Wednesday, May 9, 2007

May 09, 2007 - Why “Public Ownership” is a Disaster for Newspapers.*

I found this opinion piece at (registration required?) after I wrote my previous blog entry today. And while it doesn't pertain directly to what I wrote about the dinosaur media and the Internet the author makes a pretty interesting point; privately owned media is more likely to be diverse, independent and is more likely to stay that way than are the big corporate media conglomerates, who in the end, are only about the bottom line for their shareholders and Wall Street analysts.

“Public ownership” says Gary Weiss, “has been a disaster for newspapers not just because it invites hostile takeovers. Quite simply, much of what newspapers do has no clear investment rationale. Entire segments of the business -- such as foreign bureaus and investigative reporting -- are inimical to profitability, particularly when viewed on the quarter-by-quarter basis favored by Wall Street. [CNBC pundit James] Cramer nailed down the shareholder value view of the newspaper biz a few weeks ago, when he said, 'These are diminishing assets. They don't need to exist. Younger people rarely read them.'

Cramer is not wrong or cynical; he is simply being realistic and refreshingly free of hypocrisy. Viewed from a shareholder value perspective, the newspaper business is a dinosaur. And that is why the shareholder point of view needs to be eliminated from the newspaper business. The shareholders, not the newspapers, are the ones who don't need to exist.

A free press has a purpose in society. Shareholders, bless their hearts, deserve to make money without being screwed. But they should find another way of turning a profit. Columbia Journalism Review put the case against public ownership mildly in a recent editorial, saying, 'Public ownership of newspapers no longer makes the kind of sense it made when the industry was rapidly shedding labor costs thanks to new technology, and when the money that stockholders poured in was invested partly in editorial.' " [link in original]

Hmmm... Maybe this will all shake out in the marketplace, but it is kinda sad to see all the independently owned papers get gobbled up by Gannet, NewsCorp, and the Rupert Murdochs of this world, but maybe their aggregation will usher in newer and better kinds of media like the Drudge Report, independent political and cultural websites, blogs, Radio Pacifica, and the other forms of news reporting and opinion voicing that are currently taking root. I hope so anyhow.

*A “publically owned company” as is used in this context means this.

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