A 20th Century Phenomenon
Rare, And 71% Fail
Employee-owned dailies appear to be an ideal concept for the newspaper
industry. While fulfilling journalists' dreams of ownership, the dailies
might solve a multitude of problems.
This paper examines the concept, which is important because 260 dailies
remain independent, and some owners want their publications to remain
locally owned. Moreover, journalists continue to dream of acquiring
dailies of their own, and employee-ownership may be the only practical
alternative for achieving that goal.
Still, as the United States moves into the 21st century, few owners seem
likely to turn their dailies over to their employees, and this paper
analyzes the reasons for the concept's apparent failure. Thousands of
dailies were published in the United States during the 20th century, yet
only 14 were acquired by their employees and 10 of those 14 failed, often
in just a few years.
The number of daily newspapers in the United States has declined from a
high of 2,202 in 1909 to 1,468 today. Only one daily has survived in most
cities, virtually ending the competition within cities. Busterna found
that from 1960 to 1986 the number of cities with competing dailies declined
by a little more than half, from 4.2% to 1.9%. Since 1986, dozens more
While the number of dailies declined, those that survived were acquired by
chains. The trend toward chain ownership started early in the 20th
century, then accelerated. In 1910, 2,140 of the nation's English-language
dailies were independent and only 62 owned by chains. The balance shifted
in 1960 "when the group-owned dailies first outnumbered the
independents." Moreover, the remaining independents are small,
accounting for less than 19% of dailies' total circulation.
Several factors contributed to the growth of groups:
_Experts agree that tax laws were the biggest factor. Although reduced
from 70% to 55% of an estate's value, inheritance taxes made it difficult
for owners to leave newspapers to their children. Children were forced to
sell family newspapers to raise the money needed to pay their taxes.
_While forcing families to sell newspapers, U.S. tax laws encouraged chains
to buy them. By spending their earnings to buy more properties, chains
avoided paying some taxes and gained new properties they could depreciate
for further savings.
_Some aging owners had no children or other logical heirs (or feared that
their heirs were incompetent).
_Some children were uninterested in taking over family newspapers.
_Typically, each new generation increased in size, and the 20 or 30 heirs
in a third or fourth generation often disagreed about how to run a
newspaper, demanded greater financial returns, or wanted all their money to
pursue other interests. Irreconcilable differences necessitated sales in
even small families.
_Some families lacked the large sums needed for new equipment or, more
recently, to fully participate in the new electronic age.
_Buyers abound and offered owners extraordinarily high prices, a major
inducement to sell. Moreover, owners could select groups whose
philosophy they admired. Groups could afford inflated prices and had the
expertise needed to operate their acquisitions profitably. Also,
newspapers were attractive properties because their profits were high, and
many enjoyed a monopoly or oligopoly that gave them a tremendous ability to
Journalists tended to be critical of the trend: of absentee owners and
of an industry dominated by bankers and big investors. Journalists
charged that incoming chains cut staffs and focused on their acquisitions'
productivity and profitability rather than quality. Critics also
feared chains' power. In addition, critics accused chains of charging
significantly more for advertisements and subscriptions -- and of
publishing editorials that were bland.
Loren Ghiglione, a newspaper owner for 26 years, concluded that
independents do a better job of serving their communities. "Independent
proprietors believe they care more about their towns than group managers
would," Ghiglione said. "A bigger news hole is more important than bigger
profits. Service to the community comes before service to corporate
headquarters." Similarly, Squires declared that: "All CEOs of
publicly traded corporations eventually learned what Allen Neuharth said
when he first offered Gannett stock on the public market: Investors are
only interested in good news. And it must be delivered year after year."
The evidence, however, is contradictory. Shaw found that newspapers
owned by chains can be better because an independent's owner tends to
develop conflicts of interest just from knowing and liking the people in a
community. "He comes to regard his paper as a house organ for his
community and not a dependable source of facts," Shaw said. "Managers of
group papers, on the other hand, don't have to kowtow to local power
structures. They are freer to practice independent journalism than owners
who live in town."
Still, Shaw concluded that something valuable vanished when the "old,
ornery, independent cusses" who once controlled the American press were
replaced by the managers sent in by chains. The independents' worst was
embarrassing, Shaw said, "but their best was better than what we have now."
Still, chains such as Knight-Ridder have enjoyed a reputation for
journalistic excellence: for putting quality before profits. Also,
many executives believe that "a company's character and operation are
shaped more by its size and caliber of top management than by how its stock
is traded." Cranberg, Bezanson, and Soloski, for example, concluded
that four public companies "have managed, so far at least, to blunt the
financial-market forces that increasingly govern the behavior of the rest
of the firms." The four include McClatchy Newspapers, The Washington Post
Company, the New York Times Company and Dow Jones. Overall, however,
Cranberg, Bezanson, and Soloski warned that the people investing in
publicly traded newspapers "are concerned with revenues, margins,
continuously improving profitability, and stock performance. They are
indifferent to news or, more disturbingly, its quality."
Summarizing the controversy, Ureneck said: "Public ownership has proven to
be a mixed bag. On one hand, it provides the capital necessary for a
company's expansion and diversification, and it offers owners
liquidity. On the other hand, it cedes control to investors who are
primarily interested in profit, not journalism."
Employee-owned dailies can avoid many of the problems associated with
chains. They remain locally owned and are controlled by journalists, not
businessmen. There is no concentration of power, and employee-owners may
be freer to emphasize quality over profits. Moreover, the concept rewards
loyal employees by enabling them to share in a company's profits.
Why, when the concept seems to have so many advantages, did employees
acquire only 14 dailies during the 20th century, then sell 71.4%? The
first two sections of this paper address that question. Section III
describes alternatives advocated or implemented by journalists.
The author defined an employee-owned daily as one which: (1) gave all
its employees, not just a few, an opportunity to become part-owners; and
that (2) was controlled primarily by its employees, who held 51% or more of
To learn more about employee-owned dailies published during the 20th
century, the author read the biographies and autobiographies of journalists
who worked for those dailies, but also books about other journalists and
other dailies. In conjunction with a series of related studies, the author
read a total of approximately 100 biographies, 150 autobiographies, and 250
magazine articles written by and about early reporters and editors. The
author also looked at 20 books written about specific newspapers and at
approximately 180 books written about related topics. Some of the latter
books described early journalists and newspapers in general. Others
described the journalists or newspapers in a specific city, state, or
region. Still others described journalists who fell into specific
categories, such as "women journalists" and "fighting editors." Many of
the books are described in annotated bibliographies devoted to
In addition, the author consulted Poole's Index to Periodical Literature
and Reader's Guide to Periodical Literature to find magazine articles
written about the topic. To supplement those sources, the author
visited dailies' web sites and interviewed or corresponded with newspaper
By looking at every employee-owned daily, as opposed to focusing on just
one, the author was able to look for common patterns and answer the
question: "Why did such a large percentage of the nation's employee-owned
dailies fail?" By looking at other journalists and other dailies, the
author was able to answer a second important question: "Why did employees
acquire so few dailies?" While looking for answers to both questions, the
author found frequent references to the alternatives discussed in Section
III of this paper. Finally, by consulting a variety of sources, the author
was able to learn the perspective of both employees and their employers.
SECTION I: Obstacles To Employee Ownership
Although journalists often dreamed of owning a daily of their own, there
were four primary obstacles to achieving that goal. First, during the
early 1900s, owners typically wanted to leave newspapers to their families,
not employees. Second, escalating costs made it difficult for employees to
afford dailies. Third, negotiations were transacted in secret, so
employees rarely had an opportunity to bid for dailies. Fourth, many
newspaper owners were businessmen anxious to maximize their profits, not
journalists anxious to promote professional values.
JOURNALISTS' DREAM. Clearly, many journalists dreamed of owning a
newspaper and were confident that they would succeed: that a daily would
make them rich, powerful, and famous. Moreover, if journalists owned a
daily, they never would have to worry about being fired. Samuel Blythe,
for example, "decided that the only way to make money and reputation was to
own a paper: to work for oneself instead of for wages." There was an
undeniable romance to the idea of getting away from the rat race to take up
the bucolic small-town life. As the owner of a small daily, journalists
imagined that they would be freed of mean-spirited, penny-pinching
publishers and their sacred cows.
Allan Forman, editor of The Journalist, found that, "Hardly a day passes
that some sanguine newspaperman does not burst in upon us with the
announcement that he is going to start a paper and revolutionize
journalism." Yet when Forman looked at journalists' plans, the result was
invariably the same. Journalists did not have enough money, and those who
tried to implement their plans failed.
