Profit Pressures Over Time
A slightly different version of this article originally appeared in the Winter 2004 issue of the Newspaper Research Journal, titled "Good Journalism, Good Business." You can read the other articles by clicking on the links in the sidebar.
"Oh, you've just been working for Gannett too long," a jovially confident Gregory Favre, then editor of The Sacramento Bee, told a couple of editors anguishing over profit pressures at a conference outside Chicago in 1997. Four years later, Favre would be leading an initiative at The Poynter Institute focused in large part on the impact of those very pressures on journalism quality throughout America.
And, in quick proximity, a respected Knight Ridder publisher would quit over cost pressures,1 the president of the American Society of Newspaper Editors would make the issue the centerpiece of his convention speech,2 and Favre's former boss, the CEO of family-dominated McClatchy, would mull the virtues of remaining public versus taking the company private3 as a protection against Wall Street's unstinting imperatives.
No one was thinking any longer that only Gannett editors knew profit pressures. Thus has the erosion of American journalism's public service role due to increasing business pressures changed from rarely discussed hot-potato notion to conventional wisdom. It would be pondered at think tanks and industry conventions, within individual newsrooms and in trade publications, books and online discussions.
Against the background of a dozen years ago, this change looks dramatic indeed. As Gannett's "editor of the year" in 1990, I was invited to speak at the company's year-end meetings. Commending Gannett's pioneering move in launching USA Today, I made this suggestion: Here's my dream for the next risk-taking, history-making endeavor: Let Gannett show how corporate journalism can serve all its constituencies in hard times. As we sweat out the end of the ever-increasing quarterly earnings, as we necessarily attend to the needs and wishes of our shareholders and our advertisers, are we worrying enough about the other three? About our employees, our readers, and our communities?4
It was, after all, Gannett's indomitable CEO, Al Neuharth -- retired by the time of that speech -- who had made quarter-by-quarter profit "improvements" the goal for media companies across the nation. Certainly Gannett knew how to make it happen. When the company bought The Des Moines Register in 1985, the paper's profit before taxes was just under $6 million. Within a year, it was $11 million, then $17 million the next year. By the time I returned to the paper as editor in 1988, it was $20.5 million.
Yet, dramatic as these rapid gains were, their effects were clearly not to be discussed. After that 1990 speech, incredulous executives indignantly asked my publisher if he had approved my remarks in advance. And he, in turn, felt compelled to ask me (if somewhat sheepishly) to write a note to his corporate boss assuring him of my fundamental loyalties to the company.
Nonetheless, by the time of that speech, profit pressures were fast becoming a widespread challenge for editors. That very year, Gene Roberts left his job as executive editor of The Philadelphia Inquirer, a paper he had built into one of America's best. That marked the beginning of the wider journalism world's understanding that the once eminently admired Knight Ridder was doing its best to emulate Gannett's business successes.
By 1993, former Chicago Tribune editor Jim Squires had published "Read All About It! The Corporate Takeover of America's Newspapers," an early entrant in what would become a spate of books on the subjects. Wrote Squires:
During the last decade, the culture of the press has changed from that of an institution dedicated to the education of the public to that of its rival, television, which is dedicated to entertaining consumers for a profit. At the same time, the new corporate owners of the press have taken the responsibility for "news" content out of the hands of trained, experienced professional journalists whose goal was peer recognition for quality journalism, and put it into the hands of trained, experienced professional business managers whose goal is peer recognition for successful business management.5
Still, the conversation at that early moment remained muted. Roberts didn't talk openly about the pressures when he left the Inquirer. He didn't want to poison the well for the editors who would follow him, he told me in a phone call at the time. And Squires' book, though eagerly noted by many, was rejected by others as the product of infighting at the Tribune.
There was such powerful aversion to this conversation that even in 1997, at that Chicago conference where Favre was so confident that the problem was limited in scope, the topic came out only with great difficulty. The convener of that meeting, Oregonian editor Sandra Mims Rowe, wrote afterward:
The editors dissected the difficult, sticky, and often-avoided question of financial investment in newsrooms at some length, awkwardly at first, but ultimately with a passion and coherence that would surprise many in our newsrooms.6
Why was the topic so difficult? For one thing, journalists have long nursed an aversion to talking about the business side of their operations. This avoidance was part of the old "church/state wall," traditionally seen as protecting journalism from commercial pressures. Purity seemed best-served through an aversion of the eyes. Indeed, I talked to editors in the early '80s who did not know what their profit margins were. And those who did weren't talking.
