The eternal conflict in the newspaper business between the quest for profit and the duty to perform public service converges these days with the soaring worth of newspapers.
In this decade individual papers have sold for more than a billion dollars, and they were not especially huge newspapers at that – the Boston Globe and Minneapolis' Star Tribune. Entire airlines have sold for less.
Why is it that in this era of sluggish circulation, fierce advertising competition and the looming threat of the Internet, newspapers are worth so much? The short answer is that they throw off a lot of profit and will continue to do so for the foreseeable future – enough to cover fairly quickly the cost of acquisition.
Another factor is that while the demand to buy newspapers remains high – because of their high profitability – the number of papers on the market dwindles almost monthly. There are fewer than 300 individually owned newspapers left in the United States, and most of these are small in circulation. That's why several recent deals have involved purchasing chains rather than individual papers. Big demand and short supply drives up prices, as it always does.
A question that worries many journalists is whether the drive to increase profits that elevates the worth of newspapers before they are sold, and must continue to underwrite the high price of buying them, threatens their quality.
The quest for profit was among the subjects taken up by a recent forum at Harvard University sponsored by the Nieman Foundation and the Committee of Concerned Journalists. The first half of the program consisted of two panel discussions, the first featuring management executives who in effect represented owners and the second composed of editors. (For the record, I moderated both panels.)
Underlying the discussions was the forum's overall theme, "The Separation of News and Business," and whether there are differences in how news executives and management measure success that might undermine journalism's fundamental mission.
As might be expected in such a setting, the panel of executives paid homage to the need for journalistic quality. Indeed, a member of the editors' panel, Maxwell E.P. King of the Philadelphia Inquirer, somewhat acidly likened the executives' session to a "love-in" and expressed misgivings about what the corporatization of newspapers portends for the future.
His point spoke to how much the newspaper industry has changed. Where once it might have been said that the typical newspaper owner could spend whatever he wanted on journalistic quality, having only himself to please – and clearly not all owners chose to spend much – today's typical owner is a large corporation with many different constituencies to please. Publicly owned companies must please Wall Street. Large privately owned companies must please a plethora of descendants produced by generations of ownership. And all companies must please readers and advertisers.
Once most newspapers were managed by people who came up through the ranks and pretty much relied on seat-of-the-pants expertise, which also pretty much dictated doing things as they had always been done. Too often this meant reacting to competitive threats instead of getting ahead of the curve with initiatives that prevent threats.
Corporate ownership has changed this, putting more emphasis on professional management and, let it be said, more emphasis on profit. Recently this trend has included encouraging, sometimes mandating, that editors get involved in marketing strategies to improve circulation and advertising.
These changes may make journalists uncomfortable, but they have also produced favorable results. Not long ago it was almost unheard of for a newspaper to make a strategic investment in any kind of endeavor that did not promise an early payoff in cost-savings or higher profit. Today many newspapers and certainly all the major newspaper chains are making strategic investments in losses , likely to extend for years, to establish themselves on the Internet. This is the kind of forward-looking strategic investment that newspapers of the past often lacked.
At the Harvard forum it was encouraging that management executives were sensitive to the importance of editorial quality. Notably eloquent was the controversial Mark H. Willes, Times Mirror's chairman and chief executive and publisher of the Los Angeles Times.
He said it is his conviction that high profit in the newspaper business depends on a commitment to top-quality journalism and that the commitment must be maintained even when profit margins fall in a recession.
Now that's the kind of management talk that editors love to hear. l