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.