Jay Harris brought editors to their feet at the annual meeting of the American Society of Newspaper Editors in April with an on-target attack on the profit pressures that make so many of their professional lives miserable. The question now is whether journalists will back the applause with action.
“Prescient Words Delivered a Decade Ago”
– Geneva OverholserHarris quit as publisher of Knight Ridder’s San Jose Mercury News to protest company orders for bigger margins. Geneva Overholser’s “experience as editor of The Des Moines Register a decade or so earlier illustrates the limits (and perils) of plain talk to influence policies that produce the orders. At a 1990 meeting of Gannett bigwigs, who had just honored her as Gannett’s Editor of the Year, Overholser spoke boldly of her journalistic vision. The Register recently had won for Gannett an all-too-rare Pulitzer (for public service). Nevertheless, Overholser’s plea, as pertinent now as it was then, went over like the proverbial lead balloon. Overholser, for personal and professional reasons, left Gannett five years later. The company’s newspapers have pretty much shunned her nationally syndicated column.
Randall Bezanson, John Soloski and I interviewed many newspaper editors for our recently published book, “Taking Stock: Journalism and the Publicly Traded Newspaper Company” (Iowa State University Press) and found them, by and large, not to be happy campers. “I have a fantasy,” one told us, “that I win the lottery, buy the paper, and reduce the profit margin. I need a bigger newshole.” Another bridled at the “micro-managing bunch” at headquarters who put him through “agony.” It would be surprising if very many of these and other working journalists, who voiced their frustrations to us on condition that they not be identified, publicly bite the hands that feed them—at times very well.
Overwhelmingly, editors told us they never think about stockholders: Their constituents, first and foremost, are readers. Editors know the needs of their papers and know how best to serve readers. Since knowledge is power, they are in key positions to shape the future of newspapers. Despite obstacles to activism, there are effective ways for editors and other journalists to work for change, individually and collectively, without putting their heads on a chopping block.
The focus of “Taking Stock” is the publicly traded segment of the newspaper industry. By both reach and influence, the companies are a major and important part of the journalism business, accounting for more than 40 percent of daily and about half of Sunday circulation. What sets the segment apart, of course, is that stock in the companies is a market commodity, traded mostly by large institutional investors. Thus, this “different kind of business” is evaluated and treated in the marketplace the same as any other enterprise, and it behaves, for the most part, accordingly. A number of our recommendations, therefore, are peculiar to publicly traded companies but many are applicable to the press generally.
We found this “different business” actually to be little different in the way it is governed than other non-newspaper corporations. While journalism is at the heart of the publicly traded newspaper enterprise, seldom do people with journalism backgrounds serve as corporate directors. Thus, rarely is anyone acquainted with newspapers a member of the board’s compensation committee, the panel with critically important responsibility for the incentives for management that denote the values of a company. And these values are what drives corporate decision-making. If quality of news presentation, for instance, is a goal, then salaries, bonuses and stock options should be awarded in significant part on achieving certain measurable quality-related goals, such as non-advertorial newshole or training. Instead, we found that the incentives in place are so top-heavy with rewards for achieving financial goals that “it is possible to study a [compensation] committee report of how top managers are rewarded and not realize that the enterprise discussed is engaged in journalism.”
A noteworthy exception is the McClatchy Company, in which four of the company’s nine outside directors have worked as journalists and one of them, veteran editor Larry Jinks, serves on the compensation committee. At McClatchy, compensation rewards individual achievement and company performance, which is measured by financial results as well as other criteria. These include “growth in circulation, product excellence and market acceptance, sound strategic planning, development of new products and services, and community involvement and good corporate citizenship.”
Even if they are inclined to speak out like Harris and Overholser did, individual editors can have little influence on needed structural changes in corporate governance. Not so with organizations that represent journalists. The American Society of Newspaper Editors (ASNE), for one, founded “to work collectively for the solution of common problems,” has among its missions “helping editors maintain the highest standards of quality.” Few decisions have a more direct bearing on newspaper quality than the choice of policymakers for newspaper company boards of directors and the compensation policies they adopt.
