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Revisiting Corporate Newspaper Structure and Profit-Making: Was I Wrong?
David Demers, assistant professor
Edward R. Murrow School of Communication
Washington State University
Pullman, Washington 99164-2520
509-335-6508 / [log in to unmask]
This paper was prepared for presentation at the annual meeting of the
Association for
Education in Journalism and Mass Communication (Chicago, July 30-Aug. 2,
1997). The
author wishes to thank the Edward R. Murrow School of Communication and the
College of
Arts and Sciences at Washington State University for providing partial funding
for this
project and Kelly Scott and Debra Merskin for their assistance and support.
Short Abstract
Revisiting Corporate Newspaper Structure and Profit-Making: Was I Wrong?
In a survey of newspapers conducted in 1993, I found that the more a
newspaper
exhibits the characteristics of the corporate form of organization, the less
emphasis it places
on profits as an organizational goal and the more emphasis it places on
product quality and
other non-profit goals. However, some data in a survey I conducted in the
fall of 1996 failed
to support the profit findings. This paper reports on the findings from
another, more
comprehensive survey conducted in February 1997 in an attempt to resolve the
discrepancy.
Extended Abstract
Revisiting Corporate Newspaper Structure and Profit-Making: Was I Wrong?
In a national probability survey of newspapers conducted in 1993, I found
that the
more a newspaper exhibits the characteristics of the corporate form of
organization, the less
emphasis it places on profits as an organizational goal and the more emphasis
it places on
product quality and other non-profit goals. However, some data in another
survey I
conducted in the fall of 1996 failed to support the profit findings. As such,
I conducted a
third survey in February 1997 to determine if my original findings were a
fluke. Corporate
newspapers, I have argued, are structurally organized to maximize profits, but
increasing role
specialization a characteristic of large-scale organization decreases
emphasis on profits
as a goal and increases emphasis on quality and other nonprofit goals. The
findings from the
most recent survey support the original 1993 data corporate newspapers place
less
emphasis on profits and much more emphasis on product quality and other
nonprofit goals.
Revisiting Corporate Newspaper Structure and Profit-Making: Was I Wrong?
Do newspapers place more emphasis on profits and less emphasis on product
quality
and other nonprofit goals as they acquire the characteristics of the corporate
form of
organization? That was the question I sought to answer three years ago in a
national
probability survey of publishers and journalists at 250 newspapers. The
results, which were
published nearly two years ago (Demers, 1995), contradicted the convention
wisdom, which
contends that the corporate form of organization places profits above all else
(Bagdikian,
1987; Commission on Freedom of the Press, 1947; Herman, 1985; Kreig, 1987;
Kwitney,
1990; Murdock & Golding, 1977; Squires, 1993; Soloski, 1979; Underwood, 1993).
Instead,
I found that corporate newspapers place less emphasis on profits as an
organizational goal
and much more emphasis on producing a high quality news product (Demers,
1995).
In autumn 1996 I conducted another national probability, and I posed one
question
about profits to a subsample of respondents: How much importance does top
management in
your organization place on profit maximization. To my surprise, the results
contradicted the
earlier findings. The correlation between corporate structure was positive
(r= +.31, p<.01),
not negative, and although the sample size was small (n=51), the correlation
was statistically
significant (p<.01). This finding could have been dismissed because the
subsample who
answered the question may not have been representative of the population of
newspapers
only respondents who failed to respond to the first mailing were given the
profit question in a
second follow-up mailing. However, I still felt it was necessary to conduct
another study to
determine whether the 1993 findings were still valid.
This paper reports on the findings of this new survey, which was conducted
in
February and March 1997. The question of whether corporate newspapers place
more
emphasis on profits and less on product quality is one of the most important
facing the media
industry today. Critics argue that the historical trend toward
corporatization of the
newspaper industry and other media industries (Demers, 1996a, Chapter 2) is
destroying or
has the potential to destroy good journalism and democratic principles.
Corporate structure
reduces diversity in the marketplace of ideas, the critics argue, because
corporations are
allegedly more concerned about making money than serving the informational
needs of the
community or producing a high quality product (Bagdikian, 1987; Commission on
Freedom
of the Press, 1947; Herman, 1985; Kellner, 1990; Kreig, 1987; Kwitney, 1990;
Murdock &
Golding, 1977; Squires, 1993; Soloski, 1979; Underwood, 1993). In contrast, I
have argued
that corporate newspapers place less emphasis on profits and more on product
quality, in part
because increased role specialization a characteristic of large-scale
organization
decreases emphasis on profits as a goal and increases emphasis on product
quality and other
nonprofit goals.
What Is the Corporate Newspaper?
I have written extensively about the concept of the corporate form of
organization
and how to empirically measure it (Demers, 1996). As such, there is no need
to go into all of
the details here. However, a brief statement is in order for those
encountering this concept
for the first time.
