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- Dean Baquet
Former editor, Los Angeles Times - Charles Bobrinskoy
Vice chairman, Ariel Capital Management - Lauren Rich Fine
Managing director, Merrill Lynch - Larry Kramer
Former head, CBS Digital Media - Nicholas Lemann
Dean, Columbia University School of Journalism - Scott Moore
VP content operations, Yahoo! - James O'Shea
Editor, Los Angeles Times - Eric Schmidt
CEO, Google
I think a great newspaper is, first and foremost, responsive to its readers. I think a great newspaper prints the truth. I think a great newspaper's aggressive. I think a great newspaper ... acts as the watchdog for the region that it covers. …
And is it in danger, that model of a great newspaper?
Yeah, I think it is, but I don't think it's quite in as much danger as people think. There's a tremendous amount of anxiety right now about newspapers and the threat to newspapers. I think there is such a threat, but I'm convinced -- and maybe it's because I believe in the reader, and I believe in the people who care about news -- I'm absolutely convinced that even if they don't survive on paper, though I think they will, ... there will always be an appetite for what's going on in the world. …
I think what's under threat is not the journalistic model. What's under more threat is the business model for what a great newspaper is. ...
The business model for newspapers is a challenge, because as we move some of our readers to the Web, ... the business side hasn't figured out a way to make a buck, the same buck on the Web that it makes on paper. But I'm just convinced that the institutions that cover the mayor, the governor, the president, the Middle East, the war in Iraq, the war in Afghanistan, that there is such a hunger for that, that there will always be institutions that can do that, whatever they look like. ...
Dean Baquet [editor of the Los Angeles Times] said, "Wall Street's my enemy." [Merrill Lynch analyst] Lauren Rich Fine said Wall Street is his enemy.
I'm disappointed that he said that. He should not have said that. Dean is running a division of a company that is owned by pension plans, retirees. GM's pension plan owns stock in the Tribune Company. People are counting on appreciation in Tribune Company shares to fund their retirement.
He's saying it's the short-term profitability. He's saying if you invest the money necessary you'll have to live with low profits for a while.
On that point he's just wrong. The only people that are investing today are people who have a long-term outlook, like we are, Ariel. Our motto is "Slow and steady wins the race." Our mascot is the turtle. If we were concerned about events next week, we wouldn't own newspapers, because all the short-term news is bad. We believe this is an industry that's going to pay off as they migrate to the Internet and as they prove the power of their ability to be such a great place for advertisers to get this very attractive demographic, but it's not a short-term play.
Lauren Rich Fine again: "We've told our clients to stay on the sidelines until we figure out what the growth rate is, if there's a growth rate, but until then you really don't need to own the stocks," meaning newspapers and media companies in general.
No doubt about it. Wall Street hates the newspaper industry right now. No doubt about it. And that's, of course, what we like so much. This is a great contrarian opportunity. You don't do well as an investor by buying what everybody else likes. That's how you buy Internet stocks at the top. How you do well in investing is by buying good businesses when they're out of favor, and nothing is more out of favor right now than newspapers.
Not just Wall Street but Warren Buffett. Same thing?
Remember, Warren Buffett still owns The Washington Post. So Warren Buffett has made it clear that the business is not as good as it used to be. No doubt about it. But the stocks used to trade for 20 times earnings. Now they're trading for 10.5 times EPS [earnings per share] and 7.5 times cash flow.
What does that mean?
Warren Buffett is right that the businesses are not as good as they used to be. But the fact of the matter is the stocks have come down way more than is justified by the reduced growth rates in these companies. We think the market is overestimating the decline and underestimating the growth of interactive and Internet revenue.
We think those two factors are going to produce a much better outlook for these two companies than Wall Street thinks, or actually, in this case, even than Warren Buffett thinks.
This is a big bet on the Internet, that newspapers and newsgathering will survive and have some quality because the Internet, a method of delivery, is simply replacing trees and trucks.