FAMILY LOYALTIES. Typically, early owners were emotionally attached to
their newspapers and wanted to pass them on to children. Many viewed
their daily as a quasi public trust and, by keeping it in their family,
achieved a kind of immortality for themselves and their work.
The advocates of employee ownership were mistaken about owners'
relationship with their employees. Those advocates seemed to believe that
owners were anxious to reward loyal, long-term employees. Yet the books
and articles written by journalists indicate that, typically, their
relationship with owners was cold, distant, and impersonal. Owners and
their staffs were from different classes with different interests. In many
cities, owners were part of the local aristocracy whereas reporters were
considered hired help: subordinate and easily replaceable.
Even some of the field's most famous publishers rarely spoke to or even
knew their staffs. Other publishers were autocrats who terrorized
their staffs: Wilbur F. Storey and James Gordon Bennett Jr., for
example. Similarly, Joseph Pulitzer allowed a city editor to rule his
Evening World "like a dictator." The city editor, Charles E. Chapin, never
spoke to members of his staff outside its newsroom and, at work, never
talked about anything but business. "I was myself a machine, and the men I
worked with were cogs," Chapin explained. "The human element never entered
into the scheme of getting out the paper. It was my way of doing
things." At one point, Chapin even bragged that he fired 108 men.
Moreover, dailies had few long-term employees. Beginners normally started
their careers in small towns and, after gaining some experience, moved to
larger markets. Experienced journalists then moved from one big daily to
another. Journalists' ultimate goal their Mecca was New York City,
yet even the journalists in that city considered their jobs "a temporary
Another reason for the turnover was age. Like athletes, reporters were in
their prime during their 20s and early 30s. Youngsters were able to
stand the strain of the job: the poverty, stress, long hours, irregular
meals, and lack of sleep. Keller estimated that 90% left before they
became old, using their jobs as stepping-stones "to something else less
exacting, less limited in remuneration, less insecure in employment."
Editors and owners contributed to the turnover. "One error in judgment,
one serious mistake, will wipe out a record of years of faithful,
conscientious, and fruitful toil," Keller explained. "A change in
management or the whim of a proprietor may annul a position won by a
lifetime of earnest endeavor and devotion to duty." Even talented
reporters and editors were fired when newspapers' profits fell. Other
reporters and editors were eliminated in the purges directed by efficiency
experts or when newspapers were sold, merged, or closed. (As
recently as 1986, Weaver and Wilhoit found that reporters had worked for
their current employer an average of only three or four years, and that
journalism remained "a young person's occupation," with many of the
industry's practitioners leaving in their 40s.)
Editors, too, came and went. An extreme example, William Randolph
Hearst's Chicago American, had 27 city editors in its first 37 months.
OTHER FACTORS. Employee ownership also was discouraged by: (1)
escalating costs, (2) the secrecy surrounding most negotiations, and (3) a
conflict between business and professional values.
Journalists' salaries remained low as costs escalated during the 1900s,
making it increasingly difficult for employees to afford dailies. By 1900,
most cities had several dailies and, for journalists, the cost of
establishing or purchasing one was prohibitive. None of the reporters
Samuel G. Blythe knew had a cent, or expected to ever have any money,
except on payday. Other journalists agreed that the industry's
salaries were low, making it difficult for reporters to save any money.
Jointly, employees wanted to buy more dailies but were denied an
opportunity to even bid for them. Normally, when dailies were sold, the
negotiations were conducted in secret. Typically, the New York World was
sold and killed perhaps unnecessarily behind closed doors. The
company's revenue had declined from a peak of $25 million to $13 million,
and it had lost more than $1.5 million in 1930. Still, the Morning World
had a circulation of 320,000, the Evening World 284,000, and the Sunday
World 500,000. The company had not set aside any money for emergencies,
and some journalists accused the Pulitzer family of squandering all its
profits on luxurious living. Some journalists also believed that new and
more competent owners would be able to save the newspapers.
Joseph Pulitzer's youngest son, Herbert, offered to sell the newspapers to
Adolph Ochs, publisher of The New York Times. Ochs apparently wanted to
turn the World over to its employees and if given the time might have
provided financial assistance, but received no response to his proposal.
For a few hours, the World's employees tried frantically to raise enough
money on their own. Some pledged their life savings, but their effort was
too little, too late. Claude Bowers, a columnist at the World,
suspected that the Pulitzers were reluctant to sell their newspapers intact
and that the sale had already been secretly agreed to. Roy W. Howard of
Scripps-Howard submitted the highest bid, $5 million, then killed the
morning World and merged the Evening World with his afternoon Telegram.
Other owners never considered selling their newspapers to their employees,
a notion foreign to their values. While some owners viewed their
newspapers as sacred trusts, with an obligation to their readers and
communities, others did not. Increasingly during the 1900s, newspapers
were owned by businessmen who invested in them after becoming rich in other
As early as 1908, William Salisbury complained that, "Journalism in
America is, in nearly every case, but a business to newspaper owners and
managers....." The newspapers Salisbury worked for were owned by "a
multimillionaire politician, two ex-printers, one ex-baker, and three
bankers, one of whom was an ex-keeper of a peanut stand."
After working 13 years as a journalist, J.W. Keller agreed that: "When the
question of capital is considered, journalism becomes at once a business,
pure and simple. Money is invested to make money. The fundamental
principle of metropolitan journalism today is to buy white paper at 3 cents
a pound and sell it at 10 cents a pound." Keller found that nearly all the
money invested in new publications in New York City, for example, came
"from sources entirely alien to journalism itself."
SECTION II: Attempts At Employee Ownership
Counts of the nation's employee-owned dailies vary because of mergers,
failures, and conflicting information. For years, the Milwaukee Journal
and the Milwaukee Sentinel, for example, were separate publications,
counted as two employee-owned dailies. Since their merger in 1995, they
have been counted as one. Also, employees owned different proportions of
newspapers, from a few shares to 100%.
THE SUCCESSFUL. As the 20th century ended, employees owned a majority of
the stock in only four dailies.
1. Milwaukee Established in 1937, the employee-ownership plan in
Milwaukee, Wis., is the oldest still in effect. Employees own 90% of the
stock in Journal Communications, Inc., which owns the Milwaukee Journal
Sentinel, plus five television and 34 radio stations in other
cities. Lucius W. Nieman founded the Journal in 1882, and several chains
wanted to buy it when Nieman died in 1935.
Nieman's will allowed his trustees to sell the Journal to the bidder most
likely to carry on his ideals rather than to the highest
bidder. Nieman's successor, Harry J. Grant, believed that ownership
motivated employees to do their best, but also wanted to maintain local
ownership and to spread the Journal's profits among the employees who
helped earn them.
To fend off chains, Grant established an irrevocable trust. Shares valued
at $3,500 each were split 100 for 1 (to $35 units) and offered to employees
who had worked for the Journal five years. More than 500 employees
qualified, and each received an initial stock quota of from $500 to $5,000,
based on their pay and rank. The company helped employees arrange bank
loans at low interest rates, and a large bonus helped them make a 50% down
payment. The balance was due within 10 years, with dividends applied
toward payment. To prevent sales to outsiders, employees held
"certificates of participation" instead of actual stock and, when they left
the company, were required to sell their certificates back to the
trust. Seven employee-owners served on the company's 24-member board.
2. Omaha In 1962, the owner of Omaha's World-Herald was about to sell
the daily to the Newhouse chain. Peter Kiewit, who operated one of the
largest construction companies in the region, learned that the newspaper
was being sold to a chain "and did not want his hometown paper owned by an
outsider." Kiewit bought the World-Herald, then "let the newspaper people
run it, and created a mechanism that would, upon his death, permit employee
ownership while ensuring the paper remained locally owned." When
employees resell their stock, they receive only its book value. Any amount
over that goes to charity, so neither the World-Herald's employees nor the
Kiewit Foundation (which retained about 20% of the stock) has a financial
incentive to sell to a buyer offering a premium.
3. Fairbanks, Alaska In 1975, C.W. Sneeden, publisher of The Daily
News-Miner in Fairbanks, Alaska, established an employee ownership plan
that ensures the daily's continued local ownership and independence.
4. Monroe, Mich. The Evening News in Monroe, Mich., was acquired by its
employees in 1994. Grattan Gray, chairman of the board, sold 58.8% of the
company's stock to an Employee Stock Ownership Plan (ESOP).* The
company was heavily in debt, and Gray concluded that an ESOP was "the only
answer to maintaining local ownership." All but eight or 10 of the
newspaper's 100 employees converted at least a portion of their 401(k)
plans into company stock.
