Opinion

Jack Shafer

The leadership lessons of Chairman Rupert

Jack Shafer
Jun 26, 2012 19:56 UTC

This piece originally appeared in Reuters Magazine.

Rupert Murdoch has endured more crises during his 80-plus years than Richard Nixon and Odysseus combined, so the CEO and chairman of News Corporation can be forgiven for seeming nonplussed by his current predicament. He took over the family newspaper business in Australia at 21, when his father died, and expanded it. He fought the British unions in 1986 and won. He repelled the bankers in 1990, when he was close to insolvency. He has survived two divorces, the purchase and sale of MySpace.com, a bunch of other digital disasters, and even the predations of John Malone, who threatens Murdoch family hegemony with his purchase of News Corp stock. And now, referencing his media empire’s latest fiasco, the British Parliament has deemed Murdoch “not a fit person” to run an international company.

If Murdoch were the sort of pompous captain of industry who collected leadership maxims, Look for Trouble would likely top his list. He craves competition, and has repeatedly bet his company on new ventures like 20th Century Fox, the Fox Network, NFL football and his satellite operations.

Most chief executives think rewarding stockholders is their primary job. Not Murdoch. The Murdoch family owns the controlling shares in the company, so the chairman can largely ignore Wall Street to pursue a strategy that stretches across decades, not quarters. Yes, he’s impulsive, but creatively so.

I asked Ken Auletta, who has covered Murdoch for almost 40 years, to distill management maxims from the CEO’s adventures. He offered Ideology Is for Amateurs, which captures Murdoch’s political agnosticism. He leans right in his utterances, but subscribes to the politics of expediency, which explains how easily he shifted in the UK from supporting the Tories to supporting Labour and back again. Auletta says Murdoch’s genuine identity is that of a businessman. If he has any ideology, it’s What’s Good for Me?

A second maxim identified by Auletta – Public Memories Are Short, So Apologies Are Inexpensive – explains his performance before the phone-hacking committee last summer, when he said, “This is the most humble day of my life.” This very insincere regret made headlines around the world and bought his company a breather as it scrambled to rebuild its defenses.

Turning the morning news into soap opera

Jack Shafer
Jun 21, 2012 21:50 UTC

Ann Curry, the second fiddle on NBC’s Today show, is apparently being shown the door. That news was broken yesterday afternoon by Brian Stelter, the prolific media reporter of the New York Times on the newspaper’s website, and that 1,100-word story earned prominent placement on Page One of the business section of this morning’s paper.

I’ll forgive you in advance if you don’t care whether Curry continues on Today or if you don’t care whether she finds a slot elsewhere in the NBC empire, just as long as you forgive me for not giving a fig either. It’s not that I dislike Ann Curry or Today‘s first fiddle, Matt Lauer, or even Today‘s morning-show competition. It’s just that I dislike the shows for being dulled-down messes of news, entertainment and talk. If I watch any of them, it’s by accident.

My lack of interest in the morning-show mix puts me in the majority. Today, which is usually the number-one-rated program, and ABC’s Good Morning America, which took that position a couple of times this spring, draw an average of fewer than 5 million viewers. The third-ranked show, CBS’s This Morning, pulls in a little more than 2 million viewers. In a country of 311 million, that’s minimal interest.

Jonah Lehrer’s recycling business

Jack Shafer
Jun 20, 2012 23:38 UTC

“Write every piece three times,” the late Richard Strout used to advise journalists who craved advancement in the profession.

Strout, who wrote the New Republic’s TRB column for four decades and worked 60 years as a Washington correspondent for the Christian Science Monitor, wasn’t calling on his colleagues to submit identical copies of their work to different publications for payment, as New Yorker staff writer Jonah Lehrer just got busted for.

Strout was more subtle. If, for example, you were a freelancer who had just penned a slice-of-life piece for the New Republic about a coal strike in West Virginia, the only way to earn back your investment of time on such a low-paying piece was to spin off a similar yet distinctive version, maybe to the Outlook section of the Washington Post. If you could reconstitute elements of the narrative into a work that fed the policy debate over unions, your efforts were legitimate. After satisfying those two outlets, a smart freelancer would shoot for the glossies with a big coal-strike feature, perhaps the New York Times Magazine or the Atlantic. Sometimes the publish-every-piece-three-times impetus has come not from writers, but from editors who, having seen a writer’s earlier work on a topic, wanted a localized version of the writer’s story.

Who jumped first from the newspaper sinking ship?

Jack Shafer
Jun 15, 2012 22:21 UTC

When did the ripe, bulbous, and gibbous newspaper bubble pop?

It was probably in the 1990s, when the business better resembled a cruising blimp than it did the dotcoms like Pets.com, Boo.com, and TheGlobe.com, which all went kerblewy around the turn of the century. Unlike the bombing dotcoms, the high valuation of newspapers was based on real, not imaginary profits, and the belief that the profits from these deals would extend for years, if not decades, into the future.

