Are Myths Killing the Newspaper Business?

Are newspapers dead, dead, dead? If you can believe everything you read in them, apparently so. Hal Fuson, a veteran of 44-years in the news business, didn’t think those obituary writers had their stories straight. In fact, they were reporting myths about the dire state of the industry as though they were facts. When Fuson, who is a member of FAC’s board, recently retired from Copley Press, decided to set the record straight. “I had a few things to get off my chest,” Fuson writes, “So I agreed to be interviewed by a journalist I trust: myself.”  –df





Unloading the Chest

by Hal Fuson

Description is revelation. It is not
The thing described, nor false facsimile.
It is an artificial thing that exists,
In its own seeming; plainly visible,
Yet not too closely the double of our lives,
Intenser than any actual life could be…
-Wallace Stevens, “Description Without Place”

“For the real environment is altogether too big, too complex, and too fleeting for direct acquaintance. We are not equipped to deal with so much subtlety, so much variety, so many permutations and combinations. And although we have to act in that environment we have to reconstruct it on a simpler model before we can manage with it. To traverse the world men must have maps of the world.”—- Walter Lippmann, Public Opinion: The World Outside and The Pictures in Our Heads.

Harold W. “Hal” Fuson retired recently after 44 years as a newspaperman. Like many retirees, he has a few things to get off his chest, so he agreed to be interviewed by a journalist he trusts: himself. The interview was conducted in his home office in Encinitas, California where he found himself with his feet up on his desk drinking his second coffee of the day.

Q. You don’t play golf. Why in the world would you want to be retired?
A. People don’t take you seriously when you tell them you are unemployed, so mostly it’s just a matter of semantics. Let me make clear that I am not looking for another job. If people find out you’re both unemployed and looking for a job, they’ll never take you seriously.

Q. You seem to want people to take you seriously. Why?

A. I’m always interested in new experiences. Being taken seriously would certainly qualify.
Q. As I understand it, you took over management of a business with decades of unbroken success at cash flow rates of better than 20 pct. and in two years reduced the revenue by about 40 pct. and the cash flow to almost nothing. Then you sold it for a tiny fraction of what it was worth just five years ago. Why would anyone take you seriously?
A. Probably they shouldn’t.
Q. Tell us a little about your career.
A. When I retired on June 30, 2009, I was the executive vice president and chief operating officer of The Copley Press, Inc., which for over a century had been in the newspaper business in California and the Midwest. Prior to that job, I was the company’s general counsel for almost 25 years. Before that I was with the Los Angeles Times. Early in my career I spent over a decade as a journalism teacher. Just to show you that I wasn’t one of those media executives who didn’t understand the Internet, here’s a hotlink to a more detailed resume on my LinkedIn site.

Q. Does the company still exist? What happened to its newspapers?
A. The company still exists and I remain on its board. My last contribution, if you can call it that, was to negotiate the sale of its flagship newspaper, the San Diego Union-Tribune. The sale closed in May, 2009. The company still owns real estate and other assets unrelated to newspapers and continues to operate with a small headquarters staff.

Q. Newspapers are dead, dead, dead. Right?
A. I don’t think so, but if I was able to answer that question unequivocally, I could also have foreseen the collapse in their revenues that began in 2007.

Q. Yes, but lots of smart people knew that newspapers were dying years ago, right?
A. Those are the same people who predicted 38 out of the last two recessions. You give enough monkeys enough typewriters, you get Shakespeare, or, at least, John Grisham.

Q. Okay, so maybe not a lot of people foresaw just how quickly the Internet was going to destroy you. But it did, right?
A. The Internet is not their friend, but it didn’t destroy newspapers. Partly because newspapers aren’t destroyed and partly because a number of factors conspired to crash the market for advertising, especially print advertising.

