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 popular.

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!

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