REPORT ON MEDIA OWNERSHIP AND THE IMPACT ON DIGITAL JOURNALISM IN A DIGITAL AGE

Jonathan Dailey Media Ethics Prof. Cowling November 24, 2013

In the past, newspapers were typically owned by families whose sole business was the management of the newspaper. That trend has been drastically changing, and now these media organizations are being taken over by powerful individuals and large corporations. Recently several news organizations have been purchased by individuals and large corporations that have little or no journalism experience, and that is adding to the controversy. Media conglomeration has been a recent and increasing trend in the industry as well. Many people have controversial feelings about the impact that the conglomeration of media ownership could be having on journalism during this time of continual innovations and advances in technology. A lot of people are concerned about the future of the industry, and how this conglomeration of media ownership will affect and change the industry in the long term. According to the 2010 blogspot.com article “Media conglomerates: does ownership affect content?”, until the 1980s, antitrust laws helped to ensure diversity of ownership between competing businesses . However, these antitrust controls over businesses were weakened heavily by the Reagan Administration ("Media conglomerates: does," 2010). Then in 1996 President Bill Clinton continued this trend by lifting most of the restrictions on the number of radio and television stations that one corporation could own ("Media conglomerates: does," 2010). So lower enforcement of antitrust laws, and deregulation paved the way for a powerful corporate takeover in the media industry ("Media conglomerates: does," 2010). According to Alex Mediavilla’s 2013 research presentation YouTube video Conglomerates in the Media: Who runs the world?, a conglomerate can be defined as a corporation made up of a number of different companies that operate in diverse fields. Conglomerates are corporations that have become powerful enough to buy out other companies, allowing them to boost their control over our consumerist society (Mediavilla, 2013). According to research from Sarah Crachiolo and Craig Smith’s, Chapter 6: Media conglomeration and the news, the increasing concentration of media ownership has been going on for quite some time now, and this trend is only continuing to grow. For example, by 2002

most broadcast media organizations were owned by just 10 companies, known as the “Big Ten” (Smith & Crachiolo). The big ten consisted of AOL/Time Warner, General Electric, the Walt Disney Company, AT&T Corporation, Viacom, Liberty Media Corporation, News Corporation, Vivendi Universal, Sony, and Bertelsman (Smith & Crachiolo). Then by 2006, the conglomeration continued even further, downsizing the big ten, to the “Big Six” (Smith & Crachiolo). The trend of media conglomeration happened very rapidly, and shows no signs of slowing down. In 1983, 90 percent of our media was controlled by 50 companies (Mediavilla, 2013). By 2011, the big six had complete control over that same 90 percent of the media (Mediavilla, 2013). The amount of control and influence that these conglomerates have over our media is outstanding (Mediavilla, 2013). For example, just 232 media executives control all of the media consumed by 277 million Americans, which equals one media executive for every 850,000 subscribers (Mediavilla, 2013). In 2010 the big six generated $275.9 billion in revenue (Mediavilla, 2013). This would be enough money to buy every team in the NFL 12 times over (Mediavilla, 2013). These media conglomerates are able to reach a very large audience in a short amount of time (Mediavilla, 2013). As long as the government continues to stay out of the way of media conglomerates, these powerful corporations will continue to grow the level of power and influence that they have over the mass media’s audience (Mediavilla, 2013). There is a lot of controversy surrounding the recent trend of media conglomeration. The public has become increasingly concerned about the credibility of the media under the current conditions, because only a few large corporations own and control most of the media that we consume every day. Media conglomeration has also led to fears of interference and bias by these large corporations who may try to influence their business and political positions through the power they have over the content that they provide to mass audiences. In 2007, the Project for Excellence’s annual “State of the Media” report stated that the public perception of media bias and partisan divide are rising. According to the report, “In contrast with a decade ago, there are no significant distinctions anymore in the basic

