One option to ease the financial pain the newspaper industry is experiencing, and perhaps even make newspapers stronger, is to turn them into "nonprofit, endowed institutions," New York Times opinion contributors David Swensen and Michael Schmidt wrote Tuesday.
So far, actions taken by newspapers, such as refinancing debt, selling off assets and cutting staff have been "short term solutions to a systemic problem, Band-Aids for a gaping wound," according to Swensen and Schmidt.
As many, if not most, newspapers are pulled down by debt, all while circulation falls and a profitable business model can not be found for online, Swensen and Schmidt state that newspapers will "find no refuge from their financial problems" as long as they remain for-profit businesses, The New York Times column states.
If newspapers go the endowment route, however, much like public universities, they would be more stable and independent, Swensen, the author of "Pioneering Portfolio Management" and chief investment officer at Yale univerisy, and Schmidt, financial analyst at Yale, believe.
"Aside from providing stability, an endowment would promote journalistic independence. The best-run news organizations insulate reporters from pressures to produce profits or to placate advertisers. But endowed news organizations would be in an ideal situation -- with no pressure from stockholders or advertisers at all," The New York Times opinion piece states.
Endowment sizes would differ based on the size of the newspaper, but a publication the size of The New York Times would need about US$200 million a year, and with another outlay for overhead, the endowment would likely total about $5 billion, according to Schmidt and Swensen.