< Best Of Times, Worst of Times

Transcript

Friday, November 17, 2006

BOB GARFIELD:
This is On the Media. I'm Bob Garfield.
BROOKE GLADSTONE:
And I'm Brooke Gladstone. Some of the nation's best newspapers are family affairs. The Grahams own The Washington Post, the Bancrofts, The Wall Street Journal, and the Sulzbergers, The New York Times. But while the Grahams have diversified wisely and done well by the Post, sagging stock prices have sparked family strife at The Journal, and now, even the Sulzbergers are feeling the pinch.

All these papers share one noteworthy feature – two classes of stock, one for public investors to keep investors dollars flowing, and one that packs extra voting power for the families.

Morgan Stanley money manager Hassan Elmasry wants to take that system down. His company owns more than seven percent of New York Times’ stock. Last week, he submitted resolutions to be voted on at next year's annual meeting of stockholders that would give non-Sulzbergers more clout.

Without family support, it can't win, but it does show, says New Yorker staff writer, Ken Auletta, that investors want more bang for their buck.
KEN AULETTA:
They feel that if they own the same share, that they should have the same vote as the Sulzberger family member who owns the same share.
BROOKE GLADSTONE:
And gets double votes.
KEN AULETTA:
But gets double votes. So from their vantage point, they think it's undemocratic. From the Sulzbergers' vantage point, they feel that the only way to protect journalism from the predatory practices or the short-term thinking of investors is to have two classes of stock so that they could continue to invest in improving the newspaper.
BROOKE GLADSTONE:
The pressure is for Arthur Sulzberger, Jr. to give up his dual positions of publisher and chairman. Do you think his management has helped or hurt the paper?
KEN AULETTA:
Look, if you look at performance, you'd have to say The New York Times has not performed as well as it should have, as a business, over the last 10 years. That's clear. And if you're the chairman of that company and publisher of the newspaper, you bear some measure of blame for that. And so Arthur Sulzberger, Jr. is being roughed up by a lot of people, and sometimes deservedly so.

But what is often overlooked and shouldn't be, in fairness, is that The New York Times is arguably the greatest newspaper in the world, and a paper that saved itself over the last more than a decade by going national. The person who made that decision was Arthur Sulzberger, Jr.
BROOKE GLADSTONE:
He's also taken a few hits, hasn't he, for editorial management? He didn't seem to handle the Howell Raines/Jayson Blair mess too well, and, of course, the Judy Miller situation kind of blew up in his face as well.
KEN AULETTA:
In both cases, he came off to cold-eyed investors as someone who could be a little supercilious at times, and not mature, and that hurt him.

On the other hand, you see, if you look at it from a journalist's point of view, you look at Arthur Sulzberger and you say, my God, this guy believes in quality. They have 1,200 people doing news all around the world. He puts more beef in the stew even when the stew is thinning, because he believes that good journalism wins out in the end, and that's important.
BROOKE GLADSTONE:
Is there any sense that the family is beginning to divide on Arthur Sulzberger?
KEN AULETTA:
I don't sense that at all. My sense is that that family feels that if you attack Arthur Sulzberger, Jr., you're attacking them. They have no illusions that the Morgan Stanley person who is making this claim and this effort to change the two classes of stock, he's not just going after Arthur Sulzberger, Jr. He's going after the whole notion of family ownership, and the thing that is their religion.

They grew up in the Sulzberger family, and they try and instill that value system – we are the best newspaper in the world, we put more money into journalism, we don't preoccupy ourselves with profits and greed.
BROOKE GLADSTONE:
I guess the grizzliest cautionary tale about the opposing interests of business and family ownership is The L.A. Times recently, with the firing of the esteemed, though short-lived, editor, Dean Baquet.

Now, when the Chandler family owned The L.A. Times, they had the two-tiered stock system, and that went away when the Tribune Company bought The L.A. Times. It also seems to have ushered in an era of constant trauma at that paper. Can you sort of sum that up?
KEN AULETTA:
When the Chandler family sold, because of dissension within the family, in part, they were sold to a company that had a different value system and was not just in the newspaper business, but was heavily into television and newspapers not of the quality of, any of them, really, of The L.A. Times. And The Chicago Tribune is a good newspaper, but not a great newspaper.

And that cultural divide is a very hard one to overcome, and that's what we're witnessing with the, in part, with the attacks on The New York Times today.

But we're witnessing something else, and I think it's real important to say this on behalf of the Tribune Company or Wall Street or anyone who says, my God, what's your plan for growth in the future? And that's a fair question to be asking, and it's one that journalists should climb out of our bunkers and not just, look, how do we do good journalism, but how do we attract readers?
BROOKE GLADSTONE:
There seems to be some kind of strange middle way emerging among papers that are being bought, or, at least, courted by single, wealthy individuals or consortiums of wealthy individuals. John Tierney, a prominent Philadelphia businessman, recently bought The Philadelphia Inquirer. Wealthy buyers are eying The Chicago Tribune, The Boston Globe and even The L.A. Times. Do they know something that we don't?
KEN AULETTA:
Well, one of the things they know – and this is a really important thing – in the age of conglomerates, where small newspapers and radio and television stations are taken over by giant corporations and they lose their local ties, local businesspeople, who have made a lot of money, say, my God, I want to have local ownership. I want to have people who care about this community.

And some of these wealthy people are saying, look, I'm prepared to take a smaller profit margin. I want a profit, because I'm a businessman. I'm willing to take a lesser profit, and I'm going to take the company private, and therefore, I'm not going to worry about fickle Wall Street.

That's potentially a very exciting thing in that it's people who are saying, we feel the same sense of public trust that the Sulzberger family feels.

On the other hand, the crunch question becomes what happens if Jack Welch, who owns The Boston Globe, or David Geffen or Eli Broad, who own The L.A. Times, what happens the first time their new newspaper does a piece on one of their friends they don't like? Will they defend it? And that's a question that the jury's out on.

The jury is not out on how the Sulzbergers respond to that. They've proven over the years that the journalism comes first.
BROOKE GLADSTONE:
Ken, thank you so much.
KEN AULETTA:
My pleasure.
BROOKE GLADSTONE:
Ken Auletta is a staff writer for The New Yorker magazine.