believability of major national news organizations”. What they mean by this is that CNN is not any more trusted then NBC, or FOX ("The state of," 2007). The same is true for newspapers, many people don’t view the larger papers such as The New York Times, much differently than their local paper ("The state of," 2007). They say that there are signs of these media conglomerates influencing content with their own bias and even agenda setting goals ("The state of," 2007). This is a growing concern, and could be a contributing cause to why the media is losing trust and credibility with the public ("The state of," 2007). Many people believe that these large corporations are solely interested in profit, and not in journalistic integrity, and providing quality content. The Pew Research’s Project for Excellence stated in their 2004 annual report on the state of the news media that, “The public’s concerns about the news media’s morality, professionalism, accuracy, honesty about errors disconnects the public and the news media, whose primary motivation may have become profit”. The study claims that focusing on profits rather than on industry innovation is raising serious concerns about the long-term health of American journalism ("The state of," 2004). Another issue is the financial problems facing the media industry ("The state of," 2004). This has led to significant budget cuts, and staff cuts in the news media, resulting in a decline of newsgathering ("The state of," 2004). Almost all sectors of the media are experiencing financial cutbacks, and the internet is the only media platform that has seen increases ("The state of," 2004). Staff members of the media are being replaced with more efficient technology, which according to the 2004 report on the state of the news media can, “Be used to replace the newsgathering skills, homogenize the content, rely more on feed material and wires, which is cheaper than original reporting, there is tendency for branding to be more focused around the style than the substance of reporting.” Also media conglomeration has forced those who do work in newsrooms to work longer hours, and provide content to more than one station. Now most television news rooms are affiliated with many different stations now ("The state of," 2004).

One of the most controversial issues facing the media industry right now is the fact that individuals and large corporations with little or no journalistic backgrounds are purchasing media organizations, there are many recent examples of this. Many people are concerned that the quality of the journalistic content, and believe reporting will be negatively affected, because these individuals, and large companies have not previously worked in the media industry. They do not have the background or understanding of how the media operates. Some believe that they will continue to make even more cutbacks, because they are only interested in making a profit. This is a serious problem because the industry has already faced enormous staff reductions and downsizing due to the financial problems that the industry has had as a whole. There are also concerns about bias with this new type of ownership. Some argue that the large corporations will act in their own self-interest, and neglect to scrutinize their own business interests, and companies. However, others argue that change is good for the media. Many people are hopeful that changes in ownership will bring new life to the struggling industry through innovation and new ideas. According to Jack Mirkinson’s 2013 HuffingtonPost.com article “Washington post sold to amazon's Jeff Bezos”, this year the Washington Post, and their affiliate publications, were sold to Jeff Bezos for a bargain price of $250 million. The previous CEO, Donald Graham, decided to sell the Washington Post due to the financial problems that have plagued the print industry as a whole, in the first half of 2013 the Post lost $49.3 million (Mirkinson, 2013). Bezos is most known for being the founder and owner of Amazon.com. However, he has also acquired a large collection of other businesses over the last two decades (Mirkinson, 2013). According to the 2013 WashingtonPost.com article Washington post's sale and the future of news, many people are concerned and unsure of what the future will be like for the Post under its new ownership because Bezos has no previous journalism experience. Many journalists and media experts expressed their thoughts, and concerns regarding this new ownership ("Washington post's sale," 2013).

Emily Bell of the Tow Center for Digital Journalism said, “We cannot know about Bezos, because he has never been tested.” She went on to say, “How will he like his Amazon workplace practices scrutinized by his own paper?” ("Washington post's sale," 2013). David Carr of the New York Times expressed his concerns by saying, “Given that the Post still has potency as a political symbol, the fact that it could be acquired by a man who made his fortune taking apart book-publishing — another traditional business — served as more evidence that the power center in the media world has turned away from the East Coast” ("Washington post's sale," 2013). Other journalists are excited about this new ownership, including me. Mathew Ingram of GigOm expressed his excitement by saying, “Jeff Bezos has not only the financial resources, but the awareness and insight into the social web to be able to take the Post in some dramatic new directions, if he wants to — up to and including acquisitions that could extend the paper into new areas of the digital landscape.” He went on to say, “The next few years could be a fascinating time to be in the newspaper business, if only to watch someone like Bezos remake it from the inside out” ("Washington post's sale," 2013). Ingram’s thoughts on this issue mirror my own. In a lot of cases I feel that individuals and large corporations with no journalism experience will have negative effects on the media, but I hope and believe that Jeff Bezos will not be one of those cases. According Brad Stone’s 2013 businessweek.com article “Why Jeff Bezos bought the Washington Post”, he has made it clear that he believes that the values of the Post do not need any changing. He promises to implement new innovation and ideas in the future through experimentation in hopes of bringing the Post back to its former position of glory and excellence. Bezos also appears to be committed to his readers, and their expectations for content. He demonstrated this in a note he wrote to the Post’s employee’s by saying, “Our touchstone will be readers, understanding what they care about – government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports – and working backwards from there. I’m excited and

