The world has watched the courting of the Dow Jones (and WSJ) by R Murdoch. With the successful courtship, much has been written, and said, about it; many analyses, covering too the principles of media and vis-a-vis the ungenteel issue of profits. News, media are indeed businesses and have the bottomline to watch. Advertisements are key revenue-generaters, whether they be placements in print or online...
~Janadas Devan on newspapers and businesses (ST, Sat 4 Aug 07) ~
NEWSPAPERS are a strange business. They are a business whose chief employees, journalists, are invested in the notion that their business is not business.
Write stories so as to raise the newspaper's circulation so it can sell more ads so its stockholders are happy? Hell no! We journalists answer to a far higher and loftier calling.
It is 'to get the news, to publish it instantly, whether bull or bear', as the first issue of The Wall Street Journal put it in 1889. It is to be not only 'the gatherers of facts, but to set forth intelligence regarding those facts, ... give wisdom' as Clarence Barron, the founding patriarch of the Bancroft family that has controlled Dow Jones for more than a century, put it in 1928. It is to express fearlessly opinions that 'represent only the publication's own editorial philosophies', as the Dow Jones Code of Conduct declares.
Dow Jones' current owners and journalists sincerely believe all this. If they didn't, they would have accepted Mr Rupert Murdoch's offer to buy Dow Jones on April 17, the very day he made his bid. After all, he was offering US$60 (S$91) per share for the company, a premium of 67 per cent over its market price of US$36 a share. That meant the Bancroft's family stake, valued at US$750 million by the market, would be worth more than US$1 billion after taxes, according to The New York Times.
The stake was generating only US$20 million a year in dividends for the family, a return of just 2.6 per cent. By selling to Mr Murdoch, and investing the proceeds in US treasuries, they would earn at least US$50 million a year, more than doubling their income. If Dow Jones made widgets, there would have been no doubt as to what they should do. Where do we sign, the Bancrofts would have asked. But Dow Jones didn't make widgets. Thus the angst.
The Bancrofts finally decided to sell because newspapers are indeed a business. Journalists, when they write about journalism's problems, tend to ignore this, concentrating on 'the editorial side of the business, possibly because most people competent to write about journalism are not comfortable writing about finance', as Mr Russell Baker noted in an excellent piece in a recent issue of New York Review of Books. 'Still, it is on the ownership and management side that the gravest problems exist.'
A former New York Times columnist, Mr Baker defined those problems succinctly: Newspaper 'advertising and circulation are being drained away by the Internet', and newspaper 'owners seem stricken by a failure of the entrepreneurial imagination needed to prosper in the electronic age. Surveys showing that more and more young people get their news from television and computers breed a melancholy sense that the press is yesteryear's thing, a horse-drawn buggy on an eight-lane interstate'.
That even The Wall Street Journal is not immune has further fed that 'melancholy'. The Journal, after all, is the largest subscription newspaper in the United States, with a circulation of 2.1 million, almost double the Times' 1.1 million. Also, among major newspapers, the Journal has had a successful Web strategy. WSJ.com - which is subscription-based, unlike nytimes.com - has 980,000 paid subscribers. Between 1991 and this year, the Journal won 16 Pulitzer prizes, confirming its status as one of the best newspapers in the US. And yet, despite all this, its profit margins have remained thin since the bursting of the dot.com bubble in 2001. It is currently in the low single digits, compared to Mr Murdoch's News Corporation's 14 per cent in the nine months ending March 31.
Quality American newspapers were for long protected from the ravages of the market because they were owned by deep-pocketed families - the Chandlers (of the Los Angeles Times), the McCormicks (Chicago Tribune), the Ridders (Knight-Ridder newspapers), the Sulzbergers (New York Times), the Grahams (Washington Post) and the Bancrofts. The Chandlers, McCormicks and the Ridders have all left the scene; the Bancrofts joined them this week; and there are only two left - the Sulzbergers and the Grahams.
The current Graham at the Post - Mr Donald Graham - wrote an angry op-ed in April, warning that Wall Street's single-minded focus on maximising profits will kill journalism. It was an astonishing piece, considering that Mr Graham is a businessman himself, and presumably is as interested in profits as any other businessman. But for long years, his family, the Sulzbergers and the Bancrofts all saw their newspapers more as public trusts than businesses, and this vision provided the quality press with security. Or so journalists thought.
The families controlled their newspapers through a two-tier stock structure designed to give their stocks far greater voting power than common stocks. As the Journal's Cynthia Crossen noted, the thinking was, if the family stuck together, the newspapers 'would be invulnerable to hostile suitors'. The arrangements 'buffered the company from corporate raiders, but also gave its managers and directors a false sense of security'. Mr Murdoch's takeover of Dow Jones showed how false.
Journalists, on the whole, are aghast at the sale. Mr Murdoch has a reputation of being a meddler in the editorial policies of his newspapers. He has said he would be crazy to destroy the integrity of publications that he has paid US$5 billion to purchase, but few are inclined to take him on trust.
But what alternative is there? How long would it have been possible for Dow Jones to continue surviving as now, with its high-minded, low single-digit rates of return being protected from the market by one family? The hold of even the Sulzbergers over the Times is being threatened by a stockholder revolt, led by Morgan Stanley. How long would it be possible for any of the quality US press to survive the shift to the Internet without an imaginative response on their part?
Nobody knows what Mr Murdoch will do to the Journal editorially, but it is difficult to object to his business plans: Invest more in the newspaper's news-gathering capacities, expand circulation and, above all, invest in the Web and integrate print with digital and cable to provide news and analysis round-the-clock. As even the Journal's editorial page acknowledged: 'Business success is vital to editorial independence.'
Does this saga hold lessons for Singapore?
There are no Sulzbergers or Grahams in Singapore. But laws restricting the stock holdings of any one entity in media companies here function like Sulzbergers and Grahams do in the US to buffer Singapore Press Holdings and Media Corp from the ravages of the market. Thus, there can be no Murdochs in Singapore. But Murdoch or no Murdoch, Singapore newspapers will not be immune from the same forces that are roiling US papers. It is inevitable.
Legend has it that the last words Clarence Barron spoke before he died was to ask his secretary: 'What is the news?'
Legend does not record how she responded, but if she were alive today, she would say: 'The news, sir, is a business.'
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