That's part of the story, and it's happening today, ... and it's not a pipe dream. The revenues are growing 25 to 35 percent. Right now if you go online in Chicago, if there's a major event, the best coverage of news in Chicago online is chicagotribune.com. Just as the newspapers were able to create WGN Radio and then WGN TV, we think they're going to be able to move a significant part of the business to the Internet.
Produce enough revenue to maintain quality in the news they gather?
Absolutely. There is still going to be investigative news done in a not-for-profit format. The second in my analogy is history books. Most of the best investigative work done on history is done by people who just love it. The best Civil War books investigating what really happened at Gettysburg weren't done by people in companies or corporations; it was done by people who just love history. And I think that work will still be done.
A lot of what's done on the Internet today is done by people who are just interested in politics.
So you're telling people you can be poor and honest and make a difference?
There are a lot of people who are professors, who are not so poor, running a blog that gets Internet traffic. The CBS Dan Rather National Guard scandal was uncovered by bloggers uncovering the six-month investigation done by Dan Rather and his highly paid staff, so I reject the concept that only newspapers can do good work.
It's not necessarily just newspapers or television, I think, that's at question. It's a question of newspapers and broadcasters with the assets, the standing, to be able to do stories in depth, pay qualified people to do the story accurately, and stand up to those who don't like the story because of the facts in it. That's the danger that's felt in the newsroom --
Mike Royko in Chicago was the most widely read newspaper reporter in Chicago for 30 years, and all he did was investigate local stories. He was paid very well by local, for-profit corporations. But the reason it worked is because people wanted to read what he had to write. So the key is, your six-month study better be on a topic that people care about.
If they don't, then I would argue this society hasn't lost what you say it's lost. Mike Royko brought an important service to Chicago by investigating City Hall. He wouldn't have brought a lot to Chicago investigating a problem in downstate Illinois that really didn't affect people.
Long-term future for newspapers or not?
We don't know the answer. I believe you'll still see a print newspaper close to its current format 20 to 30 years from now. But what will happen is much like your losing stock tables in some newspapers today: Maybe the classified section doesn't get printed anymore; maybe there's a page that says, "We've added 25 new house listings, 30 new jobs; these are the income levels; these are the disciplines; go online." I think more of it will be produced online, but the print paper will serve as the gateway and should satisfy the people who are regular readers who ... are reading for the analysis and the news. ...
If you can give blanket advice to an industry, ... what should the newspaper industry do these days to survive and to try to grow?
I would say to survive and to grow, the first thing you might need to do is invest so heavily that it does hurt your short-term profits. Understand that the stock prices will go down, but really look long term to what you think you can be going forward and what consumers really want from you. Ultimately you need to listen more to the consumer. It doesn't mean that you have to go tabloid. It doesn't mean you have to become an entertainment newspaper and put Britney Spears on the cover. But it does mean that you need to be more in tune with what the consumer wants and find a more creative way to give them what they don't want but you think they should get. There are ways to do that. There's ways to engage consumers in a dialogue, and I think you can use the Internet very forcefully to do that. ...
You describe what's going on with the newspaper industry as something like what's happened to Detroit and the Japanese automakers. Is that what we're really seeing here?
I think so. I think to some extent, it's an industry that's moving slower than it should to change, to recognize what its audience wants. What its audience wants is not a newspaper; it's news. And learning how to give that audience the news it wants when it wants it is difficult. It doesn't mean you give up the franchise of teaching them or giving them news that you think is important. You can still do it. But you have to learn how to do it. ... You watch their habits. You pay attention to how people want to get their information, and then you give it to them. But you give it to them in the right way. And over time you build your reputation.
Now, you have a running start if you're an existing media brand. You can have a credibility, a chit that you have because you've delivered news in an honorable and straightforward way over the years, whether it's a New York Times or an NBC News or a CBS News or Atlantic magazine or Harper's. ...
You can take that to the Internet. … But you have to do it, and you have to do it in a way that's interesting. You have to engage people once they're there. You have to make it so that they want to keep coming back. And when that's the habit they form, you've got them. Advertisers will follow; revenue will follow. You still need to own that time.
