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Friday, October 14, 2005

Well, Leo, What About JOAs?

T. Craig Ladwig, formerly an associate editor of the News-Sentinel and now of the Indiana Policy Review (IPR), has some interesting thoughts on the topic of newspaper JOAs over at the IPR website. You can access his writing here. Mr. Ladwig has been published on the topic of the effect of large chain ownership of newspapers on the editorial page of the Wall Street Journal.

At the beginning of the month, I posted a piece on Indiana Parley titled "Museum on Main Street" that referenced an article by Denny Wilkens that appeared in Editor & Publisher. The article concerned Mr. Wilkens' views about the changes wrought by the publicly traded newspaper chains.

Several comments on the piece were posted. Leo Morris of the News-Sentinel asked:
Corporations try to balance making a profit that makes their shareholders happy and making a useful product that keeps their customers happy. Are you saying: 1)that no longer applies or, 2) the rules should be different for newspapers?
# posted by Leo Morris
My reply was:
I assume Leo is addressing me and not Mr. Wilkins. I'll respond by addressing the general Indiana Parley readership.
I don't believe corporations should try to BALANCE making a profit that makes their shareholders happy and making a useful product that keeps their customers happy.
It is an imperative that a corporation does both.
There is an implication in the phrasing of Leo's question that HE views the two things as mutually antagonistic.
As for the comment that the rules should be different for newspapers; my goodness, the rules ARE different NOW for newspapers.
To address Leo directly -
Your employer operates under a Joint Operating Agreement. That's a specific federal law to exempt newspapers which are organized following certain procedures from the regular federal anti-trust laws. I'm well aware that Fort Wayne Newspapers had one of the first JOA's in the country; it predated the arrival of Knight-Ridder by decades. So, it's not really a matter of publically-traded corporate ownership.
Leo, are you suggesting that the rules SHOULDN'T be different for newspapers?
Would you support Congressional repeal of the JOA Act?
# posted by Mitch Harper
Leo never replied to that question. So I'll ask again: Well, Leo, would you support Congressional repeal of the JOA Act?

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My original comment about newspapers living by the same rules as other corporations referred to the rules of capitalism in a supply-and-demand world, and I don't really see any difference between what the two of us are saying. Certainly companies have to pay attention BOTH to the interests of customers and the interests of shareholders, but I don't think it contradicts that to say that those interests have to be balanced. A company that pays too much attention to shareholders' desire for immediate and significant returns might pay too little attention to the product that makes the profits possible. One that concentrates too much on plowing money back into the product risks making the shareholders unhappy about their return.

As for JOAs, I have mixed feelings. When they were first instituted, it was felt that the importance of keeping two newspapers in a town outweighed other considerations. Today, with newspapers having lost their dominance, with so many more sources of information, with anybody able to publish worldwide without investing millions in a press or broadcasting equipment, perhaps it is not so important.

I don't feel too comfortable discussing the intricacies of anti-trust considerations. It's a specialized area of law, and I might make an observation that seems commonsensical to me (such as why newspapers need special legislation to cooperatively manage certain functions while shopping malls, say, don't) that an attorney would immediately recognize as shallow and misinformed. In any case, congressional repeal might be a moot point. I don't quite remember how many JOAs there have ever been, but it's a low number (25? 50?), and their success in preserving two-newspaper towns is mixed, at best. There are only a dozen left, and all the factors working against more than one paper (except in the largest metropolitan areas) may overwhelm them.

Personally (I emphasize that I am speaking only for myself and not for my company or anyone else there), I wouldn't mind competing head-to-head in the morning with The Journal Gazette and seeing which product people like better. But others tell me that for reasons other than the JOA, that would be problematical -- challenging a product that has already established itself in the morning marketplace, for example. Marketing is another area I'm not an expert in.

I still love newspapers and what they can mean to a community, and I still think Fort Wayne is luckier than most cities in still having two.
Does Leo understand the economics of a JOA? That is, that the two entities split the profit? However promoters of the JOA law first rationalized it, market forces are suspended in the interests of the owners, not readers or advertisers. Any economist will tell you that the only result of such an arrangement is to limit the market, to keep other competitors out. Nothing, least of all an independent editorial voice, is "preserved," only limited to a partnership. Finally, as a News Sentinel reader for more than 40 years, why haven't I read any explanation of the JOA in the newspaper itself, particularly in the letters to the editor section. I recall only promotional material that the Journal Gazette was "locally owned." Shouldn't Leo, as our seeker of truth, have spoken up at that point and noted that although his "competition" was legally right in claiming to be locally owned, it spit every dollar it earned with his employer, a publicly held corporation in California. The papers are more accurately described as the members of a cartel with one partner a local. Leo, whether on the editorial page or a blog, is merely the cartel's agent -- first and foremost.
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