Then there was the question of loyalty to (or sometimes fear of) the company. Communications companies are notoriously poor at communication, and the very news companies that press other businesses to reveal internal information, including dissension within the ranks, hold their own information exceptionally close to the chest. That year-end Gannett speech was subsequently omitted from the in-house publication in which all such remarks traditionally were printed, though it made its way quickly onto newsroom bulletin boards -- prompting a colleague to label it "samizdat," the old term for repressed literature familiar from Soviet days.
In the end, the discomfort you might cause your publisher (as I found out that day) was, for most, an effective brake on any inclination they might have to raise the difficult issue of how business pressures were weakening their journalism.
Finally, there was an assumption of impotence -- a widely-held feeling that, if there's nothing you can do about a situation, talking about it can only make it worse. Better to buckle down and deal with it. Thus, articles in the trade publications and speeches at industry gatherings bore titles along the lines of "Doing Good Journalism in Bad Times," or "How Creative Hiring Can Stretch Your Newsroom Dollar," or, even, "Stop Whining and Focus."
Many editors understood that being more attuned to readers was an important responsibility. There were added complexities. Many editors understood that being more attuned to readers was an important responsibility. Charges of aloofness and arrogance had hit home. So had the assertion that journalists were more interested in impressing their peers -- or beating the competition -- than in serving the public. Civic (or public) journalism grew up partly in response to these concerns, as did reader advisory councils and other efforts to make newsrooms more accountable in their communities.
How, editors asked themselves, did one differentiate between these valid efforts to be responsive -- and the marketing pressures that were requiring them to spend more time at corporate decision-making tables than in their newsrooms?
These hesitations were destined to be overwhelmed by the power of the facts on the ground. That wall of separation? It was famously reinterpreted in the experience of the Los Angeles Times, whose CEO Mark Willes's much-watched determination to tear it down culminated in the sale of Times Mirror to Tribune Co. and the forced departure of Willes. The last straw was a special issue of the Times magazine (presented as an editorial product) about the new Staples Center. The Times' publisher, it emerged, had agreed to share the profits of the magazine with the center itself.
Here was clear evidence of the damage that can be done when the wall comes down, and it came at a time when the impact of the business pressures on the quality of the journalism was ever more evident. As former Philadelphia Inquirer executive editor Jim Naughton wrote in 2001, looking back at the paper he had left in 1995 and recalling the cuts he had had to make: "When I contemplated leaving, we thought we were running out of places to trim without doing lasting damage. We were just cutting capillaries then; now they slash arteries."7
The old aversion to talking about the business side was largely dissolved. Few were feeling any longer that avoiding it could protect the journalism.
Meanwhile, the old notion that one simply must not address these controversial topics was effectively blasted apart by the much-revered Jay Harris, who resigned as publisher of the San Jose Mercury News. Unlike the editors who had downplayed the reasons for their departure, this publisher spoke at ASNE's 2001 convention, and he held the hall in the palm of his hand.
Recounting the events that led him, finally, to leave Knight Ridder, the company he had served so well and with such passionate loyalty, he said:
I had watched a long train of abuses against the traditions and core values of a great profession and a great company. I had witnessed enough.And, he concluded, "The trend threatening newspapers' historic mission is clear if we are willing to see it."8 Far fewer editors remained unwilling to see -- and speak about -- the matter after Harris' moving speech.
Meanwhile, the feeling faded that having this conversation was pointless, in part because the focus moved from lamentation toward solutions, as discussed below. But it's important first to note that the changes telescoped here came gradually, and had various causes, as I wrote in an American Journalism Review article in 1998, part of a project on "The State of the American Newspaper":
Corporatization didn't rock editors' lives suddenly. It began with cost-cutting campaigns in the '70s and '80s, then gathered speed as computers gave bean-counters new clout to pressure news hole and payroll. As readership fell and bottom lines flattened out (or worse), corporate headquarters in distant cities stepped up their memos and publishers turned up the heat. Bit by bit the editor's autonomy has eroded: from the overall budget to the news hole from personnel policies to new sections, from job tenure to the shape and size of stories. Stress fractures appeared everywhere along the traditional wall between business and editorial.9
But awareness did grow, however gradually, and so did willingness to speak out -- partly because the concerns about the effects of the pressures deepened as those effects grew more visible.