Q. But everything I read in the newspapers says they are dead, dead, dead. Can’t you believe what you read in the newspaper.
A. Generally what you read in newspapers is true enough, certainly more true than what you hear on MSNBC or Fox News. There is, however, a certain inherent bias in all media that smart readers have to adjust for. Here, let me give you a brief lecture:

The nature of journalistic narrative drives much of our thinking about the state of newspapers. Newspapers employ far more journalists than any other medium and these journalists are endlessly fascinated not only by their own navels, but also by their own stomachs and the revenue stream that feeds them. Journalists think quite a bit about where their bread is coming from and what they think about they often write about. Other media aren’t blessed by a plethora of journalistic stomachs of their own, so their content is driven largely by the news judgments of media that do have journalists, namely newspapers. In addition to the special hazards of journalists writing about themselves, all journalism is, after all, journalism — it focuses on what’s new, sometimes to the detriment of larger truths. The combination of navel-gazing and the requirements of the journalistic form reinforces certain myths and inevitably leads to over-simplification.

Q. Hmm. That’s a mouthful. So, you’re suggesting that readers have to apply a little, uh, Kentucky windage to whatever they read?
A. Yeh, you could put it that way. Bottom line is that journalists, like all of us, are especially untrustworthy when talking about themselves. Here are some examples of myths that newspapers help propagate about themselves: The Myth of Money-Losing Newspapers; The Myth of Shuttered Newspapers; The Myth of Paper and Ink as a Dead Medium and the Myth of a Newspaper Golden Age.

Q. Those sound like topics for more lectures.
A. Yes, so let’s start with the first one:

The Myth of Money-Losing Newspapers
Stories abound of newspapers in bankruptcy or facing sale or closure because newspapers don’t make money any more. There has been a huge hit to newspaper profits in the last two years, but the great majority probably remain profitable on a cash operating basis. It’s hard to be sure, because newspaper companies, even the public ones, don’t often publish income statements for individual newspapers. Those newspapers that have reported losses may be including substantial non-cash losses, e.g. amortization of purchase price and other capital expenditures. And even those newspapers that are draining cash today probably could be operated on a cash positive basis if their owners were willing to make the necessary and painful changes required to reduce costs, often in the face of powerful union opposition. But the operating costs aren’t the cause of those bankruptcies you’ve read about. It is the cost of acquisition debt that has sunk Tribune Company and the owners of the Minneapolis Star-Tribune and the Philadelphia Inquirer, and is threatening to capsize McClatchy. In each case, the owners simply incurred far more debt to acquire their newspapers than the operations can now support. The newspapers published by these companies are likely still profitable, if only barely so, on a cash operating basis.

Q. Are you suggesting that the owners were fools to pay those prices, like the reported $600 million that was paid for the Star-Tribune?
A. No more foolish than the millions of Americans who were paying too much for houses during the same period. The newspapers, by the way, just like the houses, are almost all still standing, which leads me to the next lecture:

The Myth of Shuttered Newspapers.
A powerful theme of much of the journalistic narrative is that newspapers are closing in major cities. In fact, only three major cities have lost newspapers in the last few years and in each case there is a surviving metro newspaper serving those communities. The closed newspapers are in Seattle, Denver and Tucson, each of which was part of a joint operating agreement that had kept alive “failing newspapers” under the terms of the Newspaper Preservation Act, a 1970 law that exempted certain operations from federal antitrust laws. At last count, according to Wikipedia, there were six surviving joint operating agreements — 22 have ceased to operate. One of the survivors is in Detroit, which last year stopped home delivery of print newspapers on Mondays, Tuesdays and Wednesdays. By definition, a joint operating agreement is a device for saving an editorial voice that would otherwise be stilled by the effects of economic competition — they don’t work very well as business propositions and the numerous critics who opposed the act at its inception may well have been right. The important point is that what happens to newspapers in JOA’s tells us almost nothing about the overall state of the industry.

Q. You seem to be suggesting that newspapers are going to be fine and that all the “Sturm und Drang” of the last few years has been pointless.
A. John Sturm is the president of the Newspaper Association of American. Sturm’s a good fellow, even if he does sound like a radio voice of the 1950s. I don’t believe I’ve met Drang. But to answer your point, not at all. Newspapers are never going to be the same again and that’s not, repeat not, a good thing. I’ll get to that in a minute. First, let’s prick another myth.

The Myth of Paper and Ink as a Dead Medium.
Too bad Bill Gates didn’t invent paper and ink: he’d be much richer. The notion that paper and ink as an engine of communication is as dead as the buggy whip has yet to be proven, even though it was first posited with the advent of radio in the 1920s. Sturm’s predecessor at the newspaper association was all over that one trying to stifle radio before Rush Limbaugh was born. Unfortunately, he failed. Prophets have been foretelling the imminent disappearance of paper and ink for many decades now, but still it persists, the Kindle and iPad notwithstanding. Newspapers remain the only medium capable of landing on your doorstep in a complete, neatly wrapped paper and ink package every morning within a few hours after the presses start. The medium itself is conducive to presentation of information in a coherent, consistent, orderly way that doesn’t scatter attention the way the web does. If newspapers can deliver value to advertisers, and there is every reason to believe that’s true, especially as this recession ebbs, there is no reason to think paper and ink will die.

Q. Good, because otherwise I’m not sure what I’d wrap my fish with. Although I do feel guilty about all those old-growth trees and spotted owls you killed in your career.
A. That’s another subject, but let me at least interject that very few old-growth trees end up as fish wrap. Newsprint comes mostly from wood by-products and tree farms, as well as recycled paper, and is one of the easiest commodities to recycle. If you do your part to keep old newspapers out of the solid waste stream and into the recycling bin, you don’t need to feel guilty about using a superior medium to inform yourself about public issues, at least not as guilty as you should feel about driving a car, even a Prius with refitted brakes.

Q. Any more myths?
A. Yes, and this is an especially big one for people like me who first got ink in their veins in the 1960s.

The Myth of a Newspaper Golden Age.
Newspapers may have experienced something of a golden age, from, say, 1968 – 2005, but it was much shorter than most people think and occurred for structural reasons related to a much longer-term decline in newspapers’ position in the information marketplace. Throughout most of American history, most newspapers were partisan rags. That was true of the Los Angeles Times until Otis Chandler became its publisher in 1960. Others were commercial notice sheets much needed by shippers and traders, but priced outside the reach of ordinary citizens. The shift to the Golden Age blessing of objective, independent down-the-middle reporting in which I was fortunate to spend my career, occurred primarily for economic reasons, not moral ones. When you’re the only newspaper in town and your success depends on delivering eyeballs to advertisers the last thing you want to do is alienate half of your potential readership.

Q. You mean Woodward and Bernstein were just helping line up advertisers to fatten the Graham family’s bottom line?
A. Not at all. They are true American heroes, even if Bernstein is a bit boorish and Woodward’s subsequent prose is somewhat windy. They did wonderful work. There have been scores of others like them and there still are. Also, some very brave owners, like the Grahams, who have taken a lot of heat at the country club and elsewhere that less stalwart entrepreneurs would not have.

Q. It’s too bad nobody’s reading their work any more, at least not in the newspaper.
A. Hate to do this, but that’s another lecture. People still do read paper and ink newspapers.

The Real Story of Newspaper Readership.
Newspapers have been shrinking as a proportion of the larger information market since at least the introduction of radio. First, competing dailies, which existed in even the smallest markets, began to succumb to mergers with stronger competitors, then, especially after WWII and the advent of television, afternoon dailies gradually disappeared. By the 1970s, few markets supported more than one daily newspaper. The “penetration” of newspapers, the number sold divided by the population, has been declining for 100 years and in recent years each paid circulation reporting period is greeted by further exclamations of dread about the future of the medium. The exclaimers don’t take into account the extent to which newspapers, as an advertiser-driven medium, are adjusting their circulation patterns to reflect the needs of advertisers. Newspapers seldom make back the cost of manufacturing and distribution on the circulation revenue from the sale of each newspaper. As their profits have been squeezed, newspapers have reduced their circulation territories, sometimes massively, and sharply reduced promotion costs, including everything from advertising and contests to price discounting. Those reductions have been especially harsh in the advertising collapse of the last two years.

