Corporatization of the News Media

1
Corporatization of the News Media

• Profits v. Editorial Integrity
• Can they coexist?
• Critical Issues in Journalism and Global
  Communications, JMSC6002/March 2003
• D. Weisenhaus

2
Profits v. Editorial Integrity

• News is a business. It has always been so. --
  Taking Stock Journalism and the Publicly Traded
  Newspaper Company, 2001
• The present newspaper business model is deeply
  flawed. --William Woo, Stanford University

3
General questions

• Are there aspects of news production that should
  be off-limits to budget/company pressures?
• What can news departments do to enhance their
  profitability? Should they even think about that?
• What can editors and news directors do to protect
  integrity of reporting from business pressures?

4
History

• Separation of business and news is only about a
  century old. In 1800, most common name for US
  paper was The Advertiser!
• Purposes advertise commerce or promote partisan
  politics
• Joseph Pulitzer Dont teach business side of
  journalism because it would corrupt journalists.

5
Newspaper trends...

• As in Hong Kong, U.S. newspapers are privately
  owned and try to make profits
• Not licensed by government
• Do not receive government subsidies
• Are protected by law
• U.S., most newspapers are owned by shareholders,
  stock traded on Wall Street
• Trend toward chain newspapers. Gannett is largest
  with more than 100.

6
How profitable are newspapers? Until recently,
very profitable!

• In U.S., newspaper profit margins were 2-3 times
  the average for US manufacturing. 19-27 vs. 7-8
• investment in news coverage, declined 10, from
  1992 to 1997
• production expense down
• payroll down
• marketing up
• revenue/profit up

7
Hong Kong profits

• Ming Pao HK18 million profit for 6-month period
  ending Sept. 2002, up from HK14 million loss for
  same period in 2001.
• Looking for ways to increase productivity,
  management has circulated a set of objectives
• Two Is Stories must be interesting and
  informative.
• Two Qs Reporters must produce quality and
  quantity
• Three threes Reporters must provide three news
  ideas a week, must produce three page leads and
  must contact three newsmakers.

8
More Hong Kong profits...

• Next Media expected earnings of HK379 million
  for year ending March 2003, up from previous
  year. Why? 12 cut in staff, paper prices down
  30 and closing of rival Eastweek!
• Oriental Press Group HK204 million for
  six-month period ending Sept.2002, up from HK150
  million previous period.
• SCMP Net profit of HK482.8 million over
  18-month period ending Dec. 31, 2001.

9
Grand contradiction

• Media is commercially based or market driven
• Media in free society has crucial public
  function promote ideas and inform
• Protected by law

10
What is (was?) the business of news?

• The business of news is news. Growth of newspaper
  industry driven by publics appetite for
  news...News was product around which business was
  shaped. News was long been selected, presented
  and packaged in appealing -- and profitable --
  ways. (comics, sensational headlines, extra
  editions, penny papers, news graphics)

11
Now?

• The business of news is business, not newsNews
  is shaped by audience rather than audience shaped
  by the news.
• Business of news is no longer providing broad
  public information to mass audience but providing
  specialized information to smaller and more
  profitable audiences.
• --Taking Stock

12
Conglomerates

• Six firms dominate American mass media. Each is a
  subsidiary of a larger parent firm, some
  operating in other industries.
• AOL/Time Warner, General Electric, Viacom,
  Disney, Bertelsmann, News Corp.
• Trouble AOL/Time Warner 100 million global
  subscribers, 75 million cable homes, 30
  magazines. US98.2 billion loss last year! Called
  off merger between CNN and ABC. AOL lost 170,000
  subscribers in last 3 months of 2002.

13
Pro v. Cons of Big Business

• Pro more resources, more distance between
  advertiser and editorial content, more power.
  Less involvement by owners. E.g., Jimmy Lai/Next
  and Charles Ho/Sing Tao
• Con more resources to protect, less concern over
  editorial integrity, no accountability to
  community, less choice of content.
• Any more arguments?

14
Related Globalization Debate

• 1970s, attacks on Western traditional methods of
  collecting and distributing international
  news/popular entertainment. Led to a call for New
  World Info Order, a vague but radical reordering
  of international comm. systems
• Disputes into late 1980sin part political/
  ideological related to East/West Cold War
  rivalries
• Fought in academia, UN, news media. With 1989
  collapse of Communist states in Europe, ended.
• Charge that 80 of world's news flow comes from 4
  major Western services -- AP, UPI, Reuters, AFP.