The worst thing that the situation can be is you lose them to some other source of information on the Web. Then getting them back is going to be impossible.
It depends. I am way less pessimistic than most people I run into every day in my job, for a number of reasons. The scary stuff in the newspaper business is happening really at about a dozen or so of the biggest big-city newspapers. Based on who comes here [Columbia Journalism School] to speak, the people who publish in small- to medium-sized markets are not nearly as pessimistic as the people who are publishing in big markets. They say, "We're a local newspaper; we publish a lot of local news; our audience is loyal to us; it's not slipping away; our advertisers are not slipping away."
On the Web, some people are doing extremely well, like Bloomberg News, and that's because they're able to charge a huge subscription price because they're based on financial data.
The model for the daily newspaper is they've mushed together a bunch of things traditionally under one roof, and if the Internet starts taking away little pieces of it, the whole doesn't cohere economically, or that's the scenario. The biggest example of that is the classified ads being taken away by craigslist and others.
Some sites on the Web, particularly Bloomberg, have done sort of the opposite: They've built an economic base on all this financial data that people are willing to pay a fortune for, and then layered news on top that their readers like and want, but that's clearly supported by something else.
People will experiment and come up with ways to make this work. I definitely think the trends will drive most American newspaper journalism to be intensely local, and that's where the economic sweet spot is going to be. The most endangered is the Washington bureau and the foreign bureau. The newspaper has to be willing to say in its print and Web iterations, "What you're getting from us, you cannot get anywhere else."
Now wait a second. You are saying that some newspapers are doing OK; a lot of them are still making money. The Los Angeles Times makes over a billion dollars in revenue a year, and over $200 million a year in profit today, and it's in a crisis, and the newsroom is being cut.
That's a different question. My understanding of that is public markets bet on the future of companies. Public markets are often wrong, but they're not just completely blind. So the calculus of investors is, yes, the Los Angeles Times has a 20 percent profit margin, but it's also losing, what, 7 percent of its audience every year? Play it out for 10 years; it's not going to be at 20 percent profit in 10 years unless some cuts are achieved or additional revenue [is found].
That's all the investors are doing. If they thought it will produce 20 percent profit in perpetuity, then the stock wouldn't be going down.
But you're talking about the public markets. [Berkshire Hathaway chairman and billionaire investor] Warren Buffett says newspapers, as an industry, are in decline; tells people, even though he owns a large chunk of The Washington Post, "Don't invest." That's causing a crisis in newsrooms across the United States.
Look, I'm not an investor. For the most part, the public markets do not believe in the future of the traditional print newspaper, particularly big-city newspapers. That's why the stocks of companies associated with traditional newspaper journalism are quite depressed right now.
On the other hand, there's a lot of private players who are trying to get into the business. Some of them are trying to get into it for vanity reasons or public service reasons or whatever you want to call it. Some of them, I think, think they can make the economics work and that the markets are overreacting to something temporary.
But let's say it does happen. Then there's a conversation that people in journalism don't really want to have, but it might be a conversation worth having, which is in much of the world, including in the United States, good journalism is associated with various explicit and implicit public policies. That is, government interventions to make journalism better, such as the BBC in Britain, which has taxing authority; such as the now-departed Fairness Doctrine and various public service requirements in broadcasting; such as nonprofit status and quasi-public status like NPR and PBS have.
We may have to start thinking, if we value reportorial journalism, about structural interventions that will preserve it if trends move in that direction, rather than just saying, "Oh, isn't it horrible?" Or saying, "Why can't we have owners who don't care about profits as much?"
When we interviewed Dean Baquet and Jeff Johnson, the former editor and publisher, respectively, of the Los Angeles Times, they said, "We answer first to our readers and then to our shareholders." Is that a naive perspective in the modern world?
It's a complicated question. Journalism in the United States has traditionally been completely independent of government, although today that's not really true; this show we're on now is, indirectly, very heavily supported by the U.S. government. Like it or not, it's just true. But nonetheless, if you have journalism having a commercial basis, and also journalism as a profession in the sense that the people who practice it have a set of values that are not purely commercial, you've got a built-in tension.