Historically, most scholars and journalists have used the term "corporate"
without
providing a precise conceptual or operational definition. The term is most
often used as a
synonym for one or more of the following ideas: (1) a legal entity that, in
contrast to a sole
proprietorship or partnership, gives owners limited liability and other
privileges under the
law; (2) a large, complex organization, like a bureaucracy, that has a
hierarchy of authority, a
division of labor, and lots of rules or red tape; (3) a chain or group i.e.,
an organization
that owns two or more newspapers in different cities and is typically managed
by
professionals, not the owners, who are stockholders. Drawing on the work of
the German
sociologist Max Weber (1964; Gerth & Mills, 1946), I argue that all of these
characteristics
may be seen as capturing some features of the modern corporate organization,
but none by
themselves is sufficient to capture what Weber called the "bureaucracy."
A bureaucracy, he argued, is a specific type of corporate organization
one in
which behavior is goal-directed and decision-making is rational. By rational
he means that
bureaucratic organizations try to reduce the production and distribution of
goods or services
into routines so as to find the most efficient and effective way to reach a
goal (Weber, 1964;
Gerth & Mills, 1946, pp. 196-244). In addition to rationality, bureaucracies
are characterized
by a hierarchy of authority, employment and promotion based on technical
qualifications, a
set of rules and procedures that define job responsibilities and show how
tasks are
accomplished, formalistic impersonality, and a division of labor and role
specialization.
Although Weber believed bureaucratic organizations are very efficient, he did
not
see them as a panacea. Weber, in fact, was very pessimistic about the
consequences that
bureaucracies had for individual freedom and autonomy and democratic
decision-making
(Gerth & Mills, 1946, pp. 224-228; also see Michels, 1984). A number of
empirical studies
also have questioned the extent to which bureaucracies are rational or
efficient (Merton,
1957; Crozier, 1964). However, bureaucratic organizations often adapt to
changes in the
environment, and they still remain the most effective and efficient way to
coordinate the
work of large numbers of people (Blau & Meyer, 1987).
In this study, then, a corporate newspaper is conceptualized as an
organization that
exhibits rationality in its decision-making and has a complex division of
labor, a hierarchy of
authority, a staff of highly skilled workers and a set formal rules and
procedures. The ideal-type counterpart to the corporate newspaper is the
entrepreneurial newspaper, which is
family owned and managed, and scores low on the characteristics mentioned
above.
Ownership structure (e.g., chain vs. independent, public vs. private) and
organizational size
(circulation or number of employees) are two empirical measures of corporate
structure. But
this study widens the operational "net" to include measures of the other
concepts identified
above as well.
Theories on Corporate Structure, Profits and Organizational Goals
As noted in the introduction, the most popular theory of organizational
structure
contends that corporate newspapers are more concerned about profits than other
goals. The
"critical model," as I call it, is not a highly unified or codified theory
i.e., no researcher
has systematically laid out its assumptions, concepts and propositions.
However, a review of
the literature (Demers, 1995, 1996a) shows that at least three major arguments
are put forth
to support the critical position.
The first is that corporate newspapers have more market power; that is, they
are less
constrained by competition. This power is said to be derived in part from
economies of
scale, lack of competition at the local level, greater knowledge of the
marketplace, tax laws
that favor corporate enterprises, more efficient operations and greater
rationality (efficiency)
in decision-making (Bagdikian, 1987, pp. 12-16; Blankenburg, 1983; Compaine,
Sterling,
Guback and Noble, 1982).
The second argument supporting the notion that the corporate newspaper is
more
profit-oriented revolves around ownership structure. Because corporate
newspapers are
more likely to be publicly owned, they must be constantly oriented to the
bottom line to keep
stockholders happy and investment dollars flowing in, some researchers argue
(Hirsch &
Thompson, 1994, p. 150). Competition under these conditions is not just a
matter of
producing a better and less expensive product than a competitor; it is a
matter of generating a
profit that is higher than at companies in other industries as well.
The third argument supporting the idea that corporate newspapers are more
profit-oriented stems from the belief that locally owned newspapers are more
responsive to the
social and moral concerns and interests of the local community. Chain
newspapers are
perceived to be less responsive because (a) their owners rarely live in or
grow up in the
communities their newspapers serve and because (b) their managers are less
involved in
local community organizations, are oriented more toward the organization
(Pellegrin &
Coates, 1956), and change jobs more frequently (Parsons, Finnegan, & Benham,
1988).
Without strong ties to the local community, the chain organization is
perceived as being
more interested in pursuing profits than in pursuing the goals or interests of
readers or the
community (e.g., moral development). Large newspapers also are believed to be
less
responsive to the local community because of increased emphasis on formalized
rules, which
often promote impersonal relationships within the organization as well as with
the public.
Because corporate newspapers are assumed to be profit-maximizers, many
critics
also believe they place less emphasis on product quality. The assumption most
critics make
follows a zero-sum formula: If a newspaper maximizes profits, then it has
less money to
spend on newsgathering, improving the product, or serving the public. In
particular, critics
charge that chain newspapers often sacrifice good journalism for profits.
Chains and
publicly owned newspapers often have been accused of hiring fewer reporters
and spending
less money on local news production (Hirsch & Thompson, 1994, p. 150).
Empirical Research
Despite a massive literature that criticizes the corporate form of
organization,
empirical research actually fails to provide a great deal of support for the
critical model
(Demers, 1996a). This is the case when corporate structure is operationalized
in terms of size
(larger newspapers), ownership (chain-owned newspapers and publicly owned
newspapers),
or my more complex multivariate measure. Overall, the conclusions of studies
on profit-making are highly mixed, and the research on product quality clearly
shows that corporate
newspapers place greater emphasis on and produce a higher quality product,
when the latter
is defined in professional terms, such as winning awards, seeking to do the
job well, treating
employees well, better writing, etc.
Although larger newspapers appear to be more profitable (Blankenburg, 1989;
Blankenburg & Ozanich, 1993; Demers, 1996b, Tharp & Stanley, 1992), they
actually place
less, not more, emphasis than smaller newspapers on profits as an
organizational goal
(Demers, 1991). In contrast, some research on chain newspapers suggests that
they place
more emphasis on profits than independently owned newspapers (Busterna, 1988a;
Demers
& Wackman, 1988; Demers, 1991; Soloski, 1979; McGrath & Gaziano, 1986), but
other
studies are mixed or suggest that there is no difference between chains and
independents
(Donohue, Olien & Tichenor, 1989; Olien, Tichenor & Donohue, 1988; Demers,
1995,
1996a).
On the issue of product quality, the research very clearly indicates that
larger
newspapers place more emphasis on product quality as an organizational goal
and on a
number of other criteria appear to produce a higher quality product. But the
evidence is
mixed for chain ownership.
Research shows that larger newspapers (a) proportionately spent more money on
news-editorial costs (Blankenburg, 1989, p. 101); (b) are much more likely to
mention
product quality when asked to name the three most importance goals in their
organizations
(Demers, 1991, 1995); (c) make fewer spelling and editing errors (Meyer &
Arant, 1993); (d)
devote more space to editorials and letters to the editor (Demers, 1995); (e)
are more likely
to have codes of ethics (Anderson, 1987); (f) hire more highly educated
journalists
(Johnstone, Slawski, and Bowman, 1976); (g) report more social conflict in
their news
columns (Tichenor, Donohue & Olien, 1980); (h) conduct more opinion polls
(Demers,
1987); (i) launch more investigative reporting projects (Downie, 1976;
Sellers, 1977); (j) win
more Pulitzer Prizes (Meyer & Arant, 1993); and (k) publish more editorials
and letters to
the editor that are critical of established authorities and other mainstream
groups.
Research on ownership structure suggests that chain newspapers produce a
higher
quality product (Becker, Beam & Russial, 1978), have larger news staffs (Lacy,
1986), have
more editorial autonomy control (for review see Demers, 1996b; also see
Wilhoit & Drew,
1991, p. 31 ), and encourage quality journalism (Flatt, 1980). On the other
hand, many
studies have found few differences between chain and independent newspapers
(for reviews
of the literature, see Busterna, 1988b; Compaine, Sterling, Guback & Noble,
1982; Olien,
Tichenor & Donohue, 1988; Picard, Winter, McCombs & Lacy, 1988), and some have
even
found that chains place less importance on product quality (Litman & Bridges,
1986) or
produce more homogenous content (Akhavan-Majid, Rife & Gopinath, 1991;
Glasser, Allen
& Blanks, 1989; Thrift, 1977; Wackman, Gillmor, Gaziano & Dennis, 1975).
Theoretical Perspective: A Structural Model
My theory of corporate structure does not dispute the argument that corporate
newspapers are more profitable, since they are structurally organized to
maximize profits
(Demers, 1996a). However, I argue that corporate newspapers place less
emphasis on profits
as an organizational goal and more emphasis on product quality and other
nonprofit goals,
for three major reasons.
First, corporate newspapers, like corporate organizations in general, would
be
expected to be more profitable because they have greater economies of scale
(Picard, 1989,
pp. 62-65). Larger newspapers benefit from economies of scale because the
ratio of first-copy costs to the total number of copies is lower. As the
quantity of output increases, the
per-copy price declines. Economies of scale are also derived through product
purchases and
management efficiencies. Since larger newspapers and chains can buy raw
materials in
larger bulk, they usually can negotiate better prices. Chains also may
generate economies of
scale through administrative and news-gathering practices. The span of
control is wider in
larger organizations that is, one manager oversees more workers and, thus,
management costs per employee are lower (Blau, 1970). Centralization and
standardization
of bookkeeping also can produce economies of scale, and in-house news services
that serve
more than one newspaper can lower news production costs.
