Is McClatchy Different?
The Sacramento-based company,
with its hip, high-profile CEO and
no-layoff policy, has positioned itself as an alternative to the typical approach to corporate journalism. Does it deliver the goods?
By Susan Paterno
Within seconds after we meet, Gary Pruitt is apologizing profusely, digging his hands deep into the pockets of his blue jeans and confessing to a misunderstanding between him and his secretary that had him body surfing the day before instead of sitting down for an interview. Pruitt, the multimillionaire wunderkind CEO of the McClatchy Co., had come from the company's Sacramento headquarters to Orange County's $500-a-night Ritz Carlton beachfront resort to preside over a retreat for publishers and editors of his 11 dailies, coincidentally arriving a few weeks after the Wall Street Journal named his company as a candidate to buy the Orange County Register and its billion-dollar parent company, Freedom Communications Inc.
Susan Paterno (firstname.lastname@example.org) is an AJR senior contributing writer.
Pruitt presented himself at the Ritz as he often does, a modern Candide, always positive, always on message, always looking as though he stepped from the pages of a Ralph Lauren catalog, running a company as trim and fit and athletic as he is. He has a smile that probably broke a hundred hearts in high school and an endearing goofy charm, stumbling over Hegel and rattling off Rolling Stone lyrics in the same conversation, likening his Wall Street strategy to a Lenny Kravitz tune for analysts, talking as guilelessly about journalism as he does about redecorating his office from the dark wood paneling of the previous regime to a streamlined modern gray and blue, with matching Expressionist paintings and a light fixture that his mentor and predecessor Erwin Potts told him looks vaguely pornographic.
At 46, Pruitt represents the future of journalism, a new game whose rules have changed considerably from the '70s and '80s, when C.K. McClatchy led a company so aggressive it had more than a dozen libel suits pending against it. Back then, McClatchy paid some of the best salaries in the business and boasted a stable of newspapers with a "raw, heartfelt sense of belonging to a cause," as the company's octogenarian namesake--and its journalistic conscience--Jim McClatchy put it recently.
Today, McClatchy papers are thoroughly modern and professionally designed newsgathering machines, heavier on features, sports and projects than they were, and far less willing to take down the big players that control the economic development of the markets McClatchy dominates. If C.K. McClatchy was a cowboy, then Gary Pruitt is a dairy farmer, more inclined to see his high-quality products graze and grow, with editors embracing the industry's latest trends--teams, public journalism, civic mapping, easy-to-read digests--anything to boost circulation and the company's reputation in the world of modern newspapers.
When C.K. died in 1989, the family put Erwin Potts, then Pruitt in charge; in the last three decades, that triumvirate has presided over a company whose tumultuous transformation--from a family-owned nearly nonprofit to a publicly traded powerhouse--mirrors the turmoil of an industry far more focused on economic performance than on journalism. Over the years, McClatchy's vision has changed considerably, from its founders' decree to "always [be] fighting for the right no matter how powerfully entrenched wrong may be," to multiple visions and voices controlled by the publishers in each city where McClatchy papers operate daily monopolies.
Pruitt aims to do what no other CEO of a publicly traded newspaper company has yet accomplished: to unravel the Gordian knot that confounds most of journalism these days, to figure out a way to make enough money to satisfy Wall Street's unrelenting demands while serving the public interest and redefining quality journalism.
In the last five years, McClatchy has become an oft-cited standard-bearer for publicly traded newspaper companies, lauded for pledging to provide the journalistic equivalent of guns and butter--dedicated to expanding the company while continuing to invest in its newsrooms. The three Bees have won notice of late: in Sacramento, for exposing sex crimes at public universities; in Fresno, for exposing academic fraud at Fresno State; in Modesto, for exposing shady land deals.
"For my money, they exemplify the best of chain ownership," says Jim Bettinger, director of the John S. Knight Fellowships for Professional Journalists at Stanford University. "They seem to be doing it right."
