Tribune Company CEO Dennis FitzSimons announced recently that a deal had been struck with Chandler family interests that frees the company to pursue alternatives “to further enhance shareholder value.” Additionally, FitzSimons said an independent committee had been created to oversee other steps, perhaps sale of papers and/or TV stations, or taking the company private, to create “additional value for shareholders.” Spoken like a true widget company executive.
In other words, it is investors uber alles. The readers and viewers and communities where Tribune properties operate will just have to take a back seat to the interests of shareholders. Just the way all other businesses operate.
Journalists are fond of saying that, while newspapers are a business, they are unlike other businesses that must turn a profit because they are a public service or public trust with a constitutionally-protected mission to inform the public. If that sounds quaint, it’s because newspaper corporations by and large turned their backs on the concept when, beginning in 1963, they went public. That fateful decision meant that newspaper company executives had to play by the same Wall Street rules as everybody else. Which also meant, among other things, stock options, fat salaries and bonuses for executives tied, as a rule, not to improved circulation and journalism but to meeting financial targets.
Newspaper companies then became indistinguishable from the widget makers, looking and acting the same as any other money-driven corporation. Read the proxy statement of a media company nowadays and you have a hard time realizing that the business being described is engaged in journalism.
A few years ago a couple of University of Iowa colleagues, Randall Bezanson and John Soloski, and I collaborated on a book about this development, “Taking Stock; Journalism and the Publicly Traded Newspaper Company.” One of my assignments for the book was to Interview most of the leading stock analysts who follow newspaper companies. For these analysts, the decision to go public has been highly lucrative personally. But when I asked if they thought the decision has been good or bad for journalism, they were nearly unanimous that it was harmful. The reason? It compels the companies to do all the things to cut costs that hurt quality.
The talk in the air nowadays is about undoing the mistake of having gone public by taking the companies private. In the book, we declined to recommend unscrambling the egg because, we said, private owners can be as greedy as public investors. We noted there were plenty of things publicly traded newspaper companies can do to improve both quality and the bottom line. Mainly, we said, they should look and behave like companies with a public-service mission instead of trying to imitate the widget makers.
That is exactly what the publisher and the editor of the Los Angeles Times attempted to do recently when they mutinied against corporate demands to dance to Wall Street’s tune. But they need help. Among the things that would help stiffen the spines of newspaper corporate directors would be legislation some states have that authorizes directors to do more than just parrot “shareholder value.” Or as we recommended:
“Legal changes should be effected to assure that directors of the companies are authorized to consider the journalistic quality of the newspapers and the needs of the communities served by them in making business decisions, including decisions about acquisition and sale of the company and any of its newspapers.”
We need more “other constituency” statutes — that is laws to protect directors from lawsuits if they take the same principled stand as Jeffrey Johnson, the L.A. Times publisher, and Dean Baquet, its editor, in behalf of readers, communities and employees. Let’s now call them Johnson-Baquet laws in honor of the guys who put their jobs at risk in the service of their constituents. Indeed, Johnson was canned last week when Tribune editors lowered the boom.