THE UNSUCCESSFUL. Ten other newspapers owned by their staffs failed, were
sold, or merged. Each failure seems unique, so while publishers can learn
some lessons from employee-
ownership's failures, it may be impossible to anticipate every
problem. Arranged by their date of acquisition, the employee-owned dailies
that failed included:
1. & 2. Kansas City Employees acquired The Kansas City Star and The
Kansas City Times in 1926. Publisher William Rockhill Nelson died in 1916
and mistakenly even some employees thought that Nelson arranged for his
staff to buy The Star. In fact, a son-in-law was responsible for the
arrangement. Nelson's will said The Star should be sold after the
death of his wife and daughter, and the proceeds given primarily to an art
gallery. Nelson's son-in-law helped The Star's staff submit the
highest bid, $11 million.
Reporter Martin Quigley complained that, initially, shares in The Star
were priced at $100 and that 75% were sold "to front office big
shots." Only the remaining 25 percent "was put up for grabs to the cheap
help," and there was not enough for everyone who wanted it. While some
reporters were unable or unwilling to invest, "a good many correctly sensed
that it would be the best buy of their lives." The stock made even a
police reporter a millionaire. Quigley added:
None was offered me, and I could not have bought a dollar's worth if it
had. In later years, though, as the original purchasers died off and their
holdings had to be held in trust for sale to employees, most of the
reporters who stayed on were encouraged to buy in. Many staffers ...
refused to buy on the principle that an employee ought not to have to buy
stock to ensure adequate retirement income.
In 1977, The Kansas City Star and The Kansas City Times were sold to
Capital Cities Communication for a record $125 million. Fifty years
after being acquired by its employees, the company had run into financial
problems. There were allegations that the company's managers were inept,
while an executive complained that the company was "run by committee."
3. New York Also in 1926, employees of The New York Sun were offered an
opportunity to buy its stock. The Sun's 71-year-old owner, Frank Munsey,
had died of appendicitis and left the bulk of his $20 million estate to the
Metropolitan Museum of Art. Munsey instructed his executors to sell his
properties within five years, but had said he wanted to reward his
employees. Executor William T. Dewart approached the museum's trustees,
who agreed to sell The Sun, the Evening Telegram, and other properties to
him for about $13 million. Dewart sold the Evening Telegram, then
concentrated on The Sun, selling large blocks of stock, also valued at $100
a share, to employees.
Employees apparently had no role in The Sun's management and, by the
1940s, many no longer owned stock in the newspaper. At $100 a share, it
was too expensive (and offered first to The Sun's executives).
By 1947, The Sun's employees knew the newspaper was losing money, and
there were rumors about its sale. But The Sun was 116 years old, and
employees thought a new owner would revitalize, not kill, the
publication. Abruptly on Jan. 4, 1950, employees were informed that
The Sun was dead. One of those employees, columnist Ward Morehouse, commented:
The New York Sun had been a great deal more than just a job to these
men. It was a newspaper they had loved. They had stuck together for years
in defying the Newspaper Guild and denying it a foothold in the
organization; they had taken pride in The Sun's traditions, as they had in
their own work and in their contributions to the independence and accuracy
of the news stories. Many of them had stock in the paper and there were
many who regarded it as a place that offered lifelong employment. Most of
them had heard the management's ringing denial of sale rumors at an office
dinner some years before and had remembered the exact words, "Yes, the New
York Sun is for sale at the newsstands for five cents!"
4. Hartford, Conn. Under a trust devised in 1947, employees were
encouraged to buy stock in The Hartford Courant but required to sell the
stock back when they retired or died. Employees' heirs could keep the
stock only if they obtained a special waiver. All voting rights, plus the
power to grant waivers, were given to The Courant's trustees.
In 1978, Capital Cities offered The Courant's stockholders $132 a
share. Employees opposed the sale whereas employees' heirs -- with no jobs
to lose and everything to gain -- "tended to vote in favor of selling, or
at least considering other offers." Still, the offer was rejected.
In 1979, the Times Mirror Co. of Los Angeles offered The Courant's owners
$200 a share: a total of $105.5 million. At the time, The Courant's
directors were squabbling with top executives (and the executives with one
another) over how the newspaper should be run. Plus, there were other
problems as well:
_Some directors and managers were critical of The Courant's news coverage.
_Despite climbing profits, some directors believed the newspaper's earnings
and stock price were too low.
_There was the continued threat of a takeover.
_After a strong publisher retired, illness forced his handpicked
successor's premature retirement, leaving a vacancy in The Courant's
When the Times Mirror made its more generous offer, The Courant's
directors accepted it, thereby extricating themselves from all the
5. Cincinnati In 1952, employees and readers who wanted Cincinnati's
morning daily to remain locally owned purchased it from the estate of John
R. McLean. About 75% of The Enquirer's employees acquired stock. In
1955, internal dissension resulted in the firing of some leaders of the
employee movement, and many shareholders sold out.
Scripps-Howard published Cincinnati's evening daily, the Post & Times
Star, and began acquiring stock in the Enquirer. By 1970, Scripps held 60%
of the stock and was ordered by a court to sell it. The Enquirer's board
had been waiting for an opportunity to regain a majority interest, and most
of The Enquirer's stockholders approved the purchase, bidding $35 a
share. A minority argued that the company could not afford Scripps'
shares, which would cost $17.6 million, and filed four lawsuits to block
the purchase. A Cincinnati-based holding company that owned a local bank
then offered Scripps and other stockholders $40 a share, thus acquiring The
6. Palo Alto, Calif. In 1957, employees acquired the Peninsula
Newspapers Inc. of Palo Alto, Calif. Two decades later, they sold the Palo
Alto Times and other properties to the Tribune Co. of Chicago.
7. Redwood City, Calif. The Redwood City Times also was owned by
Peninsula Newspapers Inc. Thus, it, too, was acquired by its employees in
1957, then sold to the Tribune Co.
8. Milwaukee, Wis. During a strike in 1962, the Hearst Corp. sold the
money-losing Milwaukee Sentinel to the Journal for $3 million. The
Sentinel then became an employee-owned daily and continued to be published
in the morning while the Journal continued to be published in the
afternoon. By 1995, newsprint costs had risen, and the dailies'
circulations had declined. The dailies were merged, creating the Milwaukee
Journal Sentinel which is published in the morning.
In 1996, the Milwaukee Journal Sentinel was threatened. Affiliated
Publications offered $1 billion for the newspaper's parent
company. Employees were paying $36.24 per share, and Affiliated's offer
would have doubled the value of each share. Some employees were
unhappy because the Journal and the Sentinel had merged, eliminating 248
jobs. Still, Milwaukee's employee-ownership plan survived. Holders of
two-thirds of the company's shares had to support a sale, and the
corporation's board could overrule any vote.
In 2003, leaders of Journal Communications Inc. proposed dissolving the
66-year-old employee stock trust and selling Journal shares to the
public. Under the proposal, employees' shares would be worth 10 votes
each, so the company's employees would retain control in corporate
governance matters. Yet many of the company's shareholders tended to be
older and may want to diversify their holdings or to repay loans they
obtained to buy stock. As more stock is issued and the percentage held by
the employees declines, those employees may someday lose control of the
company. There also are fears that new FCC rules, "combined with
Journal Communications' plans to go public, could ... make the company an
The sale of shares to the public will provide the capital the company
needs to expand. Under the new FCC rules, Journal Communications Inc.
could, for example, acquire more radio stations or another television
station in Milwaukee.
9. Wilkes-Barre, Penn. The Citizens' Voice in Wilkes-Barre, Penn., was
established during a strike at the city's existing daily in 1978, and every
employee was given stock. Employees sold the newspaper in 2000, and an
executive explained that it "was the next logical step" and that they
"found a good match" with another daily in the state. At the time of
the sale there were still two dailies in Wilkes-Barre, a city of
43,000. The Citizens' Voice had a circulation of 33,819 on weekday
mornings and 29,739 on Sundays. Thus, it remained far behind its rival,
The Times Leader, which had a circulation of 49,823 on weekday mornings and
67,205 on Sundays.