Q. You give all these lectures, but you don’t say much about the Internet, which is why newspapers are dead, dead, dead. Remember? And, as a result, isn’t democracy going to Hell?
A. Democracy has always been a messy business. We only stick with it because we haven’t found any better way to organize peaceful societies. Maybe I’ll eventually get round to talking about why the Internet is a problem. First, though, here’s why, as a citizen, I applaud it.

The Failure to Acknowledge the Power of Offsets.
Everyone acknowledges the importance to democracy of readily available reliable information about public issues. Newspapers have long been viewed as the primary source of such information, even if most citizens have for decades named television as their main source for news (as one of my reporter friends told me, that’s like saying you get your food from your refrigerator not the grocery store or the farm). Whatever television’s shortcomings as a tool of democracy, there’s no denying the power of new digital tools for spreading and analyzing information. Much of the hand-wringing about the demise of newspapers fails to take into account the alternative vehicles that are filling the vacuum. There is more than enough information available, mostly for free, through a simple Internet connection to enable anyone to participate at a very high level in civic affairs. Admittedly, much of this information is created by newspapers and others whose business models are no longer generating levels of revenue sufficient to guarantee the free flow of information will continue. Much of it, however, comes from sources that didn’t even exist a few years ago. Some of the web sites devoted to the Supreme Court are a good example. Anyone can have at his or her fingertips almost every document available to the justices as they consider their cases. Many of these vehicles are unproven or fall short in obvious ways of replacing the best reporters, but it is awfully hard to argue that the information available to those who want it today is less than it was in the past.

Q. You really do sound like a man who doesn’t care whether newspapers live or die.
A. Since I don’t believe they are actually going to die, I don’t waste a lot of emotion on the subject of their deaths. I am concerned about their lives, however, and here’s why: Newspapers may not die, but as a class they have undergone a radical shrinkage in resources available for aggressive news coverage and community leadership. Real damage has been done and seems unlikely to abate. Newspapers and their owners have gone from naming hospitals and leading civic reforms, to a future in which most of them may be little more than Earl Scheib franchises. A perfectly good place to get your clunker cheaply repainted, perhaps, but hardly a community institution of substance. No one that I know of has ever named a hospital or an arts center after Earl Scheib, although according to Google to get to the Youngstown Children’s museum you pass a Scheib paint shop and turn past a hospital. It is fair to ask whether an Earl Scheib newspaper can be expected to routinely achieve results like putting your local Congressman in jail. My colleagues at the San Diego Union-Tribune did exactly that a couple of years ago. In order to stay afloat financially, I was forced subsequently to preside over the dismantlement of our Washington bureau, whose members did most of the legwork on the story. The new owners have only accelerated similar cuts. An industry made up of Earl Scheib newspapers will be hard put to continue to act as an advocate for the rights of citizens to be informed participants in a democracy.

Q. You don’t seem to have a very high opinion of Mr. Scheib.
A. I’m sure he’s a fine fellow, if he exists. But I suspect his business never threw off the kinds of profits that local newspapers did in the heyday of the last half century. He can’t afford luxuries like a squad of private detectives to run down the culprits that caused the damage he is painting over. He doesn’t have enough money left over from running a business in a hotly competitive market to endow hospitals. On the other hand, he probably never engaged in any of the shameless boosterism or local political and social shenanigans than some publishers have been prone to over the years.

Q. Are you implying that providing the news is a luxury newspapers can’t afford?
A. No. Newspapers without news aren’t going to do very well, but unfortunately, readers don’t necessarily discriminate between 25 cent news and two dollar news; the $1.75 delta contains a lot of luxury that newspapers have been busily throwing out. Some of them may have even slashed below the 25 cent barrier and maybe they will kill themselves. I don’t know.

Q. So, newspaper readers are stupid, eh?
A. No stupider than the people who go to chiropractors when they have cancer. In fact, significantly above average for the population as a whole. But we’re all guilty of taking things on faith derived from past glory, and only belatedly getting around to figuring out present dysfunction.