It's nothing new. It's always existed, and it's not a problem that's that easy to solve ever. There's always something else you can do that will be of journalistic value that will drive your profits down. The idea that there was a time when all newspapers were immune to economic considerations and only cared about their readers, I don't really buy that. I grew up in a town that now has a great newspaper, but when I was a kid had a horrible newspaper. The idea that there was this misty time in the past when journalism didn't care about profits and all local papers were great, that time didn't exist.
Go back and read. In 1947, there was the Hutchins [Commission] report about the state of journalism. It said there's too much concern with profits; chain ownership is taking over; sensationalism and celebrity journalism is taking over; something must be done. Go back and read [New Republic founder] Walter Lippmann's book Public Opinion, written in 1922. Same argument: Journalism had this wonderful promise once, but concern with profit and big corporate ownership has dashed that promise, and we have to think of some new way of saving journalism.
This is a constant, because of the way American journalism is structured.
Everyone's running to the Internet. At the same time, when you talk to people at these newspapers or broadcasting companies, they'll tell you the revenue from this is really pretty small and there's declining profits in their parent companies. What's at risk, they say, is in-depth reporting and the future of it. Is it at risk?
I hope it's not at risk, and let me make the case why it wouldn't be at risk. That would be that the economics of the Internet are going to start to work over time. If we're sitting here in 20 years, it's my hope that the people who are doing really good journalism on the Web, that serves local audiences and so on, will be making money at it, and that the print publication will still exist and will have settled down to a smaller, natural level.
Putting it another way, reporting -- taking out the word "in-depth" -- is the only thing you can really offer on the Internet that people would conceivably be willing to pay for; certainly subscribers, and maybe even advertisers. For that reason, I think the economics will start to work on the Web side of journalism.
Most of the established newspapers in the United States, as far as audience goes, have very healthy Web sites with much bigger audiences than their print edition. I can't think of a single big city in the United States where some other person came along and established the dominant local news site that has a bigger audience than the daily newspaper's site.
So the question really becomes, what does the slope of decline look like for the print edition, and does it start to sort of level off? What is the slope of income increase on the Web side through advertising, through some form of paid circulation, through some form of monetizing search? And will we get to some kind of equilibrium where it's still supporting reporting?
I really hope it will, and I believe it will. At every moment in my life there's been something that was in crisis, and it's always been wrong to follow the trend line at that moment down as far as it goes. It's perilous to believe that what's happening in 2006 is just going to keep happening exactly the same way, at the same pace, for the next 10 years.
Let me take you to another subject. Maybe you could speak in general, because you've written about the [Valerie] Plame case a year ago, about how it exposed journalists and their sources.
OK. So the Plame case is not really about this world of lonely, courageous whistleblowers who leak material about government corruption to journalists that we all like to think that the journalist-source relationship is all about.
Instead, it's about another part of the journalistic world that isn't, frankly, very attractive, and that is the cozy relationships between Washington reporters and high government officials. They're talking all the time. The reporters have their self-interest, the officials have their self-interest, and you can argue that it's healthy for the reporters to maintain this line of communication so they can tell readers what's going on. But part of what happens is an administration uses that relationship essentially to slime its enemies, and that's what happened here.
This man, [former Ambassador] Joe Wilson, popped up as essentially a public and fairly damaging critic of the Bush administration, and various people in the administration whispered in the ears of various reporters things meant to impugn him. That's how Valerie Plame, his wife, got pulled into it.
In other words, the basic argument as I read it -- it's all complicated and shadowy -- was, "Hey, you need to know something about this guy," and that is, "the only reason he was over there in Niger is that his wife is a CIA agent, and he was a little down on his luck, and she was looking for a freelance assignment to throw him. So that's why he was there." I think that is where the whole case seems to come from. So that particular reporter-source interaction is not the wondrous part of journalism that we all like to brag about, but it goes on.
But the administration's side -- Mr. Wilson wrote an op-ed piece in which he spoke about how he believed that it was [Vice President] Dick Cheney who had, in a sense, dispatched him, through the CIA, to do this mission -- so all the government was doing was trying to say, "That's not true; it was because his wife put him up for the job and nominated him to go do this."
