New forms of ownership & How to support owners that seek to establish local journalism as a civic resource

Geneva Overholser & Jim Shaffer notes

At the session: Shaffer and Overholser convening, Peck, Clement, Folpe, Caputo, Hosein, Johnson (of KY), Messerschmidt, Lawson (first part of session), Holman (last part of session) (BIOS PAGE)

Comment before the session by Chris Peck about the current economic model, which is “strangling the media. We’re organizing all the resources to fight that battle, and we don’t have the resources to engage new media, build your community.”

A. First topic (and related): Investors’ objectives. Opening question by Shaffer: Do we need a conversation about why we need a new breed of owners whose objectives do not include a competitive return on capital?

Peck: So is this about reforming existing owners, or finding a “new breed?”

Overholser: The “new breed” couldn’t just be corporate owners.

Shaffer: Agree. Because corporate owners, by definition, would have to be responsible to shareholders. Need a breed responsible to civic interests.

Folpe: What about Socially Responsible Investing?

Shaffer: Even “socially responsible investors” still require at least some financial return.

Two thoughts: How to bring social-investor money to news gathering

Discussion broke out two different concepts:

  • Local philanthropists willing to buy media and run them in the public interest, perhaps with no expectation of a financial return.
  • The media equivalent of environmental SRI, encouraging shareholders to invest in responsible companies. (Trillium now working on this.)

Overholser: SRI can mean two things: 1. Do no harm, or 2. Seek to make a specific positive change.

Current crop of investors still return-driven

Peck, quoting John Soloski’s thinking: Now that papers are commanding much lower prices (see Minneapolis Star Tribune) there is a potential upside in that investors could buy, have a much lower acceptable rate of return, produce a steady stable income, and still operate in the public interest. 12-15% would be OK.

Qs about that: Would Wall St. accept that (assuming the company is public or paced by the public capital markets), and will the current economic model reliably continue to produce even that low-but-stable rate?

Shaffer: “Even private capital management firms like Avista (Minneapolis S-T) still have to be economically responsible. Based on statements by Chris Harte of Avista, Avista thinks they are buying “out of favor” equities, almost like a value stock, “buy low, sell high.” They don’t get that the economics of traditional newspapering are completely collapsing.” They are bound to be disappointed, leading to more changes of ownership, until the new owners understand the new economic realities… We need a completely new motivation by owners.

Peck, quoting Christianson: Talk of disruptive technology, inability of traditional institutions to respond, something bound to grow up under newspapers and replace them.

Overholser: Perhaps an example would be Philadelphia, where they started with lofty statements, but the bottom fell out so fast …

Shaffer: That they just laid off 75 people.

Pam McAllister Johnson: But small newspapers, especially weeklies, are thriving. They’re buying presses, have good profit streams. Q—are they simply lagging behind the currently more trouble metro dailies?

Clement: On Long Island, even the small ones are dying.

Shaffer: The small ones will probably be the last to go, but they will also be affected by the decline of classified (1:1 contact), and display 1:many), which has paid for journalism at newspapers. TV is affected only by the decline in the 1:many, which is also declining.

Johnson: Her experience is that the journalists that first embrace the on-line media are the photographers, since they can’t get their work onto paper, but can supplement paper with on-line.

Thinking of live without printing — outsourcing

B. Moving along, Chris Peck speaks of print itself as an economic millstone. We eventually need to get away from print and its expense. Centralized copy desks. Potential to outsource circulation, printing.

With Web producing typically only 5 to 6 percent of metro dailies’ revenues, the good news is that (nonetheless) many Web operations now are approaching generating enough revenues to cover editorial costs. (For example, Web producing cash flow of about $8 million could handle many metro newsrooms)

Discussion: Potential to buy newspapers and do away with printing presses, distribution costs. A foundation could make this happen, or local monied interests.

[Another model – Consumers Union. 2 million paid members on their Website. Everybody pays a fee. Do this in communities, with citizens paying?

Q – The elitism of this model, excluding those who can’t/don’t pay to join.

Upside is the community owns it. They think having journalists is valuable, and they’re willing to pay for it.

Peck: The change could come either through takeover of existing newspapers or through building new Web news “papers”/services. Go to foundations, other do-gooders, and start news organizations in the public interest.

The choice: Re-engineer or start from scratch

Peck: What’s the point of buying the ruined hulk of a failing newspaper? Why not start from scratch?

Several: Audience, brand recognition, credibility

Caputo: Yes, there are two models:

  • Start from scratch, or
  • Buy existing newsrooms/papers from chains and families.

Hanson: This discussion is too newspaper-centered. (Agreement.)

