The Pitfalls and Perils of Dancing to Wall Street’s Tune

Finally, a backlash against all of the one-trick ponies occupying executive suites at media companies has begun to emerge.

It’s been a dreary exercise lately, reading Jim Romenesko’s collection of media industry news on Some days, it has become little more than a parade of memos from copycat newspaper publishers who, faced for the first time in their lives with an actual problem to solve (falling circulation, falling ad revenue, falling readership) seem to have no management tool whatsoever in their arsenals other than cost cuts.

It is, on its face, a bizarre strategy, one which would not pass muster in any Business Management 101 course: Our product is failing the marketplace test; let’s trim back even more on what we offer the public. Or, maybe, just maybe, we could roll the dice, innovate and spend more money producing something new, different and better. Ehhh. Silly thought. Ignore it.

Finally, though, a backlash against all of these one-trick ponies occupying publishing suites has begun to emerge. First, press critic Jay Rosen suggested that Knight-Ridder, which is on the block, make an announcement that instead of selling itself to another big company, it would launch a pro-active plan to sell off its component parts to individual buyers. Under Rosen’s suggestion, KR would sell all 32 newspapers it owns to local buyers (presumably local buyers with a civic conscience) who would pay a premium for the opportunity to own the local daily. If no such buyers are found, so be it. Rosen calls it “the Main Street Strategy” to distinguish it from a “Wall Street” strategy.

And, as we noted earlier, a group of Knight Ridder alumni — many of them distinguished editors themselves — published an open letter also calling for something other than a traditional block sale of the company’s newspapers to whomever offers the highest price.

In recent days, other voices have joined this chorus. John McManus, of put it this way:

“It’s come to this: A single wealthy investor [Bruce Sherman of Private Capital Management, which first urged a Knight Ridder sale] is able to threaten the civic vitality of 32 American metropolitan areas by forcing the sale of their newspapers to new owners in order to satisfy his demand for larger profits. Because those higher returns almost certainly will come at the expense of investigative reporting, independence from advertisers and adequately staffed and skilled newsrooms, the readers of Knight Ridder newspapers ought to rise up in opposition to the planned sale or dismemberment of the company.

“After a decade of shrinking its news staffs, the nation’s second-largest newspaper company no longer commands the respect it earned winning 84 Pulitzer Prizes in 79 years. But papers such as the Philadelphia Inquirer, Miami Herald, Charlotte Observer, Fort Worth Star-Telegram, Kansas City Star, St. Paul Pioneer Press and San Jose Mercury News are still too essential to the civic life of their cities to be auctioned off like so many pork bellies.”

McManus suggests that “[r]eaders dismayed at the prospect of denatured local news should write letters to Mr. Sherman promising a boycott of the new owners of their paper — if they fire journalists or slash their compensation in order to meet PCM’s price.” He notes that, “using the power of the Internet, journalists, educators, community and government leaders, and citizens who recognize that newspapers form the spinal cord of participatory government now have the power to generate a massive protest” and presumably scare away any potential buyer of Knight Ridder who has further cost cuts and degradation of the product in mind.

McManus has working for him little more than the power of his own rhetoric, but late last week,, best known for campaigning for lefty political causes, and for its formidable ability to mobilize both people and money, joined the fray.

The organization launched an online petition drive to protest job reductions at the Los Angeles Times and three other Tribune Co. newspapers — reductions that threaten the papers’ ability to deliver “strong watchdog journalism.”

On Friday, a little more than 24 hours into their Internet campaign, MoveOn organizers said they had collected 17,125 signatures to protest cuts that this week reduced the Times’ newsroom staff by 8 percent, or 85 positions. The group also said it had gathered a total of 10,360 signatures objecting to cuts at the Chicago Tribune, Baltimore Sun and Orlando Sentinel.

Of the various suggestions to thwart the further dismemberment of functioning, healthy newspapers that play a vital role in their own communities, some variation on McManus’ proposal, or MoveOn’s petitions, may hold the most promise.

Here’s why. Not so long ago there was a notion floating around the world of journalism that a newspaper, with its First Amendment protection, had an intrinsic obligation to serve four constituencies: shareholders, customers, community and employees.

That proposition now seems quaint and outdated. Publicly owned newspapers have become captive to Wall Street, where the only thing that matters is how your profits, as a percentage of revenues, measure up against the competition. (Clue: Twenty percent is considered a lot better than ten percent; thirty percent is nirvana, and rest assured, editors and publishers who do whatever it takes to get there will be amply rewarded for life.)

That’s one reason that companies like Knight Ridder have for some years been more than happy to ignore employee protests — including those of key editors — to the gutting of the core product.

But it’s one thing for companies to ignore employee protests. It’s another thing entirely for companies — even companies beholden to Wall Street — to ignore customer protests. Generally, when customers disappear, entire corporations follow suit. That’s the bet that MoveOn is making.

It may not work, but it’s a bold gambit, and this is a time for the sort of boldness not lately demonstrated in the executive suites of major newspaper chains.

Meantime, Jeff Jacobs, sports columnist for the Hartford Courant, which lost three talented sportswriters in Tribune Co.’s latest round of personnel cuts, brings us this poignant reminder of the current state of affairs.

Jacobs notes that Tribune Co., which also owns the Chicago Cubs, offered shortstop Rafael Furcal a $50 million free agent contract last week, and he did some math. “Furcal’s deal,” he informed Courant readers, “would cover our sports department payroll for the next 25 years.”

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Steve Lovelady was editor of CJR Daily.