Business of News: Taking New Stock

Straight out of college I went to work for a newspaper. When I retired, I realized I had been working on Wall Street most the time.

Somewhere in that paragraph is the nugget of a Groucho Marx joke. Unfortunately, it describes the uncomfortable truth many of us realized before that day of the Gold Watch (or “exit package” as the Euphemism du Jour allows these days). Wall Street has ruled the fourth estate for four decades. Perhaps that is changing.

The latest version in the evolution of newspaper business models has individuals buying individual newspapers (see Jeff Bezos of The Washington Post, John Henry of the Boston Globe and so forth), and public companies separating broadcast and print companies into “pure-play” entities that perform in only one or the other field.

Newspaper companies continue to careen off corridor walls as they try one strategy after another. One should be sympathetic, but only to a point. For newspaper owners set their companies on this course four decades ago when they decided to play a quarter-to-quarter game on Wall Street.

Before proceeding further, let me acknowledge that there will be no whining for the “good old days.” Weepy nostalgia is a dangerous thing, and as a former sailor once told me, “There are only two good ships in the Navy: The last one you were on and the next one you are going to.”

In the days before newspapers belonged to stockholders, the stakes, rewards, systems and goals were different.

Newspapers owned by a family were more likely to hire a local publisher and editor. Those leaders possessed a genuine interest in what was best for the community. Furthermore, if the owner or its representative was invested in the local community, it follows that they would get to know the people they hired and have a sincere interest in their success. After all, it’s much harder to lay off someone when you’ve just said hello to their spouse and children at the company picnic.

Secondly, a local owner or family ownership, weathered a financial storm better than a public company; the owner could stand to make less money this year as long as better days were ahead. A publicly-owned company can earn no such forgiveness. I recall a corporate visitor telling us, “We’re no longer in a quarter-to-quarter business. We’re in a month-to-month business.”

Finally, just as a homeowner invests in his or her home because it is a long-term value, a local owner was more likely to invest in research and development (R&D) to sustain the business. A publicly-owned company— with earnings forecasts to meet—was less likely to spend on research and experimentation to learn what might ensure a more stable future.

To put it simply: A publicly-traded newspaper company existed to make money while a locally-owned company had a stake in making the community a better place to live.

But I promised not to wade deeply into the nostalgia ocean so let’s consider the future more optimistically if the new pure-play newspaper companies operate more like Bezos and Henry who, one hopes, will act like old-time newspaper owners.

Bezos invested and invested in Amazon until it became the leader in a global retail marketplace. Although critics like to knock its tiny profits, Amazon has a lead in market share that competitors are spending billions to narrow.

Henry took a franchise whose record for losing was legendary and he began to treat it like a community asset. Fenway built a record “sold out” streak and a national brand known for World Series champions. He invested, treated his athletes like people, and celebrated those who embraced New England, i.e. David Ortiz.

Like Henry and Bezos, many of the new pure-play companies have little debt—another key factor in the success of old family-owned newspaper companies.

You have to search to find optimism in the American newspaper industry these days; certainly, the “good old days” are gone. However, there is a market of consumers who still hunger for local information. If we consider utilizing technology to exploit that asset and mix it with some of the “good old days” philosophy, there is at least a chance for growth. And if I’m wrong, we can always beckon Groucho’s successful investment advice: “I made a killing on Wall Street. I shot my broker.”

Tim Gallagher is president of The 20/20 Network, a public relations and strategic communications firm. He is a former Pulitzer Prize-winning editor and publisher at The Albuquerque Tribune and the Ventura County Star newspapers. Reach him at tim@the2020network.com.