10. Peoria, Ill. In 1984, publisher John T. McConnell began to turn the
Journal Star over to his employees, confident that their agreement would
make it difficult for employees to ever sell the daily. The Journal
Star was the first U.S. daily to create an Employee Stock Ownership Plan
(ESOP), and experts said it could serve as a model, showing "the dwindling
roster of about 375 independent newspapers how to stay locally owned and
Peoria's Journal Star remained independent only 13 years, primarily
because its employee-ownership plan was too generous. For each $50 an
employee invested in its stock, the company contributed an additional
$150. The price of each share rose from $39 in 1983 to $207 in 1996, and
some employees decided to retire early. The company did not have
enough money to buy back every share and, in 1996, sold the Journal Star to
the Copley Press for $174.5 million.
MINORITY INTERESTS. Employees acquired some stock but not a controlling
interest in other dailies, such as The New York Tribune and The Denver
Post. When Horace Greeley died, he held only 6% of the Tribune's stock, in
part because he had given some shares to employees. In Denver, Harry
H. Tammen and Fred G. Bonfils purchased The Post in 1895, and neither had
children. After their deaths, much of The Post's stock was held in trusts
and foundations. Executive Palmer Hoyt considered it an unhealthy
situation and, after studying other employee-ownership plans, wanted to
make all The Post's stock available to employees, yet they acquired
only 8%. Most of The Post's stock was turned over to the Denver Center
for the Performing Arts. Dissatisfied with The Post's performance, the
center's trustees sold The Post to the Times Mirror Co. (A current
employee adds that changes in federal tax laws made it difficult for
foundations to own for-profit businesses, and also that a newspaper
executive "was really more interested in building a performing arts center
than in running The Post.")
Similarly, employees now own 30% of the stock in the Daily News in
Longview, Wash. The other 70% belongs to a family, an arrangement that
enables the Daily News to remain independent.
SECTION III: Alternatives
Rather than sell dailies to their employees, newspaper owners have found
alternatives, some apparently more successful.
ONE Before anyone considered the idea of employee ownership, journalists
advocated endowed newspapers.
TWO Today's owners often share their profits with employees, especially
THREE Other owners leave their newspapers to charities that help a larger
number of people, typically all the residents of their community.
FOUR Still other owners create educational institutions.
The failure of so many employee-owned dailies makes owners wary of the
concept. Moreover, financial experts warn against it.
ENDOWED NEWSPAPERS. For years, journalists advocated endowed rather than
employee-owned newspapers. During the early 1900s, endowed newspapers
seemed able to solve the era's problems: commercialization,
irresponsibility, sensationalism, and bias. Endowed newspapers also seemed
able to protect newspapers from the corrupting influence of politicians and
advertisers. Groups were not yet perceived as a problem.
Charles H. Levermore of the Massachusetts Institute of Technology
complained in 1889 that newspapers misled their readers, and he explained that:
The newspaper misleads, first of all, because it is a business enterprise,
doomed to death if the profits are not forthcoming. The owners must get
advertisements in order to be able to attract a larger circulation; he must
acquire a large circulation in order to hold his advertisements....The
dominant political rings can give him profitable public printing. The
powerful corporations enchain him with patronage....He dares not speak of
municipal or corporate corruption, or of private wickedness, for fear of
losing advertisements or personal favor, or of damaging the local
Levermore believed that endowed newspapers would be fairer and more
truthful. A philanthropist might provide $4 million, and income from the
endowment might be used to hire the best talent in the country. Because no
one would depend upon the newspaper for their livelihood, journalists would
be freed of the need to earn a profit, and neither advertisers nor
subscribers would be able to pervert its policies.
In 1903, W.H.H. Murray agreed that the United States needed "a journalism
that is accurate in statement, reliable in its news, discriminating in its
editing, and free from vulgar personalism and slanderous
attack...." Murray, too, concluded that only an endowed press would permit
good journalism, and he explained that:
Money has no conscience, no honor, no patriotism, no sympathy with truth,
right, and decency, and never has had. It loves and seeks but one thing,
profits. Whatever will make the paper sell, goes into it, right or wrong,
true or untrue, slanderous or just, clean or unclean, it is all the same to
money. Whatever will make the greatest sensation; whatever will fetch the
most dirty pennies from dirtier pockets; whatever will make the most
sensational publishment and call for a more sensational counter statement
in the next issue, goes in. And this is called good journalism among us!
In 1912, a magazine editor agreed that a good newspaper with an
enterprising and trustworthy staff could not be self sufficient. Rather,
to avoid the temptation to sensationalize and commercialize, a newspaper
needed a guaranteed income. The editor, Hamilton Holt, believed that, once
established and recognized as a truthful and impartial medium, an endowed
newspaper would "exert a great influence for good on other papers by
forcing them to raise their standards of accuracy and fairness." A group
of public-spirited citizens or some great capitalist might endow the
newspaper, and Holt calculated that $5 million would be sufficient. A
board of trustees, composed of prominent individuals from different
political parties and social classes might supervise the newspaper's
finances, select its editor, and ensure that the journal lived up to its
REWARDING EDITORS. Rather than selling their dailies to employees, owners
began to reward a few key executives. Giving executives a portion of their
profits or a few shares of stock helped attract and retain the most
talented. The practice started during the mid 1800s and continues today.
To expand his empire, E.W. Scripps gave promising young executives the
money needed to establish dailies in rapidly growing industrial
cities. Scripps normally retained at least 51 percent of the stock,
dividing the other 49% among his associates, and Knight explained:
Usually in starting a paper he put up all the money. When the paper
became profitable, the editor and business manager began repaying Scripps
for the initial value of their stock. The incentive of profit-sharing
undoubtedly had much to do with making a success of what might be regarded
as shoestring newspapers. Furthermore, their initial capitalization
appeared lower than it really was, because his editors and managers worked
for a smaller salary, in anticipating an eventual share of ownership....
Scripps was not being altruistic. "He simply could make more money by
holding 51% and letting capable subordinates hold the other 49% than he
could by owning the entire paper," Knight said. As Scripps' network of
newspapers and stockholders became larger and more complicated, he devised
a simpler system of profit-sharing for every employee, regardless of rank.
Cissy Patterson was even more generous. When Patterson died in 1948, she
left the Washington Times-Herald to seven executives. Patterson hoped the
executives would cherish the Times-Herald; instead, they sold it for $4.5
million. Why? Three of the men were over 60 and wanted to retire. Two
were worried about tax problems. There also were questions about whether
the seven could work together harmoniously: about whether the
Times-Herald could be run effectively by a committee. Moreover, the men
lacked operating capital and had to borrow for their weekly payroll.
CHARITABLE DONATIONS In 1918, James Gordon Bennett died childless at the
age of 77. Bennett's will, read the next year, ended rumors that he was
leaving three newspapers to his employees, his wife, or a syndicate. As a
memorial to his father, Bennett left the New York Herald, its Paris
edition, and the Evening Telegram for the establishment of a home for old,
poor, and incapacitated journalists. Because of his estate's
financial problems, all three newspapers had to be sold, and the home never
During the 20th century, other publishers also began to leave much or all
their estates to charities:
_Joseph Pulitzer's estate totaled $18,525,116, and most of the money went
to his family. Still, Pulitzer gave Columbia University $1 million for the
establishment of a school of journalism and $250,000 to provide
scholarships and annual prizes for outstanding journalistic
achievements. In addition, Pulitzer left $500,000 to the Metropolitan
Museum of Art and a similar amount to the Philharmonic Society.
_Col. Robert R. McCormick, publisher of the Chicago Tribune, created the
McCormick Charitable Trust.
_Amon G. Carter left an estate of $10.3 million in a smaller market, Fort
Worth, Texas. Carter left some money to his children and other relatives,
but the bulk $7.3 million to the Amon G. Carter Foundation, which
supports worthy causes in his hometown.
_Theodore Bodenwein left The Day in New London, Conn., in the hands of five
local trustees, including two from his newspaper. Since 1939, profits not
needed for quality coverage and expansion have been given to community
organizations, an arrangement that assures The Day's continued
_Marajen Stevick Chinigo left control of the News-Gazette in Champaign,
Ill., to a nonprofit foundation that supports local charities.
_In Delaware, Joe Smyth created a nonprofit company to ensure its perpetual
independence. Smyth was CEO of Independent Newspapers Inc., which
published the Delaware State News in Dover and 37 other daily, weekly, and
monthly newspapers. Five trustees reinvest the company's profits back into
its newspapers. To establish the trust, Smyth "had to relinquish his
ownership and the ability to pass the company on to his children."
