AJR  Features
From AJR,   October 1999

Fair Game?   

Things can get quite tricky when a company that owns a news organization invests in a sports franchise in the same town-- as the Dallas Morning News quickly learned.

By Kelly Heyboer
Kelly Heyboer is a reporter at the Star-Ledger in Newark, New Jersey.     

The dissent was nearly immediate. On Saturday, July 24, the Dallas Morning News ran a hastily prepared story about its parent company paying $24 million for a small interest in the Mavericks, the city's struggling pro basketball team, and a soon-to-be-built sports arena.

By Monday morning, the newsroom staff was reading a carefully worded memo written by the papers' three City Hall reporters criticizing the initial story and blasting the company for putting the paper in the awkward situation of being partners with fellow team owners Ross Perot Jr. and Tom Hicks, prominent city newsmakers. "We believe that corporate citizenship should not come at the expense of the newspaper's editorial integrity," the memo said.

The same morning, a copy of the memo found its way to the desk of the managing editor of the Dallas Observer. Forty-eight hours later, it was in the weekly for all of Dallas to see. Within days, other papers had picked up the story of possible conflict of interest and newsroom revolt, and the tale found a wider audience in the nationally distributed column of Washington Post media writer Howard Kurtz.

Back in Dallas, a City Council member was already complaining that the paper's initial coverage of the situation was biased, leaving out quotes from politicians critical of the deal. Meanwhile, the paper's reporters were publicly debating ethics, and editors were fielding calls from the national media about how the nation's tenth largest newspaper was going to handle suddenly being a big-time sports team owner.

It all left Dallas Morning News Executive Editor Gilbert Bailon breathless, and slightly baffled.

When you boil it down, he says, it was a big media company (A.H. Belo Corp.) buying a minor stake (12.38 percent) in one of the National Basketball Association's saddest teams (88 games below .500 over the last three years).

"I'm surprised. This is not unique," Bailon says. "We have a small toehold, nonactive...and the team is not one of the most successful franchises."

But the July 23 Mavericks-Belo deal--and the newsroom staff's very public debate over its ramifications--struck a chord in an age in which diversifying media companies are increasingly buying into the complex and controversial world of professional sports. How do newspaper and television reporters cover a team when the company that owns it signs their paychecks? How do columnists knock or praise the owners when they are sitting in the same building? What happens when the inevitable debate starts over whether to build a new sports arena with public money?

They are not new questions. With the exception of the National Football League, which forbids corporate ownership, all major professional sports leagues have had media companies among their owners for years.

The Dallas Morning News and the Mavericks join a club packed with some of the biggest names in the business. Most notably, the Tribune Co., publisher of the Chicago Tribune, has owned the Chicago Cubs for nearly two decades. The parent company of the Pittsburgh Post-Gazette bought a minority share of the Pittsburgh Pirates to help keep the team in town. The Cincinnati Enquirer is linked with the Reds since parent Gannett has a small interest in the team. Ted Turner's media empire, now a division of Time Warner, owns parts of baseball's Atlanta Braves, the NBA's Atlanta Hawks and the National Hockey League's Atlanta Thrashers.

And media companies are now the dominant presence on the Southern California sports scene. The Walt Disney Co., owner of ABC and 80 percent of ESPN, also has a controlling interest in baseball's Anaheim Angels and owns the Mighty Ducks hockey team. Rupert Murdoch's Fox Group, owner of the FOX network, bought the Los Angeles Dodgers and earlier this year was talking about buying interests in the Lakers and the Kings, the local basketball and hockey franchises.

Corporations are becoming more common, and perhaps necessary, in sports as players' salaries climb ever higher. Critics say it is becoming impossible for an individual to personally back a team. The days when happy millionaires sat in owners' boxes and passed on teams to their children are becoming nostalgic memories. Meanwhile, publishers and TV station owners are buying into sports for a variety of reasons--from trying, in a burst of civic pride, to keep a team in town to the more practical goal of securing lucrative broadcasting rights to the teams' games.

There are many sensible reasons a business executive can find for media, entertainment and sports to be linked under one umbrella, says Bill Evans, a media ethicist at Southern Methodist University. "In terms of investment and business, it makes sense," Evans says. "But it makes it a lot tougher on the reporters and editors in the trenches."

