Corporatization of the News Media

1
Corporatization of the News Media

• Profits v. Editorial Integrity
• Can they coexist?
• Critical Issues in Journalism and Global
  Communications, JMSC6002/March 2004
• D. Weisenhaus

2
Profits v. Editorial Integrity

• News is a business. It has always been so. --
  Taking Stock Journalism and the Publicly Traded
  Newspaper Company, 2001
• The present newspaper business model is deeply
  flawed. --William Woo, Stanford University

3
General questions

• Are there aspects of news production that should
  be off-limits to budget/company pressures?
• What can news departments do to enhance their
  profitability? Should they even think about that?
• What can editors and news directors do to protect
  integrity of reporting from business pressures?

4
History

• Separation of business and news is only about a
  century old. In 1800, most common name for US
  paper was The Advertiser!
• Purposes advertise commerce or promote partisan
  politics
• Joseph Pulitzer Dont teach business side of
  journalism because it would corrupt journalists.

5
Newspaper trends...

• As in Hong Kong, U.S. newspapers are privately
  owned and try to make profits
• Not licensed by government
• Do not receive government subsidies
• Are protected by law
• U.S., most newspapers are owned by shareholders,
  stock traded on Wall Street
• Trend toward chain newspapers. Gannett is largest
  with more than 100.

6
Owners priorities v. readers values?

• Owners Make money. Make propaganda? Promote own
  views, needs? Give social value? Have prestige?
• Readers Want news. But what kind? About
  government? Entertainment (crime, sex cases)?
  Investigative or international (expensive to
  produce)? What else?

7
How profitable are newspapers? Until recently,
very profitable!

• In U.S., newspaper profit margins are 2-3 times
  the average for manufacturing. 19-27 vs. 7-8.
  (2002 20)
• Investment in news coverage down
• Production expense down
• Payroll down
• Marketing up
• Revenue/profit up

8
Hong Kong profits

• Ming Pao HK18 million profit for 6-month period
  ending Sept. 2002, up from HK14 million loss for
  same period in 2001.
• Looking for ways to increase productivity,
  management has circulated a set of objectives
• Two Is Stories must be interesting and
  informative.
• Two Qs Reporters must produce quality and
  quantity
• Three threes Reporters must provide three news
  ideas a week, must produce three page leads and
  must contact three newsmakers.

9
More Hong Kong profits...

• Next Media Net profit HK27million in 2001
  HK368 million in 2002. Why? 12 cut in staff,
  paper prices down 30 and closing of rival
  Eastweek! For 2003? Expected losses due to Taiwan
  Apple Daily
• Oriental Press Group HK340 million net profits
  for 2002.
• SCMP HK102 million net profits, 2002
• Global China (Sing Tao, Standard) 152 million
  net profits, 2002

10
What about Hong Kong?

• The HK media market scene
• 14 daily Chinese language newspapers
• 2 English-language dailies
• 3 radio companies (10 channels)
• 4 free-to-air terrestrial channels, TVB market
  leader
• several pay cable companies

11
HK Newspaper Market

• HK newspapers are dominated by Oriental Press
  Group and Next Media, which control 70 of
  newspaper readership
• 1. Oriental Daily News (OPG) 35
• 2. Apple Daily (Next) 25
• 3. The Sun (OPG) 10
• 4. Ming Pao, SCMP, Sing Tao (10-12)

12
HK ownership at a glance...

• OPG Founded 1969 by Ma brothers. Became HKs
  best-selling paper in less than 10 years. Largest
  shareholder is wife of younger brother who fled
  to Taiwan after 77 drug charges. Ma Ching-fat
  current chairman.
• Next Media Jimmy Lai, largest shareholder. Made
  in Giordano chain, founded company in 1990,
  Apple Daily in95, Taiwan Next Mag in 2001,
  Taiwan Apple Daily in 2003.

