On Tuesday, August 5, Gannett announced it was spinning off its publishing business, consisting of USA Today, 81 daily newspapers and the British news company Newsquest. The new spinoff newspaper company will keep the Gannett name.
The company that will own Gannett’s television stations and digital assets doesn’t have a name yet, but will consist of 46 stations, including the Belo stations, which Gannett purchased last year for $1.5 billion. The new broadcasting company will be the largest group of TV stations in the top 25 markets.
Gannett’s response seemed like a knee-jerk reaction to the Tribune Company and E.W. Scripps Company doing the same thing – spinning off its newspapers and keeping its TV stations in a separate company.
And several weeks before these two spinoffs, Time Warner spun off its huge magazine businesses, including Time, People, Fortune and Sports Illustrated, into a stand-alone print business and kept its content-creation and distribution businesses, Warner Bros., HBO and Turner Cable channels.
All of these spinoffs were justified based on maximizing shareholder value. TV stations and cable channels rake in gobs of money and are highly profitable. Newspapers and magazines are slowly bleeding to death as readers move from paper to mobile screens and as advertisers inevitably follow this audience diaspora (and pay less for the corresponding mobile ads).
But when the notion of “maximizing shareholder value” is bandied about, we have to ask who are the shareholders that are demanding more “value,” which really means a higher stock price. Today’s shareholders are not individuals, but are huge institutional investors, such as pension funds, mutual funds and hedge funds that all demand outsized returns. They have a Wall-Street-Gordon-Gekko-greed-is-good mentality.
In the good old days (ahh, nostalgia) most newspaper and many magazine owners thought of their publications as delivering useful, important news and information to serve the public good, convenience and necessity, and were typically guided by the tenants of responsible journalism as well as, and often before, profits.
What seems to have happened in the four recent spinoffs is that the media companies involved have spun off anything that smacks of public service. Separate the profits from the journalism – keep the state, throw away the church.
Wall Street, 4 – Public Service, 0.
But wait. There is hope. One counter trend to the Wall-Street-greed-is-good approach is reflected in Jeff Bezos buying the Washington Post, and there are indications that the WAPO is scurrying to catch up digitally and continue to serve a more mobile public. And BuzzFeed and The Huffington Post have hired responsible investigative journalists and are publishing responsible, in-depth journalistic reports to intersperse with their click-bait content.
Another counter trend is the rise of B corporations, as reported by James Surowiecki in the August 4, issue of The New Yorker. The B in B corporations stands for benefits, and the firms are for-profit companies that “pledge to achieve social goals as well as business ones.” (I’d link to the The New Yorker article, but you can’t get in unless you subscribe, so I don’t bother.)
Warby Parker, Patagonia, Etsy, and Seventh Generation are examples of B corporations, of which there are currently over 1,000, and are allowed by law in 27 states.
The rise of B corporations is a reminder that the idea that corporations should be only lean, mean, profit-maximizing machines isn’t dictated by the inherent nature of capitalism, let alone human nature. As individuals, we try to make our work not just profitable but also meaningful. It may be time for more companies to do the same.
I would add one word to the last sentence: “It may be time for more media companies to do the same.”
But what are the odds that the old-line media moguls such as Murdock, Redstone, Moonves, Roberts, Bewkes, or Iger will get a sudden public service urge or that the Wall Street owners of their companies’ stock will allow them to achieve social goals as well as business ones.
Don’t hold your breath.