From AJR,   March 2003

Noble Sentiments   

Local owners devise ways to keep their newspapers away from the chains.

By John Morton
John Morton (mortoninc@msn.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.     

Many a newspaper owner has extolled the benefits of local ownership, vowing to maintain it in this era of big newspaper chains. Usually this lasts right up until some chain makes an offer that will place the owner truly among the idle rich, or looming estate taxes in effect force a sale.

These are the principal reasons daily newspaper ownership is down to about 260 of the nation's 1,468 dailies. But a few owners have found ways to keep their papers locally owned beyond their lifetimes.

Marajen Stevick Chinigo, until her death in December the owner of the News-Gazette in Champaign, Illinois, left control of the paper to a nonprofit foundation that will support local charities. H. Brandt Ayers, whose family owns the Anniston Star and Talladega's Daily Home in Alabama, recently announced that his family's company eventually will transfer its ownership to a nonprofit foundation that will establish the Ayers Institute--which, in collaboration with the University of Alabama, will offer a graduate program in community journalism.

The Ayers plan is a variation on the nonprofit schools that control two other newspapers: the Poynter Institute, which owns the St. Petersburg Times, and the Nackey S. Loeb School of Communications, which owns Manchester, New Hampshire's Union Leader.

There have been other approaches to maintaining local control, not all of them successful. Probably the oldest dates to 1939, when Theodore Bodenwein left ownership of the Day in New London, Connecticut, to a nonprofit trust that regularly distributes profits to charities.

A nonprofit holding company, created in 1991 by Joe Smyth, owner of the Delaware State News, in Dover, is essentially a minichain, owning two other dailies and 28 weeklies in four states under the name Independent Newspapers Inc. Smyth's goal, he told Editor & Publisher last year, was to keep the papers independent and devoted to local coverage at the expense, if necessary, of high profits.

Employee ownership is yet another strategy, notable examples being the Milwaukee Journal Sentinel and the Omaha World-Herald.

But that turned out to be a trap for the Journal Star of Peoria, Illinois. Henry Slane, patriarch of the owning family, had envisioned a federally sanctioned Employee Stock Ownership Plan as a way to keep the paper out of chain hands, and for 12 years it worked.

The paper prospered, helped by the fact that employees worked as if they owned the place (91 percent of the company, toward the end). Unfortunately, so many became rich on paper that they started cashing in their stock ahead of retirement. The financial threat to the company was so great that the directors, including Slane, reluctantly decided in 1995 that they had to sell. The Copley chain now owns the Journal Star.

What links these examples is a genuine, public-spirited desire to keep control local and avoid a fixation on generating ever-higher profits at the expense of quality journalism. These are noble sentiments, and the owners gave up a lot to honor them.

They eschewed the extraordinary wealth they could have captured simply by selling out. And their newspapers lacked the benefits of chain ownership (cheaper newsprint, management training, etc.) and its typical strategy of clustering papers in a geographic area, the better to cross-sell advertising and consolidate operations.

I recall interviewing Nelson Poynter in St. Petersburg in the early 1970s, when I was a Wall Street securities analyst following newspaper stocks. He clearly viewed me as part of the enemy camp, and he spent a lot of time railing against public ownership of newspaper companies and all the evils it would bring to local journalism.

I found him to be an owner passionately devoted to the public-interest role of newspapers and absolutely convinced that local ownership was the only way to ensure that mission's success. He later put his money where his mouth was.

Nackey Scripps Loeb of the Union Leader was no less passionate about local ownership. No chain, she told me, would honor the Union Leader's commitment to delivering a quality newspaper to the entire state of New Hampshire rather than just the profitable core market. When she died in 2000, she left her majority interest in the paper to the school named for her.

In a business sense, it might seem quaint to find newspaper owners who feel this way at a time when large newspaper corporations are immense profit machines. Chains do publish good newspapers--some of the best in the country--but it is reassuring that there are owners who hang on to the verities of an earlier day.