September 16, 2014

The Pinch and the Pauper

When I read an April 22nd blog on The Huffington Post, I got to daydreaming what Mark Twain might write if he were alive today and read what Thomas Edsall wrote:

At a time when New York Times managers are forcing all employees to take a five percent pay cut, and demanding even larger sacrifices from the NYT-owned Boston Globe, top executives of the beleaguered newspaper received substantial bonus and fringe benefit payments over and above their salaries, according to a proxy statement released on March 11.
These bonuses and benefits to top Times company executives have provoked growing resentment among Times staffers, and frank anger from Globe reporters who have been warned by Times executives that their paper will be folded if they do not come up with $20 million in pay cuts and layoffs.
On Tuesday, the Times disclosed a $74 million first quarter loss 221 times larger than the $335,000 loss in the first quarter of 2008.
According to the New York Times proxy statement filed with the Securities and Exchange Commission, corporate president and CEO Janet L. Robinson received a total compensation package valued at $5.58 million in 2008, up well over a million from the $4.14 million she received in 2007, and the $4.4 million she received in 2006.

If Twain were writing today, he might have the publishing prince, Arthur (“Pinch”) Sulzberger, in his plush Fifth Avenue apartment late one evening, swizzling his dry martini, and thinking it might be a good idea to know what the little folks are doing and what they are thinking about his publishing kingdom.
Pinch thinks he might call his pal, Steve Rattner, and ask him to dress down with him (take off his yellow suspenders, French blue shirt with a white collar, and John Lobb shoes and put on torn jeans, a dirty sweat shirt, and sneakers) and go bar hopping in Boston. But then he realizes Rattner is busy in Washington being the automobile czar and dealing with tone-deaf automobile CEOs who flew to Washington in private jets but then holding tin cups, begged for Federal bailouts.
Sulzberger, of course, doesn’t make the connection about being tone-deaf; he’s a prince. So he calls the square-jawed Bill Keller, his editor at the Times, because he knows Keller dresses down well and no one in Boston will recognize him.
In a grubby bar near the Globe in Boston, the two incognito executives, looking seedy and wearing scruffy Red Sox caps, belly up to the bar and order a beer. Keller fakes a Boston accent pretty well and asks a middle-aged man with a stubble who wears a smudged chambray shirt, “How about the Globe? They going to close it down?”
“Who cares,” the guy says, “Dan Shaughnessy and Bob Ryan would start a blog and I wouldn’t have to put up with all that international crap. I have to scroll down the home page of the website for ten minutes to get to the sports, so I hate the Globe site.”
“But doesn’t Boston need a newspaper?”, Keller asks. Pinch is too dumfounded to talk. He doesn’t think common folks have computers or know what a blog is.
“Are you kidding!” the guy responds incredulously. “That piece of crap is owned by the Pink Lady, the frigging New York Times, and that Yankee-loving rag owns a piece of the Red Sox. How do you like the Sox and the Globe owned by those greedy, tone-deaf morons? Do you know that those jerks asked the union and other employees to take a big pay cut when Sulzberger made over $2 million and his CEO, some broad he’s probably doing, made over $4 million.”
Pinch chokes on his beer and slinks further down on his bar stool.
“Yeah, well,” Keller replies somewhat imploringly, “isn’t better to have a job, even if it pays less, than no job at all?”
“Are you nuts? Haven’t you heard of equity theory or the ultimatum game – you know, the perception of fairness?”, the guy says with mild contempt. “People will act against their own best interests when they think they are being treated unfairly. They may go down, but they’re going to take the greedy bastards down with them.”
“Oh, OK. You may be right,” Keller says, quickly downing his beer. “Nice talking to you. Have a good night.”
“Same to you. But you’d better take care of your friend; he looks a little pale.”
“He’ll be OK when I get him back home to his castle … er, I mean, home.”
When they get back to New York, Keller gingerly asks Sulzberger how he thinks it went.
“Well, he’s only a sample of one. No one else feels that way or knows how much money Janet Robinson makes, which is irrelevant. We’ve got to cut expenses so we can pay back Carlos Slim the $250 million he lent us.” As he’s talking, Pinch picks up a bottle of gin, looks at it horrified, and says, “My God, we’re out of gin!”

