Okay. So you’re a billionaire businessman, you’ve bought all the villas and luxury sports cars you can get your hands on, and you’re still got piles of money left over. What are you going to buy? An art gallery? A sports team? How about a newspaper?

In an article for The New York Times last Saturday, David Carr suggests that it’s becoming increasingly common for billionaire impresarios to buy up newspapers, not for money, but for the status they offer. “Newspapers may be short on profits, but they have become a new form of ostentation,” writes Carr, “How rich is he? He can afford to own a newspaper, for crying out loud.”

As an example, Carr names Warren E. Buffett, who bought The Omaha World-Herald, despite famously telling shareholders in 2009 that the newspaper industry’s financial outlook was so dire, that he wouldn’t buy most papers “at any price.” Two other instances are are the developer Douglas F. Manchester, who bought The San Diego Union Tribune and hedge fund manager S. Donald Sussman, who bought part of the company that owns The Portland Press Herald.

Carr suggests that these rich men are attracted to newspapers not just as status symbols, but also because they know the papers might disappear altogether if they don’t receive financial help. But this comparatively harmless, motivation is sometimes combined with something more worrying; rich and powerful individuals have an interest in buying up papers to further their own agenda. Carr quotes media analyst Allan D Mutter: “As newspapers become less impressive businesses, people are going to buy them as trophies or bully pulpits or some other form of personal expression.”

Carr mentions a group of wealthy Philadelphia investors led by Democrat George E. Norcross III, and the parking lot businessman Lewis Katz, who recently bought up the Philadelphia Media Network. The New York Times pointed out in an earlier article that PNM “newspapers and Web site routinely cover Mr. Norcross and the rest of the potential owners,” leading to concerns that the buyers might influence the paper’s coverage.

 As the SFNblog reported last week, PNM’s new owners have signed a pledge, vowing that “the editorial function of the business shall at all times remain independent of the ownership and control of the company,” but the fact that the statement had to be signed suggests that worries about newsroom neutrality were running high. As previously reported, an earlier member of the Philadelphia investor group was Edward G. Rendell, the former mayor of Philadelphia and Pennsylvania governor, who bowed out of the bidding as a result of accusations that his political interests would interfere with the neutrality of PNM’s coverage.

Yet is it not preferable to have a newspaper saved at any cost, than to see it simply closed up? This is what Carr suggests, as he quotes David Nasaw, a professor of history at the CUNY Graduate Center: “People just have to be aware that other agendas exist, and the owners should be clear about that, but any time a big city newspaper is saved, I think we should stand up and salute.” Besides, Carr argues, it may be that the new owners "catch the journalism bug" and their papers will go on to produce good reporting.

The American Journalism Review has a different way of looking at the new generation of American newspaper buyers, which is simultaneously more upbeat that Carr and more gloomy. On the one hand, AJR suggests that the new buyers may have genuine interests in the newspapers as business propositions. Newspaper profit operating margins have fallen from over 20% 10 years ago to 10% at present, writes John Morton, the author of the article, but “a 10 percent operating profit margin, or even a couple of points lower, is not unattractive. Some industries don't hope to achieve 8 to 10 percent margins in the best of times.”

On the other hand, Morton suggests that the new “nontraditional” owners will take the slash-and-burn approach to newsrooms if profits decline too much more “in a misguided attempt to make their investments pay off.” In contrast to this dramatic asset stripping, Carr’s description of rich businessmen continuing to pour money into papers out of love or self-interest may be preferable.

Sources: The New York Times (1) (2), Sfnblog, American Journalism Review

Image by Benjamin Sperandio, via Flickr

A small spat has arisen involving the Newspaper Guild of New York, Reuters and TheBaron.info, an independent website aimed at Reuters’ past and present employees, which raises interesting questions about Reuters’ editorial direction.

On February 23, The Baron posted an article stating that Reuters’ editor-in-chief Stephen Adler, deputy-editor-in-chief Paul Ingrassia and COO Stuart Karle told staff in a meeting that “Reuters is adopting a new editorial approach aimed at winning Pulitzer Prizes: long, in-depth, investigative special reports from all bureaux.”

The Guild reported at the beginning of last month on The Baron’s original post, which reads, “asked about the business case for such a radical switch in journalistic priorities, the editorial chiefs said the chairman and majority owner David Thomson wants Pulitzers, and this is the only way Thomson Reuters can get them. He is a very rich man – the world’s 17th wealthiest billionaire according to the most recent Forbes magazine reckoning – and that is what he wants, chief correspondents were told.”

Yesterday the Guild wrote that Karle and Ingrassia had “both vigorously denied the report”, calling the idea behind it “stupid”. The Guild states that Karle had labelled the Baron’s original report as “factually incorrect and based on a flawed premise” and had termed the Guilds’ earlier reporting of it as a “cheap shot”. The Guild quotes Karle as saying “You do this stuff (quality journalism) because it’s a good in itself. It’s explicitly not a goal to win prizes.”

However, the Guild also reports that Barry May, an ex-Reuters journalist an editor who authored The Baron article stands by what he wrote, stating that he expressly verified the report before publishing it. May adds that in the three weeks after the report’s publication, no one from Reuters contacted him to say that it was false. What’s more, a later article by The Baron points out that Reuters deputy-editor-in-chief Paul Ingrassia wrote in a blog post a few days ago that, “online media companies (including my own…) have been investing serious cash in upgrading the quality of their reporting and have made no secret of gunning for their print counterparts when it comes to journalism awards, including the granddaddy of them all, the Pulitzer.”

