News and Profits
Jay T. Harris resigned March 19 as publisher of the San Jose Mercury News, saying he was unwilling to make staff cuts necessary to meet the profit goals of Knight Ridder, the paper's parent company, in the current weakening economy. (Newspaper analyst John Morton estimates that the Mercury News earned a profit of better than 30 percent of sales last year.) On April 26, Dow Jones quoted Knight Ridder executives as saying they had been told they would receive bonuses for cutting staff--as much as twice their salaries, according to one official. Knight Ridder said the story is untrue. Shortly after resigning, Harris explained his action in a speech to the American Society of Newspaper Editors.
It was the conviction that newspapers are a public trust that brought me to Knight Ridder in 1985. I understood then and understand even better today that a good newspaper and a good business go hand in hand. Indeed, without a good business it would be impossible for a newspaper to do good journalism over the long haul. But at some point one comes to ask, What is meant by a good business? What is good enough in terms of profitability and sustained year-to-year profit improvement? And how do you balance maintaining a strong business with your responsibilities as the steward of a public trust?
Most businesses can reduce expenses more or less proportionately with demand and revenue without doing irreparable damage to their core capabilities, their market position or their mission. But news and readers' interests do not contract with declining advertising. Nor does our responsibility to the public get smaller as revenue declines or newsprint becomes more expensive.
In the same way that hospitals are important to the health of individuals and communities, good newspapers are important to the health of our communities, our nation and our democracy. My argument today is that a freedom, a resource, so essential to our national democracy that it is protected in our Constitution, should not be managed primarily according to the demands of the market or the dictates of a handful of large shareholders.
Quality is not a matter of public versus private ownership--the issues are the same in both. There are publicly held newspapers where quality does not vary noticeably in good times or bad. There are others, and I would include Knight Ridder in this number, that publish very good newspapers, but the tension between quality and responsibility on the one hand and financial expectations on the other is constant, and the balance is tenuously maintained.
I thought the tension and its sources were captured clearly and succinctly in a recent segment on The NewsHour With Jim Lehrer during which correspondent Terrence Smith asked Lauren Rich Fine, a Merrill Lynch media analyst, "What profit margin does Wall Street expect from a newspaper, a publicly held newspaper company? If they average in the 20s, is that enough? What does it have to be?" To which Fine responded: "Well, it's never enough, of course. This is Wall Street we're talking about."
That is an honest and unabashed statement of what some of us see as the tyranny of the current situation. It matters not whether the source of that tyranny is the demand of analysts and major shareholders, the reaction of corporate executives to those demands or merely the demand of owners of privately held newspapers for an unreasonably high return.
The trend threatening newspapers' historic public service mission is clear--if we're willing to see it. And it can be challenged and reversed--if we're willing to speak out. Of course, many are unable, or unwilling, to see or speak the truth of the situation. One reason is that the high salaries many of our leaders receive, in newsrooms and business offices as well as corporate headquarters, have turned into golden handcuffs. And those handcuffs have morphed into blindfolds and gags as well.
But this muffle of good fortune has not produced absolute silence. Today, we hear a growing chorus of brave souls, inside and outside the industry, protesting vigorously--and an audible grumbling of discontent from within the ranks of journalists and readers alike.
So where do we go from here? I am hopeful and optimistic about the future of American newspapers--both as a business and as key contributors to the vitality of our democracy. I neither believe nor will I accept that the current trend can't be changed, that the proper balance can't be restored, that the unwise is somehow unavoidable or that a course that is inconsistent with our principles and values must be followed. I believe that if we are willing to speak the truth, willing to talk together and work together to determine what the proper balance is and how it can be restored, we can achieve that end. Here are a few thoughts on how this might be done:
§ The discussion needs to include all the stakeholders, not just publishers, editors, large shareholders and institutional investors. Journalists and employees from the business side need to be at the table as well. So do readers, scholars and a diverse group of community representatives.
§ One goal of the effort should be to develop a working definition of what being a good and faithful steward of the public trust requires of newspaper managers and newspaper owners.
§ The moral, social and business dimensions of the issue should be fully explored and given equal priority.
§ The discussion should build the case for a steady and reliable investment, insofar as prudent business allows, in news, circulation, research and promotion.
§ The case needs to be made that editors must seek equal access to the publisher's chair. Journalists cannot leave the helm to those who do not have a deep commitment to a newspaper's responsibilities to its readers and its community.
§ And finally, a way must be found to give the public a sense of "ownership" in its community's newspaper. It should hold the paper--its managers and owners--to reasonably high standards and accept nothing less.