What If the Red Sox Buy the Boston Globe?

Jessica Heslam in the Boston Herald.com’s “Inside Tracks” reported on Monday, April 20, that Red Sox owner John Henry had expressed interest in buying the New York Time Company’s interest in the Red Sox, the New England Sports Network (NESN), and the Boston Globe.

“According to sources, Henry told Globe officials that if he bought the Times’ 17.75 percent stake in the Sox, he’d also take the Globe off their hands.
Henry would not comment on whether he had the talks, but told the Herald’s Inside Track in an e-mail, “Baseball fans rely heavily on newspapers. No one wants to see a newspaper with a great, long-term history go away. Losing the Globe, the Herald or any New England paper is a big loss for the Red Sox.”

The possibility of the Red Sox owning the Boston Globe got me pondering about media companies owning sports franchises or, in this case, a sports franchise owning a media company or controlling sports content distribution. How would the Boston Globe’s popular and highly respected sports columnists Bob Ryan, Dan Shaughnessy, and Jackie MacMullan feel about having Boston Red Sox owner John Henry as their ultimate boss?
Media companies owning sports franchises is nothing new. The Walt Disney Company owned the Anaheim Ducks from 1993 until 2005, and in 1995 Disney bought ABC and acquired an 80 percent interest in ESPN, which it still owns today. ESPN owns a small piece of the Arena Football League, which has suspended its 2009 season. The Tribune Company, owner of the Chicago Tribune has owned the Chicago Cubs from 1981 until the present, although this past January, the Tribune Company owner Sam Zell announced he was selling the Cubs to a group headed by Tom Ricketts.
Last year there was some rumbling about Chicago Tribune reporters grumbling about alleged pressure from above to squelch negatives about the Cubs while Zell, facing bankruptcy, was trying to unload the Cubs.
I have no idea whether the pressure was real or imagined, but I wonder if sports fans perceived that there was cream puff coverage. Therefore, I called the ultimate source for sports reporting, ESPN, which has had to deal with covering the Ducks when both the Ducks and ESPN were owned by Disney and has to cover Major League Baseball and the NFL while it has significant, close, and expensive relationships with both leagues.
I talked with John A. Walsh, ESPN’s Executive Editor. I’ve known John for almost 20 years and have done consulting work for him at ESPN, so I was able to get through to him. I asked him if he thought the Globe’s or, for that matter, any media outlet’s coverage would be affected consciously or unconsciously because of being owned by a sports team in general or the Red Sox specifically.
In a word, he said “no.” But he elaborated. Walsh is not a typical television sports executive; he’s an intellectual. He has a MA in Journalism from the world’s oldest journalism school at the University of Missouri, and his background is in newspapers and magazines, so he put his answers to my question in an historical and ethical perspective.
To illustrate his “no,” he told me about the time ESPN’s “Sports Center” showed a clip of Disney CEO Michael Eisner leaving a Duck’s game early and the anchors kidding him unmercifully to the anchors’ and the audience’s delight. He never heard from the notoriously thinned skinned Eisner (my description, not Walsh’s) nor would he have batted an eye if he had.
Walsh said that good reporters’ and columnists’ reputation and credibility are their biggest assets, which they would not jeopardize by caving in to a team owner’s pressure. He said reporters who cover a sport have to develop strong relationships with team sources and that they often have to fight the temptation to coddle their sources and not reveal anything unflattering. However, they overcome this pull and report what they know in order to maintain their credibility.
Walsh said that the NFL was not at all pleased with the extensive coverage ESPN gave to Atlanta Falcons quarterback Michael Vick’s arrest on charges of promoting dog fighting, but that ESPN covered it as completely as they thought it deserved.
However, if I were the czar of a major league sport and had the power, I would forbid a media company from owning a sports franchise because I think the temptation for biased reporting is too strong. As my father used to say to me, “Son, you have strong will power and can resist anything but temptation.”
I often listen to Yankee games on the radio. I clench my teeth when I hear John Sterling and Susan Waldman (who I like a lot) fawn over the Yankees. They have to be homers because they are paid by the Yankees, not CBS’s Newsradio 88, and we know what hard asses George Steinbrenner and Yankee president Randy Levine are. Can you imagine either of them allowing negative comments about their god, Derek Jeter?
So I do worry about the Red Sox owning the Boston Globe. ESPN might be strong and independent enough to resist pressure and air and publish unbiased coverage of sports. John Henry might not be as much a hard ass as Yankee executives are, but I wonder about how strong reporters could be at a struggling newspaper that the owner (the New York Times Company) is threatening to close unless it gets $20 million in concessions from the union.
Who would cave to pressure first, the unions or the sports reporters? What do you think?

