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Serving the public or shareholders?

Dean Baquet

Former editor, Los Angeles Times

Dean Baquet

I'll say it less colorfully than John did. ... The L.A. Times makes a lot of money, without question. All of the big American newspapers make a lot of money -- not all of them, but most of them. ... I don't want this to sound grandiose or highfalutin, but I think a newspaper is a public trust, and I think my mission is a public service mission.

In an odd way -- a politician might not see it this way, but I see myself as a public servant. There's tension between my view of my world and the people who own newspapers. There's no question of that, because they are beholden to shareholders, and they need -- they want for the paper to be highly profitable. Sometimes that view of what a newspaper is supposed to be and my view, which is that a newspaper is a public trust, sometimes they come into conflict.

You mean private profit versus the public interest?

Yeah, yeah. My ... priorities have to be different from [those of] the owners of the newspaper, and I think every editor should feel this way. My priority list is ordered completely differently from the people who own newspapers. My priority list is, first and foremost, cover the world; be responsive to my readers. I don't think a whole lot about how profitable the paper is. …

But you'd like to be profitable?

Sure, because if the paper's profitable, I can have more foreign bureaus; I can have more national bureaus; and I can have more investigative reporters. Sure. I don't think there's anything wrong with being profitable as an institution; I just mean, for me, as the editor of the paper, profitability is not my first goal.

How much profit do you need to make, do you think? You're not a novice in this business. ... How much profit should a newspaper make so you can have those foreign bureaus and keep the doors open?

I don't know. I can't put a number on it, and [not] just because I think it depends on the newspaper. You've got to be profitable enough to weather financial crises. You've got to be profitable enough so that if you run into a three-year recession you don't have to shrink the news wall and shrink the staff. You've got to be profitable enough so that if five of your biggest advertisers go in the tank, you don't have to suddenly pull back from your coverage of the Middle East, ... profitable enough to cover the world with comfort and not have to pull back when a big story breaks. ...

John Carroll

Former editor, Los Angeles Times

John Carroll

You referred to a "crisis of the soul" and said that "our mission is to save journalism itself."

Right. Well, let me take the two separately. The crisis of the soul has to do with the cultural difference between the corporation and the values of corporate business and journalism. There's a widening gap between the two. They don't really speak each other's language very well. They have different philosophies, different ethics. To some extent those differences spring from loyalties.

The corporate people believe that every employee of the company should be loyal, first and foremost, to the shareholder, and that is a prevailing ethic in American business, and it makes sense in just about every way. The journalist believes that he or she works not for the shareholder primarily, but for the reader and for the public. It may seem like an abstract difference that doesn't cause problems, but it does, particularly when the money gets tighter.

The two sides look at each other as separate tribes. Journalists look at corporate ownership as some alien tribe that has taken away the local newspaper and is, lately, determined to milk it to death. The corporate people tend to look at us with amazement sometimes: How can these people not understand that they work for the shareholder? It's this business about serving the public. That's a luxury we can't afford anymore. ...

I think journalists -- good journalists -- have always looked upon themselves as public servants. ... I don't know why they want to go into it. I don't think it's really the money. The money's pretty bad unless you become a superstar. I think it's a combination of things. For a certain type of person, ... it's just an exciting way to make a living. It's an exciting job. It's fun. It gives you an excuse to satisfy your curiosity, gives you a reason to ask people questions and talk with interesting people and see interesting things, ... and you get paid for it. ... Just the sheer entertainment and satisfaction of crafting a story and seeing it in the paper, that in itself is a reason to go into it.

Then when you sit back and you think, well, is there a larger purpose to it? Yes. I've been involved in stories that have actually done some good for people. You have, too, stories that may have saved lives, stories that have increased the quality of justice in America, stories that have enlightened the public in helping to exercise their vote with more pertinent information.

So in the reflective moments, you can say not only am I entertaining myself; I'm actually doing some good.

And [is that the mission right now for journalism] ... ?

Well, I wouldn't be so grandiose as that, but I do think that the position of journalism in America is in question. This is the question that the founding fathers furrowed their brows over quite a bit: ... What will public discourse be?

Now we've turned all that over to Wall Street. It's a market question. The markets don't care about the quality of American self-government. That's not their business. [And we've] abdicated that question to the markets.

[Some say], in the modern world, the public interest is what the public is interested in. ...

Well, it's true. That's quite true. But what the public is interested in depends to some extent on what information is available to the public.

Lauren Rich Fine

Managing director, Merrill Lynch

Lauren Rich Fine

[John Carroll] said in general, but also speaking about the L.A. Times, "Newspapers, the big newspapers, are cash cows, but they're being milked to death." Is he right?

