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March 16, 2006

Why Not Restructure Journalism as a Local Trust?

A way to save the local newspaper

It used to be that journalism was called a public trust. Now it’s mostly considered an under-leveraged market asset. Everywhere you look, the drive to monetize the readership and credibility of journalism is leading to its degradation. It’s demoralizing, it’s bad for our democracy, and it’s destructive of local civic culture.

This was brought home to me after Knight Ridder recently sold 32 daily newspapers for $4.5 billion. The purchaser, McClatchy Co., surprised everyone by announcing that it would immediately sell off a dozen of the newspapers it had just bought because it considers them under-performing. Their profit margins were only 18%. (The rest of McClatchy’s newspapers are earning 30%.)

Over in broadcast news, Editor & Publisher reports that local news programs are actually offering to integrate an advertisers’ products into the newscast in exchange for paid commercials or “product integration” fees. Warning that the plan might backfire, the president of the Radio-Television News Directors Association, Barbara Cochran, said, “You’re selling the credibility of the news, and if viewers start thinking your news is for sale, then the credibility of your news is lost and your audience is lost,” she said.

I hate to break it Cochran, but that happened a long time ago. Local broadcast news is a joke. Even Bob Woodward of the Washington Post would rather “play the market” than serve the public trust. Rather than tell the _Post_’s readers what he knew about former CIA agent Valerie Plame, he was saving his hottest material for his next blockbuster book.

But here’s a fascinating idea: why not regard journalism as a trust – literally? That’s what they do at The New London Day (Connecticut), The St. Petersburg Times (Florida), The Manchester Union Leader (New Hampshire) and the Anniston Star (Alabama).

Strictly speaking, the Day is the only newspaper owned by a trust. When the tax law was changed in 1969, it was no longer possible for private foundations to own more than a limited percentage of any one business, and the Day was “grandfathered” in. But while a private foundation can’t own 100% of a business, a public charity under 501©(3) of the tax code can. So that’s how the other three newspapers above are managed.

Nelson Poynter, the owner of The St. Petersburg Times, saw fit to vest ownership of that paper in a newly created Poynter Institute, an independent nonprofit school for training journalists. Legally speaking, the head of the Poynter Institute is the head of the newspaper. But in practice, this means that St. Petersburg Times can be utterly independent and locally responsive. It can aspire to the best instincts of the journalism profession – to serve the public without fear or favor – without being constantly mauled by investors to deliver more, more, and still more profit.

Karen Dunlap, the President of the Poynter Institute, said that she and her colleagues frequently say: “We don’t run The St. Petersburg Times. And if we tried, they don’t want to hear from us. They don’t run us; we don’t run them.” She adds: “Good relationship.” It is true that local ownership can be as small-minded and mediocre as the bean-counting managers hired by Wall Street. But as the squeeze of commercialism and profit-seeking forces journalism to surrender its traditional standards and get into the gutter with the tabloids and mass entertainment, perhaps it is time for more communities to ponder a radical idea – the newspaper as a local trust. Green Bay residents were able to do something similar with the Green Bay Packers; thousands of locals own shares in the team that are never going to provide any financial return. But the arrangement has prevented any outsider investors from buying the team and moving it elsewhere. And fans feel a genuine ownership of the team.

An arrangement of this sort is actually brewing in Philadelphia right now. A handful of wealthy businesspeople in Philly has commitments of more than $100 million to buy the Philadelphia Daily News. The group says it wants to emulate the community-owned structure of the Green Bay Packers.

Meetup.com, the Daily Kos, MoveOn.org and other Internet venues have shown that, in today’s networked environment, it is actually possible to pursue the collective goals of thousands of ordinary people. Maybe we should be pondering a new future for journalism and local newspapers – as citizen-owned trusts. The results could only be beneficial for journalism, for democracy, and for us commoners.