November 08, 2007
Greed Sinks News Biz

Newspaper owners have always blamed their troubles on competitors: radio, TV, shoppers, and now the internet. However the problem is not with others, but with publishers who for decades have been bleeding their papers to achieve obscene profit margins. Their method has been to replace whole departments with computerized machines, to bust unions, and then to pay rock-bottom wages.

My stepfather, Ralph Ingersoll, ran a chain of small and mid-sized dailies. My first job out of college was as a reporter for the Boston Globe; my next was at the Newark Evening News, a far superior newspaper, where I was a reporter and education writer.

Then I bought a small daily in Saranac Lake, New York, and a weekly in Lake Placid with money borrowed from my wife’s family and the papers’ owners. After 10 years I sold both papers to a large chain of small newspapers for which I worked 13 years before retiring.

I am close to many chain owners, having attended countless publishers conventions, and having been a guest in their homes where they talked freely — especially, of course, in my late stepfather’s three homes in Connecticut, New York City, and St. Maarten. Here’s what I learned—

It’s fair to say that all chains expect their papers (barring metros) to earn at least 20 percent of gross before taxes. A chain owner once told me with a gleeful smile that one of his papers returned 40 percent of gross. (For a little perspective here, the average for American corporations is seven percent.)

At daily newspapers everything is subordinated to maintaining those bloated margins, which can only achieved by delivering the smallest possible quantity and quality of news. As a consequence the products are mostly atrocious, written by raw reporters earning as little as $300 a week to start. Even today new staffers get 23 to 25 cents mileage allowance to drive cars they must own to get the reporting job in the first place.

I can tell you unequivocally that greed drives most chain newspaper corporate decisions. I’ve seen mom and pop dailies go from 10 percent to 30 percent profit in a year after being acquired by one of the chains that own most daily newspapers today. And even now, in their alleged distress, most chains keep 20 percent or more before taxes.

The fact is that if owners had settled for 10 percent net on gross after cold type and computers came in 30 years ago, that extra money could have insured a quality of product that would have made them strong in the face of challenges from TV and the net.

Now most papers are tight, offering poor and scant local coverage, very little national or international coverage, and pablum opinion pages to please the business community. It is no wonder subscribers have been fleeing since long before the web was a potent competitor. Yet still the publishers bleat about losing readers and advertising, especially classified, to the Internet.

I, for one, do not feel sorry in the least. I read all of my papers now on line and free. Just wait until my 14-year-old son (who loves the news) and his peers reach their 20s. They will get all their news from TV and the web.

These kids are used to the web and know how to find far, far better coverage, opinion or anything else than most newspapers offer even on their own web sites. The local newspapers have not found a way to replace their lost income with advertising on their web sites, or lost circulation income as readers flee to the web — many to the newspapers’ own free web sites.

The publishers have made this bed for themselves. Sure there are other factors, but the biggest is the overweening greed of the owners themselves.

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Posted by Bill Doolittle at November 08, 2007 04:54 PM
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If the publishers were creative enough they could print manga-style newspapers and the kids would eat it up.

The design and formatting hasn't changed in so long it's pathetic. And the coverage of local events is terrible. It's really difficult to even find out what's going on in your own town right now. Sad, really.

Posted by: donna on November 9, 2007 12:00 PM

Thanks so much for this articulate example of corporatization which ignores local community interests and is infecting businesses and even "nonprofit" organizations throughout our country.

My own recent,painful,unbelievable observation of this sort of untrammeled greed that power can enable is at Habitat for Humanity International. Board greed and abuse of power triggered the firing of HFHI Founder and Co-Founder, Millard and Linda Fuller.

The Fullers had maintained an inexpensive location for their international headquarters, provided excellent training facilities at minimal cost and had kept executive salaries low (CEO ranges of $12,000-$70,000)for thirty years. The Fullers utilized all funds and donations for the noble purpose of providing homes for people in need throughout our world.

Local affiliates of HFHI were community-based and coordinated volunteers and owner builders. Grateful homeowners over time paid back interest-free loans at rates they could afford and, thusly, enabled affiliates to maintain funds to continue the process in their own communities.

A greedy board found the only way they could effectively corporatize HFHI was to eliminate its' two leaders. Currently, certain executive offices have been moved to the expensive city with salaries in the hundreds of thousands and affiliates must send contributions from their funds to headquarters and have been issued standard building/fundraising requirements, which may or may not be appropriate for the particular community involved.

However, hope does spring eternal. There might actually be ways to ignore greedy corporations and preserve a civilized country and world for our children and grandchildren.

I am happy to say that while HFHI might become just another corporate tool, the Fullers have founded a new nonprofit organization, which commits its funds and efforts for the purpose intended. Take a look at www.fullercenter.org. You might also like to read THE HOUSE THAT LOVE BUILT by Bettie Youngs.

Incidentally, when Millard Fuller tried to name his new organization Housing for Habitat, the board threatened to launch a lawsuit, since it owns the word "Habitat", a word Millard got by with using for thirty years with impunity.

I can only hope they don't see how many times I have used the word "for" in this message.

And I can only say to Millard and Linda, "Please be careful about who you bring onto your current board. Remember, board members are deemed to be perfect and CANNOT be fired."
mfd

Posted by: on November 10, 2007 12:57 PM
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