In a perfect world, these people at the high levels of the Bush administration should have flipped through their book of legislation and said, "There is a law against exposing a working CIA agent." In fact, even if it weren't a law, they shouldn't have done it, for all the obvious reasons. They should have had the thought, "We're so mad at Joe Wilson because we just dispute his version of why he was sent there, but unfortunately we have to bite our tongues, because we're not allowed to out a CIA agent." That is what should have happened in this case, but it's not what did happen.
And what does this case say about the relationship of the Bush administration to the press?
Well, what it says to me is sort of counterintuitive, because everybody goes around saying, "This administration is the most leakproof and the least hospitable to the press ever, the most hostile to the press ever." I've covered Washington on and off for a long time, and I don't disagree with that. This is an administration where you can't just stroll into the White House and the Executive Office Building and phone people up and go see them. It's pretty locked down.
But what this case shows is that even the Bush administration, because of the way Washington works, is in constant, chummy, off-the-record contact with the press.
Selected members.
Selected members. But the people that they're talking to are a mix of friendlies and fairly neutral people. In other words, [Time magazine reporter] Matt Cooper did not have a reputation as a member of the conservative media or somebody sympathetic to the Bush administration or unsympathetic; just a reporter covering the White House for a major news organization.
I assume you believe in reporters having confidential sources. Now, the first kind of sources we're talking about --
What I tell students here, when they ask, "Is it always preferable to get things on the record?" is, you should try to get things on the record. I always try as a journalist to get things on the record. But if pressed, I wouldn't say to people, "I will only speak on the record, and I will never go on background or off the record," because you do get things that are helpful to you in prying out some other information from some other person. So I believe in it, but not as the first resort, I suppose.
What's the public-interest in stories that resulted from confidential sources, the real whistleblower type?
Essentially, if you work in a news organization, you get tips all the time about things that need to be looked into. Most of them don't amount to anything, but some of them do amount to something. And many, many, many really good and important and world-changing stories begin with an anonymous person leaking an interview or leaking a document. ...
A really good example is the Abu Ghraib story. This story rocked the world. It was bad for the American war effort in Iraq, but I think very few people would argue that it isn't net good for the country and the world and democracy and discourse to have this seen in the light of day. And all this material in the first instance came from confidential sources. If you had a world with no confidential sources, I don't think we'd know about Abu Ghraib. Not everything comes out on its own.
So [the use of] confidential sources is wedded to the public-interest function of the press, especially over the last 30 years or so?
The First Amendment was not written with confidential source relationships in mind. The First Amendment was written at a time when there really wasn't much reportorial journalism, and what I think the framers of the Constitution had in mind in the First Amendment was protecting essentially freedom of political speech when it was printed and disseminated.
Nonetheless, I think there's a very strong public-interest argument for confidential source relationships and how they enhance democracy. That's why most of the states have legislation on the books protecting those relationships. Now, the federal government doesn't have legislation protecting it, and that's where things are getting interesting right now.
Well, [New York Times reporter] Judy Miller went to jail because of it, the lack of a federal shield law.
Judy Miller went to jail, right.
What do you think of Judy Miller and what happened? She went to jail. Did that help journalism? Did that hinder journalism?
I admire her for sticking by her guns and essentially saying, "I have a confidential source relationship, and I'm going to protect it, and I'm going to go to jail to protect it." She didn't claim that it was legally protected; she essentially said, "I have made a bargain with my source," who turned out to be [former Chief of Staff to Vice President Cheney] Scooter Libby, "and I'm standing by my word even though I know there isn't any legal protection currently, and I'm going to go to jail over it."
