Guest commentary & counterpoint

Is news just another business?

ChronWatch.com's Jim Sparkman says journalists should drop the pretense that news is different from any other business; GradeTheNews.org's John McManus begs to differ

Posted Feb. 15, 2006
Updated Feb. 16, 2006*

A faithful San Francisco Chronicle reader for more than 30 years, retired chemical engineer Jim Sparkman started ChronWatch.com three years ago to balance what he sees as liberal advocacy in the paper.

Mr. Sparkman and Grade the News' John McManus have been trading e-mails for years with differing takes on the state of the press. Grade the News invited Mr. Sparkman to pen a commentary with the understanding that John McManus would respond.

Jim Sparkman: Pssst journalists! Some "breaking bad news" for you.

Somehow journalists have developed the impression that they practice an art necessary to the proper functioning of society. As such, they feel they should be allowed to practice their art without concern for the competitive pressures so typical of business entities.

John McManus: Quality journalism is necessary (but not sufficient) for the proper functioning of democracy. But don't take my word for it. Consider what Tom Jefferson, wrote:

...were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.

Or James Madison:

[T]o the press alone; checkered as it is with abuses, the world is indebted for all the triumphs which have been gained by reason and humanity over error and oppression.

Or Walter Lippmann:

All that the sharpest critics of democracy have alleged is true if there is no steady supply of trustworthy and relevant news. Incompetence and aimlessness, corruption and disloyalty, panic and ultimate disaster must come to any people which is denied assured access to the facts.

Sparkman: Unfortunately, the reality is somewhat different: By and large, newspaper journalists are employed by a business that is subject to all the normal pressures of competitive survival that other business firms face. You must produce a product that is deemed to have economic merit, or your business will not survive. McManus: Newspapers are subject to most normal business pressures. But because they are protected by the First Amendment, they also get special mailing rates, exemptions from antitrust and child labor laws, and a few other perks.
Sparkman: I have no idea where journalists got the idea that they supply a public service that deserves a subsidy. McManus: I don't know of any U.S. newspaper journalists who have argued for a subsidy beyond those mentioned above.
Sparkman: Do all journalists expect to work for a government controlled U.S. version of the BBC or the CBC? McManus: No, very few.
Sparkman: In truth, there is no practical way to devise such a subsidy. It is delusional to think otherwise. McManus: Some Western European countries subsidize newspapers and it works quite well. And since you bring up broadcast, I don't think NPR and PBS are corrupted by their government subsidy.
Sparkman: Objective reporting of "the news" by the major newspapers has been largely replaced by varying degrees of advocacy journalism that promotes a particular political ideology. Such a product appeals to only certain segments of the reader population. As such, it is not public-service oriented, since it is designed to serve a limited segment of the population. McManus: Socially responsible journalism -- which all Bay Area news media print and broadcast subscribe to in their codes of ethics -- requires an advocacy or bias for the public, and no one else. When the Chronicle exposes business scams or police brutality, you may see that as "liberal," but because such practices harm the public, I would consider them evidence of an appropriate public bias.
Sparkman: The competitive world is changing in a way that diminishes the need for your product. In other words, your business has a strategic issue that must be faced. McManus: If we're talking about news on paper delivered to your door, I'd agree. But news itself is more valuable than ever. That's because news is about change -- what's new -- and technology is changing everything in our society at a faster clip than ever before.
Sparkman: There is no basis for the belief that the owners of newspaper businesses are more demanding in their profit expectations than other business owners.

McManus: The average pre-tax operating profit of an American firm is about 7%; newspaper companies average three times that. This month's Forbes Magazine contained this table contrasting ExxonMobil's profits with national media companies:

Earnings before interest, taxes and depreciation as a percentage of sales for the latest fiscal year:
CBS 26%
Gannett 32
GE (owns NBC) 25
Knight Ridder 20
McClatchy 28
New York Times 18
News Corp. 21
Tribune 23
Disney (ABC) 19
Washington Post 23
ExxonMobil 16
Sparkman: Let's use the San Francisco Chronicle as an example. McManus: You can't argue for the rule by citing the exception.
Sparkman: The Chron has acknowledged losing $62 million in 2004, and it is rumored that losses of this magnitude are typical since the merger with the San Francisco Examiner. In other words the electrical and phone bills are not paid out of the Chron's gross profits, but by the transfer of cash from the parent Hearst Corporation. Exactly what is the Hearst group supposed to do with this operation that is a financial drain? Hearst and the Chron publisher are not cutting staff and outsourcing "the news" in order to increase profits. They are doing so to stem the losses. How can one possibly classify that as acting out of blatant corporate greed?

McManus: I don't know of anyone who has accused the Chronicle of "corporate greed." Certainly GTN has not.

Don't you think the Hearst Corporation is absorbing losses in order to turn a profit down the road? I sincerely doubt that Hearst plans to keep open an operation it has given up hope of making profitable.

Sparkman: On the question of providing a public service, it is widely judged that the Chron has elected to target the highly liberal San Francisco audience. In so doing, they deliberately reduce the size of their potential customer base. This decision is questionable from a business point of view, and must be based on a dedication to that particular political ideology. Therefore, no conservative thinker would agree that the Chron's product serves a broad public service. It is laughable to think that it is journalism like this that has made America "strong and rich."

McManus: I'd be shocked if the Chronicle were trying to alienate conservative readers, but then you judge political bias differently than we do.

Sparkman: The other bit of harsh news is that journalists are no different from any other professional group employed by a business: the engineers that work for Bechtel, the accountants that work for Ernst & Young, or the lawyers who are employed by Chevron. All those professions have high ethical standards that are not compromised by their terms of employment, or by the need of their firms to be profitable. McManus: Harsh? Journalists earn half or less than average salaries in the groups you mentioned. A second difference is that journalism is not a profession; there's no peer review, no licensing, no disbarment, no enforceable ethical codes. Journalists are ordinary employees who do what they're told or are fired. They can't rely on professional norms to counter unethical demands by employers.

Sparkman: Come on guys. Do what other businesses do in this situation. Improve your product. Broaden the potential customer base. Cut your costs. Study the competitive environment. Adjust to the new media alternatives. Figure out innovative ways to deliver "the news."

But, whatever you do, quit whining about your being the foundation for our society. Whining keeps you from doing all the things above that might save your business, your job, and your profession.

McManus: Was the spotter on the bridge of the Titanic "whining" when he warned of an iceberg off the bow?

* An earlier version of this article was laid out horizontally; Mr. Sparkman asked for two parallel commentaries. Because Mr. McManus gets the opportunity here to respond to Mr. Sparkman, GTN has extended an offer to Mr. Sparkman to respond in kind.

Jim Sparkman directs ChronWatch. He holds a master's degree in chemical engineering. He completed an executive training course at the Harvard Business School. He retired from Kaiser Aluminum & Chemical Corporation after assignments in Australia, Lousiana and Jamaica before becoming a corporate vice president in Oakland repsonsible for worldwide primary metal operations.