Journalism Junction

Continuing last week's discussion about "What Counts Most" these days at Knight Ridder papers (and elsewhere), here is Knight Ridder CEO Tony Ridder's response. My thanks to him for sending it:

Response to Geneva Overholser's column

By Tony Ridder
Chairman and CEO, Knight Ridder

In her recent column, in very strong language, Geneva Overholser suggests that a Knight Ridder focus on achieving outstanding total shareholder returns represents a misplaced priority, particularly with respect to the vitality of investigative journalism.

With all due respect to Ms. Overholser, whose stature in the industry is deserved, let me suggest this additional perspective:

Knight Ridder is a public company. While its successes can be measured in many ways – and we regard first-rate journalism as a critical one – its return to shareholders is another. As our shareholders should, they remind us of this reality frequently – in meetings in San Jose, in their offices around the country, and twice annually, when we present to the financial community at industry forums in New York City. Other publicly-traded newspaper companies all work under exactly the same pressures.

In 1995, when I became CEO, Knight Ridder was widely perceived to be a financial performer in the middle of the pack – at best. "Underperformer" was the way some of our shareholders phrased it. I saw no reason then, and I see no reason now, why we should not perform financially in the front ranks of our industry, much as we had always performed in the front ranks journalistically – without compromising our editorial mission. Accordingly, we set out to put certain disciplines, measures and incentives in place to achieve that goal.

The long-term incentive plan was one of these. Significantly, this plan is not related to short-term profits and objectives. It is designed to encourage long-term strategy that will enhance the company's prospects over many years. In concept and execution, it is similar to plans in many large companies, including some in the publishing industry. Nor has it been a secret. As Ms. Overholser accurately notes, it is discussed annually in our proxy statement.

Between 1996 (when it was instituted) and 1999, the plan did not pay anything. That it did pay in this second cycle is the reflection of a share-price performance that recognizes success in creating the long-term strategy and positive prospects for our businesses (and employees) that I describe. In that context, I would note:

First, Knight Ridder newspapers continue to do impact journalism. Our post 9/11 coverage was widely celebrated as outstanding; the range and depth of breaking news, public service projects and investigations in our newspapers is impressive; and the health and vitality of our newspaper group is underscored by the circulation gains we achieved this year.

Second, the cuts implemented in 2001 in response to the industry’s worse recession since World War II, were tailored to conform to a dramatically foreshortened revenue stream, and they were implemented as humanely as possible. Fully 89% were voluntary, and the level of cutback was not materially different than that at other well-respected newspaper companies.

Knight Ridder executive compensation is not at the high end of either peer-company compensation or compensation for companies of similar size. If we are to retain the talent we require to meet all of our many priorities, the long-term incentive plan's role is vital. As is support of excellence – by all of its many definitions – in our journalism.

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In another current piece of the Knight Ridder puzzle, Miami Herald columnist Jim Defede asks: What happened to The Herald?

And, elsewhere in Florida journalism, a guest opinion in the Sarasota Herald-Tribune looks at corporate responsibility: GE vs. the newspaper companies.