Second, corporate newspapers would be expected to be more profitable because
they
have greater access than noncorporate newspapers to human and capital
resources, which are
crucial for adapting to changing market conditions. Chains and larger news
organizations
employ more highly educated and skilled employees because the work in them is
more
complex and specialized. They have the resources and knowledge, for example,
to conduct
sophisticated readership surveys. Larger, more complex organizations also
have a greater
capacity for adoption of innovations than smaller ones (Moch & Morse, 1977).
The
innovative process in modern capitalism usually requires a substantial
investment, which
often exceeds the capital resources of smaller organizations. I am not
arguing here that
family owned newspapers have inferior management; rather, corporate
organizations have
superior resources, both human and material, for making decisions.
And third, corporate newspapers are more profitable because they are
insulated from
many of the social and political pressures in the local community that could
inhibit
maximization of profits. As noted above, larger, more complex newspapers are
more likely
to have formal codes of ethics, which decreases the probability that
management or an
employee will cater to outside interests. Perhaps more importantly, corporate
newspaper
owners are more likely to live in another community and their managers have
less
commitment to the local community, since that newspaper is often a stopover on
the
corporate ladder. The owners of family owned enterprises, on the other hand,
usually live in
the communities their newspapers serve and have close ties with local elites,
who may very
well expect the newspaper to put community well-being over profit
maximization. Thus,
corporate newspapers might be expected to have weaker ties to the local
community, even
while their workers have a stronger commitment to producing a high quality
product.
Although corporate newspapers would be expected to be more profitable, they
would
be expected to place less, not more, emphasis on profits as an organizational
goal. There are
three reasons for this proposition.
The first is that increased role specialization removes editors and other
employees
from concern with the bottom line and increases concern with the news product
or other
nonprofit matters. Editors at smaller newspapers are much more likely to be
concerned
about profits because the likelihood is greater that they will be involved
with decisions
concerning the bottom line. Since the organization is smaller, they are more
likely to be the
publisher or advertising director, or they are more likely to be in contact
with those who are
concerned about the bottom line. Workers in complex business organizations
also are aware
that profitability is an important goal. However, most are not directly
involved budgetary or
financial matters; making money is the concern of the advertising department
and other
specialized roles in the organization.
At the corporate newspaper, role specialization means that journalists have
greater
freedom to focus their efforts on what they do best: gathering and reporting
the news. This
means that journalists at corporate newspapers would be expected to place
greater emphasis
on producing a quality product, as well as such goals as winning reporting
awards, acquiring
the latest technology, or being innovative in news gathering. These nonprofit
goals are
revered by journalists, and they not profits are the factors that lead to
a promotion, an
increase in pay, a better job, or greater prestige and power. At the same
time it would be
expected that other managers and workers in the corporate news organization
will place
greater emphasis on maximizing growth of the organization and conducting
readership
research. Maximizing growth of the organization, as noted earlier, has direct
benefits for
professional managers, increasing their power and control. Corporate
newspapers also
would be expected to place greater emphasis on readership research, because
they located in
more pluralistic communities, where the diversity of lifestyles and interests
is so complex
that readers' needs cannot be effectively or efficiently measured through
interpersonal
contact.
The second reason corporate newspapers would be expected to place less
emphasis
on profits as an organizational goal is they are more financially stable and
secure. Corporate
organizations are less vulnerable to changes in the marketplace because they
have greater
access to human and capital resources and greater control over markets and
prices.
Consequently, they have less need to be concerned about the bottom line and
can turn their
attention to other matters. In contrast, survival is a major concern in small
companies,
particularly where there is a great deal of competition or unstable economic
conditions. In
small communities where the retail base is dwindling, the concern about
profits at the local
paper will be very high. A newspaper in this community might be expected to
be more
likely to promote economic development and be a booster for local business and
industry.
One advertiser also may represent a significant proportion of the total
advertising budget and
may play a more influential role in shaping news coverage.
As noted above, role specialization would be expected to increase concern
with
product quality. But this is not the only factor. Another is competition.
Corporate
newspapers have more employees, and competition among them for organizational
resources
(e.g., promotions, pay, prestige) is fiercer. The goal of many reporters, for
example, is to
publish front-page stories. Such stories enhance the social status of
reporters and can
indirectly contribute to promotions or better job opportunities. Because
corporate
newspapers have more reporters competing for the same space, one might also
reasonably
argue that they have higher quality news stories as well.
And the third reason corporate newspapers are expected to place less emphasis
on
profits is that they are more likely to be controlled by professional managers
as opposed to
the owners. The logic here is that professional managers do not benefit as
directly from
profits as the owners. Managers obtain their primary compensation through a
fixed salary.
If one assumes that professional managers are self-interested actors (basic
assumption of
many economic theories), then it becomes illogical to argue that they should
they maximize
profits for the owners. Galbraith (1978) calls this the "approved
contradiction." Rather than
profits, professional managers would be expected to place greater emphasis on
maximizing
growth of the organization, since this is the primary means through which
salaries increase.
In addition, professional managers would be expected to place more emphasis on
non-profit
goals, such as winning awards and producing a high quality product, since
these are the
factors that lead to recognition from one's professional peers. Work is more
than a job to
professionals; it is an occupation, something that is expected to bring them
intrinsic
satisfaction.
Drawing upon this theoretical imagery, then, one would expect that the more a
newspaper exhibits the characteristics of the corporate form of organization:
(H1) the less
emphasis that newspaper will place on profits as an organizational goal or
value; (H2) the
more profitable that newspaper will be; (H3) the more emphasis that newspaper
will place on
product quality as an organizational goal; (H4) the more emphasis that
newspaper will place
on other non-profit organizational goals, such as maximizing organizational
growth, winning
reporting awards, using the latest technology, beating the competition,
conducting readership
research, giving reporters more autonomy, being innovative, supporting the
community and
increasing circulation. These propositions are identical to those tested in
the 1993 study
(Demers, 1995).
Method
The methodology for the 1997 study is identical to the 1993 and 1996 studies.
Questionnaires were mailed in February and March 1997 to the highest ranking
manager
(e.g., publisher, general manager) and the highest ranking editor at 250 daily
newspapers
randomly selected from the 1996 Editorial & Publisher International Yearbooks.
In 1993,
police reporters were also surveyed, but they are excluded from the data to be
compared in
this study. In both years, a $1 incentive was included to boost response
rates. In 1993, 271
valid responses were returned out of a total of 500 mailed (54 percent
response rate). In
1997, 477 questionnaires were mailed, and 186 valid responses were obtained at
the time of
this writing in late March 1997 (a 42 percent response rate). Questionnaires
were still
arriving at the time of this writing and it is expected that the final
response rate will exceed
50 percent. (Note: This paper will be updated for the AEJMC conference. But
the additional
returns are not likely to change the overall findings.)
Although individuals responded to the questionnaires, it is important to
point out that
the newspaper not the journalist is the unit of analysis. To conduct such
an analysis,
the findings were aggregated for each newspaper that had more than one
respondent. In
1993, this meant that 154 of the 250 newspapers sampled (62 percent) were
included in the
analysis. For 1997, 148 of the 250 newspapers were included (59 percent).
For continuous
measures (i.e., ordinal, interval and ratio level measures) and dichotomous
nominal
measures, the final value used in the analysis represented the mean of the
ratings given. In
cases where the values for one of the respondents was missing (e.g., failure
to answer a
question), the values of the other respondent(s) were substituted. No nominal
variables were
included in this analysis. The 1997 data were weighted in terms of sample
group (publisher
vs. editor) to be identical to the 1993 survey. This reduces measurement
error on that
variable.
Corporate Structure. Using Weber's conceptual framework as a guide,
respondents
were asked to provide information on 14 individual measures of corporate
structure. The
first dimension or category was division of labor, or organizational
complexity. The most
frequently used measure of this dimension is the number of workers or
employees (Blau &
Meyer, 1987). Three measures were employed here: number of full-time
employees;
number of full-time reporters and editors; and number of beats or departments.
Hierarchy
of authority was operationalized as the number of promotions needed for
reporter to become
top editor. Three indicators of the presence of rules and procedures were
used: whether the
newspaper has "its own formal, written code of ethics"; whether the newspaper
has "its own
employee handbook of rules and procedures"; and whether the newspaper has its
own "style
book (in addition to AP or UPI)." Staff expertise was measured by a question
which asked
whether "reporters normally need a bachelor's degree to be considered for
employment at
your newspaper." Rationality was operationalized as the amount of importance
top
management places on "finding the most efficient way to solve problems." Five
measures
of ownership structure were included: whether the newspaper was owned by
chain or
group; whether public ownership was possible; whether the newspaper was a
legally
incorporated business; whether the newspaper was not controlled by one family
or
individual; and the number of daily newspapers in chain.
The 14 items were factor-analyzed using principle components, oblique
rotation.
The results were nearly identical in both studies. A factor loading of .60
was used as a rule
of thumb for determining whether a measure could qualify for inclusion with a
particular to a
factor, and measures that had two or more loadings greater than .30 and less
than .60 were
considered problematic. Using an eigenvalue of 1.00 as a minimum for defining
a factor, the
analysis initially produced a four-factor solution. However, this solution
produced several
multiple factor loadings. A five-factor solution was then extracted, and this
stabilized most
of the loadings. As expected, the division of labor items loaded heavily
together, on the first
factor, but the hierarchy of authority measure also loaded strongly there.
Conceptually one
can distinguish between division of labor and hierarchy of authority, but
operationally they
cannot be separated, at least in terms of how they are measured here. I gave
the first factor
the label "structural complexity," with newspapers scoring higher being more
complex. The
ownership items loaded heavily on the second factor, with one exception
number of
newspapers in chain which also loaded moderately highly on the third and
fourth factors
(rules & regulations and staff expertise, respectively). Because of these
mixed loadings, this
item was excluded from the ownership index. The third factor included two of
the three
rules and regulations' measures: whether the newspaper has an employee
handbook of rules
and a formal, written code of ethics. The other measure, whether the
newspaper has its own
style book, loaded most highly on the fourth factor (staff expertise) and
posted the lowest
final communality estimate (i.e., had the lowest explained variance). As
such, it also was
excluded from subsequent analysis. The fifth factor consisted solely of the
rationality
measure.