She had a coherent argument for why she then left jail and testified, which was that Libby had released her from her bond that she had made with him, a sort of private contract without legal standing. So therefore she left jail. I think the way the case nets out, though, is that prosecutors would take from it the signal that if you just keep pushing and pushing and pushing on the press, they're going to cave on this going-to-jail stuff and eventually testify. So I'm not sure that --
But has that been unfair, because [journalist and author] Bob Woodward didn't resist the subpoena when it turned out he was one of the first recipients of this information. [Columnist] Robert Novak didn't resist. [NBC's] Tim Russert walked right in and said, "Of course I'll testify." And Cooper at first testified and only then balked, and then later testified. Has it been unfair to rap Judy Miller because she was willing to take this to jail and make a point of it?
She showed a lot of courage in being willing to go to jail to protect her source, and that's admirable. I just think the net of that case doesn't play well for the press in its ongoing maneuvering with prosecutors, because prosecutors took from that case the lesson, "If you keep pushing you'll eventually get the person to testify." So it's important. Her behavior and The New York Times' editorial stance are both important.
If they thought all along, "If only Scooter Libby would have a conversation where he'd release us from our obligation, then we wouldn't need to go to jail, and we'd be happy to testify," it would have been better from a PR standpoint for them to have that conversation a few months earlier and not walk up the hill and then walk down the hill. But nonetheless, I do admire her for being willing to go to jail to protect the promise she made to her source.
But the reason prosecutors may take encouragement to subpoena reporters is that the journalism community, particularly the Washington journalism community that sits in that same sort of hothouse every day, basically caved? [Special prosecutor] Pat Fitzgerald gets people to sign waivers, and everybody walks in and starts talking.
Right. Look, here's the situation. Almost all states have a shield law that spells out when reporters are protected in their source relationship and don't have to testify. There is no federal shield law. This applies notably in the area of national security; national security is not covered by shield laws.
If you had to say to somebody, "What's the net result of the Plame case with respect to protecting the reporter-source relationship?" and you have to state it in one or two sentences, you'd say: "The net result is, absent a federal shield law, if prosecutors push hard, news organizations will eventually cooperate. Some will cooperate right away, some will cooperate more slowly, but the prosecutor got every news organization to testify." That's the one-sentence version of this.
But even if there's a federal shield law and you have an issue like the identity of a CIA agent, or who told you about an NSA [National Security Agency] program, no shield law is going to protect --
Well, so that's what's good about legislation. It's healthy to settle public policy matters through having laws passed because it makes all this clear, what's protected and what's not protected. A hypothetical federal shield law would clearly have to address situations like this, and it would have to say either, "Even in all cases it's protected, end of story," in which case the prosecution wouldn't go after the press, or they would say, "There are the following three or four exceptions where there is no shield," and then prosecutors would go after the press, [and] they'd have a strong case.
In other words, it's hard for the press to argue, "There's something we do that is in the public interest, and even though the public's elected representatives haven't detected that it's in the public interest, we know it is, so therefore we get a legal protection." It forces the press to go into Congress and argue the case. It's democracy at work.
One reason that a federal shield law wasn't passed -- as I understand it, Congress was poised to pass it in '74 or '75 -- one of the issues was, "What's a journalist?"
All these things you can settle, though. We journalists tend to think everything involving us is uniquely complicated and nobody can possibly work it out and understand it except for us. I've seen various iterations of this definition. But you can settle this by having a bunch of people in a room writing various versions of the legislation and arguing about it. They're all out there now. I don't think it's a crippling problem.
But meanwhile, if a federal court just ruled on another Judy Miller case involving phone records. ... And the BALCO [Bay Area Laboratory Co-Operative baseball steroids] case is pending and those reporters [Mark Fainaru-Wada and Lance Williams from the San Francisco Chronicle] are facing jail, and a young blogger [Josh Wolf] is in prison. It sounds like there's a concerted effort, particularly on the [part of the] federal government, to squeeze reporters and to squeeze this privilege.
I wouldn't say a concerted [effort]. I would stop there. I would say the atmospherics have changed on this issue. The atmospherics are that I think prosecutors, having to meet and talk about it, would just by reading the papers have the feeling that if the information they want entails subpoenaing a reporter and asking about his source relationship, the climate is much more friendly now to that working than it used to be.
