Trusts aren't financial panacea
by Peter Preston Posted Tue, Apr 21 2009
It seems an appetizing prospect for newspapers in a crunch. Can’t make enough profits to stagger through? Then become a nonprofit organization. Can’t raise the funds to invest in newsroom development? Then find a rich charity somewhere to cough up the wherewithal. The New York Times, remember, recently ran a piece calculating that it needed a $2 billion endowment to keep its journalism going into the far distance—and no banker worth rescuing gets out of bed for under $2 billion these days. From crisis to eternal sunshine in one easy bound—what could be more obvious? But look harder before you get carried away.
The paper I’ve worked at for most of my life, The Guardian, has been run by a (slightly changing) form of trust for more than 70 years. When its great owner and editor, C.P. Scott, died, followed too swiftly by C.P.’s son Ted, the rest of the Scott family felt threatened by death taxes. One more death and the Manchester Guardian might have to be sold to keep the Inland Revenue at bay, which would be a tragedy for journalism. So let’s do the big, the imaginative, the wholly committed thing and give the business away to an independent trust of good people charged with only one responsibility: to keep The Guardian and its traditions alive.
In retrospect, that sounds like a wonderful idea. The group of lucrative companies around the core newspapers, bought or delivered because they could be profitable, has grown through luck but also with judgment. There are no shareholders shouting that their stock must rise nor share prices riding for a fall. Profit goes straight back into the enterprise. The Guardian and its Sunday sister paper, The Observer, have relatively formidable resources to tide them through a recession. They have also invested mightily in their Internet sites over the last ten years so that they’re now amongst the world leaders in that medium. The trust only selects Guardian editors; it doesn’t tell them how to edit or what to say. Journalistic freedom goes hand-in-hand with business.
It sounds just as nice as $2 billion arriving in the mail—an ideal way of running papers in an era where too many lousy ownership models are ruthlessly exposed as frail and over-borrowed chains, fracturing at the slightest tug. But let’s not get carried away.
I can look back at earlier Guardian trust history and remember, with a sudden sweat of fear, how every upside can have a downside. I remember the 1960s, after we’d knocked Manchester from the masthead and moved our headquarters to London, and how the paper teetered on the brink of a merger with the Times. I remember the 70s, when we had to keep putting up cover prices one month to pay the next month’s wages. I also remember how big groups with big resources tried to drive us out of the market. We didn’t survive then because of our trust structure, as trusts without enough money are just as vulnerable as cash-strapped companies. Indeed, the structure made it rather difficult to survive on loans. No, we came through by hard work, ingenuity, strokes of good fortune and flashes of management insight.
Little of that, however, fits with much of the current clamor for better proprietorships. What many papers in a financial hole want is a fairy godmother to bail them out and keep things in a steady, untroubled state. I can understand that, but I can’t forget that trusts without resources are feeble defenses against the real world. Financial viability can’t be brushed aside.
Just as problematic, excessive comfort in an uncomfortable, competitive climate has its dangers, too. You’re a beacon of world journalism—say, The New York Times. Does that mean you can afford to relax, make no cutbacks and live on your reputation? Clearly not. Here comes a Mexican billionaire waving his checkbook. Or take Le Monde, the pride of French journalism owned by the people who write and edit it. Surely they must be better off, freed from the pall of men in suits! Another bad joke, it is a timely reminder that good journalists with big egos can make pretty bad managers.
There is no ideal means of ownership, no ideally benevolent proprietor. The Guardian way is fantastic with fantastic benefits, but it was created in special circumstances that can’t be easily replicated (though the St. Petersburg Times and Anniston Star in the U.S. are both substantially following that model). Endowments might save The New York Times and give it a self-satisfied life until change sweeps over its seawall, but benefactors won’t save the New York Post or Daily News because they’re not elite papers in upmarket distress.
For the rest, we’re back to giant chains attempting to pull through by engineering even larger mergers, to isolated, family-owned companies still trying to preserve historic values, and to individual power-seekers with money to burn. Enter Alexander Lebedev, oligarch and former KGB agent, buying up the London Evening Standard. Is that an ownership model to celebrate and copy? Probably not. But it is one path amongst many into an uncertain future where great ogres of the past such as Rupert Murdoch are suddenly saviors. I know it doesn’t make sense. But whoever thought owning newspapers was a sensible way to earn a crust?
Peter Preston
Global Journalist columnist Peter Preston is editorial director of the Guardian Media Group and was the chairman of IPI from 1995 to 1997.