Tuesday, March 11, 2014
The investment in MaineToday Media by wealthy businessman and philanthropist S. Donald Sussman reflects a small but emerging trend of buyers and investors who are looking at newspapers as more of a civic enterprise than a money-making opportunity, national media experts say.
In a way, they say, it's a back-to-the-future take on the tradition of American newspapers being owned by wealthy families or community leaders with local political and business connections.
But to signal a modern commitment to journalistic integrity, the experts say, owners must make it clear that their influence doesn't extend to the news pages.
"They should hire good editors and then get out of the way," said Kelly McBride, a senior faculty member who teaches media ethics at The Poynter Institute, the nonprofit journalism center in St. Petersburg, Fla.
McBride's comments followed news that MaineToday Media will receive a multimillion-dollar loan that will enable it to pay down debt and fund an ambitious growth plan aimed at restoring its role as the state's leading news source.
The company announced Friday that it has reached terms with Maine Values LLC that include the loan, valued at $3 million to $4 million.
Maine Values is owned by Sussman, a wealthy financier who is one of the state's leading philanthropists and political donors. Sussman, who is the husband of U.S. Rep. Chellie Pingree, D-Maine, will not control the media company. He will own a 5 percent equity stake and have a seat on the board of directors.
MaineToday Media owns and operates The Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal of Augusta, the Morning Sentinel of Waterville and the Coastal Journal of Bath, as well as digital properties including mainetoday.com, Maine Jobs and Raising Maine.
In an interview, Sussman stressed that he won't be involved in the daily operations of the newspapers or in matters of hiring and news coverage. He said he was motivated to invest in the company and loan it money after learning that the newspapers were at risk of closing. He said he considers newspapers essential to informing residents about government, schools and other activities.
"I do believe the community needs the newspaper," he said. "Transparency is the key to democracy. Without it, we can't have a democracy."
Cliff Schechtman, managing editor of the Press Herald/Telegram, said the newspaper's mission will not change but its ambitions will expand.
"We're committed to probing, unbiased journalism, and only the community will decide whether we're successful or not," Schechtman said.
Sussman was the top political donor in Maine in 2010, giving $1.3 million to Democratic and environmental causes. His largest donation that year was $390,000 to Equality Maine, which supports equal rights for gays and lesbians.
MAINE CONSERVATIVES REACT
Lance Dutson, chief executive officer of the Maine Heritage Policy Center, wished Sussman luck in the venture, saying it's great that in America, people can do what they want with their money. The conservative think tank runs an online political news website called The Maine Wire.
Dutson said he does not expect a significant change in editorial content.
"The paper's editorial content has appeared like it's owned by Chellie Pingree and Donald Sussman for years already," he said. "I don't know how it could possibly become more slanted toward them."
Dutson described the trend in news consumption as a kind of "Balkanization," with liberals and conservatives reading publications that align with their political views. Sussman's investment just cements what consumers have long known, that the Press Herald is a liberal newspaper, he said.
Charlie Webster, chairman of the Maine Republican Party, echoed Dutson's comments about free enterprise and said he hopes Sussman makes a profit.
Webster said he doesn't expect changes in the content of MaineToday Media newspapers, which he called among the most liberal in the state.
"With his investment, it's not likely to move to the center, which is something a lot of us would like to see," he said.
The relationship between Pingree and Sussman became an issue among Republican opponents during Pingree's 2010 re-election campaign, when it emerged that she was flying between Maine and Washington, D.C., aboard a private jet owned by Sussman. The U.S. House ethics committee ruled that the flights were allowed because she was Sussman's fiancee.
Sussman has been criticized by Republicans for spending much of his time at a house he owns on St. John in the Virgin Islands, where he was able to avoid paying a portion of his federal taxes. He became a Maine resident in 2009.
"I pay taxes here, a lot of them," Sussman said.
He also dismissed continuing criticism from Republicans that he's being investigated by the Securities and Exchange Commission. Sussman said those charges stem from a fine in the 1990s involving the practices of an auditor for Paloma Partners, a hedge fund that Sussman founded, and was settled with a $20,000 consent order.
"Only because I married Chellie are people interested in me," he said.
'THIS IS SUCH AN OBVIOUS ISSUE'
Sussman's marital situation is a legitimate interest, said McBride at The Poynter Institute, because Sussman's link to a powerful person and the public perception of that connection matters.
"The fact that he's married to a U.S. congresswoman is just as much of a concern as if he was married to the largest employer in town," she said.
The perception that Sussman could use his position to influence the newspaper's journalism was acknowledged, but downplayed, by Portland Mayor Michael Brennan, a Democrat.
He noted that Robert Baldacci, brother of former Democratic Gov. John Baldacci, had close personal ties to the newspaper's previous top management.
"This is such an obvious issue," Brennan said. "I'm sure Donald Sussman is going to understand the sensitivities, and will take steps to put a firewall between himself and the newspaper."
Tom Bell, president of The Newspaper Guild, the largest union within MaineToday Media, said people will have legitimate questions about whether the newspaper can be trusted as an unbiased source of political news.
"We have been assured by Sussman that he won't interfere with our work," Bell said. "The Guild is determined to protect the independence and professionalism of the newsroom. We are confident we can be successful."
Sussman, who is 65, has given millions of dollars to charitable and civic institutions in Maine. They range from the Deer Isle Fireman's Association and the Good Shepherd Food Bank to the Island Institute and the Preble Street Resource Center. He was named the Spurwink Humanitarian of the Year in 2011. He also received a Maine Philanthropy Award last year at Colby College.
Sussman said he views his investment in a similar light.
"It's my intention to make sure the newspaper has the resources to do what it needs to do and serve the community," he said.
EVOLVING NEWSPAPER OWNERSHIP
The prolonged economic downturn, falling print readership and a shift in advertising to the Internet and social media have made it difficult for newspaper owners to maintain enough staffing to practice quality journalism while earning double-digit profits. The continued grim outlook has forced some corporate owners and disillusioned investors to put unprofitable properties on the market.
"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.
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: