Profit vs. Public Service
ORIGINAL ARTICLE AT: http://www.poynter.org/content/content_view.asp?id=65732
News media executives search for new economic models for media success. Normally that means building audiences for broadcast, print, and online news, but the search also takes another path. It also means ensuring survival of independent news organizations. In this case, the answers for future success might be found in models from the past. There are unusual ownership arrangements, experiments that failed, family efforts that faltered, and some ventures that survive.
In search of strong news media, owners created schools, developed community foundations, set up employee ownerships, and devised trusts as means of keeping news organizations independent and locally focused. These non-traditional approaches are found in various geographical regions, in a range of organization sizes, and among ideological opposites. Some are recent efforts that aren't fully formed. Others have lasted for decades.
The best arrangements value community responsibility, commitment to local ownership, and a passion for quality journalism. Several names emerge as leaders in preserving non-profit ownerships. Newspaper leaders include Theodore Bodenwein of the New London (Conn.) Day; Nelson Poynter of the St. Petersburg (Fla.) Times; William and Nackey Loeb of the Manchester (N.H.) Union Leader; and more recently, Brandy Ayers of the Anniston (Ala.) Star; and George McLean of the Tupelo Northeast Mississippi Daily Journal.
This study address the first of five proposals set forth by the Breaux Symposium at Louisiana State University. The proposal is: More media outlets should be operated by nonprofits and public policies should encourage and support this type of media ownership. The study looks at the organizations named and others that model non-profit ownership. It examines the individual organization's history, form of ownership, the intent of the owner, and challenges to the form of ownership. Using this analysis, the study also addresses four sets of questions raised: Is the method feasible, operable, desirable, and measurable? …
In this excerpt, we will look at only one model, the case of the St. Petersburg Times.
The St. Petersburg Times
In 1938, in St. Petersburg, Fla., Nelson Poynter became general manager of his father's newspaper, the St. Petersburg Times. Poynter took the role after his father, mother, and sister agreed that Nelson would have the right to buy all of his father's stock.
The Poynters were from Indiana and the father, Paul Poynter, bought 10 newspapers during his life.1 He bought the Times in 1912.
Nelson was a graduate of Indiana University, where he edited the student newspaper when Ernie Pyle was one of the writers. Poynter earned an economics degree from Yale University at age 23, and then went to Florida to help his father, who was in financial trouble with the Times. Nelson dealt with the problems and moved to buy his father's stock in the newspaper, over time, for $100 per share.
In 1939, Poynter became editor of the newspaper. In 1947, he bought most of the stock, and became owner of the newspaper.
At that point he issued his "Standards of Ownership," that became the significant document for the owner and his newspaper. In it he valued community service, modern equipment, an above-average staff, and steps to eliminate debt and reward employees. The first provision in the standards is the one most associated with him. He wrote:
Ownership or participation in ownership of a publication or broadcast property is a sacred trust and a great privilege.2
During three decades of ownership of the Times, Poynter led the nation in using color graphics and photos; in strengthening the news report and winning journalism awards, including the Pulitzer Prize; in raising a strong voice in the community, although his was generally more liberal than the community's.
In 1945, he and his second wife, Henrietta, founded Congressional Quarterly, and Poynter made trips to Washington. He became better known nationally and raised the reputation of the St. Petersburg Times.
In 1978, he died of a cerebral hemorrhage shortly after groundbreaking for the new campus of the University of South Florida, St. Petersburg. He had fought to bring the campus to his city. Upon his death, The Times of London described him as a man who had built "a remarkable newspaper in an unremarkable city."3
During his whole tenure of leadership at the Times, Nelson Poynter was at odds with his sister over ownership of the newspaper. Eleanor Poynter Jamison ran the family's newspaper in Sullivan, Indiana, but she felt her brother was depriving her of her inheritance at the Times.
Two months after purchasing the newspaper, to pacify his mother, Nelson Poynter sold his sister's 40 percent of the Times common voting stock. The sale included a provision for him to buy back the stock at a "fair price."4 It was a small move that had huge consequences during his life and after Poynter's death.
Poynter was adamant about not sharing ownership with family or leaving the newspaper as a family inheritance. According to his biographer, Poynter told his lawyer, "I've never met my great-grandchildren, and I might not like them."
He sought to leave his newspaper to one successor as chief executive rather than a group. By the 1950s, he considered leaving the company to a foundation. In 1969, the political climate turned against foundations and limited the percent a foundation could own of a profit-making enterprise.5
Poynter settled on creating a school. It would improve the state of journalism and preserve the independence of the St. Petersburg Times. He named the school the Modern Media Institute. In 1984, Trustees changed the name to The Poynter Institute.
Nelson had tried to buy back the stock he had sold to Eleanor. His successor, Gene Patterson, made the return of the stock a top priority, but didn't come to terms with Eleanor or with her daughters after her death in 1987.
In 1988, two weeks before Patterson turned over leadership of the Times to Andrew Barnes, a Texas entrepreneur called to let the Times leaders know that he had bought the stock of the late Eleanor Poynter Jameson from her two daughters.
There followed a two-year battle in which leaders of the Times and The Poynter Institute took on Robert Bass and his group, called Poynter-Jamison Ventures Limited.
By this time, the Times was a circulation leader in Florida, it was in a growing market, and was often regarded as one of the top newspapers in the nation. It was a prime target for purchase or corporate take-over. The Poynter Institute had developed a reputation for outstanding mid-career development programs for journalists. The battle over stock drew national attention. It focused attention on Nelson Poynter's arrangement that left a well-regarded, but small, journalism school as owner of a prosperous newspaper. When a settlement was reached, the Institute still owned the Times.
Andy Barnes wrote a column in December 1999 explaining the situation to readers. Here are excerpts:
As I wound up the year's work a few days ago, I signed a very big check, $22.5 million. It was profit this newspaper publishing company has earned and set aside over the past few years, and it went to our owner, The Poynter Institute.
It was a pleasure to send the check off. A debt created nearly 10 years ago is paid. I've never burned a mortgage, but it must feel the same. Ownership is secure. It's time to turn to new challenges.
But we also savor the moment, and mark the importance of this newspaper's highly unusual ownership.
Nelson Poynter, a Hoosier who came to love St. Petersburg, owned the majority of the St. Petersburg Times, having bought it from his father, Paul Poynter. He created The Poynter Institute, which is a school for journalists now located on Third Street South in St. Petersburg.
The Institute had two purposes: to teach journalists, young and old, and to keep his newspaper independent and free to serve its communities. Newspaper publishing, he wrote, is a sacred trust and must always be carried out in the public's interest. Ownership by a distant corporation would make that impossible.
The problem was, he didn't own all of the stock. His sister, Eleanor Poynter Jamison, owned 200 shares. Poynter tried repeatedly to buy the shares. His successor, Eugene Patterson, tried to buy the shares from Mrs. Jamison, and after her death, from her daughters. They failed to do so.
Just as I came into this job in late 1988, we learned the stock was in the hands of a Texas financier named Robert M. Bass. He wanted somehow to parlay his stake into ownership of the whole paper and have us send him more money in the meantime.
Those of us running the paper fought back. Our loyalty was to the newspaper and its communities, and to the school, not to a financier's greater wealth. After two of the most challenging years of my life, a deal was struck that included the debt to Poynter, which was $30-million until we paid $7.5-million earlier this year. Now the debt is paid. The Poynter Institute owns all the stock. That stage is done.
The setup boils down to this: a profit-making, tax-paying publishing company owns the St. Petersburg Times and several magazines: Florida Trend, Congressional Quarterly, and Governing. The company's earnings after taxes go to build the business and support The Poynter Institute.
That's not how it works at most newspapers. Corporate owners in distant cities all too often lack familiarity with local people and issues. They may not even know newspapers very well. As a result, the only thing that counts to the owners is dollars, and readers suffer.
Some of the differences:
If our owner demanded profits be twice as high as they are, it would inevitably cut into our ability to hire enough people and buy enough newsprint to really tell you what is going on in our communities. We run a nicely profitable business so we can be an excellent newspaper; all too many companies print newspapers so they can make a lot of money.
The price of our paper is low. We keep it that way so all citizens can be informed, not just the well-to-do. We believe our democracy depends on informed citizens.
Having a publishing company owned by a school raises questions of who's in charge. Poynter set it up so one person would have the command, not a committee, because he believed a committee might not make the necessary tough decisions. As CEO, I also vote the stock on behalf of The Poynter Institute. I was picked by Patterson, my predecessor, and in turn have named Paul Tash as my deputy and successor when the time comes.
* * *
I believe he would have smiled to see that the check with which we paid the $22.5-million debt was imprinted "Barnett Bank," though the funds will actually come from the successor NationsBank, which is actually now Bank of America.
Banks have come and gone. His newspaper, and the school he created to own it, remain. Our commitment to serving the readers of Tampa Bay's communities remains undimmed.
This piece is an edited excerpt from, "A Study of Non-profit Ownership of News Media," part of "The Breaux Symposium on News in the Public Interest: A Free and Subsidized Press" by Louisiana State University's Manship School of Journalism.
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