What he's suggesting there is that the corporations that own multiple newspapers are taking that cash flow and trying to show a certain growth rate that might not be the natural growth rate and might not be good economic decisions for shareholders long term that are helping short term. So I think it is a fair statement. ...

If you are an editor of a newspaper, in theory, you are a highly passionate human being. You care about democracy. You're really there to fight the good fight. You love investigative journalism. It's really expensive to do that, and you can't really prove that you sold more newspapers or sold more advertising as a result of good-quality journalism. ...

There have been a lot of studies done that prove that even good-quality newspapers that have maintained the quality -- The New York Times being a great example, The Wall Street Journal being an even better example -- ... you can't really prove that they're doing any better economically than their peer group. They suffer the exact same issues. ...

A lot of this gets to the threat of the Internet. If you look at younger generations, it's not that they don't want to be well-educated consumers, but they're accustomed to [having] everything at their fingertips online. They might never choose to read a print paper. It seems very arcane to them, that. By definition, it's old news if it took that time to print it and distribute it. ...

So what about the argument that young people don't read newspapers, that everyone who reads newspapers is over 50 or well-educated, so let's go after that youth market?

I wouldn't go after the youth market with a print product, which is different than saying they don't read. They do read; they just read different things. They will read a product that is tailored to them and doesn't have the Iraq war on the front of it. ... I don't think younger people will pay for a print product. I think they're happy to take it for free. There's a lot of companies that are very successful without charging for their product, TV being the most notable one, that still can survive on advertising. But I wouldn't go after the youth market specifically. It's a very fickle market. ...

The New York Times has just announced they're going to shrink the size of the paper. Is that a good idea? Does that bother you as a reader?

I don't know because I haven't seen it yet, but the paper's been losing a few inches over the last few years anyway. You probably read The Wall Street Journal is doing the same thing, and they've moved to a tabloid in Europe and Asia. It bothers me in the sense that one of the things I like about any newspaper is the predictability of being able to find things. But once you get used to a new format you probably are reasonably indifferent to it.

They need to do it in the sense that there are certain costs involved with the production of the paper, the cost of paper itself. So these are ways to try to maintain the editorial quality but cut costs that don't affect it. It certainly is a worthy experiment, and if you really think ultimately over time it moves online, it's a great way of weaning people from the print product.

What about ads on front pages?

I am completely indifferent to it. I think it's a brilliant decision. There are certain advertisers that will really enjoy getting that positioning. There have been a lot of studies that prove that most people will read the front page and that a much smaller proportion ever get past the front page. So if I was an advertiser, that's the slot that I would want. ...

In Europe, of course, they do it a lot. And papers here are putting it on the front page of other sections. ...

I don't even know why there's a debate. If you brought in anybody of my generation or anybody who's just looking at pure dollars and cents, it's just such an easy decision to make. I don't think it makes anybody think differently about the quality of the editorial. Let's just say there's always an ad by a restaurant; are you going to trust the review of that restaurant? You know something? You are going to trust it because you can't afford to compromise your relationship with the consumer by writing a positive review just because they're an advertiser. ...

You know [former L.A. Times editor] Dean Baquet, you ask him about Wall Street, he says, "Wall Street's my enemy right now."

I think Wall Street is viewed as the enemy in that there is a fixation at [the] corporate [level] on your stock price and the valuation. When you believe in your own business and you don't think you're being valued appropriately, it does become a bit of a battle. ... I think their time and energy is better spent trying to figure out what their future business model will be, because if they can figure it out ... -- we're real easy; we'll take the stock higher -- so we will no longer be the enemy. ...

The L.A. Times thinks of itself, after 1960, as being the New York Times of the West, a major player. They're very proud of their overseas bureaus, their coverage of the war in Iraq and so forth. So Dean Baquet says: "I don't care what the reader survey is telling me what people really want. I'll give them that, but they've got to eat their broccoli, too. I'm going to give them Iraq war coverage whether they want it or not."

Well, there's the interesting phenomenon. If I ran a consumer packaged-goods company and I told people that "I'm sorry that this toothpaste tastes really bad, but it's good for you," and then don't understand why I'm not selling any toothpaste, I'd get voted out of running the company. ...

So Dean is right. Everybody should care, and they should eat their broccoli, but they have a choice whether to put down their 25 or 50 cents each day, and if they don't like what's on the front page and don't think it's what they're interested in, no one should be surprised that circulation is gushing downward. ...

Do you know a guy named Dan Gillmor, [director of the Center for Citizen Media], by any chance?

I've met him once, yes.

