Such generosity is hardly unheard of. Just recently, billionaire hotel magnate Barron Hilton announced that he would donate essentially his entire fortune to a nonprofit foundation, and others with high net worth, such as Bill Gates and Warren Buffett, have expressed similar intentions. George Rahdert, a St. Petersburg attorney who advised the Times in its fight with Robert Bass, says that several wealthy individuals who own or have interest in purchasing newspapers (such as billionaire Eli Broad, who explored the possibility of buying the Los Angeles Times) have sought his counsel on how to replicate the Poynter model. According to Rahdert, though, most balk at the prospect of giving away a substantial chunk of their wealth. And while money men such as Sam Zell and Brian Tierney have taken formerly public newspapers private in the last two years, the billions in debt incurred in making those deals, combined with declining advertising revenues, mean that any proposal to transfer ownership to a nonprofit institute would likely draw strong opposition from the bondholders, bankers, and fellow investors who helped finance the deal in the first place.
The situation is even more complicated for newspapers such as The Washington Post and The New York Times, which are family-controlled but publicly traded. Both papers have dual classes of stock: multiple-voting shares are tightly controlled by family members, while conventional shares are traded on the open market. This insulates the papers from unsolicited takeover attempts (though not totally, as the Bancroft family demonstrated during Rupert Murdoch’s successful bid for The Wall Street Journal). But the structure also makes it more problematic to transfer control to a nonprofit entity than it would be for a private owner. Theoretically, the voting shares could be placed in a nonprofit, while the nonvoting shares remained publicly traded. But as the Poynter Institute’s feud with Robert Bass shows, even one disgruntled shareholder would have standing to challenge the structure in court—and given the anemic performance of most newspaper stocks in the last few years, would probably have little hesitation in doing so.
“The common stock holders would clearly have an argument that this type of arrangement constrains potential returns and the marketability of the company,” notes George Rahdert. The process might be more feasible, he adds, if the Sulzbergers or Grahams first decided to take their companies private, trading debt for equity. If the deal promised “periodic payments to debt holders with no expectation of equity participation,” it just might work. But even then, concedes Rahdert, bondholders could argue that nonprofit ownership potentially endangers their payments and move to block the arrangement.
I asked Frank Blethen, whose family has controlled The Seattle Times for five generations, if we might see the Poynter experiment repeated on a larger scale. His answer was an unequivocal no. “It’s a pleasant campfire tale,” Blethen said. “But the key point why you won’t see it again…is that you have to give up most of the value in the organization, and it’s very rare for a family to do that.” Blethen thinks a more practical solution is legislation and incentives that encourage a variety of media-ownership models. “On a local and regional level, independent newspapers are still a nice business, with eight, ten, twelve percent returns. It’s the big public ownership model that’s falling apart.”
This was the very train wreck foreseen by Nelson Poynter, who died three decades ago. If his legacy to journalism is no more than having provided a viable example of nonprofit newspaper ownership, as well as a living reminder that at least some newspaper owners see their publications as more public trust than cash cow, then that’s surely enough. As Paul Tash put it, channeling the spirit of his benefactor: “Every community deserves a newspaper that loves it best.”