Pixar’s New Movie Panned By Wall Street

On Monday, April 6, The New York Times Business/Media section ran a story by Brooks Barnes titled “Pixar’s Art Leaves Profit Watchers Edgy.” Barnes referred to Pali Research’s Richard Greenfield, who downgraded the stock of the Walt Disney Company because of a poor outlook for Pixar’s new animated film to be released in May.
The film, titled “UP,” is about a 78-year-old man who ties thousands of balloons to his house. The Times story quoted Greenfield as saying, “We doubt younger boys will be that excited by the main character;” he also complained about the lack of a female lead.
When a friend called my attention to the story and asked what I thought about the affect on Pixar’s creativity of a Wall Street stock downgrade, it got me to thinking…
SCENE: New York Fifth Avenue apartment, about 9:30 p.m. A boy, Atticus, is in the study doing his 5th grade homework. His father, Richard (“Dick”) enters. The father is tired from a long day’s work writing reports about entertainment companies. His coat is off showing his red suspenders, and he’s smoking a cigar.
Dick: “Hi, son. How’s the homework going?”
Atticus: “Good, Dad. What did you do today?”
Dick: “Same ole, same ole. Wrote a couple of reports – one on Pixar’s new movie, “Up.”
Atticus: “I hear it’s supposed to be good. I hope it’ll be as good as ‘Wall-E.’”
Dick: “’Wall-E’ was propaganda and it didn’t do that well in the box office – only $224 million.”
Atticus: “But it won an Academy Award for best animated movie and it gave a great message about the environment.”
Dick: “That was the problem. As Jack Warner of Warner Bros. once said, ‘If you want to give a message, send a telegram?’”
Atticus:“What’s a telegram?”
Dick: “That’s what they used to call text messages before there were cell phones. All that matters are box office receipts – how much a movie makes.”
Atticus: “Come on, Dad. My English teacher at Browning says that myths and stories tell us how to live our lives. It’s not about the money; it’s about making good movies.”
Dick: “You’re too young to understand, Atticus. You have to make money.”
Atticus: “Why?”
Dick: “Because that’s what it’s all about – making money.”
Atticus: “You mean like Mr. Madoff?”
Dick: “Don’t get smart with me. He’s a crook. I’m a stock analyst.”
Atticus: “Oh. Are stocks and derivatives the same thing? And weren’t you writing about how great they were last year?”
Dick: “Look, I get paid – and paid well so you can go to Browning – to write and recommend stocks for our clients to buy or sell. And I’m not the only one to downgrade Disney; other analysts did, too.”
Atticus: “Did they also say to buy Citi Bank like you did?”
Dick: “Listen, Atticus, don’t get smart with me. I’m just trying to make a living, not save the world. I have no responsibility to the public, just to the people who pay me and who buy stocks and derivatives from us. I can’t help it if there are crooks on Wall Street. They’re responsible for the crash and the depression, not me. I’m just following orders.”
Atticus: “OK, Dad, don’t get upset. I know you’re trying. But do you have to knock Pixar? Their movies make people feel better and maybe to live better lives.”
Dick: “That’s not my job.”
Atticus: “What is your job then? And are you proud of it?”
Dick: (Silence)