optimistic about the opportunity for invention” (Stone, 2013). I believe that he is an innovator and the right man for the job to make this happen, only time will tell. There are many other examples of publications recently being sold to individuals or large corporations with no journalistic experience. According to Beth Healy’s 2013 BostonGlobe.com article “John Henry’s Purchase of the Boston Globe Completed”, the New York Times Company sold the Boston Globe to John Henry, the owner of the Boston Red Sox and other sports enterprises. This occurred just days before the news broke that the Post was sold to Bezos (Healy, 2013). Henry paid just $70 million for this deal, which gave him ownership of the Globe, its websites, its affiliated news businesses, the Worcester Telegram & Gazette, and their website (Healy, 2013). The New York Times Company decided to sell the Globe because it wanted to focus more heavily on its national and international brand (Healy, 2013). Many people are worried about the issue of bias under Henry’s ownership. According to Ian Crouch’s 2013 NewYorker.com article “What is the value of a newspaper?”, people are worried that his ownership of the Boston Red Sox, and other sports enterprises such as a NASCAR team will influence the Globe’s sports reporting. They wonder if he will limit criticism or heavily favor the sports teams that he owns in the paper’s sports (Crouch, 2013). That is a major concern to me personally, not just with Henry, but with any individual or large corporation that acquires a media organization. The owners could potentially restrict fair, unbiased coverage because of their business dealings, their political views, and other things important to them. In my opinion this is mainly because they have not had experience working in the journalism industry, or dealing with journalistic ethics. However, in Henry’s defense, he did state that he did not intend to influence the Globe’s sports reporting (Crouch, 2013). Let’s hope that he keeps that promise and maintains fair unbiased coverage of all things published in the Globe. According to Amy Chozick’s 2012 Nytimes.com article “Sale of Philadelphia Papers is Completed”, the Philadelphia Inquirer is another example of a newspaper being sold to wealthy and

powerful individuals. The Inquirer has had a long and storied tradition of excellence in investigative reporting in the newspaper industry, and is the third oldest newspaper in the United States (Chozick, 2012). Over the Inquirer’s 183 year history its staff has been awarded 18 Pulitzer Prizes. At one time the Philadelphia Inquirer was one of the most profitable papers in the country (Chozick, 2012). However, as time went on the paper began to lose subscriptions and profitability (Chozick, 2012). This has become a common problem in the newspaper industry today. Technological innovations, most notably the internet, have made it difficult for print newspapers to remain profitable (Chozick, 2012). They have had trouble coming up with new business models to solve this problem (Chozick, 2012). Eventually in 2009 the Philadelphia Inquirer filed for bankruptcy and was sold in 2010 (Chozick, 2012). The paper was recently sold again in 2012, and purchased by a consortium of some Philadelphia’s most powerful business and political leaders (Chozick, 2012). In the deal they paid $55 million, plus an investment of as much as $10 million in working capital to acquire the Philadelphia Media Network, which is the publisher of the Philadelphia Inquirer, the Daily News, and Philly.com (Chozick, 2012). The group of new owners was formed six months ago by Pennsylvania governor, and former Philadelphia Mayor Edward G. Rendell (Chozick, 2012). These new owners include Lewis Katz, who is a parking magnate, and former journalist, George E. Norcross III, a Democratic power broker in Southern New Jersey, and Joseph Buckelew, who is a Republican fund-raiser and owner of an insurance brokerage firm in Southern New Jersey (Chozick, 2012). At one time Rendell was considered to be the group’s most public member (Chozick, 2012). However, he recently withdrew after concerns arose that he would potentially use the newly acquired papers to advance himself politically (Chozick, 2012). He spoke about the acquisitions saying that, “There was enough blowback from reporters and editorial people, because I’m active politically and support candidates and the president, that I decided to step back,” However, he went on to say that the current owners “might ask me my opinion every once in a while” (Chozick, 2012).