EDUCATIONAL INSTITUTIONS. Nelson Poynter created journalism's most famous
trust. Poynter, who published the St. Petersburg Times until his death in
1978, believed that an independent and locally-owned newspaper is "less
bottom line-driven than its publicly held counterparts and more accountable
to readers." Poynter mistrusted even family ownership, believing that
the Times should be controlled by "professionals who recognize what the
duty of the paper is." He considered, then rejected, the idea of
allowing employees to take over the Times or leaving the Times to his alma
mater, Yale University. Instead, Poynter created the Modern Media
Institute, later renamed the "Poynter Institute for Media Studies," hoping
it would elevate the practice of journalism and ensure his daily's
continued independence. (Ten years after Poynter's death, a family
squabble threatened even the Times. Poynter's nieces sold their 40%
interest to an investment group controlled by financier Robert M. Bass, who
then tried to take over the entire newspaper. To get rid of Bass, the
Times went into debt to buy his shares.)
Two other publishers also recently announced the establishment of
educational institutions. In 1999, Nackey Scripps Loeb, publisher of The
Union Leader in Manchester, N.H., founded a school of communications. When
she died in 2000, her stock went to the school. Similarly, H. Brandt
Ayers, whose family owns the Anniston (Ala.) Star and Talladega's Daily
Home, has announced that their ownership will eventually be transferred to
a nonprofit foundation that will establish the Ayers Institute, which will
offer a graduate program in community journalism in collaboration with the
University of Alabama.
FAILURES' CHILLING EFFECT Today's owners are reluctant to try
employee-ownership because so many attempts failed. Howard H. "Tim" Hays,
for example, hoped his sons or other relatives would take over the
Press-Enterprise in Riverside, Calif., but none wanted to. Hays then
considered three alternatives: (1) employee ownership, (2) giving the
Press-Enterprise to Stanford University, or (3) selling the
Press-Enterprise to a public-spirited non-journalist who would guarantee
its staff's editorial independence.
Hays rejected the idea of employee ownership "because the history of such
sales is disastrous." After learning that university policies prohibited
any commitment to retaining the newspaper, Hays also decided against giving
the Press-Enterprise to Stanford. At the age of 80, he sold the
Press-Enterprise to a group: the A.H. Belo Corp. of Dallas, Texas. "Out
of consideration for our employees and our readers, we were careful in our
selection of a purchaser," Hays explained. "We had a short list of
companies we thought qualified in terms of maintaining the quality and
integrity of the paper. Belo was among them."
EXPERTS' WARNINGS Though a 401(k), employees in many industries can
invest their retirement savings in the company they work for. Companies
often add to employees' contributions, sometimes even matching
them. Financial experts are skeptical, however, and one explained:
Investing 50 percent of your retirement savings in your employer's stock
exposes you to too much risk. This is true regardless of the company for
which you work. If your employer should ever experience financial
reversals, one of the first things companies do is lay people off. Of
course, at the same time, the stock usually plunges.
Columnist Jane Bryant Quinn agrees that investing a large share of your
retirement savings in your company's stock can be incredibly
dangerous. Quinn explains, "The more you depend on a single stock, the
greater the risk of a ruinous loss." Quinn especially fears
"excessive amounts of company stock in many 401(k)s." While some stocks do
well, others "will dive and not recover, or not recover for many years,"
she warns. The price of stock in IBM, for example, "plunged by two-thirds
in the years after the 1987 crash." Other big-name firms, including
Gillette, Lucent, Campbell Soup, Coca-Cola, and Procter & Gamble, also
suffered major losses.
Yet in firms with Employee Stock Ownership Plans (ESOPs), all of an
employee's money typically goes into a company's stock. Quinn
recommends that 401(k) participants invest no more than 5 percent of their
money in their employer's stock.
Sen. Barbara Boxer, a California Democrat, introduced a bill that would
have limited 401(k) plans to investing no more than 10% of their assets in
an employer's stock. Firms with 401k(s) lobbied against the bill, and it
failed, but other members of Congress also want to limit employees'
investments in their companies' stock.
Discussion And Conclusions
Despite journalists' yearning for ownership and criticisms of chains, the
concept of employee-ownership seems to have failed. Only four
employee-owned dailies have survived, and one of the four the Milwaukee
Journal Sentinel is threatened.
Why did employees acquire so few dailies?
Journalists who advocated employee-ownership seem to have romanticized
their relationship with newspaper owners. Those advocates believed that
employees deserved a larger share of newspapers' profits, and perhaps a
share of newspapers' ownership as well. While promoting the concept, few
acknowledged the obstacles that employee-owned dailies encounter.
First, owners' relationship with their employees tended to be remote and
impersonal. Second, rather than devoting their careers to a single
newspaper, journalists typically moved from one daily to another, then left
the field entirely. So despite stereotypes to the contrary, dailies had
few loyal, long-term employees to reward. Also, as the price of dailies
escalated, it became more difficult for employees to afford
them. Moreover, today's financial experts warn employees about the danger
of investing too much money in an employer's stock. Finally, the
advantages of selling to a chain were overwhelming -- and the failure of
71.4% of the nation's employee-owned dailies made owners leery of the concept
Why did so many employee-owned dailies fail?
To succeed, employee-owned dailies had to avoid a dozen problems. The
price of a newspaper's stock had to be low, so every employee could afford
it, and the stock had to be divided fairly among all of a newspaper's
employees. Newspapers had to help with the financing and also had to
repurchase every share when employees quit, retired, or died. Company
bylaws had to make a sale difficult, perhaps by requiring a two-thirds vote
(or by prohibiting shareholders from profiting from any offer). Also,
although owned by their employees, dailies could not be run by
committees. They needed executives with the power and vision to accumulate
the capital needed for improvements, expansion, and the repurchase of stock.
Other problems were even more difficult to avoid. Publishers committed to
the concept of employee-ownership were unable to ensure that their staffs
remained unified and that all their successors were highly
competent. Also, with fewer dailies available, those owned by their
employees aroused the interest of chains eager to expand. Moreover,
employees like any other investors might become more interested in
their newspapers' profits than content.
Owners who turned dailies over to their employees during the 20th century
wanted to reward them, but also to ensure their dailies' continued
independence and local ownership. In the 21st century, publishers seem
likely to prefer other alternatives, especially profit-sharing. Others are
leaving their dailies to a trust, charity, or educational institution. To
do so, owners may have to give away the fruits of their life's work,
disinheriting their families.
Still, there are rewards for the agreements that succeed: evidence that
employee-owned dailies do, as intended, an exceptional job of serving their
communities. For years, the Milwaukee Journal was ranked among the
nation's best dailies. While other newspapers retrenched during the
1990s, Omaha's World-Herald remained committed to maintaining its role as a
statewide newspaper and achieved a high penetration rate. The St.
Petersburg Times, a daily owned by a non-profit institute, also provided "a
bigger news hole, lower newsstand price, and more news staff than many of
its peers." Moreover, the Times' penetration rate was 10 points higher
than the industry average. Its employees, too, benefitted from the
trust established by Nelson Poynter, enjoying exceptional working
conditions and a notably high morale.
Finally, newspapers' problems change from century to century. At the
start of the 20th century, journalists worried about the problems of
commercialization, irresponsibility, sensationalism, and bias. To solve
those problems, journalists advocated endowed papers. During the 20th
century, journalists worried about the growth of chains. To protect
dailies' independence and local ownership, journalists advocated
employee-ownership. As new problems arise during the 21st century,
journalists are likely to advocate new solutions, not employee ownership.
 The tally of 14 employee-owned dailies includes both The Kansas City
Star and The Kansas City Times and also both the Milwaukee Sentinel and the
Milwaukee Journal. The tally of the 10 that failed includes both
newspapers in Kansas City and also the Milwaukee Sentinel, which was merged
with the Journal in 1995.
 John C. Busterna. "Trends In Daily Newspaper Ownership." Journalism
Quarterly, Vol. 65, No. 4 (Winter 1988), p. 833.
 Mary A. Anderson. "Ranks of Independent Newspapers Continue To
Fade." Presstime, August 1987, p. 17.
 James V. Risser. "Endangered Species." American Journalism Review,
June 1998, p. 20.
 Comprehensive lists of the reasons newspapers are sold appear in
"Newspapers On The Block: Buyers Ready, Rules Changing" by Elise
Burroughs. Presstime, November 1983, p. 5. The list in Presstime notes
that, "Perhaps most common, a family may be forced to sell an inherited
newspaper to pay estate taxes." For a similar list, see: "Ranks of
Independent Newspapers Continues To Fade" by Anderson, pp. 16-23.