In sum, the factor analysis produced five empirically distinct factors. An
overall
corporate index variable was created after the values for the individual
measures were
standardized and summed. The five dimensions were also correlated (data not
shown). The
Pearson r values ranged from .10 to .26 in 1993. Structural complexity was
correlated with
every dimension except ownership structure. This is consistent with previous
research which
has found little or no correlation between circulation (a proxy measure for
complexity) and
chain ownership (Demers, 1991). However, ownership structure is correlated
with rules and
regulations, and rationality. Rules and regulations is correlated with all of
the other indices.
Rationality is correlated with all of the dimensions except staff expertise,
which in turn is
correlated with structural complexity and rules but not ownership.
Organizational Goals. Respondents were asked to rate 21 statements designed
to
measure emphasis that "top management at your newspaper" places on profits,
product
quality and other goals. Responses were recorded on a seven-point scale
ranging from "not
very important" (1) to "extremely important" (7). They included: (1)
increasing circulation;
(2) increasing profits; (3) responding to readers' needs; (4) improving the
news product; (5)
doing the job well; (6) reducing costs; (7) maximizing profits; (8) beating
the competition;
(9) responding to advertisers' needs; (10) supporting economic growth in the
community;
(11) being a leader in the community; (12) hiring the best employees; (13)
maximizing
growth of the organization; (14) treating employees well; (15) being the best;
(16) supporting
local community leadership; (17) being innovative; (18) having the latest
technology; (19)
giving reporters more autonomy; (20) winning reporting awards; and (21)
conducting
readership research.
All of the items were factor-analyzed (principle components, oblique
rotation) and,
again, the results were highly similar in both survey years. A six-factor
solution produced
the most stable results. The first factor, defined as a quality index,
contained eight items, but
two of them being innovative and beating the competition had loadings less
than .60
and also produced moderately high loadings on at least one other factor.
These two items
were excluded from the quality index, which included responding to readers'
needs, doing
the job well, improving the news product, treating employees well, being the
best and hiring
the best employees. Three of the profit items increasing profits,
maximizing profits and
reducing costs loaded heavily on the second factor. It was expected that
responding to
advertisers' needs also would have loaded highly with these profit items, but
it did not it
had multiple loadings and, consequently, was excluded from the analysis. The
third factor
consisted of three community involvement measures. The rest of the items
loaded on the
remaining four factors, none of which was named because each contained
multiple loadings
or were conceptually mismatched. The analysis will examine each of these
items separately
(winning reporting awards, conducting readership research, maximizing growth
of the
organization, giving reporters more autonomy, being innovative, beating the
competition,
increasing circulation, and having the latest technology). The six factors
altogether
explained about three-fourths of the variance in both surveys.
Six additional measures of perceived emphasis on profits and product quality
were
included in study. After rating the 21 importance measures, the respondents
were asked to
identify the first, second and third most important ones. About a fourth of
the newspapers in
both studies mentioned at least one of the three profit items as being the
most important.
The mean number of times profit was mentioned as one of the three most
important goals
was about 0.6. About half of the newspapers mentioned one of the six product
quality items
as the most important goal. The mean number of times quality was mentioned as
one of the
three most important goals was about 1.3. In short, the analysis will include
three
"subjective" measures of profit and three "subjective" measures of product
quality: The first
being a numerical index composed of the importance ratings; the second being
the
percentage mentioning that goal as the most important; and the third being the
mean number
of times that goal was mentioned as one of the top three goals.
One "objective" measure of profitability also was employed. It was based on
a
question which asked respondents to indicate whether their newspapers made a
profit:
"Which of the following best describes the bottom line' at your newspaper
last year?"
Responses were recorded on a four-point scale in 1993: (1) lost money, (2)
broke even, (3)
made up to 15 percent profit on revenues after taxes, (4) made over 15 percent
profit on
revenues after taxes. Because a large number of newspapers (roughly half)
had fallen in the
fourth category in 1993, a 7-point scale was used in 1997: (1) lost money, (2)
broke even, (3)
made 1% to 9% profit on revenues after taxes, (4) made 10% to 19% ... , (5)
made 20 to 29%
... , (6) made 30% to 39% ... and (7) made 40% or more ... . This measure
approximated a
normal curve, with about two-thirds falling into the categories 4, 5, and 6.
Only one-half of
one percent said their newspapers said lost money or made 40 percent or more
profit last
year. As might be expected, this measure produced slightly higher refusal
rates than the
other measures (about 20 percent in both surveys).
Results
The 1997 data support the findings from the 1993 survey, not the fall 1996
study, and
further suggest that the relationship between corporate structure and emphasis
on profits as
an organizational goal as well as product quality has become even stronger.