We are talking mostly in any case about Web “publications,” but publications don’t necessarily imply print.

Caputo: The starting point doesn’t matter. It’s the eventual realization that the end point is a multi-purposed newsroom.

Overholser: So, it’s newsgathering that’s a key element of social capital. (Not news dissemination in any particular form.)

Jonathan Lawson: Introduces discussion of newspaper as owned by municipality. Comparable to utilities. Municipal broadband. “This is about communications rights, free speech. We need to have quality journalism.”

Q – how to make it happen nationally, given nature of federal politics. Maybe locally?

Peck: Something you need locally, like the lights and water.

Lawson: Let everyone lobby for a broadband communications utility.

Grants vs. advertising — it’s hard either way

C. Strength of advertising model. Noting comment from night before that nonprofits are far from a problem-free solution. Noting here, too, that keeping grants going is quite an effort.

Hosein: You need to change the “rules” of journalism, when the support of journalism gets in bed with funders.

Shaffer: So, the “old” journalism was also supported by “funders,” and acceptable “rules” or understandings emerged.

??: Other nations have government support. Problematic here, for various reasons.

Lawson: NPR and PBS are models.

Overholser: Offer tax breaks?

Shaffer: But tax breaks are only useful if there’s a profit, generating tax that needs to be sheltered. I wouldn’t count on profit for at least a while, therefore, tax breaks wouldn’t be of value.

??: Some combination of support: benevolent money at startup, some subscription money, some advertising. Maybe profit eventually.

Hosein: “Journalism is like Mozart. Mozart always had a patron. The community can be the patron.” As for the difficulties that could be caused by the communities’ demands (who wants nosy journalists poking around?) a firewall would be needed.

Folpe: We would need to change the concept of government as a patron.

Discussion of “cause-related” vs. “impartial” media. Need for/ value in both.

Messerschmidt: Had a conversation with a Ford Foundation program officer (John Funibiki, no longer at FF), NW Cable News, with Belo … a new form of media organization.

Peck: What if we sought support from universities? They have money? (Many: They do??)

Overholser: In any case, there’s so much good that comes from community support.

Union model – UAW owned little radio stations. Huge pot of money there.

Peck: And Christian radio …

Caputo: But are we deviating from public interests? … If journalists could cast themselves as educators … maybe too top down … Overholser: Yes, probably.

D. Moving on to broader hopes – educating the public about value of journalism as well as producing news in the public interest.

Taping the “expression” of the young-adult network?

Peck: Suppose we operate at the secondary level, creating a network of young people as newsgatherers. Link up with public schools. Join other local organizations.

Hosein: Maybe we call this course or subject “expression.”

Overholser: Who is “we?” Consumers’ Union model?

Caputo: Government seed money?

Several: Subscription, ala public broadcasting?

The idea: Local civic leadership; test communities

Shaffer: There’s a model in Portland, ME. The Institute of Civic Leadership. The mission is to build civic capacity. “Perhaps ICL could run this thing as a civic resource.” We need to talk to Ralph Gage in Lawrence KS to learn from his experience.

Holman: Ralph has been actually conducting classes – over subscribed – in how citizens can be journalists.

… social venture partners

Caputo: Tough sell.

Overholser: But so much to be gained.

Development of these themes – angel investors, signing up local citizens. A significant number of local people as shareholders “You live here, you get a share” You can be a member for free, but if you’d like to pay, do so.

Peck: How about owning or partnering with coffee shops around the town, to convene people. Build civic capacity. (maybe make money on the beverages). Hook up with schools, media reform organizations … Obits as a gold mine… no law that you must contribute in church, but it becomes part of the culture.

Johnson: Tithe to the civic media?

E. What to do now? Go out and identify 10 or 12 communities ripe for this. Isolated small towns? Failing newspapers?

Peck: Where would this work best?

Hosein: Kelowna, BC: Terrible (Thompson) paper; terrible TV; 100,000 people.

Overholser: What’s different about this one?

Shaffer: Civic values? Role of media in education?

Could APME community roundtables help identify such communities?

Develop a business model, find a laboratory, do a media startup. Two or three places?

Could a school of journalism take this model under its wing?

Jane Folpe (Columbia) – ask a biz school to do it. To build a model. Bring together J school, biz school, school of public policy

Shaffer: Medill and Kellogg would be good collaborators, if we could interest them.

Messerschmidt: And an institute for public policy…

NEXT STEP: Create the model of civic-resource journalism

Next steps: (all) Let’s try to develop a model or template for “civic resource” journalism and see if we can use this to inspire and stimulate action. We need to develop and publicize this model. Let’s see if we can find and suggest this to test cases.