Is there anything more forlorn than the American metropolitan newspaper? First readers began deserting in droves, then the advertisers followed. Family owners headed for the exits and then hedge funds and other financial players scooped up newspapers thinking they were buying at the bottom of the market. Greater fools came and went, each saying they could cut their way to former glory and renewed profitability. They got a haircut instead.
Many smaller community newspapers remain stable and newspapers with a large national footprint have generally done better. But quite a few of the midsize regional and metropolitan dailies that form the core of the industry have gone off a cliff: over all, the newspaper industry is half as big as it was seven years ago.
So if most newspapers are an uneconomical proposition incapable of sustaining profits, let alone pay off the debt so many buyers have larded on them, who is left to own them?
Not the merely well off, but the kind of men with who long ago separated themselves from humdrum economic realities of life. Sure there are other expensive hobbies, but how many antique cars or 19th-century landscapes can you own? Newspapers may be short on profits, but they have become a new form of ostentation. How rich is he? He can afford to own a newspaper, for crying out loud.
At the end of last year, Warren E. Buffett bought The Omaha World-Herald through his company, Berkshire Hathaway. This would be the same Mr. Buffett who told his annual shareholder meeting in 2009 that newspapers faced “unending losses” and that he would not buy most of them “at any price.” Yet there he was, ponying up $200 million for a relatively small regional newspaper in Berkshire Hathaway’s hometown.
And he is not alone. Douglas F. Manchester, a very rich developer, bought The San Diego Union Tribuneat about the same time, for a reported $110 million. At the end of last month, S. Donald Sussman, a hedge fund manager and philanthropist who is married to a congresswoman, Chellie Pingree, bought a stake in the company that owns The Portland Press Herald in Maine.
And then word came at the beginning of last week that a group of very rich, very influential Philadelphia businessmen — including George E. Norcross III, a Democratic power broker in Southern New Jersey, and Lewis Katz, the parking magnate — bought the Philadelphia Media Network, which owns The Inquirer, The Daily News and Philly.com.
Does all this smart money see something the rest of us have failed to? Some hidden, unlocked riches in these distressed assets? No. In each instance, the buyer was motivated, at least in part, by the fact that the newspapers faced an existential threat: but for the new owners and their deep pockets, they might go away.
The benefactors also stand to benefit in ways that may not go directly to the bottom line, but have significant value. We will give the Oracle of Omaha a bye here because no newspaper can touch him — newsprint spitballs against a battleship — but in San Diego, Mr. Manchester has been frank about using the paper to prosecute a pro-development, pro-new-stadium agenda.
Mr. Sussman is now wed to both a member of Congress and one of the largest newspapers in Maine, so the conflict there is manifest. And the men involved in the Philadelphia purchase have received frequent and sometimes rugged coverage from the papers there.
At this point, the media columnist is supposed to make tsk-tsk noises about editorial independence. But that moralism is a luxury that mostly belongs to another era, when newspapers had functional monopolies and everyone was dying to get their hands on them. Now selling a newspaper is akin to peddling a used Humvee, a hulking beast that has lost relevance in a changed landscape.
Besides, who is to say that it will turn out badly, at least in terms of sustaining much-needed coverage in important American cities? The Philadelphia properties have had four owners in the last five years and the recent sale price of $55 million was just 10 percent of what they were worth in 2006. One of the ownership groups was led by Brian P. Tierney, a public relations executive who was assailed for harboring all manner of agendas when he helped buy the newspapers.
At the time, a former Inquirer reporter, Ralph Cipriano, said of Mr. Tierney: “He doesn’t understand what we do. He doesn’t respect what we do, and he doesn’t think we should be doing it.” He added: “I don’t see how a guy like that can run a newspaper and not just turn it into another extension of the spin machine.”
It didn’t turn out that way. Mr. Tierney eventually lost control of the papers for business reasons, but when he did, the staffs and many people in Philadelphia hailed him as a hero, a man who rigorously oversaw the editorial independence of a newspaper he once fought with.
One reason he got such high marks is that he hired William K. Marimow, formerly a Pulitzer Prize-winning reporter at The Inquirer. Mr. Marimow was quickly dismissed after Mr. Tierney lost control of the newspapers to his lenders.
Mr. Katz and Mr. Norcross faced similar skepticism in the run-up to their purchase. Just before the sale was announced, The Inquirer quoted a report by the New Jersey comptroller accusing Mr. Norcross of orchestrating an insurance payback scheme. Arriving with a big credibility gap, the new owners responded by bringing back Mr. Marimow from Arizona State, where he had been teaching, and reinstalling him as editor in chief.
If you pull back a few thousand feet, you can see newspapers coming full circle. Before World War II, newspapers were mostly owned by political and business interests who used them to push an agenda. People like William Randolph Hearst and Robert McCormick wielded their newspapers as cudgels to get their way. It was only when newspapers began making all kinds of money in the postwar era that they were professionalized and infused with editorial standards.
“We are going back to a form of ownership that dominated in an earlier era,” said Alan D. Mutter, a newspaper and technology consultant. “As newspapers become less impressive businesses, people are going to buy them as trophies or bully pulpits or some other form of personal expression.”
David Nasaw, a professor of history at the CUNY Graduate Center, has written extensively about the newspaper barons of old. He is skeptical about the motives of their modern descendants. “People just have to be aware that other agendas exist, and the owners should be clear about that, but any time a big city newspaper is saved, I think we should stand up and salute.”
The Philly newspapers may end up being a cat toy for the new owners. Or the owners could catch the journalism bug and access the angels of their better natures.
Mr. Marimow, speaking before he had to run off to teach a class, said that it beats the alternative.
“I am coming back because I strongly believe that this ownership group, despite their connections, is interested in producing news in print and online that is going to be distinguished and will serve the public in the Philadelphia area,” he said. “I also believe that over the long term, they will produce a highly profitable business.”
I’m both a journalism geek and an optimist, so I’ll choose to believe most of what he believes. Except that last part about “highly profitable.”