Despite the sharp words from Reuters, the subject doesn’t actually seem to merit that much attention: it’s not exactly news to hear that a media organisation wants to win a Pulitzer. What is interesting about the issue, however, is the way it highlights editorial changes being made at Reuters. Lucia Moses published an article in AdWeek last Monday, highlighting the rise of Reuters and Bloomberg, in contrast to the decline of traditional print newspapers. In her headline, Moses describes the news agencies as “The Future of News: They're rich, they're global, and they're snapping up A-list journalists”. Moses points out that Reuters has not only hired an extra 600 journalists over the past four years, giving it a total newsroom staff of 3,000, it has also made a commitment to investigative journalism and has been hiring top journalists like Jack Shafer, formerly of Slate.

Although Reuters posted financial losses in February, Moses points out that, like Bloomberg, its news operations are supported by substantial revenue from financial data and services rather than shrinking ad money, and its costs are spread across multiple platforms.

These financial resources have given Reuters a platform to widen and deepen its coverage, and there’s little doubt that this is what it is trying to do. In a memo to staff, Steve Adler writes that, while Reuters remains absolutely committed to “fast, accurate, and fair” reporting”, these criteria, “are no longer sufficient in a changing company and a changing world”. Now, writes Adler, Reuters is focused also on providing “insight”, and this strategy will involve developing “Breakingviews, op-ed commentary, enterprise journalism, data mining, innovative video programming, stronger financial graphics, and other ventures that provide differentiated value”.

These changes manage may distance Reuters from the reputation that Moses says it has for creating stories written to make “a handful of people even richer”.

And if the shift is a success and helps Reuters along the way to a Pulitzer, it doesn’t seem like anything to squabble about…

Sources: TheBaron.info (1) (2), Newspaper Guild of New York (1) (2), Reuters (1) (2), AdWeek

German publisher Axel Springer’s subsidiary StepStone GmbH, is buying up TotalJobs, the UK’s second most popular jobs classified site, reports paidContent today. The sale, made on 31 March for a total of $110 million, marks the latest round in a “growth offensive in the area of digital classifieds” by Axel Springer.

In a press release about the sale, the Axel Springer explains that early last month it went into partnership with General Atlantic LLC in a move to expand more aggressively into the classifieds market. Axel Springer owns 70% of the new joint venture, which operates StepStone and the French and German real estate sites SeLoger and Immonet. TotalJobs, which employs 340 people and is described by Axel Springer as the “largest online recruitment business in the United Kingdom”, will add to StepStone’s portfolio of job sites across nine countries.  

The fact that Axel Springer is moving into the classifieds market stands out, because in recent years digital classified have represented more of a burden that a business opportunity to most publishers. Ashley Highfield, CEO of Johnston Press, is quoted in an earlier article by paidContent, observing that, “to say the wind was knocked out of the sails of the regional press when all the classified advertising went online is, to say the least, an understatement.”

However, a few well-positioned publishers have found remarkable success by diversifying into the online classifieds market. The most obvious example is the Norwegian publisher Schibsted, which invested almost 60 million in digital classifieds last year. Media analyst Ken Doctor examined Schibsted’s model in an in-depth article in Nieman Lab in February, and found that Schibsted’s online classified businesses, spread across 28 countries, contributes 21% of the company’s overall revenue. Doctor also highlights the “49-percent profit contribution of booming online classifieds business, even though it generates only about a quarter of revenue.”

Thanks to this investment in classifieds and other digital services, writes Doctor, Schibsted has significantly reduced its reliance on print advertising and circulation – something that most other publishers continue to struggle with. The model is obviously something that Axel Springer is trying to reproduce, and its growing portfolio suggests that it might be finding some success.

But there’s a potential problem for other companies that want to follow suit. Doctor states that when it comes to online classifieds; “one of the lessons Schibsted learned is that being less than the market leader isn’t worth much on the web. Dominance takes time to build, but it pays off. It leaves little room for others to compete,” he writes.

Big Axel Springer may find success as it makes its first foray into the UK – where, incidentally, Schibsed doesn’t list a presence – but UK publishers themselves haven’t had much luck in the same market so far. PaidContent writes that big UK publishing houses “have long since branched out from print small ads and now operate several specialist job websites like TotallyLegal and big-brand sites like Jobsite. But none of them rank the top five UK job sites for traffic, according to comScore.”

If Doctor’s right, online classifieds offer exciting new revenue streams for a few market leaders, but not everybody will find it easy to get a slice of the pie.

 Sources: paidContent (1) (2), Axel Springer, WAN-IFRA, Nieman Lab, Schibsted

What should professionals in the printing business be doing right now? Last month’s WAN-IFRA Printing Summit in Berlin tackled this question and called on members of the industry to provide ideas about how publishers can harness technology and adopt new business strategies to help their print products survive and thrive, even in these testing times.

Speakers included Rainer Esser, CEO of Die Zeit, Gary Hughes, CEO of Canada’s of Transcontinental printing company, and Alexis Lozano Medina, director of Artes Gráficas del Atlántico.

A full summary of the Printing Summit 2012 is now available to download here.