The undeniable advantages of the Poynter model naturally raise the question of how applicable it is to other large newspapers, particularly those that remain under individual or family control. On that point, it should first be noted that Nelson Poynter’s vision for the Times was not without its challengers. In the 1950s, in an effort to placate his sister Eleanor’s bruised feelings about his discounted purchase of the Times from their father, Poynter sold her a small stake in the company plus 40 percent of the voting stock. This deal included a key proviso: Poynter could buy back her stock at a fair price. But despite several attempts, he never managed to do so—and after Eleanor’s death in 1987, her daughters asked the paper to buy out their position in the company for $120 million.
The Times management declined the deal. In response, the daughters teamed up with Texas billionaire Robert Bass to try to force a sale of the entire paper. When those negotiations went nowhere, Bass upped the ante, offering to buy out all the company’s shares himself for $270 million, arguing that the proceeds from the sale would create a much more generous endowment for the Poynter Institute than the revenue stream from the publishing operation. This deal, too, was rejected, at which point Bass sued, claiming that the paper’s management was violating its fiduciary duty to the shareholders by rejecting his offer.
The case was ultimately settled out of court, and Bass withdrew his threat. Yet he had made a point relevant to anyone thinking of recreating the Poynter experiment elsewhere: the Times is a paper where all the financial decisions are made by someone with no direct economic stake in its success. “No one is like that,” quipped one Bass ally at the time of the takeover fight, “but the St. Pete Times and Pravda.”
The paper’s unusual capital structure has also drawn its share of skeptics. Yale University, which had been designated to receive Poynter’s shares if the original arrangement failed to pass legal muster, commissioned a “study” shortly after the Bass suit to determine whether it should challenge the institute’s tax-exempt status. The university’s gambit was led by noted First Amendment lawyer Floyd Abrams, who argued that the Poynter Institute was not organized exclusively for charitable purposes, as the law required. Though Yale ultimately chose not to pursue the issue, the Internal Revenue Service also conducted a multiyear review of the paper’s structure, which it eventually blessed.
The various challenges revealed some of the potential pitfalls of placing a newspaper under nonprofit control, and may in part explain why it hasn’t been tried more often. There are, to be sure, some other notable examples. The Loeb family donated its controlling interest in the New Hampshire Union Leader to the Nackey S. Loeb School of Communications (which was modeled after Poynter) in 2000. There is also The Day, in New London, Connecticut, which was placed in a trust that has survived two court challenges. More recently, The Anniston Star in Alabama also adopted the Poynter model. Brandt Ayers, whose family has owned the Star for almost a century, created his own institute at the University of Alabama, which runs an additional newspaper as a teaching vehicle. Ayers estimates that the Star’s parent company, Consolidated Publishing, will generate about a million dollars a year in dividends to fund the Ayers Institute.
Of course, all these examples (with the possible exception of the St. Pete Times) involve small private papers. Does the Poynter model have anything to offer America’s national papers of record? Maybe, but you’d have to clear a big hurdle first.
The most basic issue in replicating the Poynter model is that ownership must be willing to give the paper away. While donating such an asset to a nonprofit can help ease the burden of estate taxes, it still requires a willingness to give up a good deal of wealth, as well as notions of dynastic control.