Editors and reporters so admire Pruitt that in hundreds of interviews, only two people said anything critical about him, neither for publication. But despite their embrace of Pruitt, a significant number of veterans expressed serious doubts about the reign of professional management--now prevalent industrywide--about how those forces have hijacked McClatchy's once passionate and idealistic vision, while relegating Jim McClatchy to a tiny office, filled with family memorabilia, stacks of mail and Fed Ex boxes.
"Is McClatchy bad? No!" says Dale Maharidge, a former Sacramento Bee reporter, Pulitzer Prize winner, professor at Columbia University and big fan of Gary Pruitt. "I'd rather my paper be bought by McClatchy than Gannett or Knight Ridder any day of the week. My beef is not a beef, but a sadness, that the chain cannot rise to the next level consistently. It's a collective mind-set on top, as if there's a bar the bigs cannot or do not want to rise above. My advice to young journalists is: Yes. Go to McClatchy for three or four years, five tops, and then move on. If they are good, that is about the point they will outgrow the mind-set of management."
For most of its near 150-year existence, McClatchy has remained largely under the radar, founded by a progressive, publicity-shy family that owns nearly all the company's voting stock and continues to control it from the boardroom. "This is the most influential California family about whom there has been no history written," says Frank McCulloch, a legendary Time magazine Vietnam War correspondent and a former managing editor at the Los Angeles Times, the San Francisco Examiner and the first McClatchy paper, the Sacramento Bee. The McClatchys, McCulloch says, "simply don't like being in the limelight."
Unlike the Chandlers, Hearsts, Sulzbergers and Grahams, no published history documents the McClatchys. Yet the family's grip on California's capital and vast Central Valley--its swing votes and rich agricultural center--historically has helped make the state largely Democratic, counterbalancing the Republicanism that drove the Chandler and Hearst empires in Los Angeles and San Francisco. But that influence has waned, as the Central Valley's largest cities have moved decidedly to the right, so much so that when the Sacramento Bee's publisher spoke out at a local university graduation about protecting civil liberties a few months after September 11, she was booed into silence.
Pruitt's strategy is straightforward: Pay what it takes to acquire newspapers in growing regions, eschew all "national pretensions," as he has said, make the papers the best for their size, maintain the leading local Web site and boost advertising market share, all the while defusing unions, raising readership and tightly controlling expenses. "A company our size either has to grow or die," says David Zeeck, executive editor of the News Tribune in Tacoma, a midsize McClatchy daily. "It's gonna eat or get eaten by somebody. Gary talks about that all the time. You're either gonna be eaten or [be] an eater. We want to be an eater."
Without resorting to highly public layoffs and their attendant morale and severance costs, Pruitt quietly has reduced the McClatchy workforce 6.9 percent through attrition since 2000, helping to contribute to record earnings in 2002 despite flat revenues. Among media conglomerates, McClatchy boasts the 10th-largest daily circulation, with newspapers in rapidly growing regions--Tacoma, on the southern part of Washington's Puget Sound; Raleigh, at the center of North Carolina's Research Triangle; ever-expanding Anchorage, Alaska; and, its most recent acquisition, the Star Tribune in Minneapolis.
Pruitt promises to preserve the best of the past while protecting journalism in the future. And if Wall Street's demands seriously threaten journalism, he says, "We would consider removing ourselves from the public market," though that has yet to occur, he quickly adds. No McClatchy paper, Pruitt concedes, will "ever be the New York Times. But we'd like for each of them to be the best for their size."
Five years ago, Pruitt stunned the newspaper world by secretly buying the Star Tribune for $1.19 billion--at the time the most money ever paid for an American newspaper--provoking a ripe and rousing refrain of ridicule from industry insiders. "I will prove them wrong over time," he petulantly told the New York Times, "and I look forward to doing that." In the years afterward, the company's stock price soared, putting Pruitt at the table next to Arthur Sulzberger Jr., Donald Graham and P. Anthony Ridder as a major player in the journalism
Most everyone who knows Pruitt appears awestruck, mesmerized by the charisma he uses to charm journalists, executives and Wall Street analysts alike. In Anchorage, Daily News Editor Patrick Dougherty remembers fondly the time Pruitt called to thank him personally for being one of the few editors to make budget. "At the risk of sounding like a complete sycophant, and maybe it sounds like I'm kissing the butt of my superiors, but I have tremendous respect for the people who run McClatchy," says Dougherty. "Gary Pruitt is a brilliant visionary. He's as ethical as he could be. He cares about journalism. You couldn't get me out of McClatchy at the point of a gun."
