Can Rupert Jump the Double-Tiered Wall?

The world's gone wall-crazy in the last couple of years, with the ancient wisdom of China's great wall applied to the U.S./Mexico border, Israel's West Bank and now the neighborhoods of Baghdad.

Now we're about to see the viability of another kind of wall, the firewalls of family ownership long ago erected by the Sulzbergers, the Grahams, the McClatchys and, most immediately, the Bancrofts. Each of those families has a proud newspaper history, the New York Times, Washington Post, McClatchy Newspapers, and Dow Jones, respectively. Do these two-class share ownerships really act as a bulwark against forced sale to the highest bidder, or will enough gold tossed over the wall entice or force the guardians to open the gates?

As first Knight Ridder and then Tribune, both one-class companies, succumbed to what turned out to be irrational shareholder pressure (nobody really got much lucre out of those sales), the cry went out: they should have had two-class family protection.

Now Rupert Murdoch is testing the notion of what protection really means. He knew tossing a small bag of gold over the wall would make it easy for the Bancrofts to pick it up and heave it back. He expected that his weighty 65% premium would make that return more difficult.

It’s a welcome sign that the family has apparently mustered the strength to hurl it back anyhow, but you have to believe Rupert knew that they might. What’s his next step, upping his bid beyond the premium of $450 million the 300-plus members of the family would take in? Does he think he can make it sufficiently financially attractive that he can pull away 15-20% of the family votes? Or is he planning on riling up the hungry-for-windfall Class A shareholders, both legally testing the Bancrofts’ responsibilities to them or just pressuring them in the courts of public opinion to do “the smart thing.”

Maybe this offer will just blow away, and we’ll have affirmation of the firewall. Or maybe we’ll see the holes in it. News Corp’s “friendly” assault isn’t lost on all of those families, who must be having some interesting conversations. Of course, this issue has been recently joined as the Sulzbergers have skirmished with Morgan Stanley, which has pushed to replace that hopelessly old-fashioned two-class NYT system with a capital-friendly single-class system. It’s all in the innocent spirit, of course, of simply “maximizing shareholder value.”

AmericaLakeWoebegonSounds so good, but here’s the rub. Those two-tier companies just happen to put out above-average newspapers. And no, America's not Lake Woebegon where all the newspapers are above average.

Sure there are above-average papers published by single-class public companies and by private companies, but when you top the list with the New York Times, Wall Street Journal, Washington Post, you see a clear a trend.

Add to this question of overall quality the question of national and global reporting. On which print media do we depend for the best news coverage, analysis and investigation? We look to those top players plus AP, especially as major metros from the L.A. Times to the Chicago Tribune to the San Jose Mercury News to the Miami Herald pare back their reach beyond their communities – “local, local, local” is the cry. So imagine – it’s takes less imagination every day – the Journal in the historically prying hands of a Murdoch and the Times gone to private equity of unknown journalistic spirit. We’re just a couple of steps away from knowing and understanding a lot less.

There’s a problem here of course. A nation – the richest and most historically and proudly democratic – shouldn’t be a step away from a news holocaust. We shouldn’t be dependent on the goodwill, public spiritedness and courage of families like the Bancrofts, the Sulzbergers, the Grahams and the McClatchys. But we are, at least for the moment. Let’s hope they can do the right thing – supporting the higher-quality, independent journalism that their communities and our national community need.

At the same time, let Rupert’s audacious offer sound still another warning that we find new ways of funding and supporting independent journalism. It’s an old American saying: You get what you pay for. Right now, the paying is moving near totally to advertisers, and supporting journalism isn’t their goal; finding customers as efficiently as possible is. Right now, the paying is going to the media titans, conflating ego and Internet and cable gold rush dreams. Right now is the time to find new ways for readers to invest in and sustain the journalism they want and need.

How could that be done? It can take lots of forms:

• New ways for public companies to assert their public-service/journalistic principles as a value, alongside the goal of financial maximization – maybe more two-class companies, rather than fewer;  
• N ew NPR-like models —think community foundations -- in which readers voluntarily kick in “membership fees”, understanding the value of their contribution to reporting quality, rather than looking at their quarters or quarterly subscription payments as now-unnecessary expenses;  
• New business-savvy companies able to create large web-only news sites (and pay experienced journalists along the way);  
• Angel funders willing to invest in and/or subsidize journalism in the public interest;  

There are lots of ways to push journalism forward in the digital age. And we’d better get more people involved in figuring them out. Otherwise, we’ll just be spectators at the wall, grumbling about the falling rocks.