Evans followed the controversy over the Mavericks purchase in Dallas this summer with keen interest. He spent 38 years at the Dallas Morning News, rising from wire desk copy editor to executive managing editor before retiring in 1994 to teach ethics to journalism students.

Evans says he is sure the Morning News staffers will "rise above it and do their work," and not be swayed by their employers' new ownership status. Despite occasional rumblings from staff or readers about perceived conflicts of interest, the journalism history books show no evidence of a major misstep by a news organization covering a team it also owns. As with any ethical dilemma, it all comes down to day-to-day decisions made by reporters and editors, Evans says.

"It doesn't seem to matter in most cases. It just depends on the individual," Evans says. So the important thing is to acknowledge and address readers' and sources' fears that their newspaper will become biased. If journalists "ignored these responses," he adds, "there could be a problem."

Indeed, it was what the Morning News left out of the initial story about its parent company's purchase of an interest in the Mavericks that started the trouble in the Big D.

On Friday, July 23, fearing word was about to leak out to the competition, Belo officials told the company's Dallas newspaper and television station, ABC affiliate WFAA-TV, that the company had just signed a deal. Belo would purchase 12.38 percent of the Mavericks and 6.19 percent of The Arena Group, which is building and will manage a new facility for the Mavericks and the Stars, the local hockey team.

Morning News business reporter Richard Alm assembled a story about the transaction for the Saturday paper in 90 minutes. Alm's piece contained a quote from a Belo official saying the new partnership would not affect the paper's coverage of the team or the new arena. But a quote sent over in a feed from the paper's City Hall bureau was left out.

In the unused quote, City Council member Donna Blumer told reporters, "Belo can no longer be an independent voice for the public.... I don't see how anybody can trust what they read about the arena from here on out if Belo is part of the ownership."

Bailon, the paper's executive editor, says the quote was not omitted from the story to please management. Editors felt it was unfair to leave Blumer's concerns in the story without additional comment from the mayor and council for balance. So, with the story breaking late on a Friday, the quote was jettisoned.

Bailon admits the announcement that the paper's parent company was buying part of a sports franchise could have gone more smoothly. "Most of our staff found out when they picked up the story Saturday morning," he says. But given the late-breaking nature of the piece, the editor says he would probably make the same decisions if he had to do it again. "I don't have any regrets in how we covered the story," Bailon says.

But the omission of any criticism of the Belo-Mavericks deal was enough to spark a memo on the company's internal computer message board signed by City Hall reporters Robert Ingrassia, Nora Lopez and Michael Saul. "The new relationship between Belo and the Mavericks, and the paper's handling of the story in particular, raises troubling questions for all of us in the newsroom.... Have Belo's business decisions and other ties in the community affected our coverage in the past? Will they affect it in the future?" the reporters asked. (Ingrassia, Lopez and Saul all declined to comment further.)

Bailon fired back his own memo, which was also leaked and published in the Dallas Observer, scolding the newsroom for debating the issue publicly. Newsroom meetings were scheduled to talk about the Mavericks deal. Bailon says he also personally spoke to every reporter with a beat that might be affected by Belo's new interest in the basketball team and the sports arena. The editor told them to "proceed as you would" as if nothing had happened. "We are going to continue to cover things the way we had before," Bailon says.

Morning News sports columnist Tom Cowlishaw lightheartedly addressed the obvious questions of conflict of interest in a piece on the cover of the sports section the same week. "Given the size of my stock portfolio, I believe I now own .000000412 percent of the Mavericks," he wrote. "Let me assure you right from the start my journalistic integrity will not be compromised by my new position as co-owner. The fact that increased success by the Mavericks would lead to a rise in attendance, which would lead to enhanced value in Belo stock, which could lead to my early retirement at age 45, hasn't even entered my mind.... But the funny thing is that after meticulous research, I have discovered there is nothing to criticize about the Mavericks. This is a nearly flawless basketball and business operation despite what you have been led to believe."

In the end, reporters' concerns were addressed, and staffers were told to move on. "The corporation is not going to disinvest because people in the newsroom are [upset]," Bailon says.

