Profit trumps news

2013-05-29 10:00

The public right to know is being sabotaged by the relentless pursuit of returns to shareholders.

A couple of years ago, editors from across the country sat in the public gallery in Parliament to witness MPs vote on the Protection of State Information Bill.

As the National Assembly passed the bill, the editors, many of them dressed in black for the occasion, solemnly left the gallery in protest.

It was an important symbolic gesture.

But while editors are focused on the damage the bill could do to press freedom, further damage is being inflicted on our newsrooms.

Little by little, our resources are being stripped away in the name of profit.

The public right to know is being sabotaged by the relentless pursuit of returns to shareholders.

In a free market economy, so the argument goes, supply and demand ensures that good newspapers prosper and poor ones do not.

A good paper, we are told, will attract plenty of readers, which will mean plenty of advertising, which will lead to plenty of profit, which will lead to plenty of reinvestment and an even better paper, which will attract even more readers – and the whole virtuous cycle will start again.

Thus the market is said to reward good journalism and punish bad.

But there are fatal flaws in this model.

First, as we have seen, even in the good years, profit is not necessarily reinvested.

Readers might like it to be, but shareholders might not.

Second, demand for newspapers does not only depend on quality.

An event like the 2008 financial crisis knocks the whole model.

As the economy sagged, newspaper sales dropped, managers pushed up cover prices to compensate for falling circulation revenue, sales fell further, followed by advertising, and managers resorted to the only means available to maintain shareholder profit: cost cuts.

The results are visible in newspapers all over the country, where newsrooms are strewn with empty desks as posts are frozen or stripped out.

Tried-and-tested newspaper processes have been destroyed, rules broken, short cuts taken.

Harassed reporters with no time to go out on stories resort to telephone journalism, which favours elites.

With fewer and fewer of old gatekeepers – subeditors, especially – mistakes are inevitable.

Readers, exasperated by rising cover prices and the decline in the quality of their papers (and in what other industry do we expect demand to increase when the price goes up?) turn away – and the whole vicious cycle starts again, accelerated, of course, by the rise of digital media.

That our print journalism is still as good as it is is a tribute to a handful of dedicated and competent people who are battling tremendous odds.

The fact is that the interests of readers and those of shareholders do not necessarily coincide.

Shareholders in today’s financial world are capricious, demanding and focused on the short term.

Quality and ethics do not necessarily interest them until sales are affected.

Readers, on the other hand, are often in it for the long haul. Give them what they want – accuracy, reliability, good writing, information they can’t get elsewhere – and they are loyal.

Their interests overlap to a large extent with those of staff – in all departments – who have pride in their work and who have worked tirelessly to maintain standards.

Ownership by readers and staff ensures diversity and aligns the interests of owners with those of workers, mobilising the expertise of those who actually produce newspapers.

That is why some of the most respected publications in the world have sought to include elements of staff and/or reader ownership.

Le Monde, The Guardian and The Economist are examples, as well as the newer Il Fatto Quotidiano in Italy.

Various reader shareholder models are possible, from the issue of shares to newspaper subscribers to a public offer to readers.

Staff can be brought in as shareholders through a trust or a more conventional employee share ownership scheme, alone or as part of a bigger ownership structure.

Though the context was different, the Task Force on Inequality and American Democracy put it well in a 2004 report: “Citizens with a low or moderate income speak with a whisper that is lost on the ears of inattentive government officials, while the advantaged roar with a clarity and consistency that policy makers readily hear and routinely follow.”

It is the responsibility of the press to amplify those citizens’ whispers, and to do that, we need a different sort of owner.

»?Dasnois is executive editor of the Cape Times. This piece is based on a talk delivered on International Press Freedom Day at a workshop organised by the department of journalism at the University of Stellenbosch

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