Perception and Reality: The Business of Media

Public perception of the media isn't very positive these days. Every year, it seems, there's a new study telling us that the media ranks right up there with politicians and used-car salesmen in the trustworthy category.

There are undoubtedly many causes of this, but it's possible that at least part of it comes from the fact that, in an increasingly corporate world, media companies are acting more like companies than they are the champions of free speech and the public good.

Let me cite a few examples that have crossed the transom recently.

Exhibit one is Sinclair Broadcast Group, which owns or controls 62 television stations nationally.

As the trade publication Broadcasting and Cable first reported this week, former Sinclair Washington bureau chief Jon Leiberman recently had to return $1,000 in unemployment benefits to the state of Maryland.

He was indisputably jobless. Last October, after months of what he described as professional frustration, Leiberman accused company executives of political bias against Democratic presidential nominee John F. Kerry. This much I remember because the reporter made these charges in an interview with me; I was a reporter for The Baltimore Sun at the time.

But Sinclair has a strict corporate policy. No employees, even journalists, can talk to the media without explicit approval. Sinclair fired Leiberman the very day my article appeared. (The company denied there was any ideological bent in its newscasts, and said Leiberman was the biased one.)

Sinclair then held Leiberman to contractual language that blocked him from seeking a job at any television stations in the 39 markets where it has operations.

Out of work, and hampered from finding work elsewhere, Leiberman accordingly applied for unemployment benefits. And he got it — until Sinclair challenged his right to get them. The company's challenge was successful, and Leiberman had to return the benefits he'd received.

Sinclair gave Broadcasting and Cable a report by the Maryland Department of Labor. The agency found the reporter's conduct "was either a deliberate and willful disregard of the standards of behavior which the employer has the right to expect" or "a series of repeated violations of employment rules" with a "wanton disregard" of his obligations to Sinclair.

On the face of it, the company can make the argument Leiberman broke its rules; but it's at the very least ironic. After all, reporters pursue information all the time from sources who are ostensibly restricted by similar corporate policies. Presumably that includes Sinclair reporters. (The Sinclair official designated to comment on this topic did not respond to calls from NPR in time for this column's deadline.)

Here's another example. A spokesperson for CNN recently adopted a technique more fitting for some of the dodgy companies it covers — dissembling in the hope that unwelcome questions would melt away.

This winter, there was a flood of stories about the widespread use of "video news releases" — sent out by government agencies — that were designed to mimic actual news stories. They were broadcast on many local TV news programs.

When asked about the practice, the nation's media critic in chief – that would be one George W. Bush – defended it, saying that the stations ran the pieces voluntarily. But local news directors said they thought they were real. Why? Because they came from a division of CNN.

More than 800 American stations pay that division — which is called CNN Newsource — to send them stories from CNN and its affiliates. But that's not all CNN Newsource does. Many public relations firms also pay it to distribute "video news releases" from their clients — including the U.S. government. (Several competitors have similar deals.)

So CNN Newsource had more than one kind of client here. When preparing a story on the subject last month for NPR, I asked CNN, How big a side business is this? A CNN spokesman said there was no way to know how many video news releases were distributed by CNN in the typical week or month or year. It was impossible to tell, he said.

The "video news releases" weren't a major source of revenue for CNN, he explained, in genial tones meant to inspire confidence. They only generated modest fees. Naturally, the size of those fees couldn't be divulged. He also said CNN put tough safeguards in place when the issue first surfaced last year. Each public relations firm now had to sign a contract for every "video news release" saying each spot would make clear who paid for it.

Here's a pretty precise paraphrase of the conversation that ensued:

NPR: So, these guys at the PR firms actually have to sign a contract for every video news release you distribute through CNN Newsource?

CNN Guy: Yes.

NPR: And they pay you some nominal fee for each. It's not done through petty cash — you guys send them bills, right?

CNN Guy: Sure.

NPR: So why can't you march down to accounting or your legal department and have someone pull those bills and contracts? Just count how many invoices and contracts there are. Wouldn't that instantly tell you precisely how many video news releases CNN Newsource had distributed?

CNN Guy:

NPR: Hello? Hello? You there?

There was a looooooong pause. I invited him – then and several times subsequently – to reconcile his responses. No further explanation followed.

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There's another way media companies operate more like companies than media. That's when the calculus of Wall Street trumps newsroom values.

A recent trip to Kansas helped hammer this home. The family-owned World Company in Lawrence, about a 45-minute drive west of Kansas City, is investing a ton of money into finding new ways to deliver the news. Web sites, cell phones, even wireless video game devices are all part of the current mix.

It's very much a work in progress, says Rob Curley, the top news editor there. But the Simons family, led by septuagenarian patriarch and World Co. CEO Dolph Simons Jr., seems intent on figuring out what the future of media will look like. The company has a daily paper, a cable news channel, a web site and even an alternative weekly to play with — and the result is a news organization dedicated to delivering the news, whatever the medium.

The Kansas City Star is the region's dominant paper. It's owned by Knight-Ridder, one of the country's best-known newspaper companies. The Star is well over 10 times the size of the Lawrence Journal-World. I tried without luck to get a few editors of the Star to talk to me about the experiment in Lawrence.

So I went farther afield. The Arizona Republic in Phoenix has not quite twice the online staff of the Journal-World. It's owned by the Gannett Co., publisher of USA Today and more than 100 other papers. The Republic's own circulation is more than 20 times the size of the Journal-World in Kansas.

Leon Levitt, executive vice president of The Arizona Republic, said he was proud of his newspaper's multi-media efforts. But he said he had to juggle competing missions. And one of them is to make sure that the Gannett Co. draws a consistent profit from each of its properties for its shareholders. Gannett is one of the most aggressive media companies in the country in seeking profits.

"As a publicly traded company, we want to be aggressive, we want to be innovative, we want to protect our franchise and be good community citizens, and we think we do all that," Levitt said. But he added, "We think we need to be prudent to shareholders, and we need to look towards the future and do things in a way that makes good business sense."

Back in Lawrence, Dolph Simons thinks he's preparing for the next quarter century, not playing defense for the next fiscal quarter.

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There are ways in which being part of a big company helps. Stung by a barbed column by The Los Angeles Times' Pulitzer-winning car columnist Dan Neil, General Motors recently decided to pull all its advertising from the newspaper. That could cost the paper more than $10 million a year.

It does not appear that the Times or its owner, the Tribune Company, intends to back down. Both the newspaper and its parent are big enough that they can survive without the lost revenue from GM. (The Tribune Company, incidentally, owns The Baltimore Sun, where I used to work.)

And, of course, good journalism is possible within corporate confines. Knight-Ridder's Washington bureau distinguished itself with skeptical and often lonely reporting of the Bush administration's use of faulty intelligence in planning the 2003 invasion of Iraq.

But deep cuts in funding for Knight-Ridder's once-influential newspapers – such as The Philadelphia Inquirer and The Miami Herald — have diminished their ability to produce the kind of muscular reporting that made them consistently ranked among the very best dailies in the country. Significant cuts have come at the L.A. Times — before the GM affair, and despite a string of Pulitzers — and more may be in the works.

Len Downie Jr., the executive editor of The Washington Post, lost patience with the industry this week. He told Editor & Publisher that media executives should accept 15 percent profits, instead of the 20 to 30 percent cited as benchmarks within the industry.

"That is much better than supermarkets or some other businesses," Downie said. "Most of the public is shocked when you tell them what the average profit margin is."

There you have it – the top editor for one of the country's best newspapers, demanding that media companies behave a lot less like corporations – and a lot more like news organizations.

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