Shareholders and Newspapers Don't Mix

I have no idea if Sam Zell will be a "good" owner of the Tribune Company. CJR Daily ran a lengthy article by its new editor, who seems to know Zell, and couldn't figure it out either. The only clearly "good" aspect is that the Tribune Company will no longer be publicly held. Hallelujah!

Public ownership has been an unmitigated disaster for newspapers, for the simple reason that much of what newspapers do has no clear investment rationale. Indeed, much of it -- such as foreign bureaus and investigative reporting--is antithetical to profitability.

Jim Cramer pointed out yesterday, referring to newspapers, that "These are diminishing assets. They don't need to exist. Younger people rarely read them." Precisely, my dear Watson. Viewed from a shareholder perspective, the newspaper business has no reason to exist.

That is why the shareholder perspective needs to be eliminated from the newspaper business. The shareholders, not the newspapers, are the ones that should disappear.

A free press has a purpose in society. Shareholders, bless their souls, deserve to make money in a wholesome environment (as I've advocated for twenty-some years) but should stay the heck out of the news business.

Columbia Journalism Review put the case against public ownership mildly in a recent editorial:

Public ownership of newspapers no longer makes the kind of sense it made when the industry was rapidly shedding labor costs thanks to new technology, and when the money that stockholders poured in was invested partly in editorial. Today newspapers need owners with the patience and the guts to ride through this valley of transition, with its attendant economic uncertainty, and find the next high ground, which will probably have something to do with the Internet.

I'd say it never made sense.

This is not to say that newspapers don't benefit from infusions of capital and fresh ownership at the top.

The Hartford Courant is undoubtedly a better paper now than it was when I worked there in the 1970s, before it came under Times Mirror (now Tribune Company) ownership. But the same cannot be said for smaller papers in Connecticut like the Norwich Bulletin, which were decimated after being bought by the Gannett chain.

In southeastern Connecticut, the New London Day remains the best paper in the region--largely, I think, because it is owned by people who don't have to answer to shareholders.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
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