OK. So he's got a blog. He said: "Lauren Rich Fine is one of the key Wall Streeters who are all but ordering newspaper companies to get rid of all their journalists. She and her colleagues, far more than the CEOs, run the industry these days. Wall Street doesn't give a damn about journalism and never has."

That's a little harsh. It's taken out of context, I suspect. ... If I were asked to ever come in and be a publisher or the CEO of one of these companies, yeah, there would be a bit of chaos; I would do things very differently. I don't think the old model works anymore. I don't believe consumers are willing to pay for the distinction between good-quality and poor-quality journalism, which doesn't mean you don't want to hold yourself to the standard of high-quality journalism. ...

If you can't go completely online and get rid of your production and distribution, the only other cost you have to get rid of is the editorial staff. You don't need great journalists for certain types of events. I'm not qualified to tell you what all of them are, but if I ran a local newspaper like the Cleveland Plain Dealer, I would go so heavily local that it would turn people's heads. I don't think people pick up a metropolitan newspaper today to find out about the war in Iraq or Israel. I think they pick it up to find out what's going on locally in terms of politics, in terms of crime, in terms of high school sports.

Larry Kramer

Former head, CBS Digital Media

Larry Kramer

Dean Baquet says the real enemy here is Wall Street. It's the pressure from the shareholders, from the investors, and they don't care whether real newsrooms are destroyed or not.

Newspapers aren't alone in that problem. Wall Street, the continuing pounding pressure for quarterly return, has an enormously stultifying effect. It was a terrible thing for companies to have to perform in a short-term way to please investors. And it caters to short-term investors as opposed to long-term investors.

When you were saying that, I could see that there's, like, an emotional thing going on. You're remembering things that happened to you?

Sure. Yeah, of course. I mean, I went through, I don't know, eight years as a public company CEO. There was a moment in time a year or two, three years maybe before we sold the company when we were up to almost $40 or $50 million in the bank. We were profitable and cash-flow positive in a big way. I couldn't spend it because we had just turned profitable, and now the expectation was we had to grow that profit from that point on each quarter. So I couldn't spend money that would hurt profitability.

But improve the product.

But improve the product. And it was easier for me to do an acquisition because it was not being spent on operations. It was effectively not a P&L [profit and loss] issue. It's what drives companies to do acquisitions instead of building things themselves. You know, it's harder to build it yourself, and the public, if you're a publicly traded company, freaks out.

I always marveled -- a lot of people underestimate how much impact [USA Today founder] Al Neuharth had in building USA Today.

And the Gannett chain.

Well, particularly I'm talking about USA Today now. Here was a guy who built a national newspaper who spent $2 billion before he made a penny to build what is arguably a national institution today, right? Love it or hate it, it's read by a lot of people. ...

He had to finesse it through a corporate structure, and he had to show quarterly profits during the entire time he did that. The way he did it effectively was he got every one of the newspapers in that chain to pay for the building of USA Today. They donated reporters; they donated facilities; they did all kinds of things. ... He had to borrow and penalize the papers, which was an enormously difficult thing to do and painful thing to do.

But he did it. That thing was a $2 billion drain on that company until the day it became profitable 10 years later. So appreciate how hard it is in the public domain, where stockholders are coming after you to have to show those quarterly numbers and build something at the same time. There could have been 10 USA Todays if you didn't have to deal with that.

So to the public interest perspective, to the editor who says, "I serve my readers before I serve my shareholders," Wall Street is the enemy?

Yeah. Well, it's a constituency you've just told is second in line or third in line. How would you like to be told that if you put your money into that company? I'm with you. I'm just telling you shareholders are people, too. ...

Nicholas Lemann

Dean, Columbia University School of Journalism

Nicholas Lemann

When we interviewed Dean Baquet and Jeff Johnson, the former editor and publisher, respectively, of the Los Angeles Times, they said, "We answer first to our readers and then to our shareholders." Is that a naive perspective in the modern world?

It's a complicated question. Journalism in the United States has traditionally been completely independent of government, although today that's not really true; this show we're on now is, indirectly, very heavily supported by the U.S. government. Like it or not, it's just true. But nonetheless, if you have journalism having a commercial basis, and also journalism as a profession in the sense that the people who practice it have a set of values that are not purely commercial, you've got a built-in tension.

It's nothing new. It's always existed, and it's not a problem that's that easy to solve ever. There's always something else you can do that will be of journalistic value that will drive your profits down. The idea that there was a time when all newspapers were immune to economic considerations and only cared about their readers, I don't really buy that. I grew up in a town that now has a great newspaper, but when I was a kid had a horrible newspaper. The idea that there was this misty time in the past when journalism didn't care about profits and all local papers were great, that time didn't exist.