The presumption that the business decisions being made were good -- good for the business itself -- was increasingly questioned. Thus newspaper analyst John Morton noted, in a 1995 article called "When Newspapers Eat Their Seed Corn," that "the current wave of cost-cutting could hurt [newspaper companies'] future."10
By 2001, in a compelling radio program on Boston's WBUR called "The Connection," Morton was putting it even more bluntly: "Wall Street takes the view that all they're interested in is the interests of the shareholder -- yet the attitude they take really in the long term undermines the interests of the shareholder."11
On the same program, McClatchy's CEO, Gary Pruitt, added, "I think it's important for management of media companies to take a longer-term view, to transcend the short-term view of Wall Street ... I think, by and large, the shareholders of McClatchy understand actions that do not maximize profits in that year, but work for the long-term health of the company."
Pruitt's comment highlighted one of the facts emerging in this newly-vibrant debate. It was now widely acknowledged that, as one wag put it, most media companies were having no trouble staying in business; the challenge was staying in journalism.
But it grew clear, too, that some companies were far more likely than others to continue to place high value on the journalism. Among those companies were those -- such as The New York Times, The Washington Post, and McClatchy -- with a two-tiered stock voting structure, with families still dominating.
While most newspaper executives contrive to woo analysts only with financial fireworks, The Washington Post's Don Graham typically mentions the company's journalistic strength. Indeed, Graham told a Columbia Journalism Review reporter recently:
We have never done quarterly conference calls describing our earnings. We pay no attention to what Wall Street analysts are estimating we're going to make for the quarter. We don't particularly care what we're going to make for the quarter. And we have told them so.12
But, if the differentiation among companies was increasingly noteworthy, the majority of newspapers, in companies whose stock was publicly traded, were not following the lead that Abe Rosenthal had so lovingly observed on the part of his boss, Punch Sulzberger of The New York Times: "When times get tough, you put more tomatoes into the soup."
These companies were, instead, dropping the gains to the bottom line. Moreover, observers were noting that, while profits had been going up (despite the cyclical nature of the business), readership had been going steadily downward. Perhaps there was a connection?
Throughout the late '90s, coverage of the issue gained in strength of tone and in frequency of appearance. Thus the Columbia Journalism Review had a summer 1998 cover piece called "Money Lust: How Pressure for Profits is Perverting Journalism."13 American Journalism Review's groundbreaking report on the State of the American Newspaper began in May 1998 and ran through January 2000. And Nieman Reports had a special summer 1999 issue on "The Business of News, the News about Business."14
With so much evidence of the size of the problem, and widespread acknowledgment of its undermining effect on journalism's ability to do the job democracy requires of it, the plaint that had taken so long to gather began to move toward the quest for solutions.
Jay Harris' profession-shaking resignation in early 2001 was a spark for many. In its wake, I e-mailed a dozen or so colleagues and suggested getting together to talk about how we might build on the energy of that moment. The response was powerful, leading to a meeting in the Washington offices of the Committee of Concerned Journalists (CCJ), and then, with the support of the Knight Foundation through New Directions for News, to a second at The Poynter Institute in St. Petersburg, Fla.
Achieving a greater understanding of what constitutes good journalism emerged from those meetings as a key aim, along with an understanding of the relationship between journalistic health and business health. At the Poynter sessions, researchers from Tom Rosenstiel's Project for Excellence in Journalism found that their search for measurements of economic success and newsroom investment, and how the two were linked, had much in common with Poynter researchers' project on "newsroom capacity," and the two groups joined forces.
Accumulating knowledge on these and similar topics, and communicating that knowledge to a wider audience -- CEOs, analysts and investment advisers, as well as the public -- emerged as another goal.
Consequently, scholars whose work was close to these issues joined a third meeting, hosted by the Medill School of Journalism and Northwestern University's Media Management Center.
That meeting focused on research -- how to mine what exists, how to foster more research that makes a difference for the industry, how to get word out about it. As the Nieman Foundation's Bob Giles said in closing, "We all believe that if you invest in news, you contribute to the long-term stability of the news organizations. Let's give decision-makers something to work with that counters the quarter-by-quarter mindset."
Those discussions engendered still more connections -- for example with the closely-related work by Phil Meyer at the University of North Carolina. And, by the 2003 ASNE convention, the collaborative work that resulted was ready for presentation. "Quality Journalism and the Bottom Line" -- an overview of the findings -- brought Poynter's Rick Edmonds, UNC's Phil Meyer, PEJ's Rosenstiel and Missouri Journalism School's Esther Thorson before the editors -- a rare moment in which that oft-spurned (by journalists) creature, academic research, made its way into the center of one of the industry's pre-eminent conventions.
Is there any way for journalists to speak effectively with one voice? A society that had been loath to discuss the topic at all in 1997 had heard a publisher's eloquent plea in 2001 and an address by its own president, Tim McGuire, in 2002, had witnessed another remarkable step toward bringing the topic the attention it needed.