More than two weeks after the controversy, the paper published another business piece, this time dealing with the concerns of local officials and readers that the paper's sports and arena coverage would be swayed by Belo's new business interests. But for many it was too little, way too late. Similar pieces had already appeared in the Austin-American Statesman and the Washington Post.

"In my opinion, for what it's worth, they should have done that in the first place," Dallas Observer Managing Editor Patrick Williams says of the Morning News' piece acknowledging the conflict-of-interest concerns. Williams had already written three weeks' worth of stories in his "Buzz" column in the Observer chronicling the discord at the paper over the Mavericks deal, based on information leaked from the newsroom.

In Pittsburgh, John Craig may have had a sense of déjà vu as he followed the Dallas saga. Craig, editor and vice president of the Pittsburgh Post-Gazette, had recently watched his city and paper go through a long debate over whether to build new stadiums for the Pittsburgh Pirates and Steelers. No matter how balanced the paper's reporting, critics of the plan would question anything the Post-Gazette printed on the issue because the paper's publisher, Blade Communications, also owns part of the Pirates.

"They'd say, 'Well, the paper does this because they own the team,' " Craig says. "It appears to be a potential conflict, there is no doubt about that."

In truth, the Block family--which also owns Blade Communications--owns a small fraction of the baseball team. It was part of a large group of local investors who banded together to keep the Pirates from leaving Pittsburgh for a market with deeper pockets. Now that a new stadium has been approved, some in Pittsburgh have called for the Block family to get out of the sports business, Craig says. But the company has made no move toward selling.

The realities of a newspaper juggling potential conflicts between its publisher and a sports team are more complex than worrying if the beat writer's story on last night's game will somehow appear biased. "The funny thing is that covering the team--that's the easy part," Craig says. If a reporter showed any favoritism in day-to-day coverage that was obvious to readers, "you would be crucified. If there is anybody who feels pressure, it's a columnist expressing an opinion."

The legendary "dean" of Chicago sports writers agrees. Jerome Holtzman, who covered Chicago baseball as a beat reporter and columnist for more than 50 years, was lured from the Sun-Times to the Tribune to cover the Cubs in the early 1980s. His new job coincided with the Tribune Co.'s purchase of the team.

He learned years later the timing was not a coincidence. Tribune Editor James D. Squires wanted someone covering the Cubs who could rise above any hint of favoritism. Holtzman, who left the paper earlier this year to become Major League Baseball's official historian, had been writing about Chicago sports since 1946.

Squires says he was not pleased when the paper's parent company bought the local baseball franchise just as he was about to take over as head of the paper. He says he immediately went after Holtzman for two reasons: "One, because he was probably one of the most respected sports writers in the country. And second, my hiring was announced the same day it was announced we were buying the Cubs. We were very concerned about the ethical implications of that and the pressures they would put on the sports department."

Though he made the best of it at the time, Squires, now retired from the Tribune, says owning the Cubs did nothing positive for the paper. Squires wrote about the troubles the paper had with owning the Cubs in his 1993 book "Read All About It!: The Corporate Takeover of America's Newspapers." The editor says he felt the reporters were dealing with an unnecessary pressure to avoid any hint of a conflict of interest. They ended up "bending over backward to show how 'objective' they can be," he says. "It's not a very healthy kind of atmosphere."

Dan McGrath, the current sports editor at the Tribune, says the newsroom is still debating whether owning the sports team is a good idea. The sports section recently ran a letter in its Sunday edition from a couple canceling their subscription "because of the Tribune's inept management of the Cubs," McGrath says. Similar letters and phone calls have been a regular occurrence in the two decades the company has owned the franchise.

The team was big news last year, with Cub Sammy Sosa involved in a historic homerun duel with the Cardinals' Mark McGwire. During the regular season, reporters and columnists covering the Cubs get no special instructions from editors. Tribune management does not always like everything the sports reporters write about the Cubs, but it doesn't intercede, McGrath says.

The Tribune's sports editors are careful to make sure the White Sox, the other local baseball team, get equal attention and there is no favoritism in where stories are played, McGrath says.

"We just really try to treat them like any other team, but we are certainly aware that there is the perception the Cubs and the Tribune are one and the same," he says. "I would rather we didn't own the team, in all honesty."

