Who cares if a politician buys a newspaper?

February 23, 2012

Philadelphia has gone all hinky at the prospect of an investor group headed by former governor, former mayor, former district attorney, and former head of the Democratic National Committee Ed Rendell purchasing Philadelphia Media Network, the company that owns the Philadelphia Inquirer, the Philadelphia Daily News and Philly.com. The Rendell group includes powerful local businessmen and assorted politicos, causing Philadelphia magazine’s Paul Davies to fret that such a sale would result in newspapers “viewed as a direct extension of the Democratic Party and Chamber of Commerce.”

Davies’s prediction that the new publishers would interfere in editorial matters was quickly preempted by editorial interference from Philadelphia Media Network’s current publisher, Gregory J. Osberg, whom the New York Times has already caught butting in on coverage.

Philly journalist Tom Ferrick maps the web of conflicts of interest the Rendell group would weave as owners: “[H]ow do you cover Rendell if he is chairman of your board? … George Norcross is the Democratic power of South Jersey. Watch what you say about him. Lew Katz has many diverse holdings — all of which could be sensitive topics to cover.” Non-Rendell bidders bring similar baggage to the deal: 94-year-old billionaire Raymond Perelman has teamed up with his billionaire son Ronald Perelman to buy the company; Raymond’s estranged son, Jeffrey Perelman, is said to be making his own offer; and developer Bart Blatstein wants a shot, although Raymond Perelman and Blatstein complain that they’ve been frozen out from bidding by the current owners.

Davies, Ferrick and former Inquirer reporter Buzz Bissinger aren’t Chicken Littles when they say the Philadelphia newspaper sky is falling. It is falling. Or, rather, has fallen. Nationwide, newspaper advertising revenues are half of what they were in 2005. Gross profits of the Inquirer‘s parent company dropped from $120 million in 2010 to $4 million last year, as Ferrick notes. The company sold for $139 million in 2010, but after offloading its downtown headquarters for $23 million,  the current owners would be fortunate to get $50 million for the whole caboodle today.

If any city needs an independent news organization to dig out political corruption, it’s Philadelphia. But with no established, out-of-town publishers or philosopher kings queuing up to bid for Philadelphia Media Network, the city should count itself half-lucky that its plutocrats, magnates and sharp-shivved pols want to save it. But only half-lucky. There’s no way that any owner can bring back the Inquirer‘s glory of past years, when the Knight Ridder chain owned it (1969-2006). The only conceivable reason to spend $50 million on a sunset business like a newspaper company is that you could squeeze $50 million worth of value out of the existing assets when the company croaks.

In his 2004 book, The Vanishing Newspaper, Philip Meyer calls the conversion of a newspaper’s assets, including the goodwill embodied in its good name, “slow liquidation.” A proprietor simply cuts circulation, cuts pages, sells the presses and outsources printing, and cuts labor costs by dumping staff until one day — poof! — the paper vanishes. (The Philadelphia company is already doing most of that.) Is there $50 million of value locked up in the two dying newspapers and website that make up Philadelphia Media Network?

That might sound like a lot of money to you or me, but for billionaires like Ron Perelman, $50 million is chump change. If the purchasers are making a purely political move, owning the Philly megaphone could be a bargain. Consider this: Interest groups and political parties spent half that amount — $25 million — on influencing just the outcome of the 2010 Pennsylvania senate race. Because newspapers continue to be read by older consumers, who vote in larger numbers than do the young, paying $50 million for two regionally dominant newspapers that could help turn future elections looks like a bargain. There are other rewards to reap from owning a newspaper: blocking unflattering investigations, suppressing embarrassing information and shaping the public debate. As readers catch on and the publications become so small they can go down the swirly on one flush, $50 million could be a wise, if cynical, investment.

Of course, turning the Inquirer and the Daily News into purely partisan sheets violates everything professional journalists hold sacred. But seeing as there are fewer professional journalists working at newspapers every day, there are fewer of them around to protest the heresy that’s about to go down. Yet converting the Inquirer and Daily News into journals of the Democratic Party would merely return them to the 19th century, when newspapers relied on political money for their support.

“Before the advent of the modern mass media in the late 19th century, when newspapers made serious money from advertising, most newspapers depended on political money,” says James McGrath Morris, biographer of Joseph Pulitzer, in an interview. “It either came in the form of direct payment or in valuable printing contracts from the local or state government. They made no secret of this. Their names often reflected this relationship. In Missouri, for instance, there was the Missouri Republican and the Missouri Democrat … In cities like New York, the newspapers rivaled the power of party bosses.”

