February 11, 2012

Newspaper’s citizen-investor walks a fine line

Can a donor with such prominent political ties make it work? He can if the journalism – done ‘without fear or favor’ – comes first, experts say.

By Tux Turkel tturkel@pressherald.com
Staff Writer

(Continued from page 2)

"Absent a benevolent owner who's willing to live with lower profit margins, ownership looks very bad for journalism," McBride said.

But some well-off business people seem willing to value newspapers based on their role in the community, not just on a balance sheet. Two recent examples come to mind for McBride.

One was last year's purchase of the Omaha World-Herald by Warren Buffett, the billionaire chief executive of Berkshire Hathaway. Buffett's purchase of his hometown daily ensured it would stay locally owned and editorially independent, according to the company.

Last week, former Pennsylvania Gov. Ed Rendell and Ed Snider, owner of the Philadelphia Flyers, announced that they were leading a "civic-minded" effort to buy The Philadelphia Inquirer and the Philadelphia Daily News.

The announcement followed news that two hedge funds that had purchased the company at a bankruptcy auction in 2010 want to sell it. Rendell said the business people in his investor group are "civic-minded people who believe we should have healthy, strong newspapers," according to The Associated Press.

American newspapers grew in the 19th and 20th centuries largely through private, family ownership with strong business and political ties. That was the basis of the three daily newspapers in MaineToday Media that were part of the Guy Gannett Publishing Co., which was founded by Guy P. Gannett in 1921 and managed as a family trust from 1954 until 1998.

The prevalence of politically disinterested, corporate ownership of newspapers became common only over the past 30 years, said Alan Mutter, a veteran journalist and Internet entrepreneur who writes the blog "Reflections of a Newsosaur." Nationally, newspaper revenues peaked in 2005, Mutter said, when before-tax profit margins of 30 percent were common. Today, margins have fallen by half.

"Newspapers are no longer interesting to financial buyers," he said.

SAFEGUARDING CREDIBILITY

But they remain coveted by some as a source of influence, and at least one recent purchase is proving controversial.

Late last year, a California hotel owner and real estate developer, Douglas Manchester, bought the San Diego Union-Tribune and said he wouldn't be shy about being a "cheerleader" for projects he favored. He followed through last month in the renamed U-T San Diego, with a large, front-page editorial supporting a waterfront redevelopment in which Manchester has a financial interest, including a new sports stadium.

Manchester has strong political leanings and an interest in social issues. He was a major contributor to Proposition 8, the California law that banned same-sex marriages and was overturned this week by a federal appeals court.

Sussman, by contrast, was a big donor to the failed effort to make same-sex marriage legal in Maine in 2010. He also gave money to political action committees that supported pro-environmental candidates for state offices and opposed adoption of Maine's Taxpayer Bill of Rights.

Such high-profile advocacy -- if linked to a newspaper -- can do damage over time, in Mutter's view.

"At the end of the day, what a newspaper has to sell is its credibility," he said.

Closely held newspapers have long struggled with the issue, sometimes in subtle ways, said Mike Hoyt, executive editor of the Columbia Journalism Review.

Readers have long questioned whether a big car dealer, for instance, who rubs elbows with the newspaper owner at the local country club gets special treatment when it comes to news coverage. A controversial owner must assure readers, perhaps in a published letter, that the newsroom is independent of such influence, Hoyt said.

Owners who want to foster credibility should make a public pledge to do community journalism "without fear or favor," as the founder of The New York Times wrote a century ago, according to Ken Doctor, a California media analyst who writes about the future of news on his Newsonomics.com website. One way to do that, Doctor said, is to appoint an independent ombudsman who can act as a contact point for the community.

The financial reality for newspaper ownership today, Doctor said, is that newspapers must operate like art institutions, schools and other public trusts to carry out high-level journalism. Buyers may be able to make money in time, but they will have to subsidize the operation for several years.

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

tturkel@mainetoday.com

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