At the moment, many of the sports teams owned by media companies are struggling--and their owners are struggling to turn a profit with them. In addition to the NBA's Mavericks, baseball's Cubs, Angels, Dodgers and Pirates all had disappointing seasons.

As a result, media companies are learning it takes big money to stay in the game. Baseball's combined annual salaries rose more than 63 percent in the last five years to more than $1.4 billion. Disney was reportedly looking for a buyer for its Angels and Mighty Ducks earlier this year after the teams lost a combined $58 million over three seasons. But so far none of the companies has bailed out, and there are no signs publishers and network owners are backing away from the sports arena.

Mixing news and sports is nothing new. It was CBS that sold George Steinbrenner the New York Yankees in 1973 (for a bargain basement price of $10 million). Going full circle, last year it was another New York media company, Cablevision--owner of the Madison Square Garden television sports network--that was courting Steinbrenner to sell the team for $500 million to $600 million. Buying the Bronx Bombers was seen as a good investment, because MSG was already paying millions every year to buy the rights to broadcast Yankee games. But Steinbrenner reportedly balked at the price.

Though they were not part of the initial deal, Belo also had broadcasting rights in mind when it put up $24 million to buy into the Dallas Mavericks. Just days after the Belo-Mavericks transaction was announced, the team sold its lucrative broadcasting rights to Barry Diller's USA Networks for an undisclosed sum. USA plans to change the call letters of its local station, and set up a new sports/entertainment theme anchored by the Mavericks games.

When that deal expires in three years, Belo, which owns 17 television stations, will be in a good position should it choose to go after the broadcasting rights. Harold Gaar, Belo's vice president for financial and investor relations, says that was one of the appeals of investing in the team. "Quite simply, we see it as an opportunity to initiate a relationship with a major sports franchise," he says. "It's an opportunity to get to know them as minority owners."

Evans, the media ethicist at Southern Methodist University, says worries about a conflict of interest between media companies and the sports teams they own may be generational. Unlike newsroom veterans, today's young journalism students seem less concerned about the commingling of news, sports and entertainment, perhaps because they grew up in an era dominated by large corporations. They seem to have a general understanding that companies need to worry about investments such as broadcasting rights in order to keep news operations in the black.

"They seem to accept more of a business sense," Evans says of his students. "There is not this same [outrage]."

Questions about sports ownership are minor concerns compared to other conflict-of-interest issues journalists should be worrying about, says Craig, the Pittsburgh Post-Gazette editor. "Nobody bats an eye about the extraordinary relationship the newspaper has with advertisers," Craig says. "The big thing about this [team ownership] is it's very new...and sports is so controversial now, at least the business part of it."

Back in Dallas, Belo Corp. executive Gaar agrees. Frankly, he says, he doesn't understand all the fuss over owning part of a basketball team.

"They are healthy questions," Gaar says. "But media companies of all sorts face conflict of interest every day." Every television station has owners who will, inevitably, be in the news sometimes. More worrisome are advertisers, many of which are covered daily. In addition, every major city in America has radio and television stations that have a financial interest in how their sports teams perform because the broadcasters own rights to air the games, Gaar says. The better the team fares, the higher the ratings, the more advertisers and the more money the stations make.

Yet it seems to be the intimate relationship between newspapers and sports teams that raises most of the public's and journalists' ire. "This seems to become a lightning rod," Gaar says.

Belo will take the controversy over the purchase of shares in the Mavericks, its first venture outside of traditional media, as a lesson, he adds. The company has no plans to purchase stakes in other teams, but the company will not be scared away from sports or any other area as an investment because of concerns in the newsroom.

"I think the challenge that we have is to make sure we truly are objective," Gaar says. "It's a challenge, but I think it's one we're up to."

But some would say it's an unnecessary challenge.

Former Chicago Tribune Editor Jim Squires says he feels his staff did well providing balanced coverage of the Cubs. But he's bothered by the idea that other media companies buying into sports teams are looking to the Tribune Co. and saying, "If the Trib can do it, so can we."

"That does not remove the conflict of interest," Squires says. "Just because somebody does it and does it successfully doesn't mean it's right."