Twitter  Paying for news by filling a need: Lessons from Austin’s Digital News Revenue Summit nie.mn/1iTTFxy  
Nieman Journalism Lab
Pushing to the future of journalism — A project of the Nieman Foundation at Harvard
rendell-philadelphia-inquirer

The Rendell Inquirer? The specter of the instrumentalization of American news media

Around the world, Roskilde University’s Rasmus Kleis Nielsen argues, it’s common for newspapers to be viewed as the political tools of their owners. A sale of The Philadelphia Inquirer might be a sign that a similar model is on the march in the United States.

The possible sale of the Philadelphia Media Network — publisher of the Inquirer, the Daily News, and Philly.com — has sparked a debate over editorial independence. That’s because the potential buyers include powerful local Democrats like former Pennsylvania governor Ed Rendell and the New Jersey power broker George Norcross, along with various local property and business magnates. Journalists working for the company worry that their newsrooms will become subject to the wider political and business interests of the new owners.

The debate raises a larger question: What happens when news organizations become less commercially valuable, but are still perceived as politically powerful?

Columbia’s Michael Schudson has outlined one scenario for the future of the U.S. news business he calls “journalism on a diet with supplements.” The diet is the continued decline of newspapers as their revenues shrink; the supplements are new online ventures of various sorts.

The situation in Philadelphia suggests that another scenario is possible — one where news organizations are kept alive, sustained by new forms of cross-subsidy that gradually pull journalism back towards its origins as, at least in part, an instrument for outside political and business interests.

This is what media and communications scholars call “instrumentalization,” where news organizations are owned and operated by groups less concerned with the day-to-day profitability of an independent outlet than with the influence media afford — the ability to advance various political or business interests. (And often both, for those involved in regulation-sensitive areas like real estate, telecommunications, and various forms of government-related contracting.) News media acquisitions in the U.S. are still mainly seen in a narrow business perspective, explained in terms of their real estate assets or brand value. But one should not forget that controlling a media company also holds out the promise of something more primordial than quarterly profits: power.

Instrumentalization is not something confined to the distant past or to poor countries far away. The first several generations of Chandlers were notorious for using The Los Angeles Times to benefit their real estate speculation. James M. Cox built what is now the Cox Media Group by mixing politics, business, and journalism, in Dayton and elsewhere. Some suggest that Rupert Murdoch continues to bankroll the loss-making New York Post because he can use it to influence politicians who might otherwise interfere with the varied activities of the wider News Corp., as he bankrolls the Times of London.

The intermingling of journalism, politics, and outside business interests is also widespread in much of Southern Europe, where news organizations were never very profitable in their own right. Take France, where some owners are very blunt about how they see their media assets as in part organs for their own opinions. Serge Dassault is not only a billionaire businessman and senator from the UMP (the conservative governing party of President Nicolas Sarkozy) with an old conviction for corruption in the Case Agusta-Dassault. He also runs the Dassault Group, a major conglomerate with diverse interests in, amongst other things, the arms and aerospace industries. The group owns Le Figaro, the best-selling French national daily newspaper (along with other media properties). Senator Dassault is not shy about how he views his papers — according to one report, he has said that his newspapers “must promulgate sound ideas…[and] left-wing ideas are not sound ideas.” In 2004, shortly after Dassault acquired Le Figaro, French media reported that a controversial article concerning the sale of the group’s Rafaele fighter jet was spiked. Independent watchdog groups like Reporters without Frontiers have expressed concern about the consequences of such proprietorship on press freedom in France. Similar issues exist in other Mediterranean countries, as well as across much of Central and Eastern Europe and well beyond that in countries like Brazil and India.

The fundamental fear provoked by the potential takeover in Philadelphia is that we will see in the U.S. a situation familiar around the world — one where journalism is no longer an independent business and profession, but instead an instrument for outside political and commercial interests. Rendell and his associates insist that they are motivated by civic duty more than anything else. But people have their doubts. Buzz Bissinger, a long-time Philadelphia resident and journalist, put it bluntly in an op-ed: “These men want the papers because they crave power and will always crave power.” Bart Blatstein, a Philadelphia developer and owner of the Philly Hometown Media group, seems uncomfortable with the idea that they get it. He is putting together a rival bid, and has said he and his partners are willing to put money behind launching a rival print and digital operation if they do not succeed in acquiring the Philadelphia Media Network.

The risk of running a news organization as the “Rendell Inquirer” (or the “Blatstein Inquirer”) is of course that it will scare away readers and/or advertisers who disagree with the editorial line or prefer what they regard as a more independent outlet. (This was a concern in 2006 when PR man and Republican Party activist Brian Tierney acquired the group from McClatchy.) The opportunity cost of meddling with a news organization to serve one’s other interests was just a lot higher ten or twenty years ago, when most American newspapers had profit margins of 20 percent or more and could be bought and sold for hundreds of millions of dollars. Today, the Project for Excellence in Journalism estimates that the average margin is around 5 percent — closer to what has been the post-war norm in Southern Europe than to the profitable years of metropolitan newspaper monopolies with a license to print money. Tierney paid more than half a billion dollars for Philadelphia Media Holdings (then also including some community weeklies) when he acquired it in 2006. Today, the Philadelphia Media Network is said to be valued between $40 and $100 million.

In cases where even the remaining profit margin looks like it might disappear — where news organizations begin racking up losses year after year and cease to have any real market value — one has to wonder: Do such outlets then survive because proprietors happen to have both a principled commitment to independent journalism and the means to support it, even to the tune of millions of dollars in losses every year? Or are they run by self-interested owners who bankroll these outlets because they think they have an instrumental value beyond their contribution to the bottom line? If the latter is the case, they are no longer running their media properties as an industry but as instruments. This is not a situation in which journalism is simply on a diet and being supplemented by various new ventures. It is a scenario where it is more directly intertwined with outside political and business interests than it has been for years. That happens all over the world, even in developed democracies. The U.S. has been there before — and may end up there again.

                                   
What to read next
INNlogo_blue
Justin Ellis    April 15, 2014
Chalkbeat, Southern California Public Radio, InvestigateWest and others are awarded over $236,000 in micro-grants to support events programming, collaborative reporting, and a “native underwriting” pilot program.
  • HBarca

    It’s important to note the role of funds like Alden Global Capital and Angelo Gordon in facilitating these instrumentalizaiton transactions. As with the San Diego Union-Tribune sale to Doug Montgomery, the hedge fund wet dream is to find local types willing to overpay for the papers these funds picked up by buying up debt banks held after bankruptcies or the equivalent of journalistic short sale. It’s all just a deal for them. There are only a handful of true media operators left in the country. Everybody else is ripping and flipping.

  • http://www.facebook.com/people/Eric-Poole/1494638422 Eric Poole

    You forgot to mention probably the most famous newspaper example of this phenomenon – the Pittsburgh Tribune-Review, a money-loser being propped up by conservative rabble-rouser Richard Mellon Scaife. (Disclosure: I worked as a sports desk copy editor at the T-R for six months in 1998). When Hillary Clinton made her famous pronouncement that her husband was the victim of a “vast right-wing conspiracy,” she was talking about a campaign bankrolled by Scaife.

    More recently – this week, to be precise – the T-R has been running radio ads proclaiming that, while its opinion page is conservative, the news page is honest.