When an Owner's New Company Puts the Old One in Trump's Cross Hairs

If Time magazine runs another cover in a series of illustrations showing President Trump's Oval Office taking on water, employees and shareholders of Salesforce might want to brace for a tweetstorm from the White House — or even calls for regulation of the software company.

Marc Benioff, a co-founder and the chief executive of Salesforce, and his wife, Lynne, are buying Time and coming to the rescue of one of journalism's iconic institutions with the intent of protecting it.

They are also throwing Salesforce, its employees and its investors — not necessarily willingly — into the public square. Just look at Amazon and The Washington Post.

Mr. Trump often derides Amazon in part because Jeff Bezos, its founder and chief executive, owns the paper. The president openly attacks what he calls the "Amazon Washington Post"; described the paper as an "expensive lobbyist" for the company, despite Mr. Bezos' insistence that he has no hand in the newspaper's reporting; and complained about Amazon's collection of sales taxes.

In the age of Trump, the extracurricular activities of public company executives — and the benefits and risks the activities may pose for the companies that made the executives wealthy — have created new corporate governance questions.

"A press organ creates a problem for your primary enterprise that I think a board should have some concern over," said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "It creates conflicts of interest. Journalism, business and politics don't mix. The public views the media, for better or worse, as biased. You're going to turn off a nice chunk of your customers."

Salesforce co-CEO Marc Benioff speaks at the grand opening of the Salesforce Tower in San Francisco in May 2018. 
David Paul Morris | Bloomberg | Getty Images
Salesforce co-CEO Marc Benioff speaks at the grand opening of the Salesforce Tower in San Francisco in May 2018. 

The purchases of struggling journalistic institutions by billionaires and other wealthy executives, whether their motives are selfless or selfish, have repercussions for the companies whose success provided the cash. Boards of directors must wonder whether such purchases are good for business, and shareholders might have their own concerns.

Mr. Benioff said he had notified his board when he was considering buying Time.

"I always bring my board into everything I do," Mr. Benioff said in an email. "As for the board, I am for over-communication and complete transparency. There is no other way to have trust."

For years, outside investments by senior executives that didn't pose an obvious conflict — buying real estate, for instance, or a restaurant or a sports team — didn't rise to the level that required a board to be alerted. Investments in newspapers and other media companies were typically seen as adding a halo to executives' other work — and possibly even giving them, and by extension their company, leverage in local or national politics.

But that was a different time, one that ended with Mr. Trump's election.

"I think it fair to ask whether the problem here is correctly framed as Bezos' and Benioff's ownership of media properties, or whether the problem is President Trump's reaction to media criticism, regardless of ownership," said Joseph A. Grundfest, a professor at Stanford Law School and a director at the private equity firm Kohlberg Kravis Roberts.

The Benioffs have taken pains to emphasize that the purchase was theirs alone, and that they will be caretakers of the brand, not editorial decision makers.

"The Benioffs are purchasing Time personally, and the transaction is unrelated to Salesforce.com," a statement announcing the sale said. "Mr. and Mrs. Benioff will not be involved in the day-to-day operations or journalistic decisions, which will continue to be led by Time's current executive leadership team."

That last sentence would normally be intended to reassure Time's journalists, but in this environment, it may also be a message to those in Washington.

Of course, whether media owners meddle in the journalism or not, they are invariably painted as if they did. For years, conspiracy theories were floated that Carlos Slim Helú, the Mexican billionaire who bought a stake in The New York Times after the financial crisis, was somehow pulling the levers of the newsroom. That was not the case, but the belief nonetheless persisted among opponents of the newspaper.

Mr. Bezos and The Post's leadership have repeatedly said he has no involvement in any coverage decisions, yet on any given day opponents of the paper offer theories online about how an article was skewed to do Amazon's bidding.

The Post's coverage of Mr. Trump has helped put — or at least keep — Amazon in Mr. Trump's cross hairs. He has complained loudly that Amazon pays too little in taxes, and Treasury Secretary Steven Mnuchin hinted over the summer that the administration might take "a position" on tax policy related to the company. Mr. Trump also issued an executive order to have the United States Postal Service's finances evaluated as part of his assertion that Amazon receives special subsidies.

So while that all appears to be just talk so far, it could have an economic impact on Amazon.

And that makes corporate governance experts ask whether a company like Salesforce may want to add a new item to its "Risk Factors" in its annual report. It might read: Our leader owns Time magazine, which writes articles that sometimes upset and offend all sorts of people, including regulators, politicians and, often, the president of the United States, which could create additional political or regulatory issues.

"It adds risk," said Bill George, a director of Goldman Sachs and a senior fellow at Harvard Business School. "It can draw feedback from the president."

Mr. George said board oversight of outside purchases was a matter of "differing opinions." While certain combinations of businesses would create clear conflicts of interest, he said, a tech mogul's buying a news outlet didn't look like a problem to him. Even so, he recognized the potential for executives' investments to create a problem.

"I don't know where you draw the line on C.E.O.s' personal investments," Mr. George said. "It's a very gray area."

For now, let's hope it doesn't become a genuine problem given the number of journalistic institutions that may need a benefactor.