By the way, these prosecutors, they're not getting up in the morning saying, "I'm doing this in order to destroy freedom of the press in America." They're saying, "Why does the reporter get a right to stand in the way between me and catching the bad guy, which is my job?" There are two competing visions of the good here, which is why you need legislation.
The Internet is impacting all businesses, not just news. It's also impacting entertainment and the ability for big broadcast networks to make the kind of money that they are used to making.
You're saying that a smart newspaper -- and you're using The New York Times or The Washington Post as examples that are starting to invest heavily now in the Internet -- is not only going to survive but probably thrive?
I think so. And I think there's a good chance they'll actually take market share from newspapers that don't make that kind of transition. I would make a prediction that in the next five to 10 years somebody with deep pockets is going to decide that there's a great opportunity to create local-based news offerings that don't have a newspaper attached to it at all.
In other words, you'd take a pile of money -- not even all that much money in relative terms -- and go and create new staffs in a handful of cities around the country and start creating an online-only competitor to the local newspaper. You wouldn't have the same cost structure as the newspaper, but if you were putting out a product that was of equal quality and perhaps much more attractive and Web-like in its approach, you might take a lot of their audience away. And because your cost basis would be lower, you could make a lot of money on that.
I think that's likely to happen. I think newspapers who do a great job of adapting quickly in their own markets can fend it off. But if they don't, they're going to be subject to that.
So those of us who are used to having a pile of paper in the morning to read with our coffee, they're going to die off, and people will just go on to some kind of either some computer screen or some kind of electronic reader?
[Slate founder] Michael Kinsley used to say that we would know that Slate was successful when you could read it on the toilet. That was kind of the demarcation point for him, was the idea that you didn't have to sit at a desk in front of a computer screen to enjoy Slate. ...
I don't think we're at that point today, but on the other hand, we're much closer to that point than we were 10 years ago, when we were barely able to keep our servers up and when people were dialing into the services over 28.8[K] modems. Just think about how people use Blackberrys today or even cell phones or any number of different devices that are proliferating. If you want to be connected to the news today, it is not difficult to do that and be connected in a real-time way.
Now, I don't believe that print newspapers or that print magazines are going to go away, because there will always be a segment of an audience that likes their news or likes to enjoy the experience of reading a glossy magazine and enjoys that physical, tactile sensation -- just like books actually have benefited from the Internet and really not been negatively impacted for many of the same reasons.
But on the other hand, you will see that the form and the number of offerings that are out there in print are going to change. They're already changing, and they will continue to change. So there will probably be fewer newspapers. There will probably be fewer magazines. But the ones that are able to survive and [offer] both an online and an offline experience for their audience and who are able to keep a loyal audience are going to thrive. …
I interviewed one of [the Los Angeles Times'] reporters on their so-called Manhattan Project, which they've changed the name to Spring Street Project, who says up front, "Our Web site stinks." So if they don't fix that, you're saying they're doomed.
No, I don't think they're doomed. But I think that they will, if they don't fix it, they will underperform what their market opportunity is. You're talking about one of the largest newspapers in the country, with a vast audience, local audience, who's very interested in L.A. and Southern California news. There's no company that's better suited to serve that audience than the L.A. Times. And if they don't serve it well online, then they're just missing an opportunity. That's something that, from a business and management standpoint, they need to address, but it's totally doable. ...
Do you disagree with John Carroll, the former editor, who says that because of what's been going on, the very soul of newspapers in the United States is being threatened by this economic crisis?
Yes, I agree with that: The soul of the newspaper industry is being threatened. That doesn't mean it's gone; it doesn't mean that you can't revive it. You've got to sit down and say: "OK, the soul is threatened. So what are we going to do to solve it?" You can't just sit there and say: "The soul is threatened. The soul is threatened. The soul is threatened." Yeah, we all know that. But what are we going do about it? That's the question: How do you get out this? How do we turn this around? How do we take everything that we do every day, which has got a lot of value -- and a lot more value than I think Wall Street is placing on it -- how do you turn that around?