And such deals there were. The New York Times Co bought the Boston Globe for $1.1 billion in 1993. In 1997, McClatchy acquired the corporation that owned the Minneapolis Star Tribune for $1.4 billion and Knight-Ridder purchased the Kansas City Star and Fort Worth Star-Telegram (and two other smaller papers) for $1.65 billion. On the sidelines, newspaper consultant John Morton crunched the numbers and expressed the market consensus about these transactions in the headline for his January/February 1998 American Journalism Review column: “Expensive, Yes, But Well Worth It.”

Morton’s column provides no sense of the impending doom, no inkling that an entire industry is arrowing its way to a hospice, no clue that all these newspaper people have booked passage on a death ship. Even after the Hearst Corp ditched its San Francisco Examiner for a $660 million deal to buy the San Francisco Chronicle in late 1999, more happy talk ensued. If anybody cited Warren Buffett’s 1991 warning that newspapers had lost their special “franchise” value and that he wouldn’t be buying any more of them soon, I missed it.

What happens to Tribune after bankruptcy?

Jack Shafer
Jun 11, 2012 22:40 UTC

Choking softly on the wad of debt “rescuer” Sam Zell fed it, Tribune Co checked into a Wilmington, Delaware, bankruptcy court at the end of 2008. Now newly slimmed, especially after the payment of $410 million in legal and other professional fees, the much diminished patient is about to be released and turned over to its new owners, a group of banks and hedge funds. How diminished? At the time Zell acquired control in 2007, Tribune Co’s newspapers, television stations, other media properties and Chicago Cubs baseball franchise were valued at $8.2 billion. Reporting from court filings, Chicago Tribune reporter Michael Oneal put Tribune Co’s current value at about $4.5 billion.

That’s not a haircut. That’s a beheading. Some of that loss in value represents the sale (for $845 million) of Tribune’s Chicago Cubs operation in 2009, but still.

What will the likely new owners (JPMorgan Chase; Angelo, Gordon & Co.; and Oaktree Capital Management) do with the reconstituted Tribune Co? According to Oneal, who has been monitoring the ailing company’s vitals since before its bankruptcy, Tribune isn’t so sick that it must sell off all its parts immediately. But hedge funds and banks aren’t the best managers of media properties, and when combined with today’s declining market for media properties, those hedge funds and banks might want to put out a for-sale sign as soon as possible. I’m sure that if you were interested in Tribune’s 23 TV stations, which are valued at $2.9 billion, they’d meet you for coffee.

The great newspaper liquidation

Jack Shafer
Jun 5, 2012 22:53 UTC

In his 2004 book The Vanishing Newspaper: Saving Journalism in the Information Age, Philip Meyer imagined “the final stages” of a “squeeze scenario” by a newspaper owner who wanted to exit the business but didn’t want to actually sell the title: He would start charging more for his newspaper and delivering less, commencing the “slow liquidation” of his property. This slow liquidation would not be immediately apparent to observers, Meyer wrote, because the asset “being converted to cash” would be “goodwill” – the newspaper’s standing in the community and the habit of advertisers and subscribers of giving it money.

One reason an owner would want to extract a newspaper’s goodwill value before selling its physical assets – its real estate, presses, computers, trucks, paper, ink, etc. – is that traditionally, goodwill is where most of a newspaper’s value has resided. When Meyer asked two newspaper appraisers to estimate how much of a newspaper’s value was locked up in goodwill versus physical assets, both gave him the same answer: 80 percent goodwill, 20 percent physical assets.

Selling goodwill is a dangerous strategy because once sold, it’s difficult to reacquire. But a newspaper owner who feels trapped by losses and can’t find a new owner at what he considers a fair price may feel he has no alternative but to cheapen his newspaper bit-by-bit, month-by-month. He may explain the goodwill sell-off as temporary economizing to be reversed once business conditions improve, or even as the exploration of a new business model. Sellers of newspaper goodwill might protest that the financial losses they’re absorbing constitute a serious investment in the newspaper’s future, that they’re harvesting nothing. But don’t be fooled. If you’re winding your company down with no strategy to wind it up, you’re burning goodwill even if you don’t acknowledge it.

Drug panics, bath salts, and face-eating zombies

Jack Shafer
May 31, 2012 23:26 UTC

Last Saturday afternoon, a naked man gnawed off most of the face of a half-naked man on a Miami causeway. He continued chewing even after police shot him and did not stop until they shot him dead.