 Virtually every expert lists inheritance or capital gains taxes as a
primary reason for selling: SEE: "The Ownership Shuffle" by David B.
Martens. Presstime, May 1996, p. 54.
 Tax laws contribute to newspaper sales because the laws value a
newspaper at the price it would fetch on the open market. In 1981, the
inheritance tax dropped from 70% to 55% on estates valued at $3 million or
more. A closely held business could pay the bill over 15 years, with only
the interest due during the first five years. But typically, a family that
owed $50 or $100 million in estate taxes could raise the money only by
selling. SEE: "Ranks of Independent Newspapers Continue To Fade" by
Anderson, pp. 17 and 21. SEE ALSO: "The Price of Independence" by Loren
Ghiglione. Presstime, July/August 1996, p. 39. SEE ALSO: "The Ownership
Shuffle" by Martens, p. 58.
 Burroughs. "Newspapers On The Block: Buyers Ready, Rules Changing,"
 "Two more family-owned newspaper companies sold." Presstime, June
1986, p. 98. SEE ALSO: "The Cash in the Register." Newsweek, Nov. 26,
1984, p. 74.
 Ghiglione. "The Price Of Independence," p. 42. SEE ALSO: "The
Ownership Shuffle" by Martens, p. 56.
 John Morton. "Selling out for Golf and Gold." Washington
Journalism Review, February 1986, p. 60. SEE ALSO: "Ranks of Independent
Newspapers Continue to Fade" by Anderson, pp. 17-18.
 Anderson. "Ranks of Independent Newspapers Continue To Fade," pp.
 For a discussion of the trend toward corporatization, mergers and
public ownership, see Leaving Readers Behind: The Age of Corporate
Newspapering ed. by Gene Roberts. University of Arkansas Press:
Fayetteville, 2001. SEE ALSO: Taking Stock: Journalism and the Publicly
Traded Newspaper Company by Gilbert Cranberg, Randall Bezanson and John
Soloski. Ames: Iowa State University Press, 2001.
 Bruce B. VanDusen. "Thomson comes to Kokomo." The Quill, September
1983, pp. 28-33.
 Dennis Hale. "Chains Versus Independents: Newspaper And Market
Characteristics." A paper presented to the Mass Communication and Society
Division of the Association for Education in Journalism and Mass
Communication at the national convention of the association held in
Gainesville, Fla., Aug. 5, 1984.
 Ghiglione. "The Price Of Independence," p. 39.
 James D. Squires. "Plundering the Newsroom." Washington Journalism
Review, December 1992, p. 20.
 William A. Henry III. "Learning to Love The Chains." Washington
Journalism Review, September 1986, pp. 15-17.
 Robert M. Shaw. "Absentee owners: Good or bad for
community?" Presstime, November 1983, pp. 8-9.
 Susan Paterno. "Whither Knight-Ridder?" American Journalism
Review, January/February 1996, pp. 19-27. Knight Ridder's image was
tarnished by cutbacks during the recession of 2000-2001, however. In San
Jose, Mercury News publisher Jay T. Harris quit in protest, saying he would
not destroy the paper to meet profit demands. SEE: "Dimming Beacon" by
Valarie Basheda. American Journalism Review, May 2001, pp. 24-31. SEE
ALSO: "Slimming Down" by Kathryn S. Wenner. American Journalism Review,
December 2000, pp. 38-41.
 Barbara J. Friedman. "Public VS Private." Presstime, May 1986, p. 6.
 Cranberg, Bezanson, and Soloski. Taking Stock: Journalism and the
Publicly Traded Newspaper Company, pp. 1-15.
 Lou Ureneck. "Newspapers Arrive at Economic Crossroads." Nieman
Reports. Special Issue, Summer 1999, p. 14.
 Annotated bibliographies the author consulted include American
Journalism History: An Annotated Bibliography compiled by Wm. David
Sloan. New York: Greenwood Press, 1989. SEE ALSO: An Annotated Journalism
Bibliography 1958-1968 by Warren C. Price and Calder M.
Pickett. Minneapolis: University of Minnesota Press, 1970. SEE ALSO: The
Journalist's Bookshelf: An Annotated and Selected Bibliography of United
States Print Journalism, 8th ed. by Roland E. Wolseley and Isabel
Wolseley. Indianapolis, Inc.: R.J. Berg & Company, Publishers, 1985.
 Books written by and about early journalists use words that, today,
are considered sexist: "newsman," "newspaperman," and "cameraman," for
example. Other early titles also end in the words "boy" and "man." This
paper never changes those words, nor other male nouns and pronouns, when
they appear in direct quotations. Elsewhere, this paper uses non-sexist
and more modern terms, especially "writer," reporter," and "journalist."
 Samuel G. Blythe. The Making of A Newspaper Man. Philadelphia:
Henry Altemus Company, 1912. Reprinted in 1970 by Greenwood Press of
Westport, Conn., p. 50. SEE ALSO: "Journalism As A Career" by J.W.
Keller. Forum, August 1893, p. 696.
 Blythe. The Making Of A Newspaper Man, pp. 50-51.
 John Morton. "Owning Your Own Smalltown Daily." Washington
Journalism Review, December 1989, p. 49.
 Allan Forman. "New Papers And New Men." The Journalist, April 16,
1887, p. 8.
 Anderson. "Ranks of Independent Newspapers Continue To Fade," p. 18.
 Ghiglione. "The Price Of Independence," p. 39.
 John Livingston Wright. "Reporters And
Oversupply." Arena. November/December 1898, p. 614. SEE ALSO:
"Over-Crowded New York." The Journalist, July 7, 1888, p. 8.
 William A. Croffut. An American Procession: 1855-1914. Freeport,
N.Y.: Books For Libraries Press, Inc., 1931, pp. 129-131. SEE ALSO: The
Staff Correspondent by Charles Sanford Diehl. San Antonio: The Clegg Co.,
1931, pp. 56-58.
 Diehl. The Staff Correspondent, pp. 56-58. SEE ALSO: Gentleman of
the Press: The Life and Times of an Early Reporter, Julian Ralph of the Sun
by Paul Lancaster. Syracuse: Syracuse University Press, 1992, p. 156. SEE
ALSO: The Evening Post: A Century of Journalism by Allan Nevins. New York:
Boni and Liveright, 1932, p. 528.
 Quoted in City Editor by Stanley Walker. Baltimore: The Johns
Hopkins University Press, 1999, pp. 5-6. SEE ALSO: Bovard Of The
Post-Dispatch by James W. Markham. Baton Rouge: Louisiana State University
Press, 1954, p. 24. SEE ALSO: Park Row by Allen Churchill. Westport,
Conn.: Greenwood Press, Publishers, 1958, p. 250.
 Croffut. An American Procession, p. 124. SEE ALSO: It Has its
Charms by Charles W. Morton. Philadelphia: J.B. Lippincott Co., 1966, p. 208.
 In 1888, Allan Forman, editor of The Journalist, observed that,
"New York seems to be the journalistic Mecca toward which the eyes of all
out-of-town newspaper men turn. No matter how well they may be situated in
other cities, they have a yearning, secret perhaps, but none the less
strong toward getting on a New York paper." SEE: "Over-Crowded New York,"
p. 8. SEE ALSO: "The New York Reporter." The Journalist, Dec. 14, 1889,
 Lancaster. Gentleman of the Press, p. 159.
 Keller. "Journalism As A Career," p. 693.
 Keller. "Journalism As A Career," p. 694.
 For descriptions of reporters' insecurity and arbitrary firings,
see: To Hell in a Handbasket by H. Allen Smith. Garden City, N.Y.:
Doubleday & Company, Inc., 1962, p. 186. SEE ALSO: William Andrew
Spalding: Los Angeles Newspaperman by William Andrew Spalding. San Marino:
The Huntington Library, 1961, p. 91. SEE ALSO: A Book About the Business
by Morton Sontheimer. New York: Whittlesey House, 1941, pp. 5-6.
 David H. Weaver and G. Cleveland Wilhoit. The American Journalist:
A Portrait of U.S. News People and Their Work. Bloomington: Indiana
University Press, 1986, pp. 17-21 and 69-71.
 Markham. Bovard Of The Post-Dispatch, pp. 94-95. Being an editor
continues to be an insecure business, with editors leaving their jobs at a
fast pace. SEE: "Risky business" by Susan Paterno. American Journalism
Review, July/August 2000, pp. 37-43. SEE ALSO: "Zuckerman Unbound" by
Robert Schmidt. Brill's Content, September 2000, pp. 93-95 &
132-135. After acquiring the New York Daily News, Mortimer Zuckerman
employed five editors in seven years.
