But even after all of 2000’s activity, family ownership levels have not changed all that much, and neither has overall consolidation. Many buyers as well as sellers were families, and a number of new, locally focused players have come into the market. The 20 largest-circulation U.S. newspapers have 15 different proprietors, and other than two papers owned by leveraged-buyout investors (in Philadelphia and Minneapolis) and six owned by various broadly held public companies (a number that will shrink to four when Sam Zell takes over Tribune Co.), they are all family controlled.
 
Regardless of how prevalent it is, the benefits of family ownership cited by Graham and others, such as the ability to take a long-term perspective and establish community roots, simply do not hold up under scrutiny. The single-largest investment in print-journalism operations in modern times was the $1 billion Gannett—a publicly owned corporation—plowed into USA Today over a decade before the paper managed to break even. The community roots argument is undercut by the fact that most newspapers in family-owned chains don’t serve the areas where those families live. And in practice, many of the most egregious breaches of journalistic ethics have stemmed from family owners having too much interest in their community and using a local paper to further their personal, political, or economic agenda.

It’s unlikely that William Randolph Hearst would have been able to use his chain to blatantly promote his presidential aspirations had he been the C.E.O. of a publicly held company with a board that applied modern corporate-governance principles. I predict that if local wealthy families continue to buy major-market papers, journalistic purists will soon pine for the days of broad public-company ownership.

To be fair, some of the confusion over just what constitutes family ownership (is it the Murdochs or the Bancrofts?) may stem from the way most newspapers are structured, with dual-class shares. All but a few of the 14 public newspaper companies operate under dual-class arrangements, and once the Tribune sale is finalized, Gannett will be the sole remaining public newspaper company that has a market value of more than $1 billion and a single class of shares. Dual-class shares allow for public ownership while preserving corporate control for the family and management, who have “super” shares. This structure allows families to raise money to invest in developing the product and allows uncommitted family members to exit without causing an ownership or capital crisis. And since the nature and limitations of the non-super shares are clearly disclosed at the time of their sale, the public is fully aware of what it is buying and is better off for having the option to invest in businesses that would otherwise not be on the market.

Thus, Morgan Stanley Asset Management’s long-running campaign against the Sulzberger family, which controls the New York Times Co. through a dual-class structure, is obviously disingenuous. Perhaps Morgan Stanley has legitimate grievances with the Times Co.’s management, or maybe it’s just embarrassed that it invested so much of its clients’ money in a sector that has significantly underperformed the market. Maybe it’s a bit of both. Whatever the case, Morgan Stanley can not claim that it bought Times Co. stock without knowing about the highly circumscribed governance rights associated with the shares. Its indignant demand that the Sulzbergers unilaterally renounce the super nature of their shares is reminiscent of the scene in Casablanca when Captain Renault claims that he’s shocked to discover that there’s gambling at Rick’s just before collecting his winnings. Morgan Stanley was aware of the added risk of investing in dual-class securities. If it is unhappy with management or its investment, its sole remedy is to sell its shares and move on.