However, the
1997 data do not support the finding in 1993 that corporate newspapers are
more profitable
i.e., no relationship was found between corporate structure and the
objective measure of
profit.
H1: Corporate Structure and Profit as an Organizational Goal
The 1997 data generally support the first hypothesis. The more a newspaper
exhibits
the characteristics of the corporate form of organization, the less emphasis
it places on
profits as (a) the most important organizational value and as (b) one of the
top three values in
the organization. The zero-order correlations between the corporate index and
those two
measures are much stronger in 1997 than in 1993 (see Table 1, respectively,
-.35, p<.01 vs.
-.16, p<.05 and -.35, p<.01 vs. -.11, p>.05) . (Note: In the 1993 published
findings (Demers,
1995, p. 16), which included police reporters in the sample, the correlations
for both of these
profit measures were statistically significant [r= -.18, p<.01 in both cases],
as was the finding
for the "objective" profit measure [r= -.14, p<.05].) However, as was found
in 1993, the
correlations between the corporate index and the three-item profit index are
not statistically
significant in either year. This finding may be interpreted as showing that
profit-making is
important in all news organizations, but more sensitive measures of
profit-making (i.e., most
important goal and one of the three goals) are necessary to demonstrate that
corporate
newspapers place less emphasis on profits.
--------------------------------------
Insert Table 1 about here.
---------------------------------------
Correlations for two of the five corporate dimensions structural complexity
and
ownership structure are also shown in Table 1. I have argued that
structural complexity is
a more important predictor of organizational goals than ownership structure
(Demers, 1995).
The findings again support this view. Ownership structure is positively
related to the three-item profit index in 1997 (r= -.26, p<.01) and the three
most important goals measure in
1993 (r=.13, p<.05) findings that are contrary to expectations. However,
ownership is not
significantly related to the other profit items in both years. In contrast,
structural complexity
is significantly related to two of the three profit measures in both years.
The correlations in
1997 are significantly stronger than in 1993.
H2: Corporate Structure and "Objective" Profit Measures
The data do not support the second hypothesis, which expected that the more a
newspaper exhibits the characteristics of the corporate form of organization,
the higher the
margin of profit. Table 1 shows that in both 1993 and 1997 there is no
statistically
significant relationship between corporate structure and the self-reported
"objective" profit
measure. In 1993, the correlation between the corporate index and last year's
profit margin
was .07 (p>.05), compared with -.05 (p>.05) in 1997. Structural complexity
and ownership
structure also are not related to this "objective" measure.
H3: Corporate Structure and Product Quality as an Organizational Goal
The data in both 1993 and 1997 support the third hypothesis. The more a
newspaper
exhibits the characteristics of the corporate form of organization, the more
emphasis it places
on product quality as an organizational goal or value. In fact, the
correlations are all higher
in 1997. Table 1 shows that these findings hold for all three quality
measures. The
correlations are moderately strong, ranging from .23 to .54 (p<.01). The
correlations for
structural complexity also are higher in 1997 than in 1993. Ownership
structure is
significantly related only to the six-item quality index.
H4: Corporate Structure and Nonprofit Goals
As expected, the 1997 data support in general the expectation that newspapers
pursue
more nonprofit goals the more they exhibit the characteristics of the
corporate form of
organization. The data in Table 2 show that the correlation between these
goals and
corporate structure is even stronger in 1997 than in 1993 for maximizing
growth of the
organization, having the latest technology, being innovative and increasing
circulation. On
the other hand, the correlations for two goals winning reporting awards and
beating the
competition are not statistically significant in 1997. As in 1993, there is
no relationship
between the corporate index and community involvement. This finding
contradicts the
critical model, which expects corporate newspapers to place less emphasis on
community
involvement. However, ownership structure, by itself, is negatively related
to community
involvement in 1997, which supports the critics' view. The data also show
that structural
complexity is a much better correlate of organizational values than ownership
structure.
--------------------------------------
Insert Table 2 about here.
---------------------------------------
Summary and Discussion
In 1993, I conducted a national probability survey of daily newspapers in the
United
States and found that the more a newspaper exhibits the characteristics of the
corporate form
of organization, the more profitable it is however, I also found that
corporate newspapers
place less emphasis on profits as an organizational goal and more emphasis on
product
quality (Demers, 1995). In 1996, I conducted another study and included one
measure of
profit-making the amount of importance top management places on profit
maximization.
To my surprise, the findings contradicted the 1993 study corporate
newspapers placed
greater emphasis on profits. Because of the importance of this issue to the
debate over the
effects of corporate structure, I conducted another study in February and
March 1997 to
resolve the discrepancy.