At the annual midyear media review in Manhattan's McGraw-Hill building in June 2002, Pruitt was brash and in good humor, chastising the previous
presenters for going long--"I guess when you own your own friggin' building you can take as much time as you want," he said with a verbal swagger--concluding his remarks with his signature reference to rock 'n' roll. "This year...we take as our inspiration Lenny Kravitz's song 'Dig In.' In it, Lenny sings: 'Mountain is high, but look up to the sky and persevere with a smile. Once you dig in, you'll come out the other side. And once you dig in, you'll find yourself having a good time.' That's what we're doing at McClatchy. We're digging in."
In October, the same month he earned $4.05 million from selling McClatchy stock near its $65.55 high, Pruitt was sitting in his office preaching the need to remain prudent and positive at a time of diminished profits.
"We have to control expenses just because profits are down so greatly," he said solemnly. "But we want to remain positive. I think it's easy to get down. Actually, I know that sounds like sort of New Age junk, but I think it's very important to remain positive. No matter what the history of McClatchy has been, it's not an immutable nature. We define this company for our time. It's up to us. The corporation doesn't have a right to exist. It's got to prove and reprove its right to exist constantly. This is our time. We must do it."
A few months after Pruitt's straight-faced spiel about "profits being down so greatly," he announced to Wall Street "record results" for McClatchy with earnings up nearly 42 percent. Despite the windfall, Pruitt continued to promise to "hold the line on payroll and all other expenses. But it's tough. I think we can do it."
There is no doubt Pruitt is sincere when he says, as he so often does, that "good journalism is good business." But just what good journalism is, who will define it and how, are central questions at McClatchy. Jim McClatchy, now 82, has said he wants the company to become a "nationally recognized example of integrity and quality in public life," one that produces newspapers "large and small, of great quality and great courage [to] lead our citizens to the better society they deserve."
But a significant number of McClatchy veterans fear the family flame is flickering out, and will likely die when Jim McClatchy's generation passes on. Throughout the newsrooms, newcomers mix uneasily with veterans, especially those who remember the days of C.K., the passion of Frank McCulloch, the thrill of competition that kept an intense focus on tough-minded stories and ever-increasing budgets for travel, staff and overtime.
Those days are over. In Sacramento, the weekly News & Review posted the parody suckbee.com on the Web in 1998, ridiculing editors for surrendering to corporate culture and blasting "McTacky" and its acquisition-minded executive team of charismatic, profit-seeking "Virtual Garys," sapping the company's newsrooms of passion and creativity.
From Minneapolis to Raleigh, from Anchorage to Modesto, longtimers tell stories of a transformation that has left many suspicious about a new rank of publishers with track records at Gannett, Times Mirror, Lee Enterprises, Harte-Hanks, Knight Ridder and Scripps Howard, savvy moneymakers far more controlling of content than the previous generation of business managers had been, promoting newsroom changes through resource allocations, merit raises and performance reviews.
Courting local executives, promoting economic growth and development as never before, the new publishers passionately plot strategies to take market share from radio, television, talk shows and the Internet, while journalists huddle in the newspaper equivalent of a caboose, no longer powerful enough to pull the train they once engineered. Throughout the company, veterans express an abiding fear about speaking out against what they perceive as wrongheaded management decisions. "They want us to be skeptical and tough-minded outside the building, but when we walk in the door, they want us to be lobotomized idiots. They want us to be yes men and women. That's not just here," says one veteran, speaking anonymously out of fear of management retribution. "That's everywhere in newspapers." (See "Down with Top-down.")
