A Thirst for Black Ink From Good Papers

By Richard Cohen
Tuesday, June 13, 2006

The New York Times is once again under attack. This time, though, the attack is not related to its coverage of Iraq or to Jayson Blair or Judith Miller or even that ridiculous front-page piece it did on the Clintons' marriage -- an article that caused eyestrain from trying to read between the lines -- but to its stock price. Wall Street thinks it is too low.

The phrase "Wall Street thinks" is a tsunamic oxymoron because Wall Street, by and large, does not think. Instead, it is ruthlessly reptilian, instinctively striving only for profits, which means money, which means more money for Wall Street. In the case of the Times -- and also, by implication, the Wall Street Journal and The Post -- Wall Street does not like the way these companies are managed. Although they are publicly traded, they are substantially controlled by individual families. This is undemocratic and inefficient. Pray it stays that way.

The newspapers mentioned are among the very best in the country. I read all three daily, savoring the very inefficiency that so vexes Wall Street. I can rely on any one of them -- and some days all three -- to spend money in ways that keep me informed and entertained and that occasionally make me so angry that if I were not in the news biz myself, I would start a blog dedicated to mindless criticism of the media. It looks like it could be fun.

The initial shot across the bow of the Times came from Morgan Stanley Investment Management, which in April withheld its votes at the Times' annual meeting. Other shareholders joined in so that in the end about 30 percent of the votes were not cast. Then, last week, Goldman Sachs piled on. It downgraded the shares of both the Times Co. and Dow Jones & Co. (the owners of the Wall Street Journal). Both stocks fell, with the Times hovering near a 52-week low.

In general, Wall Street wants two things from the companies: elimination of the system by which the families retain control and, for sure, fatter profits. Morgan Stanley's Hassan Elmasry put it this way in a statement: "Declassifying the share structure will foster a culture of accountability that will ultimately benefit all shareholders . . . by improving financial and operational performance and closing the gap between the market price of the stock and its intrinsic value." This is the Street's idea of English.

The problem is that newspapers are experiencing negative growth (see, I can talk that way, too). The Internet is stealing readers and advertisers -- and no one yet knows what to do about it. One obvious remedy is to economize like crazy so that Elmasry's goals can be reached. But while he mentions benefit to "shareholders," he says nothing about readers or, if you will, the public in general. "Intrinsic value," after all, should not always be measured in monetary terms. The Times, I'm sure, can be more efficiently run, but I'm not sure it can be better run. After all, a Wall Streeter might question why the paper needs so many movie critics and whether, come to think of it, all those people in its Washington bureau are absolutely necessary. Who would notice a cut here and a cut there? I mean, does it have to be all the news that's fit to print?

The Washington Post spends more than $1 million a year on its Baghdad bureau. A more efficient owner might want to close that bureau and the 17 others overseas, all of which cost a fortune. After all, the television networks, owned by mighty conglomerates, have shut most of their foreign bureaus, and Time Inc., which reportedly paid about $4 million for pictures of Brangelina's baby, recently let go two of the best investigative reporters in the business, Donald Barlett and James Steele. The company said it could no longer afford them.

Look, you guys at Morgan Stanley and elsewhere, just admit you made a mistake by buying Times (or Dow Jones, etc.) stock in the first place. Sell and take a loss -- or stick around while America's quality newspapers, the ones Wall Street relies on for information, come up with a viable business plan that will drive up the price of the stock. In the meantime, you all should appreciate that there is more than one way to measure value. For you to get richer, we will all have to get poorer.


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