That thread traces just one set of meetings and its impact. Other organizations, too, were addressing the topic. An Aspen Institute session — the 2002 meeting was the sixth in a series — managed to bring corporate executives together with journalists in an attempt to discuss the question together.
Though talk was still difficult under those circumstances, several of the participants were happy to conclude that the mere fact of communication was helpful. Shortly after that meeting, a similar gathering was convened by the Carnegie Corporation in New York, bringing together not just media executives and journalists but also journalism school deans. Much of the same ground was covered but with a particular emphasis on the need to bring these issues to public attention. My notes from these meetings reflect the emergence of a number of questions:
• Is there any way for journalists to speak effectively with one voice? The Council of Presidents of Journalism Organizations has made a start on this. Others have recommended establishment of a new national organization. The goal would be better communication with one another, with owners and executives, and with the public, on issues of mutual concern -- particularly the impact of business pressures on journalism quality.
• What might effectively be pursued through discussing the increasingly prominent questions of corporate social responsibility and corporate governance? How can the conversation be broadened to include analysts and investment counselors?
• Is there a need for a new national commission to bring this issue to the attention of the public -- those who, after all, are the ones ultimately affected?
• How can journalists themselves do a better job of covering these topics? How can journalism organizations do a better job of discussing them? How can we "cross the lines" of organizations such as ASNE and Associated Press Managing Editors, Newspaper Association of America, and Association for Education in Journalism and Mass Communication to broaden the conversation and deepen its impact?
• How can we engender better research on the effects of business pressures on journalism -- and get the word out about that research? Are there differences among companies, depending on ownership? How do their experiences compare over time?
• Should we be thinking about how a mix of kinds of media, and kinds of ownership, can produce journalism that is, overall, serving America's needs? NPR and the "idea-driven" magazines such as The Atlantic Monthly and Harpers are all essentially nonprofit. Should we be paying more attention to these and other models?
In the meantime, still other conferences were taking place -- at Stanford and Harvard, among others -- and other publications were addressing these issues. In many people's minds, the 2002 publication of "The News About the News: American Journalism in Peril," by prominent Washington Post editors Robert Kaiser and Len Downie, brought the issue to the mainstream.15
Through all these new contributions, additional thoughts about possible solutions emerged. For some, the emphasis fell on emphasizing professionalism in the newsrooms, strengthening journalists to hold firm against the profit pressures. CCJ's Bill Kovach and Tom Rosenstiel published "The Elements of Journalism" with this in mind, compiled a citizens' bill of journalism rights, and brought ethics seminars into training-starved newsrooms across the country.
"Taking Stock: Journalism and the Publicly Traded Newspaper Company," another 2002 book, by scholars Gilbert Cranberg, Randall P. Bezanson and John Soloski, added richly to the understanding of the business situation media companies found themselves in -- and also to the quest for solutions. Among the authors' recommendations:
• That boards of directors should have more than one member who is a retired or active journalist of high repute and who does not work for the company.
• Boards should comprise primarily outsiders, and board members' compensation should not be tied to stock market performance.
• Executives' compensation "should be based in significant part on the circulation and journalistic quality of the newspapers."
Another interesting set of recommendations emerged from a speech by Peter Goldmark, then publisher of the International Herald Tribune, in the summer of 2000. He told a gathering at the Aspen Institute that executives of corporations that included media outlets should fund "an independent council to track, promote, examine and define the independent news function in American and in the world at large."
"Give it teeth, give it a good budget ... Probably $5 million a year minimum," he said. He recommended an organization comparable to the National Academy of Science -- "a prestigious, national, institutionalized advocate for the independence and vitality of the most distinctive non-governmental tradition in our democracy."16
Goldmark also suggested designating a board member who would have special responsibility to monitor the paper's editorial performance.
Nine former newspaper editors (Hodding Carter, Bob Giles, Max King, Bill Kovach, Dave Lawrence, Jim Naughton, Gene Patterson, Gene Roberts, and the author) took some of these recommendations forward in a letter to the CEOs and board members of the 14 largest publicly-owned newspaper companies, noting newspaper companies' "special obligations to the communities they serve," and urging them to consider adoption of some of the measures. One publisher asked in response if we were "out of our minds" to propose having journalists on the boards of directors -- but the topic continues to win support and spark discussion.