15
How to rectify?

• Civic journalism? Booster vs. watchdog?
• Antitrust laws?
• New business models?

16
New Business Models

• Newspapers owned by nonprofits. St. Petersburg
  Times owned by Poynter Institute. Problem Hard
  to start. Need owner to set up foundation like
  Nelson Poynter.
• Green newspapers Investors willing to accept a
  lower rate of return on stocks in socially
  responsible corporations.
• Tax breaks for investing in newspapers.

17
Go back to Core Values?

• Integrity, fairness, accuracy, full disclosure,
  sound news judgments
• 1) obligation to the truth
• 2) serve public interest first
• 3) monitor powerful/offer voice
• 4) provide forum for comment, criticism
• 5) maintain independence
• 6) make news engaging, relevant
• 7) keep news comprehensive, proportional
• 8) remain true to personal conscience

18
What about Hong Kong?

• The HK media market scene
• 14 daily Chinese language newspapers
• 2 English-language dailies
• 3 radio companies (10 channels)
• 4 free-to-air terrestrial channels, TVB market
  leader
• several pay cable companies

19
HK Newspaper Market

• HK newspapers are dominated by Oriental Press
  Group and Next Media, which control 70 of
  newspaper readership
• 1. Oriental Daily News (OPG) 35
• 2. Apple Daily (Next) 25
• 3. The Sun (OPG) 10
• 4. Ming Pao, SCMP, Sing Tao (10-12)

20
HK ownership at a glance...

• OPG Founded 1969 by Ma brothers. Became HKs
  best-selling paper in less than 10 years. Largest
  shareholder is wife of younger brother who fled
  to Taiwan after 77 drug charges. Ma Ching-fat
  current chairman.
• Next Media Jimmy Lai, 54, largest shareholder.
  Made in Giordano chain, founded company in
  early 90s, Apple Daily in95, started Taiwan
  Next Mag in 2001. Soon to start Taiwan Apple
  Daily.
• Ming Pao Enterprise Founded 59 by novelist
  Louis Cha. Largest shareholder Tiong Hiew-king,
  Malaysian timber baron, worth 1.4 billion. In
  2001 Tom.com buys 50 of Yazhou Zhoukan

21
...More HK ownership

• SCMP Holdings Largest shareholder, Kerry Group,
  Robert Kuok, 79, ethnic Chinese businessman in
  Malaysia (net worth US5 billion, made in sugar
  trade.) Kuok has interests in hotels (Shangri-La
  Grp), shipping, plantations, commodities in 15
  countries. Sons Ean, 47, (SCMPH chm) and Beau,
  51, help run company
• Sing Tao Holdings (Includes Sing Tao daily HK,
  Aust., NZ, UK, US, Canada/Standard/hotels/real
  estate). Founded 1938 by Aw Boon-haw (Tiger
  Balm), left business to daughter Sally in 54.
  Sold in 1999 to Lazard Asia Fund. In 2001, sold
  51.4 to Charles Ho, 53, tobacco tycoon.

22
More HK ownership

• Tom Group (tom.com) Went public 2000. Party of
  Hutchison Whampoa and Cheung Kong Group real
  estate, retailing, telecomm, shipping.
• By 2002, purchased 60 of Taiwans consumer
  magazine market. 50 of Yazhou Zhoukan. Largest
  outdoor advertising firm in China.
• Wants to build cross-media, cross-strait platform
  -- one-stop shop to offer ad space, website
  content, TV, magazines, papers and be largest
  producer of Chinese-language TV programming.
• The only question is whether we will become the
  largest Chinese media group or the largest
  Chinese media group that is ultimately part of an
  even greater media group. Sing Wang, CE.

23
Media Trends

• Trend 1 Concentration of corporate control
  through acquisitions (Tiong Hiew-King In
  addition to Ming Pao, controls largest
  circulation Chinese paper in Malaysia, launched
  The National in Papua New Guinea, Chinese paper
  in Cambodia
• Trend 2 Non-media international and regional
  conglomerates emerging as major players. (Li
  Ka-shing)
• Trend 3 The China Factor. Growing integration
  with Mainland in ownership, market, production.
  Sing Taos Charles Ho part of Global China
  Tech.w/ joint venture with Xinhua. Standard
  revamped to become business paper oriented to
  cover mainland business.

24
More Media Trends.

• Trend 4 Media battlefield is regional and
  global. HK is media capital of Chinese diaspora
  around world Sing Tao, TVB, YZ. More trying
  Next Media, SCMP
• Trend 5 Media owners expand through alliances
  and networking.