Charles Apple

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Imagine a world in which you could run a newspaper without the financial burden of shareholders. With no real profit margin necessary.

Clifford Krauss wrote in Sunday’s New York Times on just such a newspaper: The St. Petersburg Times, owned by the non-profit Poynter Institute.

For newspaper publishing — an industry awash in uncertainty as it tries to adapt to the Internet — The St. Petersburg Times offers one possible model for salvaging enterprises that must, as all businesses do, respond to financial reality.

…Interest in the St. Petersburg model has grown in the wake of Rupert Murdoch’s recent agreement to acquire Dow Jones & Company, the publisher of The Wall Street Journal. That was just the latest in a wave of seismic changes that include plummeting stock prices for publicly owned newspaper companies (including The New York Times Company), the divestiture of the Knight Ridder chain and the cost-cutting that has ravaged newspapers like The Baltimore Sun, The Miami Herald, The Philadelphia Inquirer, The Courier-Journal of Louisville, Ky., and The Los Angeles Times.

“I think the St. Petersburg Times model is wonderful, and I think it would be great if there would be more of them,” said John S. Carroll, a former top editor at The Los Angeles Times, who resigned after resisting staff cuts ordered by its owner, the Tribune Company. “The value of newspapers is dropping so the financial sacrifice necessary to do this is becoming easier, and I think there is a lot of charitable money around, and there are some money people who are concerned about the future of journalism.”

…What makes the company different from most private companies is that the owner, the Poynter Institute, does not take money out of the company beyond the dividend. Every decision that is made at the newspaper with regard to the use of profits, executives say, is based on the reinvestment needs of the company. No owner or chain is removing that money to invest in another newspaper or another business.

As a result, the paper does not need to push for lush profit margins that exceed 20 percent, a benchmark at some publicly owned newspaper chains. (In fact, its margin is now below its minimum target of 10 percent, according to the company.) Instead, it can spend money on big investigations and on innovative products that may hurt the bottom line in the short term but may pay off handsomely in the future. In short, the freedom from Wall Street’s tyranny gives the paper more room to experiment.

Still, editors at The Times, Florida’s most widely circulated paper, say the business environment here is as tough as they have ever seen, especially with the local housing market crashing. And, like other papers, The Times is having to make sacrifices.

But while most other papers are cutting back on their investigative reporting, The Times is increasing it.

Sounds like a winner to us. So how do we convert more of our newspapers to this model?

For other papers to follow The Times’s route, they will have to enlist the aid of deep-pocketed financiers with an affinity for information gathering — a very small group. One of those financiers is Eli Broad, the billionaire philanthropist who made a recent, unsuccessful bid for the Tribune Company. “You could create a nonprofit newspaper and have a number of foundations be contributors to the nonprofit,” he said, describing a model that is somewhat similar but not identical to that of The St. Petersburg Times.

Current owners of newspapers, however, seem less than enthusiastic about giving away their family jewels.

Well, naturally.

There’s quite a bit more. Read it in the Sunday Times.

While you’re there, read a story from Monday’s NYT about why some newspapers actually want a decline in circulation. In short, it’s because many newspaper subscribers don’t fit the audience that many advertisers want.

Richard Perez-Pena reported:

Many papers have decided certain readers are not worth the expense involved in finding, serving and keeping them.

“It’s a rational business decision of newspapers focusing on quality circulation rather than quantity, shedding the subscribers who cost more and generate less revenue,” said Colby Atwood, president of Borrell Associates, a media research firm.

That rational business decision is being driven in part by advertisers, who have changed their own attitudes toward circulation.

Yeah. That helps us in our mission.

Thanks to my old pal Jay Anthony for the tip.

This entry was posted on Wednesday, October 3rd, 2007 at 7:23 am and is filed under Industry woes, Newspapers, VizEds Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.