November 24, 2006
More on "The Two Publics": Are Rich Private Owners the Future of Journalism?

The newspaper industry continues to be in major flux, and changes are coming on a daily basis. I've dedicated quite a bit of writing here on the C3 blog over the past year to how convergence affects journalism. And a variety of new stories over the past week have further emphasized these changes.

First, Drake Bennett wrote a story here in The Boston Globe last Sunday called "Return of the Press Barons," looking at the continued consolidation of newspapers and what it is doing not just to the business of journalism but to the quality of the press. Newspaper are losing ads by the droves to the Internet and are losing subscribers every year, and the profits recouped from Internet versions of the papers are not coming close to making up the difference. And, in order to retain the profit margins expected by stockholders, the only answer has been to continually cut the staff and further damage the journalistic integrity of many of these papers.

Bennett's piece examines why, with many declaring the newspaper industry in crisis, now would be the time for "several high profile multimillionaires and billionaires" to start buying up papers. "Few of the suitors are speaking directly to reporters, and the resulting silence has seeded a storm of speculation around the sudden interest of these aspiring press barons," he wrote. "It is far from certain whether any of the bids will be successful, but they have turned heads at a time when the future of newspapers as we know them seems to be at stake."

And, echoing the sentiment from the question posed last month by the New York Times' Richard Siklos in which Siklos questioned whether journalism could serve two publics--Wall Street and its readers--Bennett writes:

In theory, an owner with the resources of a Jack Welch or a David Geffen could afford to forgo some earnings and pump more money back into his newspaper. He could take the sort of risks that publicly traded corporations, with their focus on quarterly earnings growth, would balk at -- the sort of risks that could allow a newspaper to adapt to a rapidly shifting economic and technological landscape [ . . . ] And yet, historically, private, local ownership has had its share of problems. Private owners, after all, are businessmen, and human beings. They tend to like making money and getting their way. And they're as displeased as the next person over unfavorable media coverage.

Last month, when covering the Times article, I wrote:

Because of the nature of short-term investments, no one wants these companies to undertake great experiments or to cut their profit margins under their watch. And so many newspapers are losing their chances to gain relevance, letting smaller businesses with a tighter focus on the Web and elsewhere chip away at the credibility these print institutions have built up over a number of years. [ . . . ] The thing about Wall Street is that investors are not afraid to jump ship when a company begins to fall, so that many are beginning to believe that the only way out is to switch to private investment by private investors not afraid to take risks to build these companies back up, with the possibility of going public again in the future.

Also, see the recent panels we had here at MIT in our Communication Forum asking "Will Newspapers Survive?"

This question of whether entrepreneurs will be the saviors of print journalism or will take them further from their objective goals is an intriguing one. And in the meantime, journalists everywhere are questioning how to define convergence and what convergence means for educating the next generation of journalists. More than that, perhaps, the question is how to develop an economically viable model for utilizing the benefits of convergence and user-generated content.

Bennett's story is another good piece to look at when thinking about the future of the newspaper industry.