Local ownership isn't cure-all for newspapers
As Philadelphia is finding out, local ownership of big city newspapers isn't a panacea.
With a local group considering making a bid to buy The Boston Globe from The New York Times Co., media specialists warned that newspapers, regardless of ownership, face huge challenges as readers and advertisers move online, and the industry seeks a financial model to support extensive newsgathering operations.
In Philadelphia, a local group earlier this year bought the broadsheet Inquirer and tabloid Daily News from the McClatchy Co. chain, sparking hope within the community and the two papers for an end to the relentless cost-cutting under its longtime corporate owner, the defunct Knight Ridder chain. (Knight Ridder sold itself to McClatchy, which in turn sold some of the papers it acquired.)
Last week, however, the new owner said layoffs were "unavoidable" because revenue was falling so quickly that the company would not be able to meet its debt payments next year. Meanwhile, with the company pushing for deep concessions in union contracts that expire next week, members of the Newspaper Guild of Greater Philadelphia, which represents editorial, advertising, and other workers, last night authorized union leader s to call a strike.
With tensions rising yesterday, union leaders were unavailable for comment. Neither was Brian Tierney, a former public relations and advertising executive who led the group that bought the papers.
"The sentiment of local ownership is noble, but the economics are still brutal," said Jay Harris, formerly publisher of the San Jose Mercury News and now a journalism professor at the University of Southern California. "The good news is the desire to have strong local papers committed to local service. But the industry is still thrashing around, looking for a sustainable long-range model."
After decades of big, publicly traded media companies gobbling up local papers, that trend has recently showed signs of reversing. Wall Street has been battering newspaper stock prices, prompting companies to cut costs. The result: Local groups led by wealthy residents are popping up across the country with hopes of protecting and preserving the papers.
In Boston, where falling circulation and advertising revenues at the Globe have led to job and cost cuts, a group led by Jack Welch, former General Electric Co. chief executive, and Jack Connors, cofounder of the advertising firm Hill Holliday, has emerged as possible bidders for the Globe. In Los Angeles, entertainment mogul David Geffen is among a group of local executives expressing interest in buying the Los Angeles Times from Tribune Co. Local groups in Hartford, Long Island, and Baltimore have signaled interest in buying Tribune Co. papers in those communities.
Media specialists said local ownership could take some of the cost pressures off papers, since, as private companies, they wouldn't have to meet Wall Street expectations. But, they added, they still face the pressures of paying off loans that typically finance the purchases and providing promised returns to private investors.
"Even a private ownership group has to operate in the black," said Lou Ureneck, chairman of the Boston University journalism department.
New owners would have to tackle newspapers' tricky transition to the Internet. So far, newspapers' online profits haven't come close to making up for declines in the traditional business.
Another big challenge, said Tom Rosenstiel, director of the Project for Excellence in Journalism, a nonprofit Washington research group, is that newspapers operate under a model foreign to most other businesses. Newspapers' mass audience is their readers, and the circulation revenue generated by sales to readers is important. But newspapers make most of their money by selling space to advertisers based in part on the papers' credibility with readers. That credibility must be protected even at the risk of sometimes angering and losing advertisers, Rosenstiel said.
"When you have management that has been in the business, they know the integrity of the news product is what they're selling," Rosenstiel said. "It's not clear whether the new local owners understand this unusual economic model."
There are concerns that a new breed of owners, who have largely become rich in other businesses, would interfere in the newsgathering process to boost their own financial interests, reward friends, or punish enemies.
In Philadelphia, the Tierney group signed a pledge not to interfere with news decisions made by editors. The Boston group, so far, has not made any such pledge.
Stephen Burgard, director of the Northeastern University School of Journalism, pointed to Santa Barbara, Calif., as an example of the vulnerability of locally controlled newspapers. At the News-Press, at least five top editors, including the editor and managing editor, resigned over interference by the wealthy copublisher, Wendy McCaw, who bought the paper from Times Co. in 2000.
Among the incidents prompting the resignations was when McCaw stopped the publication of the drunken driving conviction of one of her loyalists at the paper. McCaw said in an e-mail that she was merely following the paper's policy of not reporting drunken driving convictions unless injury or death was involved. They weren't in this case.
"Local ownership is potentially wonderful and potentially disastrous," Burgard said. "The question is, what is their sense of community stewardship?"
Robert Gavin can be reached at rgavin@globe.com. 