How do you sit down and say to yourself: "OK, we are having troubles. We are losing readership in print, and yet people are buying us online. So how do we [amass] that audience?" ... I can give a large portion of the people in Los Angeles interested in sports, because they read my sports section. But I can also take my Lakers columnist or my Lakers beat reporter, and I can deliver to you, online, everybody that's interested in the Lakers, because I'll build a page around those columnists and around that expertise. That's got to be an audience that's of interest to an advertiser, somebody who would really like to be able to reach that targeted audience. How do you blend those two to create more revenue than you created when you had this one and this one apart?
I think you can do that. That's the way you've got to go in the future, and I think the Los Angeles Times is going to show everybody that they're wrong. ...
Newspaper chains' financial advisers we've talked to are saying newspapers have to go super-local. But that doesn't necessarily result in quality information.
As a result of the globalization of the market, a few newspapers in this case could become global newspapers, and the people who don't quite meet that test get less and less readers, less and less traffic, and they have to specialize. They have to become local or regional or specialized in some market. Indeed in some markets, where there's very competitive newspapers -- I'm thinking of London, for example -- the newspapers have specialized around political parties, and that specialization seems to work.
You could imagine something similar occurring in the United States with respect to news gathering for televisions; that the two political parties could each have news outlets that were primarily specialized in what they were doing.
[Berkshire Hathaway chairman and billionaire investor] Warren Buffett says newspapers are an industry in decline, and he sees no reason to invest in them. They've lost their advertising base.]
I completely disagree with the assessment that the economics of newspapers won't work. The economics are different going forward because so many of the viewers will be online. It's just like people reading the newspapers; in many cases it should be possible to have more readers online than there are in printed form. And remember that the online reader doesn't have to have all those trees killed in order to produce the newspaper.
It should be possible to come up with an economic system using advertising and other forms of subscription that pays newspaper reporters more money over time, because you don't have to also pay for the newspaper, the physical newspaper print and the presses and all of that, and the distribution.
If, say, the L.A. Times is turned into a local paper, doesn't that remove a set of eyeballs looking out for the public interest?
It's true that the business problems of a particular publication could reduce the number of voices and the number of eyeballs, but remember, at the same time, thousands of other people are now looking at the same subjects, especially the ones that are highest priority. All the bloggers, all the people tracking everything, all the people with video cameras following politicians around.
But do they do newsgathering, present new information?
It's perfectly possible an infinitely brilliant single reporter could be their own publisher and editor and build their own brand as long as they could do it within what they can do within a given day.
The fact of the matter is that these newsgathering organizations do, in fact, have value. They actually provide a coherent trust, a coherent brand, a coherent sense that this [information] is probably true. So those structures are incredibly important to the future of news, whether it's Reuters or AP [Associated Press] or the Los Angeles Times or The New York Times or The Wall Street Journal, the Financial Times or any of the publications that you can imagine that are going through these transitions.
It is the newsgathering and the branding and the editing that will ultimately be used by the end users to determine whether they want to believe this or not.
Wall Street is waiting for the stocks of newspapers to really tank so they can take over and present a product that doesn't do as much in-depth reporting, has a lower overhead, presents people with what they "want" but not maybe what's in the public interest.
The people I've talked with who are doing private equity buyouts and so forth in the content industries admire the content industries because they have very stable cash flow and they're relatively out of favor in terms of valuation. But every one of those buyers has to have a strategy for getting growth back, and we believe that one of those strategies will be using these online mechanisms, the advertising that I've been talking about, to get real growth coming.
Mind telling me who these people are?
No, of course not. Yeah, we talk to all these people because they'll call us, ... and it's good to know them.
And these are potential buyers of content like the L.A. Times, the Tribune Company, or any of these things we see going on right now?
Yeah. And the reason that they call us is that they understand that we're part of their future. Remember that a buyout company does not buy an asset to take it to zero. They buy an asset at a low price in order to help restructure it to get to sell it at a higher price, which is how they make their money. And they make a lot of money when they do it.
And you see that going on in the coming years?
There's a lot of evidence that this will be occurring in many parts of the content industries, and I don't think it's a bad thing.