Q. What is to be done?
A. The main thing that we as citizens need to do is to keep our eye on the ball, to reckon with a picture of the world that is as close to reality as possible. We can’t afford to be distracted by nostalgia for ways of doing things that never existed quite the way we remember them and certainly don’t exist that way today. We can’t make informed decisions about the future based on warped or outdated versions of the past or the present. Best thing you can do is read a newspaper or two every morning; trust what you read, but cut the cards.

Q. That’s it?
A. No. There’re a couple of other things that come out of my years as a lawyer for news organizations. I don’t think government financial support for journalism is a good idea, but there are some government actions that might ease somewhat the pressure on newspapers. Here are a few that the industry has advocated.

• Removal of legislative restrictions on consolidation across media– the only thing dumber than a newspaper buying a television station is the federal rule that bars it from happening. Eliminate the newspaper/broadcast cross-ownership rules. Yesterday.
• Antitrust exemptions to permit joint pricing of internet content. This may be a little too close to the DNA of the Newspaper Preservation Act, but given the monopoly power of Google in the market for search advertising, it’s worth trying.
• More favorable tax policy — that California continues its sales tax on newspapers while eliminating it on snack foods boggles the mind, but I can’t see it changing. Like it or not, we use tax policy to advance all manner of social policy. Why not use it to encourage newspaper readership?

I think ultimately these are half measures, worthy enough in their own right, but not the sort of thing likely to bring back the newspaper golden age in anything remotely like its former glory.

Q. Now, you’re done?
A. Just this. One last lecture:
Through the work of newspaper publishers and organizations they have supported, like the Newspaper Association of America, the California Newspaper Publishers Association and other state press associations, the Media Law Resource Center and the Reporters Committee for Freedom of the Press, the First Amendment has received massive support over the last fifty years. That support is inevitably going to decline. Just a few examples of what was achieved, conveniently compiled by Lucy Dalglish of the Reporters Committee:

• Sullivan in 1964, public officials who have been defamed have to prove the mistake was made intentionally or recklessly.
• The federal Freedom of Information Act, first introduced back in the 1950s, after it was heavily pushed by the American Society of Newspaper Editors. It took ASNE more than 10 years and lots of money to get that law. There is not a single state open meeting or records law anywhere in the country that was not shepherded through the statehouse by the media — usually local newspapers.
• Nebraska Press Association v. Stuart in 1976. It stands for the proposition that if you learn something in an open courtroom, a judge can’t gag you from reporting it.
• Richmond Newspapers v. Virginia in 1980. It says the public has a First Amendment right to attend criminal trials except in the most extreme circumstances.
• The two Press Enterprise v. Riverside cases in California in the mid-1980s. They stand for the proposition that the public can’t be kicked out of pre-trial hearings or jury selection.
• New York Times v. United States, the Pentagon Papers case. The New York Times and The Washington Post led the effort in 1970 to make clear that, except under the most extreme circumstances, government may not censor information via a prior restraint on speech or the press.

Today, the resources available to mainstream news organizations for advocacy in the courts and legislatures are already a fraction of those available even two years ago. Fewer actions will be brought for access under state open meetings and records laws and the federal Freedom of Information Act. Fewer lawyers will bother judges with motions for access to proceedings or records, because the news media will no longer have the resources to pay for them. The pressure on public lawyers to take seriously routine requests for access has already significantly abated. Most of these lawyers, by the way, were much more receptive to public access than their government official clients. Without the potential of lawsuits backed by fee awards, the incentive for public agencies to err in favor of secrecy has greatly expanded.

Citizens, lawyers, judges, legislators, all of whom have been heard to grumble about nosy journalists impeding their grand schemes and precious privacy, are facing a choice. Either they must recognize the importance of public oversight and public access and do their part to protect it or face the consequences of their self-imposed darkness.

Q. Wooo! Nothing like leaving with a leap onto the soapbox.
A. Actually, I made that all sound a little more dire than I think it really is, because I’m hopeful that the Internet and other tools ultimately provide their own sanitizing techniques that will ultimately trump the forces of darkness. See lecture #6 above. But you can never be sure about technology.