13
...More HK ownership

• Ming Pao Enterprise Founded 59 by novelist
  Louis Cha. Largest shareholder Tiong Hiew-king,
  Malaysian timber baron, worth 1.4 billion. In
  2001 Tom.com buys 50 of Yazhou Zhoukan
• SCMP Holdings Largest shareholder, Kerry Group,
  Robert Kuok, 80, ethnic Chinese businessman in
  Malaysia (net worth US5 billion, made in sugar
  trade.) Kuok has interests in hotels (Shangri-La
  Grp), shipping, plantations, commodities in 15
  countries. Sons Ean, 47, (SCMPH chm) and Beau,
  51, help run company

14
More HK ownership

• Global China Group Holdings (Sing Tao daily HK,
  Aust., NZ, UK, US, Can./The Standard/hotels/real
  estate).
• Sing Tao founded 1938 by Aw Boon-haw (Tiger
  Balm), left business to daughter Sally in 54.
  Sold in 99 to Lazard Asia Fund. In 2001, sold
  51.4 to Charles Ho, tobacco tycoon.
• Hos vision become a multimedia corporation
  serving global Chinese communities. Plans to
  expand in Africa and Europe

15
More HK ownership

• Tom Group (tom.com) Went public 2000. Part of
  Hutchison Whampoa and Cheung Kong Group real
  estate, retailing, telecomm, shipping.
• By 2002, purchased 60 of Taiwans consumer
  magazine market. 50 of Yazhou Zhoukan. Largest
  outdoor advertising firm in China.
• Wants to build cross-media, cross-strait platform
  -- one-stop shop to offer ad space, website
  content, TV, magazines, papers and be largest
  producer of Chinese-language TV programming.
• The only question is whether we will become the
  largest Chinese media group or the largest
  Chinese media group that is ultimately part of an
  even greater media group. Sing Wang, CE.

16
Grand contradiction

• Media is commercially based or market driven
• Media in free society has crucial public
  function promote ideas and inform
• Protected by law

17
What is (was?) the business of news?

• The business of news is news. Growth of newspaper
  industry driven by publics appetite for
  news...News was product around which business was
  shaped. News was long been selected, presented
  and packaged in appealing -- and profitable --
  ways. (comics, sensational headlines, extra
  editions, penny papers, news graphics)

18
Now?

• The business of news is business, not newsNews
  is shaped by audience rather than audience shaped
  by the news.
• Business of news is no longer providing broad
  public information to mass audience but providing
  specialized information to smaller and more
  profitable audiences.
• --Taking Stock

19
Conglomerates

• Six firms dominate American mass media. Each is a
  subsidiary of a larger parent firm, some
  operating in other industries.
• AOL/Time Warner, General Electric, Viacom,
  Disney, Bertelsmann, News Corp.
• Trouble AOL/Time Warner 100 million global
  subscribers, 75 million cable homes, 30
  magazines. US98.2 billion loss in 2002! Called
  off merger between CNN and ABC. AOL lost 170,000
  subscribers in last 3 months of 2002. Took AOL
  off name.

20
Related Globalization Debate

• 1970s, attacks on Western traditional methods of
  collecting and distributing international
  news/popular entertainment. Led to a call for New
  World Info Order, a vague but radical reordering
  of international comm. systems
• Disputes into late 1980sin part political/
  ideological related to East/West Cold War
  rivalries
• Fought in academia, UN, news media. With 1989
  collapse of Communist states in Europe, ended.
• Charge that 80 of world's news flow comes from 4
  major Western services -- AP, UPI, Reuters, AFP.

21
Pro v. Cons of Big Business

• Pro more resources, more distance between
  advertiser and editorial content, more power.
  Less involvement by owners. E.g., Jimmy Lai/Next
  and Charles Ho/Sing Tao
• Con more resources to protect, less concern over
  editorial integrity, no accountability to
  community, less choice of content.
• Any more arguments?