Things like that don’t happen everyday – not even in Miami – so quite naturally the horror story has been picked up by every flavor of media around the world. The most sensational – and I don’t mean that in a good way – coverage came from local TV station CBS4 (WFOR-TV). On the day Rudy Eugene attacked Ronald Poppo, CBS4 relied on the musings of the president of the Miami Fraternal Order of Police and an emergency room physician – neither of whom attested to having firsthand knowledge of the case – to speculate that the attack was caused by a new kind of LSD, by a mixture of drugs, or by “bath salts,” the street name given to the many quasi-legal, over-the-counter stimulant concoctions that are packaged and sold under such wacky brand names as “Ivory Wave,” “Vanilla Sky,” “White Cloud” and “Zoom.”

Before any criminal lab could determine that Rudy Eugene had drugs in his system, some outlets, including the Guardian, the New York Daily News and CNN were seizing on CBS4′s reporting to vilify a “new” drug and its users, exaggerate the peril it presents and launch a new drug panic. To believe the early press accounts about bath salts – recall last year’s story of a West Virginia man found in bra and panties next to his neighbor’s murdered goat – madness comes in a $20 package of powder, the product gives its users superhuman strength, and they may have turned a 31-year-old man into a flesh-eating zombie.

The cable news audience has peaked

Jack Shafer
May 24, 2012 21:15 UTC

CNN’s rotten ratings have grown only rottener. The Time Warner-owned news network drew fewer prime-time viewers last week than any week since September 1991, the New York Times just reported. But CNN isn’t the only network riding the down escalator when it comes to ratings. Over the same week, Fox News Channel attracted its fewest viewers in the important 25-to-54-year-old category since July 2008, the Times added. * But CNN isn’t the only cable news network in the doldrums, according to year-by-year data. Various observers have blamed the viewership downturn on the lull in the 2012 campaign, on viewers defecting to the season finales on the entertainment channels and on the lack of breaking news. But I interpret the falloffs as fresh evidence that the audience for cable news has peaked.

The first sign of a peak in cable news appeared in March 2011, when the Pew Research Center released a study that proclaimed, “Though many will remember 2010 as a hard year for CNN, in reality, most cable news channels suffered audience losses.” The able chartists at Pew drew a sad graph of cable news. Combined median viewership for CNN, Fox News and MSNBC during prime time had receded 16 percent, to 3.2 million, that year. Mean viewership had also dropped 13 percent, to 3.3 million, making it the largest year-to-year drop for cable news since Pew started analyzing the numbers in 1997. It also marked the first drop in the median audience since 2006.

The bad news continued through 2011, as cable news viewership remained nearly flat. This was fairly astonishing considering all the breaking news from that year – the Arab Spring, Japan’s tsunami, the killing of Osama bin Laden, the Libyan civil war and the European economic crisis – not to mention the bustle of the presidential campaign.

So Warren Buffett likes newspapers again?

Jack Shafer
May 18, 2012 23:05 UTC

Just because Warren Buffett blew $142 million in cash on 63 daily and weekly Media General newspaper titles yesterday doesn’t mean that newspapers are back. All it means is that an old cow that’s still a milker has been moved to a neighboring farm’s pasture, where it will be squeezed until it can give no more and will then be ground into pet food.

Buffett has long loved newspapers, having made about a half a billion dollars on the Washington Post Co. after his company, Berkshire Hathaway Inc, started investing in it in 1973. In 1977, he bought the Buffalo Evening News for $32.5 million, and after it vanquished the city’s other daily, it became one of the country’s most profitable newspapers, as measured by return on assets.

But Buffett isn’t romantic about newspapers. He buys when he sees value that others don’t. For instance, in a lecture he gave at Notre Dame in 1991 (pdf), Buffett explained why he bought Washington Post Co. stock.

Candidate-press relations are, well, about as ‘sour’ as usual

Jack Shafer
May 16, 2012 23:53 UTC

Having secured the nominations of their parties, Barack Obama and Mitt Romney have set their campaign throttles to late-spring idle with a speech here, a speech there, a commencement address over there, and fundraisers and soft TV appearances everywhere. Eventually, the two candidates will stop coasting, but until they do, reporters will continue to lard their work with exercises in meta-journalism, such as today’s 1,800-word Politico piece, “Obama and Romney’s common foe.”

The common foe, don’t you know, is the press! According to Politico’s Maggie Haberman and Glenn Thrush, Barack and Mitt both “disdain” the “political news media” because they believe reporters are “eager to vaporize them for the sheer sport of it.”

Is there anything new about presidents and presidential candidates having bad feelings for the press? Does nobody recall John McCain’s low regard for the New York Times coverage of his 2008 campaign? Or of George W. Bush’s attitude toward the press? Bill Clinton’s scorn? George H.W. Bush’s hatred? Carter’s? Nixon’s? Johnson’s? Sometimes candidates do charm the press, as McCain did in 2000, and the anti-war candidates of 1968 and 1972, but it’s the exception, never the rule.

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