The sale of Dow Jones to Rupert Murdoch has generated an enormous amount of angst among the journalistic communities (and the left, but that's a nother story). Last week, for example, James Fallows wrote elesewhere on this site that:

... as is obvious as soon as you think about it, the press has cultural, social, and political effects beyond the purely commercial. But its managers are being forced to make decisions on the same focused quarterly-returns basis that guides choices at Merrill Lynch or General Motors. Sometimes those pressures for maximized return (and rising stock price) make news organizations more efficient. But in general they weaken or destroy the parts of news systems that affect people in any role other than as shareholders - that is, as readers, viewers, voters, citizens.

Carping about Murdoch's takeover of the Wall Street Journal followed at length.

Fallows' claim that it's "obvious" that journalism isn't a regular business is precisely the sort of hubris that leads journalists to think of themselves as some sort of fourth branch of government, with a mandate to act as an ombudsman for society. It would be silly, if it were not so pernicious.

By way of contrast, an editorial in The Statesman reflects an understanding of the newspaper business that seems to have escaped Fallow and his ilk:

Newspapers are a strange business. They are a business whose chief employees, journalists, are invested in the notion that their business is not business.

Write stories so as to raise the newspaper’s circulation so it can sell more ads so its stockholders are happy? Hell no! We journalists answer to a far higher and loftier calling. ...

Dow Jones’ current owners and journalists sincerely believe all this. If they didn’t, they would have accepted Mr Rupert Murdoch’s offer to buy Dow Jones on 17 April, the very day he made his bid. After all, he was offering US$60 (S$91) per share for the company, a premium of 67 per cent over its market price of US$36 a share. That meant the Bancroft’s family stake, valued at US$750 million by the market, would be worth more than US$1 billion after taxes, according to The New York Times.

The stake was generating only US$20 million a year in dividends for the family, a return of just 2.6 per cent. By selling to Mr Murdoch, and investing the proceeds in US treasuries, they would earn at least US$50 million a year, more than doubling their income. If Dow Jones made widgets, there would have been no doubt as to what they should do. Where do we sign, the Bancrofts would have asked. But Dow Jones didn’t make widgets. Thus the angst.

The Bancrofts finally decided to sell because newspapers are indeed a business. ....

How long would it have been possible for Dow Jones to continue surviving as now, with its high-minded, low single-digit rates of return being protected from the market by one family? ... As even the Journal’s editorial page acknowledged: “Business success is vital to editorial independence."

Actually, newspapers aren't really all that strange a business. To the contrary, as economist Michael Jensen has explained, they are a very familiar type of business:

I assert that most of the demand for the product of the various “news” services derives, not from the individuals’ demands for “information,” but rather from their demands for entertainment. In that sense, the news media are in competition with drama, soap operas, situation comedies, fictional writing, sports events, and so on.

Go read the whole thing, it's a brilliant essay. For present purposes, however, the main point is that journalists are in precisely the business as the guys that produce Girls Gone Wild.

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