It wasn't always so. Under Cowles family ownership, for instance, the Star Tribune had so effectively afflicted the comfortable that when John Schueler, McClatchy's first publisher in Minneapolis, started work in 1998 he remembers an ugly scene aboard the yacht of a broadcasting baron. Schueler was schmoozing local captains of industry when they began castigating him for the Star Tribune's liberal bent and hostile attitude toward business. "They were yelling, actually yelling," he says.
After that, Schueler worked to reset the Star Tribune's agenda. "I wanted to get the message across that the Star Tribune is not a monolithic entity. If they had a problem, they could talk to the publisher, the editor and the managing editor. I wanted to give them a chance to vent their anger about the company. To show balance. It was a balance issue."
The turn of the century marked other changes at McClatchy. In Raleigh, newly appointed Executive Editor Anders Gyllenhaal's push for aggressive reporting and compelling narrative led reporter Gigi Anders to so deeply tell the story of an undocumented Mexican worker's hardscrabble life it provoked enormous controversy in the community and caused the man's deportation in the summer of 1998. (See "Too Much Information?" June 1998.) Less than a year later, Gigi Anders was gone.
"I felt under siege," she says. "I expected and hoped for more support. We'd gone over it and over it." Her recollection is confirmed by Jon Franklin, a two-time Pulitzer Prize winner who worked at the News & Observer at the time and now teaches at the Philip Merrill College of Journalism at the University of Maryland.
"It was clear to me that nobody in the whole building understood the power of narrative," he says. "Anyone who understood narrative would have known instantly that once the series was published, the immigration service would have immediately hauled Anders' source in. But when the shit hit the fan, the feeling of the editors, and later of the newsroom, was that the reporter was at fault. The editors, being lamentably unschooled in these matters, failed to support their reporter, and then put the blame on her. I saw this happen several times in lesser matters, so the process of pushing the blame downward was habitual."
Gyllenhaal, promoted last year to editor of McClatchy's Minneapolis Star Tribune, has "quite a different view," he says. "This was a difficult story that turned out badly. I made decisions that I regret to this day, but I don't think there was ever an attempt to blame anybody but the editors on the story. There was never any hesitancy to say that the decisions that went wrong were made by me and the top editing group."
In Sacramento in 2000, the state's deregulated electricity market began unraveling, followed by widespread blackouts and enormous rate hikes. Private profiteers like Enron had manipulated the markets to enrich themselves at the expense of the commonweal, in the same sort of scheme Bee papers had been denouncing for 100 years. Though the Sacramento Bee published about a dozen editorials discussing the state's electricity problems that year, none was as powerful, clear or commanding as those penned by Jim McClatchy in 2001. McClatchy took on the rich and powerful, accusing the governor of executing a "sweetheart deal in smoke-filled rooms," allowing "the most clever and conscience-less of speculators...to find ways to avoid risk while squeezing the pocketbooks of consumers."
To what extent does the modern McClatchy reflect its namesake? "The answer is probably not enough," says Leo Rennert, McClatchy's longtime Washington bureau chief, who retired in 2000. "McClatchy still puts out quality papers. What is missing, however, is that great single voice at the top with strong feelings about what kind of crusading spirit there ought to be at the papers, and what they should be crusading for. Jim McClatchy may be a little boy with his finger in the dike. But he's so useful; he can tell editors and publishers what it means to be a McClatchy newspaper. And not just for nostalgia's sake, but for the relevance to today's events. Just look at Enron: Jim McClatchy can tell you these are the miscreants that McClatchy newspapers, for more than 100 years, have gone after. The older McClatchys considered themselves tribunes of the people. And the old breed isn't going to be around much longer."
Just how the idealistic and passionate McClatchy company emerged from obscurity to become a trailblazer, attempting to solve some of the industry's most vexing and complicated problems, is the story of journalism's seismic shift of the last three decades, when nearly all of the country's largest dailies switched from private to public ownership, providing an enormous financial windfall to investors and forcing cultural revolutions in newsrooms nationwide.
That's a story that began when C.K. McClatchy returned from Washington, D.C., in the early 1970s to find his great-grandfather's legacy in peril.
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