Press scholar W. Joseph Campbell points out in an interview that newspaper publishers (Warren G. Harding) and owners (William Randolph Hearst and Joseph Pulitzer) even used their positions to launch political careers. The godfather of the politics-journalism fusion, late-19th century British journalist William Thomas Stead, did them one better in promoting his sincere belief in “government by journalism.” Stead was a bit of a nut, but his innovations had a huge influence on Hearst.

Politics and journalism were two sides of the same coin in the 19th century, says Morris: “Successful editors became elected politicians, and out-of-work politicians became newspaper editors.”

As strange as that crossover may sound to our 21st century ears, politicos have been refashioning themselves as TV newsers for several decades in the contemporary era, replaying scenes from the yellow journalism period. Partisan operators like Bill Moyers, Bill Bradley, Diane Sawyer, Tim Russert, David Gergen, Chris Matthews, George Stephanopoulos, Paul Begala, Susan Molinari, John Kasich, Joe Scarborough, Al Sharpton, Jennifer Granholm, Pete Williams, and others have made the switch to “news.” On Fox News Channel and MSNBC, the concentration of politicians in journalist disguise has reduced the two outlets to stand-ins for the Democratic and Republican parties.

The partisan TV cable news channels and the prospective partisan papers in Philadelphia differ in one dramatic way: The TV news channels make real money, and the partisan press generally doesn’t. Even so, if Team Rendell wins the Philly property, it should mimic some of the techniques that lend TV cable news credibility: Just as a pro-wrestling match puts at least two combatants in the ring at a time to make the fight work, TV cable news producers always enlist somebody from the other side for Sean Hannity or Rachel Maddow to rough up. A partisan Philly paper that’s in the tank for its owners but listens to the other side wouldn’t be my first choice. But if it were my only choice, it wouldn’t be completely worthless.

Partisan funders don’t always produce bad journalism, as proved by the non-profit ProPublica, founded by Herbert and Marion Sandler and supported now by others. You’d have to grow several additional arms to become more left-wing than the billionaire Sandlers. And yet the ProPublica operation has hardly become the left’s political tool. This is not to suggest that Team Rendell could possibly match ProPublica’s success or even want to. Rendell may be talking about building a “firewall” between the newsroom and its new owners, but that’s laughable. Why buy a part of a newspaper if you can’t have any influence over it?

As currently constituted, the Rendell consortium has too many separate interests on board (revisit the Davies piece) to remain stable if the deal goes through. If the developer who has invested in the Philly papers runs up against the politicians who are part of the consortium, somebody will have to give. Like most economic cartels, the Rendell coalition will eventually spin apart because each member will think and act like his stake makes him the boss.

The great deal that Rendell and the other machers think they’re making with their offers for Philadelphia Media Network may be an illusion. As James McGrath Morris puts it. “If Rendell really wants to shape the future of media and gain power from it, the place to start is certainly not with an antique notion of news dissemination.”

If I were the kind of writer who liked to make predictions — and I’m not — I’d say that if Rendell wins the day, the Philly properties will, after a shakeout period, eventually revert to a single majority owner. This would return ownership to the status quo ante of the 1957-1969 period, when Walter Annenberg owned both the Philadelphia Inquirer and the Daily News. But those new owners won’t be in the position of strength that Annenberg enjoyed. He got away with punishing his enemies and rewarding his friends in the pages of his papers — and made money while doing so — because advertisers and readers had few alternatives.

But that’s not the case today. The golden era in which every city could support a general interest daily newspaper that could both make lots of money and produce lots of quality journalism is passing. As a lover of newspapers, that pains me. But it’s the truth.

How long until the Philadelphia Inquirer shows up on Antiques Roadshow for an appraisal? Please don’t send your prediction to Shafer.Reuters@gmail.com. My Twitter feed will go dark for one day if Team Rendell succeeds. Sign up for email notifications of new Shafer columns (and other occasional announcements). Subscribe to this RSS feed for new Shafer columns and subscribe to this hand-built RSS feed for corrections to my column.

PHOTO: Pennsylvania Governor Edward G. Rendell speaks at a rally in Pittsburgh, September 23, 2009. REUTERS/Eric Thayer


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shoot them all, that will take care of all conflicts once and for all!

Posted by MIKEROL | Report as abusive

Anschutz already owns the Washington Examiner, and Murdoch owns a multimedia empire. About time the liberals tried hitting back.

Posted by borisjimbo | Report as abusive