22
Whats the alternative?

• Jack Fuller Need for financial independence. If
  social purpose is to provide information people
  need to make political choices, they must be
  independent of government and other interests.
• To be independent, must be financially strong.
  The first duty of a free press is to make
  profit.

23
How to rectify?

• Civic journalism? Booster vs. watchdog?
• Antitrust laws?
• New business models?

24
New Business Models

• Nonprofits to own newspapers. St. Petersburg
  Times owned by Poynter Institute. Problem Hard
  to start. Need owner to set up foundation like
  Nelson Poynter.
• Green newspapers Investors willing to accept a
  lower rate of return on stocks in socially
  responsible corporations.
• Tax breaks for investing in newspapers.

25
Worldwide, Regional Media Trends

• Trend 1 Concentration of corporate control
  through acquisitions (Global China buys Eastweek,
  Tom.com YZ)
• Trend 2 Non-media international and regional
  conglomerates emerging as major players. (Li
  Ka-shing)
• Trend 3 The China Factor. Growing integration
  with PRC in ownership, market, production. Global
  Chinas joint venture media distribution with
  Peoples Daily. Standard revamped as business
  paper oriented to cover mainland business.
  Tom.com buys controlling stake in CETV w/landing
  rights in Guangdong

26
More Media Trends.

• Trend 4 Media battlefield is regional and
  global.
• --Hong Kong is media capital of Chinese
  diaspora around world Sing Tao, TVB, YZ.
• --Tiong Hiew-King In addition to Ming Pao,
  controls largest circulation Chinese paper in
  Malaysia, launched The National in Papua New
  Guinea, Chinese paper in Cambodia.
• --Next Media HK, Taiwan
• Trend 5 Media owners expand through alliances
  and networking.

27
The State of the U.S. News Media 2004,
journalism.org

• Some trends
• Growing of news outlets chasing shrinking
  audiences, thus push for revenues
• Most new investment is in disseminating news, not
  collecting it.
• More news are raw elements as end product
• Journalistic standards vary inside single news
  organization (MSNBC, NBC, web)
• Little investment in building new audiences, more
  just focusing on costs
• Convergence not as threatening, not replacing old
  media

28
U.S. Newspapers

• Newspaper circulation down 11 since 1990
• Ad revenues up 60, profits up 207, jobs
  increased 3
• People who believe what they read in newspapers
  80 1985 v. 59 2003

29
U.S. Online

• Real growth. More than 55 of internet users
  18-34 obtain news online
• Not clear its cannibalizing old media. 72 say
  they spend same time reading papers, but watch
  less TV.
• Media giants dominate Internet journalism with
  69 of 20 most popular news sites owned by one of
  20 biggest media companies
• Internet journalism still mostly material from
  old media. Only 30 of lead stories original
  reports.

30
U.S. TV (Network and Cable)

• Network news
• 44 decline in ratings since 1980, but 29 million
  still watch
• ABC, CBS, NBC 500 million revenues in 2003.
• Cutbacks in on-air correspondents by more than a
  third since 1985.
• Cable news
• 62 unedited news first draft, most repetition
• Narrow range of topics government, war, crime,
  disasters, lifestyle/celebrities
• Audience stable since 2001 at 2.4 million in
  prime time
• CNN earned 351 million in 2003, Fox 96 million,
  MSNBC 3.1 million

31
Who Journalists Work For

• Owner/corporation must be committed to citizens
  first.
• Hire business managers who also put citizens
  first
• Set and communicate clear standards
• Journalists have final say over news
• Communicate clear standards to public

32
Go back to Core Values?

• Integrity, fairness, accuracy, full disclosure,
  sound news judgments
• 1) obligation to the truth
• 2) serve public interest first
• 3) monitor powerful/offer voice
• 4) provide forum for comment, criticism
• 5) maintain independence
• 6) make news engaging, relevant
• 7) keep news comprehensive, proportional
• 8) remain true to personal conscience