The 1997 data support most of the 1993 findings corporate newspapers place
less
emphasis on profits and more emphasis on product quality and many other
nonprofit goals,
including maximizing growth of the organization, having the latest technology,
being
innovative, and giving reporters more autonomy. In fact, the correlations are
even stronger
in 1997 than in 1993. I argued that corporate newspapers place less
importance on profits
because they (1) have a greater division of labor and role specialization,
which remove
editors and other employees from concern with the bottom line and increase
concern with the
news product and other nonprofit matters; (2) are more financially stable and
secure, which
means they can afford to pursue other nonprofit goals; and (3) are more likely
to be
controlled by professional managers, who earn most of their income through
salary as
opposed to profits and, as such, it would be illogical to argue that they
would maximize
profits for the owners (Galbraith, 1976).
These data suggest, then, that the 1996 finding that corporate newspapers
place
greater emphasis on profit maximization appears to be a fluke. One possible
explanation is
simply that the 1996 subsample was not representative of the population of
newspapers.
These were newspapers who responded to the study only after a second mailing.
Contrary to expectations, the 1997 data failed to support the hypothesis that
corporate newspapers are more profitable at least as in terms of the
self-reported measure
of profitability used in this study (profit on revenues after taxes). This
finding contradicts
the critical model and my own model, which expects that corporate newspapers
are
structurally organized to maximize profits. However, this finding should be
interpreted
cautiously, since only one measure of "objective" profitability was employed,
and
theoretically the argument that corporate newspapers are more profitable is
very strong.
Overall, the results of the 1993 and 1997 studies challenge the conventional
wisdom,
which holds that corporate structure is inimical to good journalism and
democratic
institutions. Although few people would dispute the notion that corporate
organizations
often misuse their power, the crucial research question, as I have argued
before (Demers,
1995), is not whether a corporate newspaper is a mechanism of social control
because all
mainstream newspapers perform that function (Donohue, Tichenor & Olien, 1973)
but,
rather, how is that control effectuated and who benefits from it. More
research needs to
examine the effect of corporate structure on content, organizational routines
and practices,
job satisfaction, autonomy, and public policy outcomes. In terms of public
policy outcomes,
the goal should be to identify the conditions under which newspapers are more
or less likely
to promote efforts that lead to social change or social control.
ENDNOTES
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Table 1. Correlations Between Corporate, Profit and Quality Measuresa
Independent Variables
Corporate Index Structural Complexity
Ownership Structure
Dependent Variables
1993
1997
1993
1997
1993
1997
"Subjective" Profit Items
1. Importance placed on
profits (3-item index)
-.01
.03
-.18**
-.11
.09
.26**
2. Profit most important
value in organization
-.16*
-.35**
-.13*
-.27**
.07
.03
3. Number of times profit
mentioned as 1st-3rd
most important value
-.11a
-.35**
-.10
-.34**
.13*
-.03
"Objective" Profit Items
4. Last year's profits
.07a
-.05
.11
-.06
.11
-.06
"Subjective" Quality Items
5. Importance placed on
quality (6-item index)
.47**
.54**
.27**
.39**
.14*
.20**
6. Quality most important
organizational value
.23**
.31**
.17*
.23**
-.02
-.01
7. Number of times quality
mentioned as 1st-3rd
most important value
.29**
.42**
.31**
.35**
.02
.07
*p<.05; **p<.01
Note: In addition to publishers and editors, previously published data for the
1993 survey (Demers, 1995) included
police reporters as respondents. They have been excluded from the data
presented in this table in order to make the
1993 study comparable to the 1997 study, which surveyed only publishers and
editors. The sample sizes for the
1993 data range from 131 to 154; the range for the 1997 data is 109 to 148.
aThese correlations were significant in the 1993 survey when reporters were
included in the analysis (for the
subjective profit measure, r= -.18, p<.01; for the objective measure, r=
-.14, p<.05; see Demers, 1995). Table 2. Correlations Between Corporate
and Nonprofit Measuresa
Independent Variables
Corporate Index Structural Complexity
Ownership Structure
Dependent Variables
1993
1997
1993
1997
1993
1997
1. Community Involvement
(3-item index)
2. Maximizing growth of
the organization
3. Winning reporting
awards
4. Having the latest
technology
5. Beating the competition
6. Being innovative
7. Giving reporters more
autonomy
8. Conducting readership
research
9. Increasing circulation
-.01
.18**
.25**
.16*
.31**
.33**
.22**
.40**
.10
.10
.44**
-.02
.34**
.12
.49**
.20**
.45**
.36**
-.21**
.13*
.12
.21**
.15**
.14**
.12
.30**
.05
-.01
.38**
.08
.33**
.19**
.42**
.28**
.39**
.22**
.01
.16*
.21**
-.05
.09
.03
.04
.13*
.19*
-.22**
.41**
-.03
.02
.12
.15
-.04
.12
.31**
*p<.05; **p<.01
Note: In addition to publishers and editors, previously published data for the
1993 survey (Demers, 1995) included
police reporters as respondents. They have been excluded from the data
presented in this table in order to make the 1993
study comparable to the 1997 study, which surveyed only publishers and editors.
The sample sizes for the 1993 data
range from 131 to 154; the range for the 1997 data is 109 to 148.
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