The industry has come a long way since the effect of profit pressures on journalism quality was a topic blithely waved away – or nervously quashed.Interestingly, similar themes have arisen again and again. A Ford Foundation gathering in Washington ended in agreement that a "partnership for quality journalism" -- to be established with funds from media companies -- would be a fine idea. Others have talked about the need to bring the public into the discussion -- and perhaps to educate the young regarding the impact of media (for good and ill) in their lives, through literacy education in the schools.
Many of these ideas have yet to produce much in the way of concrete responses. But the need to better understand the issues has been one of the most consistent notes in the discussion -- and one upon which more and more people seem inclined to act.
Editor & Publisher had a cover piece in early 2003 called "Profiting from Experience: New studies seek to show that 'quality' can pay off. There's just one problem: No one agrees on what 'quality' means."17
In other words, this discussion -- now well along and widely engaged in -- still has a distance to go on the question of scholarly underpinnings. There's broad agreement, at last, that the nation confronts a problem of substantial proportion. But understanding the nature of the problem, and figuring out how to fix it, will require better grounding, deeper knowledge, of the problem than the discussion has enjoyed to date. Happily, scholars and practitioners alike now seem to agree on that need.
The industry has come a long way since the effect of profit pressures on journalism quality was a topic blithely waved away -- or nervously quashed. That American journalism is imperiled by short-term business practices in ways that threaten the health of our society is now a commonly discussed concern. Ideas for solutions are emerging. Solving the problem, though, will take a deeper understanding of it. This special edition of the Newspaper Research Journal is a most welcome step in that direction.
Overholser holds the Curtis B. Hurley Chair in Public Affairs Reporting in the Missouri School of Journalism's Washington bureau. She served previously as editor of The Des Moines Register, ombudsman of The Washington Post, and editorial board member of The New York Times, among other positions. She is a frequent commentator on media, and writes the Journalism Junction column for Poynter Online.
1. Jay Harris, Luncheon Address, 2001 American Society of Newspaper Editors Convention, Washington, D. C., 6 April 2001, http://www.asne.org/index.cfm?id=710 (8 September 2003).
2. Tim McGuire, Text of 2002 American Society of Newspaper Editors Presidential Speech, http://www.asne.org/index.cfm?id=3538 (8 September 2003).
3. Felicity Barringer, "Newspaper Economics: Cuts Raise Concern About the Quality of Journalism," The New York Times, 4 April 2001, p. C1.
4. Gilbert Cranberg, "Swan Song in Des Moines," Columbia Journalism Review, May/June 1995, http://www.cjr.org/archives.asp?url=/95/3/desmoines.asp (9 September 2003).
5. James D. Squires, "Read All About It! The Corporate Takeover of America's Newspapers" (New York: Times Books, 1993), 211.
6. Sandra Mims Rowe, "A note from the president -- A meeting of the minds about acting on credibility," American Society of Newspaper Editors, 1997, http://www.asne.org/kiosk/editor/97.oct/rowe1.htm (10 September 2003).
7. Jim Naughton, "The Philadelphia Inquirer: Cuts Jeopardize Quality; One of journalism's top destinations has become a departure lounge," Nieman Reports 55, no. 3 (fall 2001): 67.
8. Jay Harris, luncheon address.
9. Geneva Overholser, "Editor Inc.," American Journalism Review, December 1998, http://www.ajr.org/Article.asp?id=3290 (9 September 2003).
10. John Morton, "When Newspapers Eat Their Seed Corn," American Journalism Review, November 1995, http://www.ajr.org/Article.asp?id=76 (8 September 2003).
11. WBUR, The Connection, "The Newspaper Business," May 2001, http://archives.theconnection.org/archive/2001/05/0517a.shtml (9 September 2003).
12. Scott Sherman, "Stability: Donald Graham’s Washington Post," Columbia Journalism Review, May/June, 2002, http://www.cjr.org/archives.asp?url=/02/5/sherman.asp (9 September 2003).
13. Neil Hickey, "Money Lust: How Pressure for Profits is Perverting Journalism," Columbia Journalism Review, July/August 1998, 28-36.
14. "The Business of News, the News About Business," Nieman Reports, special issue, (summer 1999): 1-32.
15. Leonard Downie, Jr., and Robert G. Kaiser, "The News About the News: American Journalism in Peril" (New York: A.A. Knopf, 2002).
16. Peter Goldmark, Jr., excerpt from speech at Fourth Annual Aspen Institute Conference on Journalism and Society, Aspen, Co., 23-25 August 2000, http://www.bollier.org/pdf/oldvalues4thannjs.pdf (8 September 2003).
17. Lucia Moses, "Profiting from Experience," Editor & Publisher 136, no. 5 (3 February, 2003): 11-22.