Go back and read. In 1947, there was the Hutchins [Commission] report about the state of journalism. It said there's too much concern with profits; chain ownership is taking over; sensationalism and celebrity journalism is taking over; something must be done. Go back and read [New Republic founder] Walter Lippmann's book Public Opinion, written in 1922. Same argument: Journalism had this wonderful promise once, but concern with profit and big corporate ownership has dashed that promise, and we have to think of some new way of saving journalism.

This is a constant, because of the way American journalism is structured.

Dan Rather

Former anchor, CBS Evening News

Dan Rather

The reality is that in American journalism, ... things have changed; things have changed greatly. The major television news operations are all owned by huge, international conglomerates, and the effect of that is manifold.

Number one, the large corporations, the conglomerates that now own, I would say, 80 to 85 percent of the major American news outlets, have many more interests besides news. They have great needs and wants, regulatory and legislative, in Washington. They are intertwined with the political process and with political power much more than they have ever been. The corporations contribute to political campaigns; they run very large lobbying operations. ... That's a reality in almost every major newsroom in the country. In fact, in major newsrooms, I don't know of any exception. So this is one thing to have in mind.

The second thing to have in mind is, because of their size, there's a tremendous communications gap between the leadership, the very top ownership, and the lead in the newsrooms. Now, even in the time of Ed Murrow and [CBS founder] Bill Paley in the late 1950s, when Murrow had his showdown about news values versus entertainment values, there was some of this. But here's the point: News is such a small part of the average conglomerate that owns major news outlets now, such a small part of the business, that the person who owns the business rarely has any real contact with the news operation, where when Bill Paley owned CBS News, he was in direct and regular contact with the news division and people within the news division, and he knew them. I think the record clearly shows that Mr. Paley had a strong sense of his responsibility of shepherding news, helping news as a public service at least part of the time. ...

Today, the idea is, just don't make any waves; just don't cause trouble. Nobody in the corporate superstructure of one of these conglomerates wants trouble. It's not that they're Republican or Democrat or they have some ideological agenda. They may have, but their main thing is, don't do anything that may rock the stock price. ... The effect has been now to drain out the sense of public service out of television news to the point where it's almost completely gone. ...

David Westin

President, ABC News

David Westin

In fact, I think the soft/hard distinction is much harder than people would like to make it out to be. The profit motivation is clearly an issue in the sense that we need to return some reasonable amount of income to the Walt Disney Company.

By the way, the Walt Disney Company knows and will say, if you push them, they don't expect us to help their stock price. They never expect us to make a lot of money for Walt Disney. It just has to be a reasonable return. And that places certain limits on it. So that's absolutely true.

On the other hand, when 9/11 happened, if I had not been owned by the Walt Disney Company, I could not have stayed on the air for four and a half days straight without a commercial interruption. When Iraq came in 2003, I could not have spent the millions of dollars we spent to go over and cover that. I couldn't be spending the millions of dollars we're spending right now in Baghdad. If it had been ABC News, Inc., if we'd been a separately controlled corporation with our own shareholders, we could not have done that. We would not have had the resources.

I can write a check on the Walt Disney Company without asking them that will clear at the bank. So it's a more complicated, subtle story than that. The story that you suggest is one that's often written about, and it makes a nice, simple story, but it's more complicated than that.

More complicated because the resources of the Disney Corporation allow you to do things that you couldn't do otherwise.

Absolutely right. Absolutely right. People tend to think that we don't cover a story because of a profit issue. That's not true. Now, there are structural issues where we don't have as many bureaus as we used to have, and certainly the cost of that figures into it without a doubt. There's no question about that.

Now, whenever this subject comes up, as we ask ourselves repeatedly internally, the question I ask is, "Are there stories that we want to cover, overseas or domestically, that we're not allowed to cover, and what are the stories, and how [could] we do it?"

So we've experimented, for example, with a man named Martin Seemungal who shoots his own material and is his own reporter in Nairobi, Kenya, because I'm very concerned we don't have adequate coverage in Africa. We have a whole continent, for goodness' sakes, and we've got a small operation down in Johannesburg, [South Africa]. We've got an individual in Nairobi, but we're not adequately covered there. We need another bureau besides Baghdad in an Arabic Middle Eastern country. We have, again, a small operation in Egypt, but we need more of a bureau operation. So there are shortcomings, without a doubt.

And money plays a factor. By the way, if Iraq went away tomorrow, which I'm sure some people would like for reasons far beyond ABC News, but just from our selfish point of view, we could open any number of bureaus around the world with the money we're spending on Iraq -- any number. …

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posted feb. 13, 2007; last updated feb. 27, 2007

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