 George Murray. The Madhouse On Madison Street. Chicago: Follett
Publishing Company, 1965, p. 12.
 Blythe. The Making Of A Newspaper Man, pp. 236-237.
 For sample salaries around the turn of the century, see: "The
Newspaper Profession." The Journalist, June 18, 1892, p. 10. SEE ALSO:
Way Back When: Recollections Of An Octogenarian by Slason
Thompson. Chicago: The H.G. Adair Printing Co., 1930, pp. 291-292. SEE
ALSO: I've Met The Folks You Read About by Labert St. Clair. New York:
Dodd, Mead & Co., 1940, pp. 46-47. SEE ALSO; I Like People: The
Autobiography of Grove Patterson Editor-in-Chief of The Toledo Blade by
Grove Patterson. New York: Random House, 1948, p. 86. SEE ALSO: "New York
Reporters," p. 10.
 Claude Bowers. My Life: The Memoirs of Claude Bowers. New York:
Simon And Schuster, 1961, p. 231.
 Quoted in Park Row by Churchill, p. 327.
 Bowers. My Life, p. 231.
 Ken Stewart. News Is What We Make It. Boston: Houghton Mifflin
Company, 1943, p. 81.
 Churchill. Park Row, p. 328.
 William Salisbury. The Career of a Journalist. New York: B.W.
Dodge & Company, 1908, pp. 520-521.
 Keller. "Journalism As A Career," p. 700.
 Will C. Conrad, Kathleen F. Wilson, and Dale Wilson. The Milwaukee
Journal: The First Eighty Years. Madison: The University of Wisconsin
Press, 1964, p. 177.
 Alicia C. Shepard. "Merged In Milwaukee." American Journalism
Review, May 1996, p. 28.
 "Milwaukee Plan." Time, June 7, 1937, p. 61.
 Elise Burroughs. "Heady Success in Cream City." Presstime, March
2000, p. 30. For more information about the Milwaukee Journal Sentinel's
stock ownership plan, see: Http://www.jc.com/ownership.shtml.
 Chuck Wood, public relations manager of the Omaha
World-Herald. Personal correspondence with the author. Also see the
World-Herald's website: http://www.omaha.com/help/newspaper.
 Bill Roesgen. "Staying The Course." American Journalism Review,
March 1999, p. 42.
 *Legislation Congress adopted in the 1970s gives banks an incentive
to finance Employee Stock Ownership Plans (ESOPs). Banks pay taxes on only
half the interest they earn and, therefore, can grant ESOPs more favorable
rates. The ESOPs use loans to buy stock from a company's
owners. Employees then buy shares, paying for them through payroll
contributions. Some companies make additional contributions on their
employees' behalf. Although common in other industries, ESOPs remain rare
in the newspaper industry.
 Ghiglione. 'The Price Of Independence," p. 39.
 Martin Quigley. Mr. Blood's Last Night. St. Louis: Sunrise
Publishing Co., 1980, p. 86.
 Icie F. Johnson. William Rockhill Nelson and The Kansas City
Star. Kansas City, Mo.: Burton Publishing Company Publishers, 1935, pp.
135-161. SEE ALSO: William Rockhill Nelson: Story Of A Man, A Newspaper
And A City, reprint ed. New York: Beekman Publishers, Inc., 1974, pp. 176-183.
 William Rockhill Nelson: Story Of A Man, A Newspaper And A City, pp.
 Johnson. William Rockhill Nelson And the Kansas City Star, pp. 155-194.
 Quigley. Mr. Blood's Last Night, p. 87.
 George Kennedy. "Up to date in Kansas City." Columbia Journalism
Review, March/April 1979, p. 59.
 Clark Newsom. "Employee-owned papers have mixed
history." Presstime, August 1983, p. 37. SEE ALSO: "Up to date in Kansas
City" by Kennedy, p. 59.
 Walker. City Editor, p. 84. SEE ALSO: The Story Of The Sun, new
ed., by Frank O'Brien. New York: D. Appleton And Company, 1928, pp. 211-228.
 It is not clear whether employees leaving The New York Sun were
required to sell their stock back to the newspaper.
 Ward Morehouse. Just the Other Day. New York: McGraw-Hill Book
Company, Inc., 1953, p. 188.
 Morehouse. Just the Other Day, pp. 186-190.
 The history of The Hartford Courant is best told in a special
section published on its 225th anniversary, Nov. 4, 1990. See Section K
written by Joel Lang.
 "Dale says Enquirer stock purchase will be beneficial." Editor &
Publisher, Jan. 16, 1971, p. 42.
 "Enquirer stock sale plan delayed by suits." Editor & Publisher,
Oct. 31, 1970, p. 38.
 "Dep't of Justice okays sale of Enquirer to AFC." Editor &
Publisher, April 17, 1971, p. 42. SEE ALSO: "Enquirer stock purchase
opposed." Editor & Publisher, Oct. 24, 1970, p. 11. SEE ALSO: "Judge acts
while hearing suits to block Enquirer transaction." Editor & Publisher,
Dec. 5, 1970, p. 11. SEE ALSO: "Cincinnati firm hikes bid on Enquirer
stock." Editor & Publisher, Feb. 27, 1971, p. 12.
 Little has been written about the dailies in Palo Alto and Redwood
City, Calif., and the author was unable to find and interview any employees
familiar with their acquisition by employees in 1957.
 Conrad, Wilson, and Wilson. The Milwaukee Journal: The First Eighty
Years, pp. 204-205.
 Shepard. "Merged In Milwaukee," p. 28.
 Tony Case. "Meddling In Milwaukee." Editor & Publisher, June 1,
1996, p. 11.
 Shepard. "Merged In Milwaukee," p. 20.
 "Steve Smith's profitable gospel." Editor & Publisher, April 3,
1999, p. 24.
 Rick Romell and Kathleen Gallagher. "Taking stock of newspaper
quality." Milwaukee Journal Sentinel, May 25, 2003, p. 1D. SEE
ALSO: "Change in FCC rules could reshape media landscape." Milwaukee
Journal Sentinel, June 1, 2003, p. D1.
 Rick Romell. "Media ownership rules eased." Milwaukee Journal
Sentinel, June 3, 2003, p. A1.
 Interview with the author, Aug. 20, 2001.
 David Maddux, ed. Editor & Publisher International Year Book. New
York: Editor & Publisher, 2000, p. I-398.
 Newsom. "Employee-owned papers have mixed history," p. 37.
 Analyst John Morton said Peoria's Journal Star the first
newspaper to create an Employee Stock Ownership Plan (ESOP) could serve
as a model for the nation's independent dailies, but also "for the 100 or
so small newspaper chains that are essentially still family-owned
enterprises." SEE: "Throwing Off the Chains in Peoria" by John
Morton. American Journalism Review, March 1993, p. 52.
 Morton. "Throwing Off the Chains in Peoria," p. 51.
 Piers Brendon. The Life and Death of Press Barons. New York:
Atheneum, 1983, p. 57.
 Bill Hosokawa. Thunder In The Rockies: The Incredible Denver
Post. New York: William Morrow & Co., Inc., 1976, pp. 364-411.
 In 1973, 46.9% of the stock in The Denver Post was held by the F.G.
Bonfils Foundation, 44.8% by the Helen G. Bonfils Foundation, and only 8.3%
by the Post Employees Stock Fund.
 Personal conversation with Bill Hosokawa, author of Thunder In The
Rockies: The Incredible Denver Post, Sept. 5, 2000. Hosokawa, now retired,
was an editor at The Post.
 Personal communication with a current employee of The Post.
 Risser. "Endangered Species," p. 35.
 Of 18 publicly traded newspaper companies, most now use stock to
attract, retain, reward, and motivate employees. Employees also are given
or sold stock as part of their retirement plans. Employees acquired 7%
of the stock in the Kearns-Tribune Corp., which owned the Salt Lake Tribune
and four other dailies. The corporation was sold in 1997 and the stock
employees held in their retirement accounts was valued at $37.3 million,
making nearly two dozen millionaires. SEE: "Taking Stock: More employees,
at all levels, now hold company stock" by Anna America. Presstime, June
1999, pp. 35-37. SEE ALSO: "Instant Millionaires" by M.L. Stein. Editor &
Publisher, Aug. 30, 1997, p. 6. SEE ALSO: "AT&T's Plan to Sell Newspaper
Adds Fuel to a Salt Lake Feud." The Wall Street Journal, Oct. 6, 2000, p. 1.
