Saturday, October 28, 2006
OWNERSHIP: It's not all roses at Philadelphia Inquirer
http://www.boston.com/business/globe/articles/2006/10/27/local_ownership_isnt_cure_all_for_newspapers
Local ownership isn't cure-all for newspapers
By Robert Gavin, Globe Staff | October 27, 2006
As Philadelphia is finding out, local ownership of big city newspapers
isn't a panacea.
With a local group considering making a bid to buy The Boston Globe from
The New York Times Co., media specialists warned that newspapers,
regardless of ownership, face huge challenges as readers and advertisers
move online, and the industry seeks a financial model to support extensive
newsgathering operations.
In Philadelphia, a local group earlier this year bought the broadsheet
Inquirer and tabloid Daily News from the McClatchy Co. chain, sparking
hope within the community and the two papers for an end to the relentless
cost-cutting under its longtime corporate owner, the defunct Knight Ridder
chain. (Knight Ridder sold itself to McClatchy, which in turn sold some of
the papers it acquired.)
Last week, however, the new owner said layoffs were "unavoidable" because
revenue was falling so quickly that the company would not be able to meet
its debt payments next year. Meanwhile, with the company pushing for deep
concessions in union contracts that expire next week, members of the
Newspaper Guild of Greater Philadelphia, which represents editorial,
advertising, and other workers, last night authorized union leader s to
call a strike.
With tensions rising yesterday, union leaders were unavailable for
comment. Neither was Brian Tierney, a former public relations and
advertising executive who led the group that bought the papers.
"The sentiment of local ownership is noble, but the economics are still
brutal," said Jay Harris, formerly publisher of the San Jose Mercury News
and now a journalism professor at the University of Southern California.
"The good news is the desire to have strong local papers committed to
local service. But the industry is still thrashing around, looking for a
sustainable long-range model."
After decades of big, publicly traded media companies gobbling up local
papers, that trend has recently showed signs of reversing. Wall Street has
been battering newspaper stock prices, prompting companies to cut costs.
The result: Local groups led by wealthy residents are popping up across
the country with hopes of protecting and preserving the papers.
In Boston, where falling circulation and advertising revenues at the Globe
have led to job and cost cuts, a group led by Jack Welch, former General
Electric Co. chief executive, and Jack Connors, cofounder of the
advertising firm Hill Holliday, has emerged as possible bidders for the
Globe. In Los Angeles, entertainment mogul David Geffen is among a group
of local executives expressing interest in buying the Los Angeles Times
from Tribune Co. Local groups in Hartford, Long Island, and Baltimore have
signaled interest in buying Tribune Co. papers in those communities.
Media specialists said local ownership could take some of the cost
pressures off papers, since, as private companies, they wouldn't have to
meet Wall Street expectations. But, they added, they still face the
pressures of paying off loans that typically finance the purchases and
providing promised returns to private investors.
"Even a private ownership group has to operate in the black," said Lou
Ureneck, chairman of the Boston University journalism department.
New owners would have to tackle newspapers' tricky transition to the
Internet. So far, newspapers' online profits haven't come close to making
up for declines in the traditional business.
Another big challenge, said Tom Rosenstiel, director of the Project for
Excellence in Journalism, a nonprofit Washington research group, is that
newspapers operate under a model foreign to most other businesses.
Newspapers' mass audience is their readers, and the circulation revenue
generated by sales to readers is important. But newspapers make most of
their money by selling space to advertisers based in part on the papers'
credibility with readers. That credibility must be protected even at the
risk of sometimes angering and losing advertisers, Rosenstiel said.
"When you have management that has been in the business, they know the
integrity of the news product is what they're selling," Rosenstiel said.
"It's not clear whether the new local owners understand this unusual
economic model."
There are concerns that a new breed of owners, who have largely become
rich in other businesses, would interfere in the newsgathering process to
boost their own financial interests, reward friends, or punish enemies.
In Philadelphia, the Tierney group signed a pledge not to interfere with
news decisions made by editors. The Boston group, so far, has not made any
such pledge.
Stephen Burgard, director of the Northeastern University School of
Journalism, pointed to Santa Barbara, Calif., as an example of the
vulnerability of locally controlled newspapers. At the News-Press, at
least five top editors, including the editor and managing editor, resigned
over interference by the wealthy copublisher, Wendy McCaw, who bought the
paper from Times Co. in 2000.
Among the incidents prompting the resignations was when McCaw stopped the
publication of the drunken driving conviction of one of her loyalists at
the paper. McCaw said in an e-mail that she was merely following the
paper's policy of not reporting drunken driving convictions unless injury
or death was involved. They weren't in this case.
"Local ownership is potentially wonderful and potentially disastrous,"
Burgard said. "The question is, what is their sense of community
stewardship?"
Robert Gavin can be reached at rgavin@globe.com.
© Copyright 2006 The New York Times Company
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