ASNE and other journalism groups that usually concern themselves with nuts and bolts journalism issues need to act on a cardinal reality: What goes on in boardrooms directly impacts newsrooms. They should, therefore, scrutinize the composition of the boards of newspaper companies and campaign for journalists to be placed on the boards as outside directors and also as members of compensation committees. Similarly, compensation committee reports, now buried in proxy statements, should be publicized by journalism organizations and by the trade press.
The incentives adopted for upper management too often are carried over to the newsroom. Almost all the editors we interviewed receive bonuses, many of them sizable, and they often are tied at least in part to financial yardsticks, such as meeting profit targets or staying under budget. The bonuses of only a tiny minority of editors were geared to strictly editorial objectives. Many editors have a voice in shaping the criteria for their bonuses. That gives them the opportunity to make a strong pitch for bonuses related to achieving journalistic goals. Inasmuch as many editors told us that they regarded circulation to be an important measure of their paper’s quality, we concluded that circulation is properly such a goal—as it also should be, but seldom is, for CEO’s and other higher-ups.
About three-fourths of the editors we spoke with received stock options. Editors who make their views known on compensation should say thanks, but no thanks, to the options. Stock options are intended to align the interests of recipients with those of stockholders, thereby to encourage measures to boost profits, hence the stock price. Editors have no or negligible influence on stock prices, and if they attempted to they could be brought into conflict with their obligations to readers. For instance, ASNE’s Statement of Principles (“The primary purpose of gathering and distributing news and opinion is to serve the general welfare by informing the people and enabling them to make judgments on the issues of the time. Newspapermen and women who abuse the power of their professional role for selfish motives or unworthy purposes are faithless to that public trust.”) can be understood to frown on stock options; ASNE and other journalism groups ought to object to them on principle as inappropriate for news personnel.
For better or worse, editors nowadays do not just attend news meetings. Often, as members of their paper’s operating committee, they have a place at the table that deals with company-wide issues. Therefore, they have a voice that ought to be heard on the subject of audience segmentation. “Taking Stock” chronicles how the pressure for profits has led newspapers to focus on the affluent readers most desired by advertisers. The consequences are zoned editions—news coverage and marketing targeted at the well-heeled to the neglect of the inner city.
Journalism groups have been aggressive in urging employment by newspapers of minorities, but entirely too passive about the short-changing of the less affluent in coverage by refusals to deliver to public housing and by such marketing practices as denial of discounts in low-income areas. These and similar strategies amount to a form of redlining. Journalism organizations, not least those representing minority journalists, ought to be critiquing newspaper circulation and readership practices and encouraging editors to use their clout to advocate for service to the whole community.
“Taking Stock” makes a variety of other recommendations, many of which would be altogether appropriate for organizations of journalists to advance. Some recommended steps, such as those concerned with corporate boards and compensation, would take old-line journalism groups into non-traditional territory. But in a journalism world awash with stock analysts fixated on financials, incentive packages, excessive profit goals, and pressure for short-term results, it would be myopic to remain mired in the status quo and not redefine what constitutes a “journalism issue.”
The publicly traded newspaper, which first came on the scene in 1963, is a recent phenomenon to which journalists, individually and collectively, are still learning to adapt. The decision by ASNE to give Jay Harris a forum, and the enthusiastic reception to his message, are signs of an evolution in thinking about journalism. The are evidence also of the relevance to editors of measures to reform the way journalism corporations perform. It remains now for groups like ASNE to update their agendas and take the next logical step by joining, if not leading, a reform movement.
Gilbert Cranberg, former editor of The Des Moines Register and The Des Moines Tribune editorial pages, retired in 1982 to teach journalism at the University of Iowa. He is the George H. Gallup Professor Emeritus at its School of Journalism and Mass Communication. Coauthors with Cranberg of “Taking Stock” are colleague Randall Bezanson, a professor at the College of Law, and John Soloski, former director of Iowa’s journalism school and now dean of the University of Georgia’s Henry W. Grady College of Journalism and Mass Communication.