 Charles H. Levermore. "A Plea For Endowed Newspapers." Andover
Review, Vol. 12 (November 1889), p. 486.
 Levermore. "A Plea For Endowed Newspapers," pp. 485-490.
 W.H.H. Murray. "An Endowed Press." The Arena, Vol. 2 (1903), pp.
 Hamilton Holt. "A Plan for an Endowed Journal." The Independent,
Aug. 8, 1912, pp. 299-300.
 For examples of editors rewarded with stock, see: H.J. Raymond and
The New York Press by Augustus Maverick. Hartford, Conn.: A.S. Hale And
Company, 1870, p. 91. SEE ALSO: Little Mack: Joseph B. McCullagh of The
St. Louis Globe-Democrat by Charles C. Clayton. Carbondale: Southern
Illinois University Press, 1969, pp. 67-68. SEE ALSO: A History Of The St.
Louis Globe-Democrat by Jim Allee Hart. Columbia: University of Missouri
Press, 1961, pp. 118-119. Historians are uncertain whether Joseph Pulitzer
gave his top editor, John Cockerill, any stock in the New York World. SEE:
Pulitzer's Prize Editor by Homer W. King. Durham, N.C.: Duke University
Press, 1965, pp. 130-131 and 143.
 George H. Douglas. The Golden Age of The Newspaper. Westport,
Conn.: Greenwood Press, 1999, p. 147. SEE ALSO: I Protest: Selected
Disquisitions Of E.W. Scripps ed. by Oliver Knight. Madison: The
University of Wisconsin Press, 1966, pp. 203 and 281-282.
 Knight. I Protest, pp. 80-81.
 Knight. I Protest, p. 203.
 Cissy Patterson did not leave the Times-Herald to her only
daughter, Felicia, because she had no newspaper experience and the two were
estranged. Patterson apparently intended to revise her will to leave the
Times-Herald to a niece but never finalized a new will. After several
years of heavy losses, its new owner, Robert R. McCormick, sold the
Times-Herald to Eugene Meyer, publisher of the Washington Post. Meyer then
closed the Times-Herald, moving its best features and staff to The
Post. SEE: Cissy: The Biography Of Eleanor M. "Cissy" Patterson by Paul F.
Healy. Garden City, N.Y.: Doubleday & Company, Inc., 1966, pp.
391-414. SEE ALSO: Cissy Patterson by Alice Albright Hoge. New York:
Random House, 1966, pp. 223-224. SEE ALSO: It's All News To Me by
Considine, pp. 40-41.
 "Endowing Newspapers." Nation, July 20, 1918, p. 60.
 Richard Kluger. The Paper: the Life and Death of the New York
Herald Tribune. New York: Vintage Books, 1989, p. 208. SEE ALSO: The
Scandalous Mr. Bennett by Richard O'Connor. Garden City, N.Y.: Doubleday
& Company, Inc., 1962, pp. 318-319.
 W.A. Swanberg. Pulitzer. New York: Charles Scribner's Sons, 1967,
 Lloyd Wendt. The Chicago Tribune: The Rise Of A Great
Newspaper. Chicago: Rand McNally & Company, 1979, pp. 704-705.
 Jerry Flemmons. Amon: the life of Amon Carter, Sr. of
Texas. Austin, Texas: Jenkins Publishing Company, 1978, pp. 494-495.
 Ghiglione. "The Price Of Independence," p. 40. SEE ALSO: The Day
Paper: The Story Of One Of America's Last Independent Newspapers by Gregory
N. Stone. New London, Conn.: The Day Publishing Company, 2000.
 Lucia Moses. "Nelson's pointers continue to benefit Times and
institute." Editor & Publisher, Jan. 10, 2000, p. 16.
 Moses. "Nelson's pointers continue to benefit Times and
institute," p. 16.
 Quoted in "Endangered Species" by Risser, p. 32.
 Anderson. "Ranks of Independent Newspapers Continue To Fade," p. 22.
 "Applying the Pressure." American Journalism Review, October 1996,
 Lucia Moses. "Independent Thinkers." Editor & Publisher, Jan. 28,
2002, p. 10.
 John Morton. "Noble Sentiments." American Journalism Review,
March 2003, p. 60.
 Risser. "Endangered Species," pp. 19-20.
 Howard H. "Tim" Hays, chairman emeritus, The
Press-Enterprise. Personal correspondence with the author, March 7, 2000.
 Joe Burt. "Retirement plan needs some stock and bond
adjustments." The Orlando Sentinel, May 28, 2000, p. H-3. SEE ALSO:
"Improving 401 (k)s" by Jena McGregor. The Wall Street Journal Sunday,
Oct. 14, 2001, p. 1.
 Jane Bryant Quinn. "Don't base retirement only on your employer's
stock." The Orlando Sentinel, June 6, 2000, p. B-1.
 Employees who invested in company stock suffered even more when
Internet stocks crashed and companies failed in 2000 and 2001.
 Bill Saporito. "When One Stock Is Enough." Time, April 1,
2002. SEE ALSO: "The Insecurity Industry." Time, Feb. 11, 2002, p. 32.
 Jane Bryant Quinn. "How's Your 401(K) Today?" Newsweek, May 22,
2000, p. 51.
 Jane Bryant Quinn. "Rethink Your 401(K) Now." Newsweek, July
23, 2001, p. 49.
 "Power Failure." Time, December 10, 2001, pp. 68-72. SEE ALSO:
"Lights Out for Enron." Newsweek, Dec. 10, 2001, pp. 50-51.
 John C. Merrill. The Elite Press: Great Newspapers of the
World. New York: Pitman Publishing Corporation, 1968, pp. 38-40.
 Bill Roesgen. "Staying The Course." American Journalism Review,
March 1999, pp. 40-41.
 Moses. "Nelson's pointers continue to benefit Times and
institute," p. 16.
 Russ Baker. "A Happy Newsroom, For Pete's Sake." Columbia
Journalism Review, September/October 2001, pp. 54-57.
School of Communication
University of Central Florida
Orlando, Fla. 32816
Phone: 407-823-2839 (Office)
E-mail: [log in to unmask]
A 20th Century Phenomenon
Rare, And 71% Fail
By Fred Fedler
The author is a professor in the School of Communication at the University
of Central Florida in Orlando.
A paper presented at the national convention of the Association for
Education in Journalism and Mass Communication in Kansas City, August 2003.
A B S T R A C T
School of Communication
University of Central Florida
Orlando, Fla. 32816
Phone: 407-823-2839 (Office)
E-mail: [log in to unmask]
A 20th Century Phenomenon
Rare, And 71% Fail
As the United States moves into the 21st century, few owners seem likely
to turn daily newspapers over to their employees. Thousands of dailies
were published in the United States during the 20th century, yet only 14
were acquired by their employees and 10 of those 14 failed, often in just
a few years.
Why did employees acquire so few dailies?
First, owners were emotionally attached to their newspapers and usually
wanted to pass them on to children. Second, owners' relationship with
their employees tended to be remote and impersonal. Third, rather than
devoting their entire careers to a single newspaper, most journalists moved
from one daily to another, then abandoned the field entirely. So despite
stereotypes to the contrary, owners had few loyal, long-term employees to
reward. Fourth, as the price of dailies escalated, it became more
difficult for employees to afford them. Also, today's financial experts
warn employees about the danger of investing too much money in an
employer's stock. Finally, the advantages of selling to a chain seem
Why did 71.4% of the nation's employee-owned dailies fail?
To succeed, employee-owned dailies had to avoid a dozen problems. The
price of their stock had to be low, so every employee could afford it, and
the stock had to be divided fairly among all of a newspaper's
employees. Dailies had to help with the financing and had to repurchase
every share when employees quit, retired, or died. Company bylaws had to
make a sale difficult and, although owned by their employees, dailies could
not be run by committees. They needed executives with the power and vision
needed to accumulate the capital needed for improvements, expansion, and
the repurchase of stock.
Other problems were even more difficult to avoid. Owners were unable to
ensure that their staffs remained unified and that all their successors
were highly competent. Moreover, with fewer dailies available, those owned
by their employees attracted chains eager to expand.
In the 21st century, publishers seem likely to prefer other
alternatives. More publishers are leaving their newspapers to charities
that help a larger number of people, typically all the residents of their
community. Other publishers are establishing educational institutions.
A paper presented at the national convention of the Association for
Education in Journalism and Mass Communication in Kansas City, August 2003.