The financial problems that have plagued the newspaper industry in recent years have led to many cutbacks and layoffs (Chozick, 2012). The Philadelphia Media Network eliminated 45 jobs in March of 2012, and planned to cut an additional 35 positions within the following six months (Chozick, 2012). The new owners claim that they intend to remedy the decline in the newspaper profits, which is due to the decline in advertising and subscriptions (Chozick, 2012). They plan to accomplish this by preserving the Inquirer and the Daily News and innovating them, bringing them into the digital era (Chozick, 2012). Norcross said that, “This is first and foremost a business decision,” he went on to say that, “Our intention is to own the business and find new ways to make the business successful.” There is a lot of concern over whether or not the new owners of the Inquirer will use their status to influence the reporting of the publication. This is similar to the other cases of wealthy powerful individuals purchasing media organizations. However, this case poses a special cause for concern because they are a diverse group of powerful individuals that represent a wide variety of topics that the news media cover frequently (Chozick, 2012). Monica Yant Kinney, an Inquirer columnist who has written about Norcross frequently is very worried that he will interfere with the news coverage and said, “How do you own something and not run it?” (Chozick, 2012) However, in response to these concerns, the new owners claim that they are all committed to maintaining a policy of noninterference with the operations that take place in the newsroom (Chozick, 2012). To prove to that they are committed to staying unbiased in the papers reporting, they agreed to sign a 300 page pledge that addressed the concerns of potential interference, drafted by 300 newsroom employees (Chozick, 2012). The fact that one of the owners is a former journalist makes me feel a little better about the ethical intentions of the new owners, and the concerns of interference (Chozick, 2012). Katz understands the industry, and the importance of unbiased coverage (Chozick, 2012). He made their intentions for the paper clear by saying that the new owners are “patient” local investors who want the papers to thrive for the good of the community (Chozick, 2012). Hopefully they stick to this promise,

and use their knowledge, wealth, and power to reinvent the paper in a way that embraces the new technological advances that are available today. In the overview, the Project for Excellence in Journalism’s 2007, “State of the Media” report, they discuss how the modern press has been slow in adjusting to the changing landscape of the industry. They say that in recent history owners and executives have relied on caution and continuity more than innovation ("The state of," 2007). The success of the next era will most likely hinge on the quality of leadership in not only the newsroom, but the boardroom as well ("The state of," 2007). They say that, “It will require renegades and risk-takers to break from the conventional path and create new directions,” they go on to say, “Practicing journalism has become far more difficult and demands new vision ("The state of," 2007). The report also claims that journalism is becoming a smaller part of people’s information source. They go on to say, “The press is no longer gatekeeper over what the public knows” ("The state of," 2007). In my opinion, they are correct. I am concerned about the future of the industry, and ethical concerns that have arisen from the trends of media conglomerates, and newspapers being purchased by wealthy individuals and corporations. However, our traditional media has struggled to effectively respond to the technological innovations such as the internet that has plagued the industry in recent years. In my opinion, a major reason that the media industry has struggled recently, and is in a bad situation, is due to the lack of effective leadership. Many previous owners simply did not have the foresight to recognize and plan for the approaching risks early enough, therefore they were unable to counter them. Maybe these new owners will be able to use their wealth, power, and ideas to innovate the industry and resurrect it. I strongly believe that this is a possibility, especially when we have visionary people like Jeff Bezos purchasing news organizations. Although there are risks, I remain optimistic about the situation, and the possibility for progress. I believe that these new ownership trends will either save the media industry, or potentially destroy it.

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