Sam Zell (AP Photo)
Memo to Sam Zell: Keep in mind that your main product is news
COMMENTARY | April 03, 2007
Gilbert Cranberg and Randall Bezanson offer a reminder to the billionaire who has just bought into the Tribune Corp. that newspapers are unlike other businesses.
By Gilbert Cranberg and Randall Bezanson
Congratulations on your entry into the newspaper business. Without question, it is a business, though a different kind of one. Unlike your other investments, newspapers are a public service as important to the communities where they are published as public transit and libraries. For good reason, they have been described as a public trust.
So while you have bought into a business, it cannot be managed with your eyes fixed on the bottom line without doing damage to the public service side of the enterprise. Our advice is that you rip up your calendars and quit paying attention to short-term results. Just as many of your best employees are there for the long-term, the business is best managed with long-term goals in mind.
You must have noticed as you examined Tribune’s financials the outsized role of personnel; you invested in a labor-intensive business. That makes it tempting to cut costs by buyouts, attrition and layoffs. Resist the temptation. Gene Roberts, an icon in the newspaper business, once noted that he had heard of papers that improved with fewer employees but he has yet to see one, which is a warning that when you cut staff you compromise quality and risk antagonizing your most loyal customers.
Keep in mind that your main product is news. Readers take the newspaper because there is something worthwhile and interesting to learn. They don’t read it primarily because of the ads. And they don’t read it to learn of the shallower things they can get on radio and television. Your product is news in depth that is reliable and of high quality. Without that you will ultimately fail, for you will not have distinguished your product from all the other stuff that’s out there.
You must pay attention to readers. Your papers are blessed with readers who have good educations and incomes, which is why advertisers continue to do business with newspapers. Our advice is to give high priority to circulation. That means revamping incentives so that you and your executives are rewarded in substantial part for how many eyeballs they bring to your papers.
Speaking of incentives, scrap those over which employees have no control or influence. Bonuses to editors tied to financial performance of the company as a whole are futile and a waste of money. Do reward employees for hitting quality targets for service and content.
Price matters. Many in the newspaper business were sold on “aggressive pricing.” That meant aggressively raising the cost to readers. You should redefine aggressive pricing down. That would be good for readers and advertisers and the newspaper businesss generally. Not incidentally, it would be good for the health of U.S. democracy, which depends on an informed citizenry. Newspapers are a prime source of the in-depth news and information people can get from the papers you publish.
Don’t be greedy. You should take as your model the St. Petersburg (FL) Times, whose CEO says he worries when profits exceed 20 percent or drop below 10 percent. You should go him one better by willingly accepting less than 10 percent to avoid crippling the quality of your publications.
You must have noticed that newsprint costs are a big-ticket item. Avoid the temptation to trim them by printing less news. That way lies lost readers. Instead, ask your managers why so much space is devoted to huge graphics that do not add to understanding the text they are supposed to illustrate. You may be accused of meddling but since you will be paying large bills for newsprint, it’s a reasonable question.
You have no background in journalism. [Click here for a New York Times grouping of articles about Zell.] You should put outside directors who do on your board of directors. And because your expertise is business, not journalism, you should enlist people who know quality journalism when they see it. This will help you establish yardsticks to measure how well the papers you own meet the needs of the communities in which you now have such a huge stake. Who knows, Sam Zell might one day be known not just as a mega-billionaire but as the citizen who rescued the press from the doldrums.
Gilbert Cranberg and Randall Bezanson are co-authors with John Soloski of “Taking Stock: Journalism and the Publicly Traded Newspaper Company.”