, sounded primarily positive -- if resigned -- about the impact of public ownership. Yet the stock analysts, an important link in creating that impact, were by and large forthright in calling public ownership unfortunate. "Newspapers serve a wonderful purpose, so when you worry about the bottom line, there's a big difference in what you do," said one. Said another: "Staffs are leaner and there is less investigative reporting. The quality of newspapers has degraded, and part of that is due to going public."

Taking Stock lays the impact out powerfully: "News was the product around which the business was shaped. "The recent dramatic change "is compromising the newspaper's continued role as a fiercely independent source of information and opinion judged relevant and necessary for public understanding in a free, democratic, capitalist society."

Dispiriting as their conclusion is, the authors' pragmatic search for the origins of the problem invites an equally pragmatic search for solutions. What has brought us to this juncture is technological and economic changes that many companies have adopted and deployed "with insufficient regard to the quality of their newspapers, and with excessive regard to investor demands and quarterly profits." But the underlying forces of technology and economics, say the authors, could also be employed differently, and we could do much to encourage the change. They recommend that "boards of directors should have more than one member who is a retired or active journalist of high repute and who does not work for the company." Boards should be made up primarily of outsiders (not company executives and others directly involved), and their compensation should not be tied to stock market performance. Incentive compensation for executives "should be based in significant part on the circulation and journalistic quality of the newspapers." Editorial leaders' compensation should not be tied to financial performance. Every newspaper should "maintain and report annually to the public both historic and current information" on everything from revenues and expenses and operating margins to salaries and stock holdings of directors and executives. Additional recommendations concern changes in tax and securities laws that could encourage long-term investment practices.

Taking Stock is not another paean to the romance of journalism or one more eulogy over the passing of what was. It's a clear-eyed and dispassionate setting-forth of the conditions that imperil news today. The Supreme Court has said that newspapers "enable the members of society to cope with the exigencies of their period." We have yet to see whether newspaper companies can cope with the exigencies of their ownership in ways that will enable newspapers to continue to provide the nation with the information democracy depends on. Taking Stock -- if everyone concerned were to read it and put it into the hands of their company's leadership -- could improve the prospects.