Moving the Bancroft/Murdoch choice to the moral level

The fundamental problem with today's American press is a mismatch between its economic basis and its public function.

As laid out here at length, and 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.

The point is not to rehash that argument. It is to say that the "two-class" shareholding structure that undergirds America's three best newspapers (the New York Times, the Washington Post, and the Wall Street Journal) was explicitly designed to permit decisions to be made for non-economic reasons. If you want management to concentrate strictly on raising the share price, you don't need any special ownership structure. Financial markets will insist on that anyway. The only justification for "Class B" shares giving special voting power to the Sulzberger family at the Times, the Graham family at the Post, and the Bancroft family at the Journal is the assumption that the families will weigh other factors in deciding how the news operation should be run.

Thus the future of these news organization rests on the hope that the later generations who inherit controlling shares will acknowledge the concept of "enough" money. If they want the most money possible out of their inheritance, they'll eventually view the newspaper as just another asset -- and destroy it. (See the tragedies of the Chandler family of Los Angeles, the Bingham family of Louisville, etc.) If no amount of money can be "enough" -- if, to be plain, people who are already rich are greedy to be richer still -- they debase institutions on which the rest of us depend.

All this is prelude to recommending a very strong post earlier this month from Dean Starkman, a former WSJ reporter who now writes "The Audit" for the Columbia Journalism Review. He is moralistic, in a convincing way, about "What the Bancrofts Owe Dow Jones."

Read the whole thing here, but this is the summary:

The Bancroft familiy has taken more than $500 million in dividends out of the company since 1987, which is as far back as DJ's dividend history goes on the company's website (and don't even try to do this on Factiva, DJ's costly financial news and data provider; you'll sprain something.) Divided by 36 Bancrofts, that's about $14 million each. For doing nothing....

These people, as public spirited as they may be, have for years been collecting what their favorite editorial page, if it were honest, would call an entitlement...

Now is the last chance for the Bancrofts to step up to the responsibility that comes with their extraordinary, accidental and lucrative birthright. This is the moment those Class B shares were created for in the first place. Or is the idea that privilege comes with responsibility another one of those conservative “principles,” like smaller government, say, that gets jettisoned at feeding time?