Bye-Bye Books

In several years books will be radically different. I don’t know what form they will take, but one thing for sure is that they won’t be ink on paper.
The same thing is happening to the book publishing business that has happened to newspapers – executives, managers, and editors are stuck with their heads in a wad of paper, with ink running through their veins, and rigidly believing that publishing is inextricably linked to printing. They are stuck in a Gutenberg rut.
People in the publishing business communicate via email, buy stuff online, and read the news on websites, so they know that the Internet exists. But they haven’t yet made the connection between what they do (acquire manuscripts, edit them, print them on paper, and distribute them) and what the Internet does (distributes information instantaneously).
In the early 1980s I did an analysis of newspaper management textbooks. All of them dealt with newspapers as though they were a manufacturing business. There were lots of pictures of huge printing presses and rolls of paper and there were chapters on printing (manufacturing papers), circulation, and dealing with labor unions. There were few pictures of newsrooms and no chapters on how to deal with recalcitrant reporters. Managing was about managing capital assets, not human assets, certainly not human beings that covered and wrote about news.
Last week I received an advanced copy of my book (printed on paper), Media Selling, Fourth Edition, and I was thrilled to finally hold it and turn its pages. I used the book last fall in a graduate course I reach at The New School. I put drafts of a couple of revised chapters of the book online for them to read, and I received no complaints from the students. No one said, “I don’t like reading books online; I prefer carrying around a 600-page book in my back pack and having the tactile feeling of paper and turning pages.” Of course not, they do virtually all of their reading online today.
As required reading for the course I listed no books printed on paper but, in addition to the online chapters, I included four blogs, the Business section of The New York Times which could be read online, and three podcasts. I also assigned several videos to watch. After one class toward the end of the year, I asked several students if they would like to be able to listen to Media Selling on their iPods (every student had one, of course), and their responses were unanimously and enthusiastically, “Of course.”
I sent an email to my editor at Wiley-Blackwell, the publisher of Media Selling, Fourth Edition asking if they’d like to have an audio version of the book, which I would read and record. Here, in part, is the response I got: “I’ve queried my marketing team on the audio question and fear I have less encouraging news. We currently aren’t set up to sell books through these kinds of channels in the academic division and have very little (or no) request for this kind of format with textbooks historically.”
In 1976, when Steve Jobs and Steve Wozniak took their first Apple computer kit to retail stores on El Camino Real in Palo Alto, I’m sure several, except the one that finally took their new machine, said, “We’ve had no requests for a small, personal computer, so we’re not interested.” Remember, that in 1977 Ken Olsen CEO of Digital Equipment Corporation said “That there no reason for any individual to have a computer in his home.”
Gutenberg’s press was a disruptive technology, as defined by Clayton Christensen in The Innovator’s Dilemma, as was the Internet, the personal computer, the iPhone, the Kindle, and Twitter. Disruptive technologies are no longer appearing every century, or every decade, or every year; they are appearing every month. Soon they will be whizzing at us every week.
So, to think that books, which are based on a technology that is five-and-a-half centuries old, will be around much longer is the ultimate Luddite delusion. Within a few years when students matriculate for their first semester in college, they will be given a devise, perhaps something similar to a Kindle or an iPhone that connects to the Internet, and a password. Included in their tuition and fees will be a charges for up-to-date synonyms for “books” and “library” and “personal computer.”
Current libraries will be turned into museums that will display old printed manuscripts and books that are representative of the past – collections in glass cases that you can look at but cannot touch. Historical relics in a reliquary. All books, including textbooks, will be available online – no need for libraries – and students won’t buy them, they will subscribe to them.
As an author of a textbook, I will write Media Selling, have it copy edited by smart software, and publish it online to Amazon.com with whom I negotiated a deal directly. Amazon.com will have an educational division that will have an up-to-date database that includes all the people who teach a course that is related to my book and all media company managers who might be prospects for the book, and through an automated process Amazon.com will promote the book via email and AdWords on Google.
Students and professionals will subscribe to on a yearly basis, not buy it. For that subscription fee, which will be about what the printed book costs today, I will be obligated to update the book quarterly. When book subscribers Media Selling, it will automatically be updated, just like my Firefox browser is.
Bye-bye 600-page heavy books, bye-bye libraries, bye-bye book publishers. Hello convenience, hello being current, and hello revenue that goes directly to authors instead of to Gutenberg’s descendants and people who kill trees.